RGEN Initiation

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Repligen Corporation
(RGENa - $34.73)
November 13, 2017 Company Initiation Report

RGEN: Attractive LT Growth Potential; Valuation in Historical
Life Science Tools
Range; Initiating Coverage with Buy Rating and $41 PT
Repligen Inc. manufactures, develops and
markets products for the bioprocessing We are initiating coverage of Repligen Corporation (RGEN) with a Buy rating and a
industry. Its products are used in every step of price target of $41. Although the company currently trades at a premium valuation, this is
the bioprocessing cycle, including culturing of within its historical range, and we think that it is justified based on strong growth
cells, harvesting, purification and quality potential and operating margin expansion. Repligen is one of the only companies in the
control testing. Repligen is a market leader in
Life Science Tools space that offers double-digit revenue growth coupled with huge
the different niches in which it competes,
which it describes as a combined market potential to gain market share in a large market. Finally, RGEN represents a unique asset,
opportunity of ~$1,395MM-$1,490MM. as shown below, in a market filled with M&A.
Attractive Bioprocessing Backdrop. Repligen operates in the fast-growing
bioprocessing market, which we estimate is growing long term at 8%-10%. It has cutting-
Buy edge technology in multiple niches and is poised to be a leading supplier as next-
generation systems (modular construction and continuous bioprocessing) become more
$41.00 widely accepted. Growth is driven by increasingly prevalent monoclonal antibodies-
based drugs (~70 on the market, 300+ in development), plus optionality in new product
Trading Data: areas as a result of its Spectrum acquisition. Biologics is a very long-term megatrend.
Last Price (11/10/2017) $34.73 Margin Expansion. Repligens goal is to increase its gross margin from 55% to 60% and
52Week High (6/23/2017) $46.81 its operating margins from 20.4% to >25% by 2020. We think that as the company
52Week Low (1/25/2017) $28.48 increases sales of its higher-margin products and finishes integrating Spectrum, it will be
Market Cap. (MM) $1,513 able to achieve these goals. RGENs ability to scale operations suggests to us that its
Shares Out. (MM) 43.565 operating margins can expand, and its unique products suggest continued strong growth
3 Month Avg. Daily Vol. (MM) 0.412
in gross margins.
Earnings Estimates: ($ per share) Perfect Size in an Active M&A Market. Repligen represents an attractive acquisition
target for the larger players in bioprocessing, yet is small enough that it can find smaller,
(Dec) Q1 Q2 Q3 Q4 FY
attractive pieces to fill in the gaps. It has made six acquisitions since 2010 at an average
FY19E 0.25 0.25 0.13 0.16 0.80
valuation of ~5.0x sales, all of which have been EPS accretive in their first year. RGEN
FY18E 0.23 0.23 0.12 0.15 0.71
FY17E 0.15A 0.20A 0.15A 0.11 0.61
routinely adds to its portfolio through selective acquisitions of smaller, high-growth
FY16A 0.13 0.18 0.08 0.08 0.46 players with products that can be dropped into its sales networks. This acquisition
FY15A 0.12 0.13 0.08 0.07 0.40 pipeline could bring additional revenue and EPS not currently in sell-side estimates.
Spectrum Accretion Estimates Are Conservative. Spectrum will help Repligen
Valuation: continue to fill the gaps in the bioprocessing value chain, and it can also help the
Multiple Curr. FY Next FY Next FY @ PT company build sales in Asia and the rest of the world, in our view. We think the
P/E 56.9 48.9 57.7 combined company will drive revenue and EPS above Street expectations, and that it can
P/S 10.8 8.2 9.6 easily create additional relationships that will accelerate sales. RGEN estimates synergies
Source: CL King & Associates estimates of $20MM-$25MM.
Financials. We model 2017 and 2018 revenue at $140.3MM and $185.4MM,
David Westenberg, CFA respectively, compared with consensus estimates of $140.9MM and $185.7MM,
SVP/Senior Analyst respectively. We estimate 2017 and 2018 EPS of $0.51 and $0.43 vs. consensus estimates
(617) 357-5529/dwestenberg@clking.com
of $0.41 and $0.38, and adjusted EPS of $0.61 and $0.71 vs. consensus of $0.61 and
CL King Equity Trading Desk (866) 894-1244 $0.73. That said, we think a focus on near-term earnings only distracts from Repligens
longer-term story, which is that of a breakout.
Valuation. We use a 8.25x multiple on our 2019 revenue estimate of $214.2MM. We
note that the 8.25x multiple is within RGENs historical trading range of 8x-10x. We also
See required disclosures at the end of report. note that our share count of ~44 million includes the Spectrum acquisition.
WBENC certified Albany Boston New York City Member FINRA/SIPC

(800) 743-6626 / www.clking.com
CL King & Associates
November 13, 2017 Established 1972
Repligen Corporation (RGEN $34.73)

Company Description: 52Week Price Performance:
Repligen Inc. manufactures, develops and markets products for Company: Repligen High (6/23/2017): $46.81
the bioprocessing industry. Its products are used in every step of Corporation Low (1/25/2017): $28.48
the bioprocessing cycle, including culturing of cells, harvesting, Ticker: RGEN Last (11/10/2017): $34.73
purification and quality control testing. Repligen is a market
leader in the different niches in which it competes, which it
describes as a combined market opportunity of ~$1,395MM-
$1,490MM. RGEN relies on a limited number of customers for a
large percentage of its revenue, with its top two customers (GE
Healthcare and MilliporeSigma) accounting for 57% of revenue
in 2016 (with contracts through 2019/2021 and 2023). The
company was founded in 1981 and is based in Waltham, MA, and
has 450 employees.
Source: Company reports Source: FactSet Inc.
Earnings Estimates: ($ per share) Investment Thesis Highlights:

(Dec) Q1 Q2 Q3 Q4 FY
Gets to piggyback on growth of monoclonal antibodies (mAb)
FY19E 0.25 0.25 0.13 0.16 0.80 market (current mAb market >$100B and >300 mAbs are in
FY18E 0.23 0.23 0.12 0.15 0.71 development)
FY17E 0.15A 0.20A 0.15A 0.11 0.61
Lower risk than other biotech stocks, while benefiting from the
FY16A 0.13 0.18 0.08 0.08 0.46 same overall growth rate backdrop
Source: CL King & Associates estimates; Company reports
Significant margin expansion
Valuation within its historical range
Balance Sheet Items: ($, Millions), except as indicated
(Dec) Cash LT Debt Assets Equity Spectrum could bring significant synergies
FY19E $223.9 $25.1 $466.9 $397.1 Very active M&A backdrop; Repligen is a very unique asset that
FY18E $195.5 $21.4 $402.2 $342.4 would be easily fit into a larger player
FY17E $161.5 $32.2 $340.9 $275.3 May lose market share in Protein A segment as GE begins
FY16A $141.8 $99.1 $288.9 $168.8 production in 2018
FINANCIAL SUMMARY Non-GAAP

($, Millions except per share data and where indicated)
Gross Operating PreTax Net FCF
Dec Revenue Profit Margin Profit Margin Profit Margin Profit Margin EPS per share
FY19E $214.2 $120.2 56.1% $45.6 21.3% $42.6 19.9% $36.2 16.9% $0.80 $0.97
FY18E $185.4 $101.5 54.8% $40.2 21.7% $37.2 20.1% $31.6 17.1% $0.71 $0.73
FY17E $140.3 $73.3 52.2% $31.0 22.1% $26.9 19.2% $23.4 16.7% $0.61 $1.16
FY16A $104.5 $57.4 54.9% $22.4 21.4% $20.3 19.4% $16.0 15.3% $0.46 $0.33
David Westenberg, CFA

Repligen Corporation Page 2 of 39
(617)-357-
5529/dwestenberg@clking.com
Overview
Repligen manufactures and distributes bioprocessing products, and organizes itself
based on end-markets into three segments: Protein Products (52% of 2016 revenue),
Filtration products (19% of revenue) and Chromatography (28% of revenue). We
estimate that the bioprocessing markets that the company services will grow at 8%-
10% annually for at least five years.
RGEN operates primarily in the U.S. and the EU, although it has recently begun to
expand its focus to become more international. The companys revenue in the U.S.,
Sweden, the U.K. and other accounted for 39%, 29%, 7% and 25% of the total,
respectively. Historically, the majority of Repligens sales have been of Protein A
ligands, although its other segments have been growing more quickly, primarily due
to acquisitions. Other significant product lines include chromatography columns and
filtration systems, which are used in the bioprocessing cycle. Customers include
those producing drugs for clinical studies, all the way up to commercial producers of
currently marketed drugs. The company has stable business in the form of long-term
contracts with its largest customers, GE Healthcare (GE: NR) and MilliporeSigma (a
subsidiary of Merck [MRK: NR]) (a combined 57% of 2016 revenue), through
2019/2021 and 2023, respectively, although its deal with GE is at risk right now (for
more on this, see below).
Repligen holds market-leading positions in the products that it sells, notably the
Protein A ligands, which it was the first-ever producer of in 1985. The company has a
plan for increasing operating margins by 2020. Repligen is in the process of making
strategic acquisitions and innovations in order to better address different areas of the
bioprocessing cycle that it currently isnt servicing.
Repligen was founded in 1981 in Waltham, MA, by Paul Schummel and Alexander
Rich, who served on the board of directors until 2014. The company was started to
help commercialize innovations being developed in the burgeoning bioprocessing
field, including at MIT, where both founders were professors. RGEN was first able to
clone the gene for Protein A in 1982, which was the first product the company
commercialized, as well as the worlds first recombinant form of the Protein A ligand
in 1985 (Protein A being widely used in chromatographic separation for the purifying
of monoclonal antibodies [mAbs]). Based on the success of these products, Repligen
used the profits to support new drug development programs.
Up until 2010, Repligens product portfolio was focused on its Protein A offerings. In
2010, the company began acquiring other assets, e.g., disposable chromatography
columns, starting with its open platform user-specified (OPUS) column line
following the acquisition of BioFlash. The major strategic shift in RGENs strategy
came in 2012, when its contemporary business model of working to provide a broad-
based bioprocessing business came into being, with the companys strength bolstered
by the growth in the biologics market. Repligens 2012-16 product revenue CAGR
was 25.7%.
The products that the company sells provide its clients with solutions through the
entirety of the antibody purification process from initial culturing through quality
control testing, and everything in between.

Figure 1: Repligens Product Development and Acquisition History
Source: Company website
Thesis
Sustainable, Long-Term and Recurring Double-Digit Growth
There are an estimated 300+ biological drugs in development throughout the globe,
and Repligen supplies the ingredients and/or equipment to manufacture these drugs.
When the companys proteins or equipment are used in the process of building a
biologic, its revenue becomes incredibly sticky, as changing up the ingredients or
drug-producing protocol typically requires going back through the regulatory
process. In the meantime, Repligen grows as these drugs increase in usage. The
companys growth rate can be viewed as the growth in acceptance of existing
biologics plus any other deals it can secure. In other words, if RGEN were to stop its
sales and marketing process, we think the company would still grow at roughly 8%-
10% annually, near term.
In addition, Repligens products have the opportunity to displace existing methods of

drug manufacturing, given that many companies are moving to disposable filtration
equipment. Although we admit the valuation is steep, the growth duration upside and
margin expansion potential of Repligen are immense and likely underappreciated by
investors.

Competes in Large and Growing Biologics Markets, Where mAbs and

other Repligen Products (Single-Use/Continuous Flow Technologies)
Are Gaining Acceptance/Market Share
One of the main reasons we like Repligen is that it is the dominant player (with 95%
of market share in the manufacturing of Protein A ligands, as well as many first-in-
class technologies from acquisitions) in robust end-markets that are supported by the
growth the mAb class of drugs. Revenue growth from mAbs is projected to be
roughly twice as fast as that of small molecules. Below, we describe in detail a few
key points related to this theme and discuss specific elements of Repligens business
that will benefit.
Figure 2: Growth in Global mAb Market Over Time
Source: Investor presentation
The Global Biologics Drug Market Is Driven by the Strength of the mAb Class
of Biologics. Given that RGEN has, since 2012, moved away from developing drugs
of its own to becoming a supplier to researchers and manufacturers, it has no
exposure to the drug approval concerns that development companies in the space
have to deal with, while it supplies the successful companies from the clinical to
production stages. Antibody-based biologic drugs account for ~$100B in sales of
global biopharma revenue and represented the majority of the top 10 best-selling
drugs across the pharmaceutical industry in 2016, including a record 10 FDA
approvals of antibodies in 2016, with more than 300 mAbs currently in trials. In
2017, as of September 29, there have been nine mAb approvals in the U.S., with
Repligen expecting there to be a total of around 12 for the year. Growth in mAb sales
was ~20% over the past few years, but we are projecting it to be in the low to mid-
teens in the upcoming years. That being said, we expect growth in the companys
product lines to come not just from growth in mAbs, but also from market share
capture.

Figure 3: mAbs in Different Phase Trials and in the Market by Cell Culture Type
Figure 4: The Growth of the Biopharmaceutical Market Is Driven by mAbs
Figure 5: Monoclonal Antibody Approvals in the U.S. and Europe

Similarly, there are a number of generic-producing and specialty pharma companies

looking to produce follow-on products, as major mAbs come off patents in the U.S.
and European Union. This includes at least 12 companies looking to produce the first
generic version of Humira (adalimumab), which came off patent for some indications
in late 2016 in the United States. Given the high values and costs of biologic drugs,
developing countries are also investing significantly in the space in order to supply
lower-cost alternatives to their markets.
To take advantage of this, Repligens strategy includes platforming of its products,

and targeting acquisitions to expand its line of products to encompass the full
bioprocessing cycle. All three of the companys product segments have benefited
from this, but in particular, its Chromatography and Filtration businesses have seen
strong growth in high-margin areas; both businesses have grown significantly since
2012, with revenue having grown extensively both organically and as a result of
acquisitions.
We expect the Protein Products segment will grow at approximately the same rate as
the wider mAb market (the segment grew at just above 12% from 2012 to 2016, in
line with growth in mAb revenue globally during that period), and we foresee Protein
Products growing at the same rate as mAbs in general, although we conservatively
model it as growing at approximately a 5%-7% growth rate. Of the wider company,
we foresee a growth rate in excess of the markets, as the company continues to make
strategic acquisitions.
Figure 6: Segment Revenue Mix and Margins Over Time (and 2017 Guidance)
Source: Investor presentation (Guidance as of 11/9/2017)
Furthermore, two of the points of Repligens internal strategy include geographical

expansion and improving operational efficiency. The company is focused on
expanding its international presence, which is increasingly attractive as more
countries markets mature, and as it builds out its global sales, marketing,
applications and infrastructure. The Spectrum acquisition will allow Repligen to
leverage an existing salesforce selling to the exact same market. In addition, we
expect a good amount of cross selling of the two different product lines.

Figure 7: Cross-Country Analysis of Access to Biologic Drugs
Source: Secondary research, Deloitte Subject Matter Advisors, Deloitte analysis
Room for, and Focus on, Margin Expansion
Repligen has also seen efficiencies improve, e.g., an increase in the proportion of
sales coming from direct product sales, which increased to ~50% in 2016 from ~20%
in 2012. On the gross margin side, the company sells products that have minimal
price erosion issues. In fact, once its products are used in the manufacturing of a
drug, Repligen has most of the leverage in the negotiation. Although bears would
point to GEs independent manufacturing of Protein A as a headwind (at worst, its a
revenue cliff and major competition for Repligen; at best, it just gives GE negotiating
leverage), we note it will take GE years to get to market with its Protein A solution.
We also see significant operating leverage. Because Repligen sells business-to-

business (B2B) into pharmaceutical companies, it uses minimal sales and marketing
effort. With the significant industry tailwinds, we also see little need to accelerate
R&D spend. In addition, the Spectrum acquisition will add cross-selling opportunity
and allows the company to use an expanded product portfolio.

Figure 8: 2017 Guidance and Long-Term (2020) Goals
Source: Investor presentation (Guidance as of 11/9/2017)
An Increasingly Diversified Company/Additional Synergies from

Spectrum Merger (R&D)
Repligen has effectively had an annuity stream since it was founded in the form of its
Protein A business. It had an enormous head start in the field and used the profits
from this to fund specific biopharmaceutical projects, and, more recently, expansion
into other areas of bioprocessing. The company has had it fairly easy; given that its
patents expired years ago, most of its customers (with the exception of GEs
announcement a couple of months ago) have continued to use the company. We note
that Repligen produces seven Protein A ligand variants (different variants bind better
to different mAbs), with four of them being supplied to GE under exclusive contracts.
GE and MilliporeSigma represent 29% and 28% of revenue, respectively (down from
38% and 33% in 2014).
This has also presented the obvious risk that, after RGENs patents expired, a
competitor could come in and scoop up some of the high-margin business. That is
precisely the threat that the company could be facing when its contracts with GE end
in 2019/2021, given that GE is investing up to $70MM per year through 2022 (i.e.,
up to $350MM) to build out its Protein A manufacturing capability. GE will also be
competing on the resin front, claiming that it has the ability to produce a resin that is
40% more effective than the one Repligen is producing.
In a sense, it was inevitable that at some point the company would face competition
either from another company making Protein A, or from an alternate technology
displacing it. Given that RGEN invested that money as accretively as it did, while
diversifying its product mix, one can argue that the company actually did very well
and that the impact from a potential loss of some Protein A business will be
minimized.
That being said, we foresee multiple scenarios whereby Repligens prospects can
play out. We dont think that this is necessarily to say that the company will lose all
of its Protein A business/annuity stream. Even if it were to lose all of its GE business
in Protein A, that would represent only ~10%-15% of estimated 2020 revenue (its
2016 Protein A revenue from GE was probably around $25MM). This scenario

would be unfortunate for RGEN, but the company is growing so fast, that this would
represent less than a years worth of growth for it.
Potentially a bigger risk here is that Repligen trades at a premium multiple. In our
view, losing a large chunk of its Protein A business is unlikely to threaten the
business as a going concern, but it could hurt the stock price, as the high operating
margin, relatively safe revenue stream that has been important in funding the rest of
the companys growth becomes impinged upon.
Generally speaking, we think that Repligen will most likely have to sell Protein A at
a lower price to GE and other customers, and that it will lose a portion of its GE
business. The bull case represents Protein A prices remaining stable, and the bear
case represents the company losing the majority of its Protein A business post-2020,
as GE becomes a competitor; however, the wind down would likely take years, given
that there would be a long adoption cycle for the new products that GE will be
offering. We foresee Repligen prioritizing its other business areas (which are both
higher growth than the Protein A business, and which it has leading-edge tech in) and
becoming less dependent on revenue from the Protein A business as a means for
funding diversification.
Figure 9: Business Mix Over Time
Segment 2012 2013 2014 2015 2016 2017 2018 2019 2020
Protein Products 55% 57% 69% 63% 52% 40% 32% 29% 27%
Filtration 0% 0% 11% 19% 19% 22% 18% 18% 18%
Chromatography 13% 12% 15% 17% 28% 25% 22% 22% 23%
Spectrum Products 0% 0% 0% 0% 0% 13% 26% 26% 26%
Other and Future
Acquisitions 33% 31% 5% 0% 1% 0% 2% 4% 6%
Source: Company filings; CL King & Associates estimates
The Spectrum acquisition also represents a broadening of Repligens prospects.

Whereas the company was 75% mAb focused prior to the acquisition, now it is 60%.
While mAbs and recombinant proteins are probably the steadiest areas, we see the
diversification as a positive, given that it signals RGEN may make more headway
into the space post the integration of Spectrum.

Figure 10: End-Markets Prior to and Post the Spectrum Acquisition
We note the companys shift towards direct sales as being a strength. Moving away
from relying on a few large revenue sources is a significant plus for Repligen, and we
are encouraged by how it has been expanding its sales teams.
Figure 11: Direct Sales Focus, 2012 vs. 2017

Figure 12: Current Salesforce Distribution
Valuation Is at a Premium, but Not Unreasonable, Given the Growth and

Uniqueness of the Asset
RGEN has historically traded at a premium. Current consensus estimates put the
companys revenue growth, including acquisitions, at a 23.5% CAGR from 2016 to
2020, which well exceeds the industry estimate. Organic revenue growth should stay
in the mid-teens area. This puts Repligen in the same league as Illumina (ILMNa:
B/$250). The key difference between the two companies is that Repligen has
significantly more market share to gain. Note that RGEN currently trades at
approximately 48x two-year-forward earnings, which is below its historical averages,
as well as its high-water mark in 2015 of ~93x two-year-forward earnings. On a
revenue basis, the stock has traditionally traded around 9x forward revenue. Our $41
price target doesnt even require that multiple on a 2019E basis.

Figure 13: Three-Year History of BEst P/S (Next Ann.) and BEst EV/EBITDA(Next Ann.)
Source: Bloomberg
History and Comps

Valuation. We use an 8.25x multiple on our 2019 revenue estimate of $214MM to
arrive at a $41 price target. We note that the 8.25x EV/Revenue multiple is at the low
end of Repligens historical trading range. We also note that our ~44 million share
count includes the additional shares issued to acquire Spectrum.

Figure 14: Historical Cash Flow and Forward Assumptions

Income Statement Assumptions
Free Cash Flow 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E
Revenue 62.3 68.2 63.5 83.5 104.5 140.3 185.4 214.2 243.2
EBITDA 14.6 26.0 14.7 18.4 21.3 27.8 40.7 54.1 65.2
EBIT 11.1 22.9 10.7 13.8 16.0 17.3 31.2 40.4 50.0
Depreciation & Amortization Expense 3.5 3.1 4.0 4.6 5.3 10.5 9.5 13.7 15.2
Interest 0.2 0.3 0.3 0.1 -3.4 -6.0 -6.1 -6.1 -1.5
Working Capital 55.5 75.0 70.3 84.5 32.1 20.0 23.5 28.6 -47.1
CFO 13.4 12.2 18.4 15.1 7.5 35.7 28.6 41.1 50.7
Capital Exp 1.3 4.6 5.6 2.6 3.5 4.1 4.0 3.6 3.8
Free Cash Flow 12.2 7.5 12.8 12.4 4.0 31.6 24.6 37.5 46.9
Long Term Assumptions

Free Cash Flow 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029E
Revenue 246.3 283.3 325.7 368.1 415.9 465.9 512.4 553.4 586.6
Y/Y 15% 15% 15% 13% 13% 12% 10% 8% 6%
EBIT 55.5 69.5 86.5 105.1 127.1 151.6 177.1 202.3 226.2
Depreciation & Amortization Expense 7.4 8.5 9.8 11.0 12.5 14.0 15.4 16.6 17.6
Interest -2.7 -3.1 -3.6 -4.0 -4.6 -5.1 -5.6 -6.1 -6.5
Working Capital -2.5 -2.8 -3.3 -3.7 -4.2 -4.7 -5.1 -5.5 -5.9
Capital Exp -8.6 -9.9 -11.4 -12.9 -14.6 -16.3 -17.9 -19.4 -20.5
Free Cash Flow (EBITDA-WC-CAPEX) 51.9 65.3 81.6 99.6 120.8 144.7 169.4 194.0 217.4
Source: FactSet Inc.; Company reports; CL King & Associates estimates
Figure 15: Valuation Ranges at Different Discount and Growth Rates
EBITDA Exit Multiple

$44.60 8.0 x 10.0 x 12.0 x 14.0 x 16.0 x 18.0 x 20.0 x
7.0% $35.79 $40.28 $44.77 $49.26 $53.74 $58.23 $62.72
7.5% $34.21 $38.46 $42.70 $46.95 $51.19 $55.43 $59.68
Discount Rate
8.0% $32.72 $36.73 $40.75 $44.76 $48.78 $52.79 $56.81

8.5% $31.31 $35.10 $38.90 $42.70 $46.50 $50.30 $54.10
9.0% $29.97 $33.56 $37.16 $40.75 $44.35 $47.94 $51.53
9.5% $28.70 $32.10 $35.51 $38.91 $42.31 $45.71 $49.12
10.0% $27.50 $30.72 $33.94 $37.17 $40.39 $43.61 $46.83
10.5% $26.36 $29.41 $32.47 $35.52 $38.57 $41.62 $44.67
11.0% $25.29 $28.18 $31.06 $33.95 $36.84 $39.73 $42.62
11.5% $24.26 $27.00 $29.74 $32.48 $35.21 $37.95 $40.69
12.0% $23.29 $25.89 $28.48 $31.08 $33.67 $36.27 $38.86
Source: FactSet Inc.; Company reports; CL King & Associates estimates

Figure 16: Earnings Multiple Valuation
Source: FactSet Inc.
Stock History: Which Factors Cause the Stock to Move? As befitting a smaller
company, there are a number of instances in which RGEN has had significant shifts
in its stock price around earnings misses and beats. Repligen has generally had
earnings in excess of estimates, which has meant that the stock has generally moved
positively in tandem with earnings releases.
During the prelude to 1Q14, the company announced that it was launching its OPUS
chromatography columns. That occurred on March 26, 2014, but it wasnt until a
couple of weeks later that the stock had a huge boost in volume. This may be because
investors only then came to truly appreciate the strategic shift that the company was
making, or because of a large block trade its unclear to us. It did, however,
preclude a significant run-up of almost 50% in the stock price in about three months
time.
Note that with the earnings miss in late 2015 this was during November of that
year, when the company announced its earnings the company actually beat
consensus expectations on the top and bottom line ($19.8MM vs. $19.2MM
estimates, and $0.08 in EPS vs. $0.07 projections). What may have gotten to
investors was that RGEN announced that it was going to be abandoning a Protein A
resin development program in order to focus on its Alternating Tangential Flow
(ATF) filtration system. This shows how strongly the company was tied to its Protein
A business. Repligen went from ~70x two-year-forward earnings before the earnings
miss to ~56x after, as a result. This event shows, to an extent, the continued strategic
shift of the company away from just the Protein Products segment to its other product
lines.
You can also see a volume spike in June 2017, when Repligen announced its
acquisition of Spectrum.

Figure 17: Five-Year Price and Volume and Impacts of Earnings on Stock Price (as Opposed to
Consensus Expectations)
Source: Yahoo Finance, FactSet Inc.
Figure 18: Repligen Compared to Companies in and Around Bioprocessing

Revenue EV/Revenue Multiples
Market Enterprise
Name Ticker Cap Value 2016 2017E 2018E 2019E 2016 2017E 2018E 2019E
Thermo FisherTMO $74,657 $95,635 $18,274 $20,536 $22,794 $24,092 5.2x 4.7x 4.2x 4.0x
Sartorius DIM-FR $5,189 $5,345 $1,052 $1,085 $1,151 $1,282 5.1x 4.9x 4.6x 4.2x
Repligen RGEN $1,513 $1,417 $105 $141 $186 $211 13.6x 10.1x 7.6x 6.7x
Bio-Rad BIO $7,684 $7,473 $2,068 $2,148 $2,244 $2,328 3.6x 3.5x 3.3x 3.2x
Danaher DHR $64,163 $75,350 $16,882 $18,198 $19,064 $19,907 4.5x 4.1x 4.0x 3.8x
Editas EDIT $1,027 $745 $6 $16 $20 $32 NM 46.9x 36.5x 23.3x
Average 4.6x 12.8x 10.5x 7.7x
Median 4.5x 25.5x 20.2x 13.6x
EPS P/E Multiples

Market Stock
Name Ticker Cap Price 2016 2017E 2018E 2019E 2016 2017E 2018E 2019E
Thermo FisherTMO 74,657.2 $186.18 $8.27 $9.36 $10.61 $11.84 22.5x 19.9x 17.6x 15.7x
Sartorius DIM-FR 5,188.8 $56.29 $1.82 $1.85 $2.00 $2.29 31.0x 30.4x 28.2x 24.6x
Repligen RGEN $1,513 $34.73 $0.44 $0.61 $0.73 $0.88 NM NM 47.9x 39.6x
Bio-Rad BIO 7,683.5 $258.19 $0.95 $2.96 $4.79 $6.44 NM NM NM 40.1x
Danaher DHR 64,162.6 $92.24 $3.61 $3.99 $4.34 $4.72 25.6x 23.1x 21.3x 19.5x
Editas EDIT 1,026.9 $24.38 -$3.02 -$2.72 -$2.48 -$2.56 NM NM NM NM
Average 25.6x 23.1x 21.3x 29.8x
Median 25.6x 23.1x 21.3x 29.8x
EBITDA EV/EBITDA
Market Enterprise
Name Ticker Cap Value 2016 2017E 2018E 2019E 2016 2017E 2018E 2019E
Thermo FisherTMO $74,657 $95,635 $4,600.98 $5,230.37 $5,939.03 $6,473.75 20.8x 18.3x 16.1x 14.8x
Sartorius DIM-FR $5,189 $5,345 $282.85 $287.47 $311.37 $355.88 18.9x 18.6x 17.2x 15.0x
Repligen RGEN $1,513 $1,417 $26 $33 $47 $60 NM 42.5x 30.0x 23.7x
Bio-Rad BIO $7,684 $7,473 $294.02 $290.60 $368.68 $429.18 25.4x 25.7x 20.3x 17.4x
Danaher DHR $64,163 $75,350 $3,930.75 $4,252.05 $4,613.93 $4,963.37 19.2x 15.2x 16.3x 15.2x
Editas EDIT $1,027 $745 -$88.05 -$92.59 -$100.15 -$91.95 NM NM NM NM
Average 22.3x 20.4x 18.3x 16.3x
Median 22.3x 20.4x 18.3x 16.3x

Financials and Outlook

Recent Financial Performance
For 3Q17, RGEN reported revenue of $36.6MM (up 48% year over year) vs.
$24.7MM in 3Q16. This was slightly above expectations of ~$35.6MM. The
company recorded Q3 adjusted EPS of $0.15, which was above consensus of $0.11.
This compares with $0.08 in 3Q16. Repligen cautioned that GE supply timing
affected both Q3 deliveries and expected Q4 deliveries, but that the supply should
normalize over the next couple years.
Financial Forecasts
We model 2017, 2018 and 2019 revenues of $140.3MM (+34%; which assumes
revenue of $40.7MM in Q4), $185.4MM (+32%) and $214.2MM (+16%),
respectively, compared with consensus at $140.9MM, $185.7MM and $210.5MM.
We model EPS for 2017, 2018 and 2019 of $0.51, $0.43 and $0.61, respectively,
compared to the Street at $0.41 $0.38 and $0.58, respectively. We project adjusted
EPS for 2017, 2018 and 2019 of $0.61, $0.71 and $0.80, vs. the consensus of $0.61,
$0.73 and $0.88, respectively.
Repligen has updated its 2017 revenue guidance to $139MM-$142MM (from

$138MM-$144MM), reflecting revenue growth of 33%-36%, or 32.5%-35.5% at
constant currency. The company also projects adjusted EPS of $0.60-$0.63, up from
$0.57-$0.62 previously.
Product Segments
We model 2017, 2018 and 2019 Protein Product revenue of $56.3MM, $59.1MM and
$63.0MM, respectively, driven largely by sales of Protein A ligands.
We model Chromatography segment revenue of $35.2MM, $40.8MM and $48.1MM

in 2017, 2018 and 2019, respectively. The increase in 2018 will be, we think,
predominantly driven by OPUS pre-packed chromatography columns (PPCs), which
dominate the segment.
We model Filtration segment revenue of $30.4MM, $34.2MM and $38.5MM in

2017, 2018 and 2019, respectively. We believe the increase in 2018 will be primarily
driven by the XCell ATF device.
We are currently modeling Spectrum separately from the other product segments,
although its products are primarily filtration, along with some chromatography and
other products, and we will update our model once we gain more visibility on how it
reports. We project Spectrum revenue of $48.5MM and $55.8MM for 2018 and
2019, respectively.

Products
Repligen and its subsidiaries provide products to the bioprocessing industry, on a
scale from the initial production of drugs for research and development (R&D) to
commercial production. The companys products focus on the commercialization of
biological drugs, and it offers solutions like antibody-based therapeutics and
recombinant proteins and vaccines, which are used to aid critical steps in biopharma
production processes. Bioprocessing products are intended to drive process
efficiencies and yield improvements.
Upstream solutions involve the growth of the cells in bioreactors, the initial filtration
(for removing the majority of the particulate debris), and the preparation for those
antibodies being harvested. Repligens upstream products include its XCell ATF
filtration devices and protein cell culture supplements. Downstream solutions include
Protein A ligands, OPUS PPCs, and SIUS tangential flow filtration (TFF) cassettes.
The final step of the process involves formulating, packaging and then addressing
quality control with analytical products, such as Repligens ELISA test kits.
Figure 19: Repligens Offerings Throughout the Bioprocessing Cycle
Protein Products
Repligens Protein Products segment (~52% of 2016 revenue; an estimated 27% of

2020 revenue) consists of two parts: Protein A ligands and cell culture growth
factors. These products are fairly mature, and should grow for at least five years at
the same rate at which mAbs are growing, which is estimated at 8%-10% (although
we model growth of less than that for conservatism). As illustrated in Figure 20
above, ligands come into the bioprocessing process during the purification phase.

Repligen currently manufactures seven types of Protein A ligands, which the

company either has patents for or the exclusive rights to produce.
Protein A ligands (which are involved in the purification of antibody-based

therapeutics during the first step in the purification process) are Repligens legacy
business, which it has operated since 1985. The company currently has a >95%
market share in the production of Protein A (there being several variants of Protein
A, with some working better than others at capturing/purifying different antibodies).
The ligands are attached to resin balls (often manufactured by other companies that
Repligen sells to), which are then put inside the chromatography columns. The resin
acts as a stabilizer, so the Protein A and antibodies stick to the resin until the
antibodies are washed off and further processed.
Also included are cell growth factors, which were acquired by Repligen when it
purchased Novozymes. These include the companys insulin-like growth factor,
which increases antibody yield in the bioreactors during fermentation.
Figure 20: Protein Products Segment Breakdown and Details
Segment Product Est. 2016 Rev. (MM) Est. Market Size Market Share Est. 2020 Rev. (MM) Est. 2020. % of Rev.
Protein Products Protein A $41.0MM $350-$400MM 10%-12% $49.9MM 21%
Cell Culture Growth Factors $13.7MM $75-$80MM 15%-20% $16.9MM 7%
Source: Investor presentation, 10-Ks, C.L. King estimates
Filtration Products
Repligens filtration products (19% of 2016 revenue; an estimated ~18% of 2020

revenue, not accounting for Spectrum products) consists of three parts: XCell ATF
products, TangenX SIUS TFF cassettes, and the products from recently acquired
Spectrum, which are primarily filtration products (although Spectrum also has
chromatography products and other products for use in the operating room) and
which will primarily report in the Filtration segment. We are projecting that the ATF
and TFF products will grow at rates in the low to mid-teens through 2020, with the
Spectrum portfolio growing at a slightly lower rate (~10%).
Filtration products are used in multiple steps in the cycle. During the production step,
Repligens XCell ATF systems are attached to the bioreactor vats that the cells are
initially grown in. As mentioned, they can essentially be thought of as removing
debris that the cells secrete during fermentation as a result of their metabolizing and
respiration.
The company also sells TangenX SIUS single-use disposable cassettes for filtration
in the formulation step, where they are used to concentrate drugs after they are
processed in the chromatography columns. In our opinion, growth above that of the
biologics market in general will be primarily due to the adoption of single-use

technology as opposed to traditional filtration, as well as from synergies from the

Spectrum merger.
Figure 21: Filtration Segment Breakdown and Details
Sius Filtration Products
Filtration (TangenX TFF Cassettes) $0.3MM $200MM <5% $10.9MM 4%
Xcell ATF $19.5MM $125-$150MM ~15% $32.3MM 13%
$0 attributable to RGEN
Spectrum (acquired in 2017) $450-$500MM 8%-10% $62.5MM 26%
Figure 22: Repligen Filtration Segment Products
Chromatography Products
Repligens chromatography products (~28% of 2016 revenue; an estimated 23% of

2020 revenue, not accounting for Spectrum products) consist almost entirely of its
OPUS PPCs, although its ELISA test kits and chromatography resins are also
reported in the same space. We are projecting that the OPUS products will grow at
around the upper teens through 2020, with the ELISA test kits and resins growing at
approximately the same rate during that period.
OPUS PPCs are introduced during the Protein A chromatography phase, and usually
there are multiple columns being employed to purify the antibodies multiple times.
The chromatography columns range in size from about the width of a pencil to 60 cm
wide. The size of the columns used is directly related to the mAb development
process. The smaller columns are generally used for research and screening purposes,
while the larger columns are used for large-scale production of commercialized
products.

Figure 23: OPUS Line
Source: Repligen website
Repligens OPUS chromatography columns won an industry award for Design

Excellence Product Award, presented by the International Design Forum in 2016,
due to its user flexubility when used in the biological purification process. The
columns are designed so that the users can make up their own column configuration
that fits their purification process. Compared to the traditional chromatography
columns, the OPUS platform has a faster product changover time, favorable
economics and improved usability. This is a big improvement in the bioprocessing
industry that allows pharmaceutical and biotech companies to customize their needs
in terms of the production scale and the type of purifications (i.e., mAbs, vaccines or
recombinant proteins).
Figure 24: Comparison of Repligen Pre-Packed Chromatography Columns vs. Self-Packed
We expect OPUS to make steady gains in share as the market shifts further away
from self-packing. In our model, we estimate that Chromatography and OPUS
revenue will continue to grow substantially through at least 2020.

Figure 25: Chromatography Segment Breakdown and Details
Chromatography OPUS $26.3MM $165MM 30%-35% $50.9MM 21%

ELISA Test Kits $1.6MM $3.0MM 1%
Chromatography Resins $1.6MM $2.9MM 1%
Competitive Landscape
Repligen competes in multiple product lines that span much of bioprocessing cycle
(from pre-trial to commercial-stage products). There are different competitors in each
of these areas, and the competitors (and potential, if not likely, future competitors)
that the company faces range from large companies with R&D budgets far in excess
of Repligens to very niche companies (some of which are seen as sufficiently
complementary that RGEN from time to time acquires them). Broadly speaking,
however, the biggest players in the space are Merck, Danaher, Sartorius, Thermo
Fisher and General Electric.
As such, there are very few companies that are truly direct comparisons. Sartorius is
probably the closest, both given its focus on bioprocessing and its wide range of
offerings. Sartorius product line is actually a bit broader than that of Repligen, in
that it also offers products for lab services and produces things like the fermentation
tanks in which the cells are grown. In our view, Sartorius shows that Repligens goals
for 2020 are reasonable.
For example, Sartorius increased EBITDA margins from 19.7% to 25% from 2011 to
2016. Repligen aims to increase its adjusted operating income from 20.4% to 25%
from 2016 to 2020, and given the companys focus on the higher-margin
bioprocessing products (28% of Sartorius revenue comes from lower-margin lab
products), this seems reasonable to us. Sartorius also expanded at this rate while its
bioprocessing revenue was increasing at ~19.8% annually, which is actually slightly
below the 23.5% were projecting for Repligen. Sartorius also aims to increase
EBITDA margins to 27%-28% by 2020, which suggests to us that there is still
additional room for margin expansion, even if Repligen were to achieve its 25%
operating income goal.

Figure 26: Comparison with Sartorius
Company Repligen Sartorius
Protein Products (Bioprocessing)

Bioprocessing Solutions
Segments Chromatography (Bioprocessing)
Lab Products and Services
Filtration (Bioprocessing)
Market Cap. /
$1,478MM / $1,417MM $6,727MM / $7,997MM
Enterprise Val.
United States = 39% Americas = ~34%

Geographical Footprint UK/Sweden = 36% EMEA = ~44%
Other = 25% Asia/Pacific = ~22%
Employees 450 >6,900
FY16 Revenues (FY for Total = $1,516MM

both companies ends $104.5MM Bioprocessing = $1,137MM (72%)
Dec. #!) Lab Prod./Serv. = $379MM (28%)
Total = $2,180MM
FY20 Revenues $243.2MM (CL King & Associates Est.) Bioprocessing = $1,631MM (74%)
Lab Prod./Serv. = $576MM (26%)
25.6% (CL King & Associates EST, only Total = 11.3%

Rev. CAGR FY12-16 counts bioprocessing products revenues, Bioprocessing = 19.8%
not royalty & other) Lab Prod./Serv. = 5%
Total = 9.4%
Rev. CAGR FY16-20 23.5% (C.L. King & Associate EST.) Bioprocessing = 9.4%
Lab Prod./Serv. =11%
19.7% in FY11
19.6% in FY16 25% in FY16 (28% for Bioprocessing
EBITDA Margins
segment/16% for Lab Prod./Serv.)
26-27% goal for FY20
Preparation: Chromatography
Filtration
Lab Water Purification
Protein A Liquid Handling
Chromatography Sample Prep
Filtration Cell Culturing
Parts of Bioprocessing
Surgery Room Products Upscaling: Bioprocess Development
cycle adderssed
Test Kits Measurement: Weighing
Resins Metrology
Growth Factors Particulate Matter Analysis
Paint Mixing Solutions
Monitoring: Analytics
Microbiological Quality Control
Monoclonal Antibodies Monoclonal Antibodies

Relevant Biologic Drugs Recombinant Proteins Recombinant Proteins
Vaccines Vaccines
Source: 10-Ks, C.L. King estimates, proprietary research, FactSet Inc. (including Sartorius 2016-20 CAGR and revenue estimate;
market cap, enterprise value and estimates as of 11/10/2017)

However, Repligen does have the advantage of a wide range of products, which can
potentially equate to easier troubleshooting for customers. And perhaps more
important, in our view, is that it has made headway into the next-generation
production systems of single-use systems, continuous flow processing and modular
construction. The company can also bundle, which is fitting for a larger suite of
products.
Batch processing has been the norm for the pharmaceutical industry since its
inception. Repligen has invested heavily in technologies that are cutting edge and that
are early in their acceptance in the industry. The company has the capabilities to
supply the currently accepted single-use and stainless steel methods that are
predominant, but we see RGEN as likely gaining market share as the single-use,
modular construction and continuous bioprocessing technologies become
increasingly accepted. Each of the newer technologies requires successively less
capital investment, can be brought online more rapidly and have higher production
efficiency. We think that versus its competitors, Repligen is particularly strong in this
respect.
Figure 27: Current and Future Production Techniques
Figure 28: Advantages of Continuous Manufacturing

Figure 29: Competitive Environment and Segment Breakdown
% of 2016 Est. CAGR

Company Segments FY'16 Sales Verticals Product Sales 2016-2020 Customers Competitors
Cell Culture Growth No signifiacnt

13.1% 5%
$54.7MM Factors competition currently-
GE Healthcare
Protein Products 95% market share.
Millipore Sigma
Reported growth YoY: +3% Upcoming competition
Protein A Ligands 39.3% 5% from GE Healthcare
Sius Filtration
Products (TangenX TFF 0.3% 13% Danaher
Cassettes) Millipore
$19.8MM
Sartorius
Repligen Filtration CMO's Parker Hannifin
Corporation Reported growth YoY: +26% Xcell ATF 18.6% 14% Biopharmaceutical GE Healthcare
manufacturers (research,
trial phase, clinical and
Spectrum Lines N/A 10%
commercial scale)
Manufacturers of mAb's,
Opus 25.2% 18% recombinant proteins, GE Healthcare
$29.5MM vaccines, viral vectors Pall
Chromatography Elisa Test Kits 1.5% 17% Millipore
Reported growth YoY:
ThermoFisher
+102%
Allcells
Resin 1.5% 16%
Source: 10-Ks, C.L. King Estimate, Proprietary research (Note, SIUS Filtration systems acquisition finalized late in FY16, and its CAGR is based off of FY16E revenue; Spectrum CAGR based off FY17E revenue)

Acquisitions
Solid Demand in Underlying Business, Supplemented by Sensible Acquisitions
that Complement Existing Offerings and Product Lines. Repligens current
acquisition strategy came into being in 2011/2012, when the company decided to
focus on its bioprocessing business. It has made four acquisitions since 2012,
focusing on its Chromatography and Filtration businesses.
Repligen is able to add value by offering a full suite of products through the whole
bioprocessing cycle, which could make troubleshooting simpler and could streamline
the process of installing new machines. Acquisitions have contributed the majority of
the companys growth, supplementing strong growth in its Protein Products and
OPUS products. The company has paid an average of 5x-8x forward revenue (whch
is quite a bit lower than the ~9.2x one-year-forward P/S that the company currently
trades at, and below much of its historical range) for the acquired businesses, which
have generally been EPS accretive in their first years. Repligen considers synergies to
be significant when it makes acquisitions, which, for example, equates to what the
company estimates as $20MM-$25MM for the Spectrum acquisition (6%-7% of the
purchase price).
Figure 30: Price/Sales FY1
Figure 31: Acquisition History
Company/Assets Purchase price Prior years sales Price/last

Date Acquired Segment ($, millions) (estimated $, millions) years sales
1 Jun-17 Spectrum Filitration 359 40.2 8.9
2 Dec-16 TangenX Tech. Corp. Filtration 38.9 6.6 5.9
3 Apr-16 Atoll GmbH Chromatography 22.5 3.9 5.8
4 Jun-14 Refine Techologies Filtration 24.5 6.8 3.6
5 Oct-11 Novozymes Biopharma Protein Products 26.4 15 1.8
6 Mar-10 Bioflash Chromatography 1.8 N/A N/A
Source: 10-Ks, CL King estimates
The ability to acquire new products, assets and businesses and weave them into the
company is one of Repligens most differentiating strengths. In most cases, the
products the company acquires can be directly dropped into the same drug production
systems as it already supplies. In addition, many of these acquisitions are
underinvested in different areas (e.g., commercial, R&D, infrastructure), which
Repligen can invest in and accelerate the growth of within the first year without
having to surmount significant strategic or cultural integration hurdles. Furthermore,
the acquisitions allow the company to address customers demands, fill product gaps
and expand into new areas without taking on particularly large R&D expenses (7% of
2016 revenue).
Repligens most recent acquisition was the June 2017 purchase of Spectrum Inc., a
California-based manufacturer of filtration cartridges and chromatography products

that generated an estimated ~$40MM in revenue in the prior 12 months. Spectrum

meets many of the criteria Repligen looks for: it has products that are directly
complimentary to RGENs, and it has relationships with many of the companies that
Repligen already does business with, further expanding RGENs abilities to
encompass more of the bioprocessing space (in this case, expanding the company
away from just supplying mAb producers toward vaccines, recombinant proteins and
gene therapy products). Acquisition has been a hallmark of Repligens growth
strategy, and we expect management to continue to identify good opportunities,
filling the gaps in the companys product offerings and using its ability to acquire
financing (including $129MM from a recent equity financing) to fuel future growth.
Figure 32: Repligen Acquisition Highlights
Management
The last few years at Repligen have seen some of the most significant shifts in the
companys overall strategic focus and management in its history. Former CEO
Walter Herlihy led Repligen for some 19 years (from 1996 to 2015) and oversaw its
expansion from $7MM to $83.5MM in revenue, and its shift from being purely a
Protein A manufacturer used to fund additional startups of the founders, to its current
incarnation, which is that of a company striving to supply the full cycle of
bioprocessing systems. Mr. Herlihy was also present when Tony Hunt, the current
CEO, came on board as COO in 2014. Prior to that, he was president of Life
Technologies bioprocessing division, when the company was acquired by Thermo
Fisher.

Up to today, Repligens management has been given significant leeway from

investors. RGEN has had a premium valuation (up to 93x two-year-forward earnings
in June 2015), even given its significant shift in focus, its lesser ability to allocate
resources to R&D compared with its competitors, and its necessitating continued
growth to justify its valuation. We believe this is due to the strong markets which it
supplies, its steady performance in its core business, strong sustained growth in its
supplemental business units, and the comfort provided by a management team that is
experienced in performing strategic acquisitions and in seeking out future growth
opportunities for the company.
Figure 33: Management Overview
Name Position Dates Previous Leadership Roles Total Comp.
FY'16
Tony J. Hunt, MBA President, Chief Executive Officer & Director 2015 - Present $2,659,606
2014 - 2015 Chief Operating Office - Repligen
2011 - 2014 President of Bioproduction - Life Technologies
2008 - 2011 Senior Director and GM - Life Technologies
Jon K. Snodgres Chief Financial Officer 2014 - Present $936,696
2009 - 2014 Chief Financial Officer - Maquet Cardiovasciular
2005 - 2008 Vice President, Finance - Thermo Fisher
Howard Benjamin, PhD Vice President-Business Development 2009 - Present $739,493
2007-2008 Vice President, R&D - Le@P Technologies
2005-2007 CSO - Growth Point Life Sciences
Steve Curran Vice President - Global Operations 2015 - Present -
2013 - Present Sr. Director - Thermo Fischer Scientific
2010 - Present Sr. Director of Operations - Life Technolgoies
2008 - 2011 Director of Operations - Life Technologies
Ralf Kuriyel Senior Vice President-Research & Development 2011 - Present -
2008 - 2011 Sr. Director - Pall Corporation
Stephen Tingley Vice President-Sales 2012 - Present -
2009 - 2012 VP Business Development - Repligen
2008 - 2009 Director, Business Development - Isogen LLC
Ken Elmer Global Head, Human Resources 2016 - Present -
2014 - 2016 Chief Human Resoures Officer - attune
2006 - 2013 Sr. VP Human Resources - Celerant Consulting
Christine Gebski Vice President, Product Management and Field 2015 - Present -
Applications 2011 - 2014 Head, POROS Business Unit - Life Technologies
2014 - 2012 Director, Applications and R&D - Life Technologies
Gustav Silversparre Vice President, Operations, Repligen Sweden 2013 - Present -
2011 - 2013 Operations Director - Repligen Sweden
2008 - 2011 Operations Director - Novozymes Biopharma Sweden
Source: 10-K, proxy
Introduction to Bioprocessing
Repligens products, as mentioned, span much of the bioprocessing cycle. The
manufacture of nearly all (>95%) mAbs occurs through the bioprocessing cycle using
products that the company manufactures.
The first step in the process is to culture cells so that they multiply into quantities
sufficient for processing in the bioreactors. This is done by placing the cells in a
series of increasingly larger vats, which they multiply in.

Figure 34: Cell Culturing Process
The cells then go into production vats. The market for these vats (essentially large
petri dishes, in which the antibodies are produced by the cells) is currently dominated
by GE Healthcare, Merck, Sartorius Stedim (DIM.PA: NR), Danaher (DHR: NR) and
Thermo Fisher (TMO: NR). The bioreactors contain the media liquid, the genetically
engineered cells that are essentially the seeds that produce the antibodies, and the cell
culture growth factors (which stimulate the cells to produce more antibodies).
Repligen doesnt produce or sell the bioreactors that the cells are initially grown in,
and it only produces resin for certain niche markets; however, the company does
produce the cell culture growth used in the bioreactors (insulin commands an >80%
market share of the cell growth supplements currently used in the market Repligen
has a patent on an alternative that is >100x as potent). During the fermentation
process, filtration systems are also attached to the bioreactors and are used to remove
particulate matter from the media liquid (mostly lactic acid and ammonia thats
produced as a result of respiration when the cells are eating and producing
antibodies). This step increases yield 2x-3x over what it would be if the waste wasnt
removed.
Figure 35: Graphic Representation of mAb Production Cycle
After the antibodies have been produced, the liquid is put through chromatography
columns, where the Protein A (which is attached to the resins, which are essentially

sticky little balls) catches on to the antibodies. This initial pass-through removes
impurities, increasing the purity to 95%+. A slightly acidic liquid then goes into the
columns and unbinds the antibodies from the Protein A. The liquid then passes
through additional chromatography columns, increasing its purity each time.
Figure 36: OPUS Chromatography Mechanism of Action
Then, the liquid is combined with a low pH substance (i.e., an acidic substance),
which kills any viruses present in the liquid. The final product is tested to make sure
it meets quality control standards, including ensuring that there isnt Protein A in it.
The antibodies are then put into a liquid (buffer) that holds them until the product is
actually administered.
Figure 37: Bioprocessing Cycle Overview with Relevant RGEN Products
1. Culturing 2. Harvesting 3. Protein A Chromatography
Seed cells multiply in preparation for Antibody is captured at neutral pH and eluted
placement in to bioreactors. Cells then Separates cells and cell debris from protein (detached from protein A) at a low pH. High
processed in bioreactors to produce containing supernatant. Performed using yield (>95%) after first column, and higher
antibodies, using growth factors to increase centriguation or filtration. purity (>99%) after passing through multiple
yield. columns.
Related products: Opus pre packed columns,

Related products: Cell growth factors, XCell chromatography resins, protein A ligands,
ATF KrosFlo TFF, ProConnex MBT
4. Viral inactivation 5. Cation/Anion exchange chromatography 6. Viral filtration

Removes host cell proteins, DNA, leached
Incubation of the protein A elution pool at protein A, mAb aggregates and antibody Single pass (dead end) filtration with
low pH inactivates (kills) adventitious viruses. fragments. This step can be a bind-elute or membranes designed to remove viruses.
flow through step.
7. Ultrafiltration 8. Final Filling Quality control testing
Feed flows over a semi permeable, flat sheet mAb is concentrated to final concentration
membrane that further removes particulate and buffer is exchanged to a formulation
matter. buffer, and testing is performed to detect
for leached/remnant protein A.
Related products: TangenX Cassettes Related products: ELISA test kits
Source: Proprietary research, BioPharm International

Risks to Achieving Our Price Target

Technological Alternatives to Protein A. While Protein A affinity chromatography
is the gold standard in purifying mAb, there are several disadvantages to using this
method. First, the cost of Protein A at the stationary phase is much higher than the
other non-Protein A chromatographic media. Second, Protein A is known to have
limited alkaline stability, making its cleaning process more difficult, with it having a
high risk of contamination. Thus, the bioprocess industry and academic research
groups have been researching new technologies for improving mAb purification. In
particular, the search for more efficient resin and developing alternative ligands has
been the subject of research projects.
On the industrial side, General Electric, which is the biggest consumer of Repligens
Protein A, announced on September 25, 2017 that it is launching a new Protein A
resin MabSelecct Prism A in the first half of 2018. According to Jonathan
Royce, GEs business leader for its chromatography resin portfolio, MabSelect
Prism A uses a new Protein A ligand and a new agarose bead, which have been co-
optimized to achieve very high dynamic binding capacities.
GE claimed that MabSelect Prism A can improve the antibody purification capacity
up to 40%. GE plans to make the ligand in-house or via contract manufacturer,
although Repligen, as a long-term sole supplier of Protein A to GE, will not be the
external supplier for this new product if its produced externally. GE also plans to
invest $70MM annually from 2017 to 2022 to build its in-house Protein A ligand
manufacturing facilities in Uppsala, Sweden. In short, GE is gradually turning from a
customer into a potential competitor in certain areas of the bioprocessing cycle.
While this will certainly impact Repligen in the long run, the company still has long-
term contracts with GE for Protein A production, with RGEN being the exclusive
supplier for four different Protein A ligands. These contracts run through 2019 for the
Lund, Sweden facility and 2021 for the Waltham, MA facility. Repligen also has
another exclusive Protein A supply contract with MilliporeSigma that runs through
2023. As such, we expect a limited impact on the companys Protein A business in
the short term.
Continued Sourcing/Integration of Acquisitions to Sustain Growth. Repligen has

a relatively small R&D budget (7% of 2016 revenue). As a result, its growth is to a
certain degree dependent on its ability to source and execute acquisitions. Repligen
competes with significantly larger companies that have greater resources, which
could develop new products that could displace Repligens (as well as competition
from startups, which could create new technologies that may make Repligen
obsolete). Competitors may have greater name recognition, ability to bundle and
market, or other advantages, compared with Repligen. Conversely, these larger
companies could also acquire the same companies that Repligen is targeting for a
higher price.
Customer Concentration. Repligen has a limited number of customers that

represent a large portion of its income. As noted previously, GE Healthcare and
MilliporeSigma account respectively for 29% and 28% of revenue. Both of them
have long-term contracts, which have been renewed in the past, and the percentage of
the business that they represent has been decreasing over time. Still, if one of them
were to start producing its own product that it currently purchases from Repligen, or
if, for some other reason, were not to renew its contract in the future, this could

represent a significant challenge to Repligens prospects (at least until the company
further diversifies away from those areas). Both companies are primarily utilizing
Repligen as a source of Protein A ligands, which they make Protein A resins with.
Multiple Contraction. As shown in Figures 13 and 16 above, RGEN has

commanded a premium multiple. Currently trading at a ~48x two-year-forward P/E
multiple, the company is valued below the average of where it had been for the past
couple of years, and well below its peak of 93x two-year-forward P/E in June 2015,
although it is still above a wider historical average and well above that of the wider
S&P 500. Repligen will need to sustain high levels of growth in order to justify its
current valuation, although we view the company as potentially being in the breakout
phase of its life cycle at the moment, and with the valuation being justified. However,
as a matter of course, we must consider contraction of its multiple towards historical
averages to be one of the primary risks to the company.
Pharma Macro and Regulatory Concerns. The risk exists that governments may
institute price controls on the products that Repligens customers sell, or otherwise
institute other legislations that could negatively affect the companys customers, or
RGEN itself. This risk increases as Repligen acquires new businesses that operate or
are located in different geographical locales. These could include controls on the
prices of biologic drugs, or increases in the time needed for development of mAbs,
for example, which could slow new customers in coming to the market.
Market Not Adopting Repligen Tech. Repligen has invested itself in continuous
flow technology. These technologies have been widely accepted in other industries in
the past, and Repligen sees the technologies as being a future trend in bioprocessing.
If the industry does not accept the advancements, the companys investments may
lose value.
Political Risks. Repligen is expanding rapidly both domestically and internationally.

As the companys operations expand, they become subject to additional legal
systems, with which they will have to comply, and the company will thus potentially
incur additional costs.

Figure 38: Cash Flow Statement ($ in millions, except per share data)
Cash from Operating Activities: 2012 2013 2014 2015 2016 2017E 2018E 2019E
Net Income (Loss): 14 2 8 9 12 19 20 28
Adjustments to Net income:
Depreciation and amortization 3.5 3.1 4.0 4.6 5.3 10.5 9.7 14.0
Share-based compensation expense 1.0 1.1 1.8 3.6 4.6 7.0 6.7 10.4
Deferred tax (3.1) 2.8 0.3 (0.1) (4.1) 4.2 (0.5) (1.2)
Other adjustments 0.3 0.1 2.1 4.1 5.5 5.8 7.2 11.1
- - - -
Change in assets and liabilities: - - - -
Accounts Recievable (1.2) (0.8) (1.6) (3.7) (3.2) (1.9) (4.8) (7.2)
Royalties and other recievables (5.9) 2.4 6.6 0.2 (0.7) - - (0.3)
Inventories 2.7 (0.6) (0.9) (6.1) (6.2) (3.9) (7.3) (12.4)
Prepaid expenses and other current assets 0.0 0.1 (0.8) (0.3) 0.6 0.6 (0.4) (0.1)
Accounts Payable 1.0 (0.7) 2.3 3.0 (1.8) (1.8) 2.4 2.3
Accrued liabilities 2.1 1.3 (2.5) (1.6) (4.0) (4.0) (4.4) (5.7)
Long-term liabilities (1.1) 1.2 (1.0) 2.1 (0.2) (0.2) 1.1 2.9
Net from operations 13 12 18 15 8 36 29 42
Cash from Investing Activities:

Aquisition of property and equipment (1.3) (4.6) (5.6) (2.6) (4.3) (18.0) (13.0) (18.5)
Acquisition of assets - - (21.2) - (44.6) (15.7) (19.9) (17.4)
Aquisition of liabilities - - - - - - - -
Purchase of marketable securities (39.1) (42.5) (27.5) (20.2) (23.7) (146.9) (96.8) (149.7)
Sales of marketable securities - - - - - - - -
Redemptions of marketable securities 43.2 29.2 34.8 27.6 23.4 123.1 94.6 139.4
Other assets - - (0.3) - (0.0) (0.2) (0.2) (0.2)
Net from investing activity 2.8 (17.9) (19.8) 4.8 (49.3) (57.7) (35.5) (46.5)
Cash from Financing Activities:

Exercise of stock options 1.2 2.5 1.7 0.9 1.8 8.3 5.3 8.1
Repurchase and retirement of treasury stock - - - - - - - -
Payments of contingent consideration - - - (0.1) (0.8) (0.1) (0.1) (0.1)
other financing activities - 0.1 - - 0.1 0.2 0.1 0.2
Proceeds from Debt Financing - - - - 111.1 - - -
Net from financing activity 1.2 2.5 1.7 0.8 112.2 8 5 8
Effect of exchange rate changes on cash 1 0 (5) (2) (2) (2) (3) (2)
Net increase (decrease) in cash 1 0 (4) 19 68 (16) (4) 1
Cash at beginning of year 11 12 40 35 54 122 106 103
Cash at end of year 12 12 35 54 122 106 103 104
Cash flow from operations 13 12 18 15 8 36 29 42

Less: capital expenditures 1 5 6 3 4 4 4 4
Free cash flow 15 17 24 18 11 40 33 46
Free cash flow/share 0.47 $0.54 $0.74 $0.54 $0.33 $1.16 $0.74 $0.99
- -
Free Cash Flow 2012 2013 2014 2015 2016 2017E 2018E 2019E
Revenue 62 68 64 84 105 140 189 218
Net Income 14 2 5 6 12 19 20 28
EBITDA 15 26 6 18 20 23 41 55
EBIT 11 23 11 14 16 17 32 41
Depreciation & Amortization Expense 4 3 4 5 5 11 10 14
Interest 0 0 0 0 (3) (6) (6) (6)
Working Capital 55 75 70 84 32 20 23 29
CFO 13 12 18 15 8 36 29 42
Capital Exp 1 5 6 3 4 4 4 4
Free Cash Flow 15 17 24 18 11 40 33 46
Source: Company reports and CL King Estimates

Figure 39: Income Statement ($ in MM, except per share data)

Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4E 2017E Q1E Q2E Q3E Q4E 2018E Q1E Q2E Q3E Q4E 2019E
Total Revenues 25.1 29.2 24.7 25.6 104.5 30.590 32.5 $ 36.6 $ 40.7 140.3 $ 45.7 $ 48.8 $ 44.5 $ 46.4 185.4 $ 52.7 $ 56.2 $ 51.5 $ 53.7 214.2
Cost of Goods Sold 11.1 12.6 11.2 12.2 47.1 14.0 13.9 20.0 19.1 67.0 19.9 20.6 21.9 21.5 83.9 22.3 23.1 24.5 24.1 94.0
Gross Profit 14.0 16.5 13.4 13.4 57.4 16.6 18.5 16.6 21.5 73.3 25.8 28.2 22.7 24.9 101.5 30.4 33.2 27.0 29.6 120.2
Operating Expenses
Selling General and Administrative 7.0 8.1 7.1 8.6 30.9 9.2 11.2 15.0 13.5 48.8 13.0 14.9 15.3 15.1 58.3 14.7 16.8 17.3 17.2 66.0
R&D 1.5 1.9 1.9 2.0 7.4 1.7 1.9 2.0 1.5 7.1 2.6 2.9 2.9 3.6 12.0 3.0 3.3 3.3 4.1 13.8
Other 2.0 0.6 0.7 (0.1) 3.2 - - - - - - - - - - - - - - -
Non-GAAP Income from Operations 6.3 7.8 4.6 3.8 22.4 6.8 8.6 7.7 7.9 31.0 12.4 12.588 6.8 8.4 40.2 14.0 14.301 7.7 9.6 45.6
Investment income 0.1 0.1 0.1 0.1 0.3 0.1 0.1 0.1 0.1 0.4 0.1 0.1 0.1 0.1 0.4 0.1 0.1 0.1 0.1 0.4
Interest Expense (0.0) (0.6) (1.6) (1.6) (3.8) (1.6) (1.6) (1.6) (1.6) (6.4) (1.6) (1.6) (1.6) (1.6) (6.5) (1.6) (1.6) (1.6) (1.6) (6.5)
Other income (expense) (1.0) 0.1 (0.1) 0.1 (0.9) (0.1) (0.3) (0.1) (0.1) (0.6) (0.1) (0.1) (0.1) (0.1) (0.4) (0.1) (0.1) (0.1) (0.1) (0.4)
Non-GAAP Pretax income 5.2 7.6 4.0 3.4 20.3 6.1 7.7 6.5 6.7 26.9 11.6 11.8 6.1 7.7 37.2 13.3 13.6 7.0 8.8 42.6
- - - - - - - - -
Income tax (benefit) provision 0.9 1.5 1.1 (3.5) 0.0 1.0 (4.8) (6.7) 1.7 (8.7) 1.7 1.8 0.9 1.1 5.6 2.0 2.0 1.0 1.3 6.4
Net income 1.6 3.9 1.2 5.0 11.7 3.1 8.4 4.7 3.2 19.4 6.8 6.9 2.0 3.4 19.2 9.1 9.352 3.8 5.3 27.6
Non-GAAP Net Income 4.3 6.1 2.9 2.6 16.0 5.1 6.9 6.6 4.9 23.4 9.9 10.1 5.2 6.5 31.6 11.3 11.5 5.9 7.5 36.2
EPS $ 0.05 $ 0.11 $ 0.03 $ 0.15 $ 0.34 $ 0.09 $ 0.24 $ 0.11 $ 0.07 $ 0.51 $ 0.15 $ 0.16 $ 0.05 $ 0.08 $ 0.43 $ 0.20 $ 0.21 $ 0.08 $ 0.12 $ 0.61
Adjusted EPS $ 0.13 $ 0.18 $ 0.08 $ 0.08 $ 0.46 $ 0.15 $ 0.20 $ 0.15 $ 0.11 $ 0.61 $ 0.23 $ 0.23 $ 0.12 $ 0.15 $ 0.71 $ 0.25 $ 0.25 $ 0.13 $ 0.16 $ 0.80
Diluted Share Count 33.5 34.2 34.3 34.4 34.4 34.4 35.1 42.6 43.6 43.6 43.9 44.2 44.5 44.8 44.8 45.1 45.4 45.7 46.1 46.1
Depreciation and Amortization 1.2 1.3 1.4 1.5 5.3 1.6 1.7 1.5 1.5 6.3 2.4 2.4 2.4 2.4 9.5 3.4 3.4 3.4 3.4 13.7
EBITDA 3.6 7.3 5.0 4.5 20.4 7.2 6.8 1.0 8.0 23.0 12.4 12.6 6.8 8.4 40.3 16.0 16.3 9.7 11.6 53.7
Adjusted EBITDA 6.4 9.1 5.9 5.4 26.8 8.3 9.2 9.1 9.3 36.7 14.7 14.9 9.1 10.7 49.3 17.3 17.6 11.0 12.9 58.9
Growth YOY Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3E Q4E 2017E Q1E Q2E Q3E Q4E 2018E Q1E Q2E Q3E Q4E 2019E
Total Revenues +21% +36% +25% +19% +25% +22% +11% +48% +59% +34% +49% +50% +22% +14% +32% +15% +15% +16% +16% +16%
Cost of Goods Sold +37% +47% +33% +20% +34% +26% +10% +78% +57% +42% +42% +48% +9% +12% +25% +12% +12% +12% +12% +12%
Gross Profit +10% +28% +18% +19% +19% +18% +12% +24% +60% +28% +55% +52% +37% +16% +39% +18% +18% +19% +19% +18%
Sales and M arketing +16% +30% +20% +32% +25% +31% +37% +110% +57% +58% +41% +33% +2% +12% +19% +13% +13% +13% +13% +13%
R&D (2%) +51% +27% +43% +28% +13% (2%) +6% (26%) (3%) +52% +57% +43% +139% +69% +14% +14% +15% +15% +14%
Non-GAAP Income from Operations +22% +44% +16% +11% +25% +9% +11% +68% +108% +38% +82% +46% (11%) +7% +30% +13% +14% +13% +14% +13%
Non-GAAP Pretax Income (1%) +49% +2% +7% +16% +16% +1% +64% +96% +33% +92% +54% (7%) +15% +38% +14% +14% +15% +15% +15%
Non-GAAP Net Income +7% +40% +5% +16% +19% +17% +11% +126% +90% +47% +96% +47% (22%) +32% +35% +14% +14% +15% +15% +15%
Adjusted EPS +7% +38% +3% +13% +16% +14% +8% +82% +50% +31% +54% +17% (25%) +28% +17% +11% +11% +12% +12% +11%
M angin Analysis Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3E Q4E 2017E Q1E Q2E Q3E Q4E 2018E Q1E Q2E Q3E Q4E 2019E
Cost of Goods Sold +44% +43% +46% +48% +45% +46% +43% +55% +47% +48% +44% +42% +49% +46% +45% +42% +41% +48% +45% +44%
Gross Profit +56% +57% +54% +52% +55% +54% +57% +45% +53% +52% +56% +58% +51% +54% +55% +58% +59% +52% +55% +56%
Sales and M arketing +28% +28% +29% +33% +30% +30% +34% +41% +33% +35% +28% +31% +34% +33% +31% +28% +30% +34% +32% +31%
R&D +6% +6% +8% +8% +7% +6% +6% +5% +8% +5% +6% +6% +6% +8% +6% +6% +6% +6% +8% +6%
Non-GAAP Income from Operations +25% +27% +19% +15% +21% +22% +27% +21% +19% +22% +27% +26% +15% +18% +22% +27% +25% +15% +18% +21%
Non-GAAP Pretax Income +21% +26% +16% +13% +19% +20% +24% +18% +16% +19% +26% +24% +14% +17% +20% +25% +24% +14% +16% +20%
Tax Rate +17% +20% +27% (102%) +0% +17% (62%) (103%) +26% (32%) +15% +15% +15% +15% +15% +15% +15% +15% +15% +15%
Pretax income +10% +18% +9% +6% +11% +13% +11% (6%) +12% +8% +19% +18% +7% +10% +13% +21% +20% +9% +12% +16%
Non-GAAP Net Income +17% +21% +12% +10% +15% +17% +21% +18% +12% +17% +22% +21% +12% +14% +17% +21% +20% +12% +14% +17%
Source: Company reports and CL King estimates

Figure 40: Revenue Model ($ in MM)
Q1 Q2 Q3 Q4 2016 Q1 Q2 Q3 Q4E 2017E Q1E Q2E Q3E Q4E 2018E Q1E Q2E Q3E Q4E 2019E
Revenue $25.1 $29.2 $24.7 $25.6 $104.541 $31 $32.5 $36.6 $41 $140.3 $45.7 $48.8 $44.5 $46.4 $185.4 $52.7 $56.2 $51.5 $53.7 $214.2
Product Revenue $25.1 $29.2 $24.7 $25.5 $104.4 30.6 32.4 $36.5 40.6 140.2 45.2 48.3 44.0 45.9 183.4 50.7 54.2 49.5 51.7 206.2
Protein products $13.6 $14.9 $13.0 $13.2 $54.7 15.0 15.8 13.0 12.6 56.3 15.7 16.6 13.6 13.2 59.1 16.7 17.7 14.5 14.0 63.0
Protein A Ligands $10.2 $11.3 $9.7 $9.8 $41.0 11.6 11.6 9.6 9.3 42.1 12.2 12.2 10.1 9.8 44.2 12.9 13.0 10.7 10.4 47.1
Cell Culture Growth Factors (Supplements) $3.4 $3.6 $3.3 $3.4 $13.7 3.4 4.2 3.4 3.2 14.2 3.6 4.4 3.5 3.4 14.9 3.8 4.7 3.8 3.6 15.9
Filtration products $4.4 $5.6 $4.8 $5.1 $19.8 6.7 7.4 7.7 8.5 30.4 7.6 8.4 8.6 9.6 34.2 8.5 9.4 9.7 10.8 38.5
Sius Filtration Products (TangenX TFF Cassettes) $0.0 $0.0 $0.0 $0.3 $0.3 1.7 1.7 1.8 2.3 7.6 2.0 2.0 2.0 2.6 8.5 2.2 2.2 2.3 2.9 9.6
Xcell ATF $4.4 $5.6 $4.8 $4.7 $19.5 5.0 5.7 5.9 6.2 22.8 5.6 6.4 6.6 7.0 25.6 6.3 7.2 7.4 7.8 28.8
Spectrum $0.0 $0.0 $0.0 $0.0 $0.0 0.0 0.0 7.6 10.4 18.0 11.5 12.5 12.0 12.5 48.5 13.2 14.4 13.8 14.4 55.8
Pro-Connex (Reports within Spectrum) $0.0 $0.0 $0.0 $0.0 $0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
KrosFlo (Reports within Spectrum) $0.0 $0.0 $0.0 $0.0 $0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Chromatography products (OPUS Pre-packed Chromatography Columns)

$7.0 $8.6 $6.8 $7.1 $29.5 8.8 9.2 8.3 9.0 35.2 10.2 10.6 9.6 10.4 40.8 12.0 12.5 11.3 12.3 48.1
OPUS $6.4 $7.6 $6.0 $6.3 $26.3 8.1 8.1 7.3 8.0 31.5 9.4 9.4 8.5 9.3 36.6 11.1 11.1 10.0 11.0 43.1
Atoll (Reports within OPUS) $0.0 $1.0 $1.1 $1.1 $3.2 1.3 1.3 1.3 1.4 5.3 1.5 1.5 1.5 1.6 6.1 1.8 1.8 1.8 1.9 7.2
ELISA Test Kits $0.3 $0.5 $0.4 $0.4 $1.6 0.3 0.5 0.5 0.5 1.8 0.4 0.6 0.6 0.6 2.1 0.5 0.7 0.7 0.7 2.5
Chromatography Resins $0.3 $0.5 $0.4 $0.4 $1.6 0.3 0.5 0.5 0.5 1.8 0.4 0.6 0.5 0.6 2.1 0.4 0.7 0.6 0.7 2.5
Other Product 0.1 0.1 0.1 0.1 0.431 0.1 0.0 0.0 0.2 0.3 0.2 0.2 0.2 0.2 0.8 0.2 0.2 0.2 0.2 0.8
Royalty and other revenue (incl. Acq) 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.1 0.0 0.1 0.5 0.5 0.5 0.5 2.0 2.0 2.0 2.0 2.0 8.0
Royalty and other revenue (incl. Acq) 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Revenue Growth 21% 36% 25% 19% 25% 22% 11% 48% 59% 34% 49% 50% 22% 14% 32% 15% 15% 16% 16% 16%
Product Revenue 21% 36% 25% 19% 25% 22% 11% 48% 59% 34% 48% 49% 21% 13% 31% 12% 12% 12% 13% 12%
Protein products (3%) +0% +7% +11% +3% +10% +6% (0%) (5%) +3% +5% +5% +5% +5% +5% +6% +6% +6% +6% +6%
Protein A Ligands (6%) +0% +8% +11% +3% +13% +3% (1%) (5%) +3% +5% +5% +5% +5% +5% +6% +6% +6% +6% +6%
Cell Culture Growth Factors (Supplements) +6% +0% +6% +9% +5% +0% +18% +2% (5%) +4% +5% +5% +5% +5% +5% +6% +6% +6% +6% +6%
Filtration products +40% +81% +30% (13%) +26% +55% +34% +60% +68% +54% +13% +13% +13% +13% +13% +13% +13% +13% +13% +13%
Sius Filtration Products (TangenX TFF Cassettes) NM NM NM NM NM NM NM NM +618% +2268% +13% +13% +13% +13% +13% +13% +13% +13% +13% +13%
Xcell ATF +40% +81% +30% (18%) +24% +15% +2% +23% +31% +17% +13% +13% +13% +13% +13% +13% +13% +13% +13% +13%
Spectrum NM NM NM NM NM NM NM NM NM NM NM NM +58% +20% +169% +15% +15% +15% +15% +15%

Pro-Connex (Reports within Spectrum) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM
KrosFlo (Reports within Spectrum) NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM NM

+93% +150% +73% +96% +102% +24% +7% +22% +26% +19% +16% +16% +16% +16% +16% +18% +18% +18% +18% +18%
OPUS +121% +162% +97% +97% +119% +26% +7% +22% +27% +20% +16% +16% +16% +16% +16% +18% +18% +18% +18% +18%
Atoll (Reports within OPUS) NM NM NM NM NM NM +28% +20% +20% +63% +16% +16% +16% +16% +16% +18% +18% +18% +18% +18%
ELISA Test Kits (21%) +25% (6%) +146% +16% +6% +6% +22% +22% +14% +16% +16% +16% +16% +16% +18% +18% +18% +18% +18%
Chromatography Resins (11%) +257% (15%) +55% +34% +6% +6% +22% +22% +14% +16% +16% +16% +16% +16% +18% +18% +18% +18% +18%
Other Product +60% +159% (4%) +23% +39% (7%) (100%) (100%) +82% (30%) +100% NM NM +0% +167% +0% +0% +0% +0% +0%
Royalty and other revenue (incl. Acq) NM NM NM NM NM NM NM NM -79% 29% 2281% 2281% 658% 2281% 1450% 300% 300% 300% 300% 300%
Royalty and other revenue (incl. Acq)
Margin Analysis
Product Revenue 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 99% 99% 99% 99% 99% 96% 96% 96% 96% 96%
Protein products +54% +51% +53% +52% +52% +49% +49% +35% +31% +40% +34% +34% +31% +28% +32% +32% +31% +28% +26% +29%
Protein A Ligands +41% +39% +39% +38% +39% +38% +36% +26% +23% +30% +27% +25% +23% +21% +24% +25% +23% +21% +19% +22%
Cell Culture Growth Factors (Supplements) +14% +12% +13% +13% +13% +11% +13% +9% +8% +10% +8% +9% +8% +7% +8% +7% +8% +7% +7% +7%
Filtration products +17% +19% +19% +20% +19% +22% +23% +21% +21% +22% +17% +17% +19% +21% +18% +16% +17% +19% +20% +18%
Sius Filtration Products (TangenX TFF Cassettes) +0% +0% +0% +1% +0% +6% +5% +5% +6% +5% +4% +4% +5% +6% +5% +4% +4% +4% +5% +4%
Xcell ATF +17% +19% +19% +19% +19% +16% +18% +16% +15% +16% +12% +13% +15% +15% +14% +12% +13% +14% +15% +13%
Spectrum +0% +0% +0% +0% +0% +0% +0% +21% +26% +13% +25% +26% +27% +27% +26% +25% +26% +27% +27% +26%
Pro-Connex (Reports within Spectrum) +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0%
KrosFlo (Reports within Spectrum) +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0%

+28% +29% +27% +28% +28% +29% +28% +23% +22% +25% +22% +22% +22% +22% +22% +23% +22% +22% +23% +22%
OPUS +26% +26% +24% +25% +25% +26% +25% +20% +20% +22% +21% +19% +19% +20% +20% +21% +20% +19% +20% +20%
Atoll (Reports within OPUS) +0% +4% +4% +4% 3% +4% +4% +4% +3% 4% +3% +3% +3% +3% 3% +3% +3% +3% +3% 3%
ELISA Test Kits +1% +2% +2% +2% +2% +1% +2% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1%
Chromatography Resins +1% +2% +1% +2% +2% +1% +2% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1% +1%
Other Product +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0% +0%
Royalty and other revenue (incl. Acq) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 1% 1% 1% 1% 1% 4% 4% 4% 4% 4%
Royalty and other revenue (incl. Acq)

Figure 41: Balance Sheet ($ in MM)
Balance S heet (in $000s) 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E
Assets
Cash and cash equivalents 11 29 40 35 54 122 116 140 164
M arketable securities 15 11 22 23 18 20 45 55 60
Receivables (net) 3 4 5 8 11 15 19 23 28
Inventories (net) 13 11 12 12 18 25 35 41 48
Prepaid expenses and other current assets - 0 0 0 - 2 1 1 1
Other (i.e. prepaid expenses, royalties and other recievables) 4 10 8 2 2 1 14 12 10
Total current assets 47 66 86 81 103 184 231 272 311
Property and equipment, net 11 10 13 15 14 15 32 37 42
Goodwill 1 1 1 14 14 60 30 41 56
Intangible assets, net 8 7 6 15 13 30 29 36 45
Long-term marketable securities 9 10 12 4 2 - 17 15 12
Restricted Cash 0 0 0 0 0 0 1 1 1
Long-term deferred tax asset, net - 3 0 - - - 2 1 1
Total assets 76 97 119 128 146 289 341 402 467
YOY Gro wth 28% 22% 8% 14% 98% 18% 18% 16%
Liabilities and S hareholders' Equity

Accounts payable 1 2 2 4 7 5 9 11 14
Accrued liabilities 6 8 10 7 12 16 24 28 31
Total current liabilities 7 11 11 11 19 21 33.5 38.5 44.7
Other long-term liabilities 2 2 3 6 5 95 31 20 23
LT deferred tax liability 0 - - - - 4 1 1 2
Total non-current liabilities 3 2 3 6 5 99 32.2 21.4 25.1
Total liabilities 10 13 15 17 23 120 65.6 59.8 69.8
S hareholders' equity:
Common stock 0 0 0 0 0 0 1 1 1
Additional paid-in-capital 185 187 191 198 203 242 498 550 616
Accumulated other comprehensive income (loss) 0 2 2 (6) (9) (14) (8) (13) (19)
Acumulated deficit (119) (105) (89) (81) (72) (60) (216) (196) (200)
Total S hareholders' Equity 66 84 104 112 123 169 275 342 397
Total Liabilities and S hareholders' Equity 76 97 119 128 146 289 341 402 467

DISCLOSURES:
Companies Mentioned: RGEN, ILMN
ANALYST CERTIFICATION
I, David Westenberg, CFA, certify that all views expressed by me in this research report regarding the securities, as named herein, and its issuers accurately reflect my
personal views. I further certify that I have not and will not receive compensation directly or indirectly related to any specific recommendations or views expressed in
this research report.
Risk Considerations and Ratings Charts for individual stocks can be found in the most recent research note.
Additional information available upon request.

a: CL King & Associates currently maintains a market in the equity securities of the subject company.
CL King & Associates, Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have
a conflict of interest that could affect the objectivity of this report. No portion of an analyst's compensation is based on a specific investment banking transaction;
however, part of an analyst's compensation may be based upon overall firm revenue and profitability, of which investment banking is a component. The information
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one or more of its officers or employees may have positions in, and may, as principal or agent, buy or sell the securities mentioned herein, and may from time to time
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This material is for your information only and does not constitute an offer to buy or sell, or the solicitation of any offer to buy or sell any securities. This material is
intended solely for institutional investors and investors who CL King reasonably believes are institutional investors.
RATINGS INFORMATION
Rating and Price Target Change History
3 Year Rating Change History
3 Year Price Change History
* Previous Close11/10/2017
Source: CL King & Associates Created by: Blue-Compass.net

3 Year Rating Change History
3 Year Price Change History
Source: CL King & Associates Created by: Blue-Compass.net

Source: FactSet, CL King & Associates
CL King Rating System* % of Companies % of companies for which CL King

Under Coverage has provided Investment Banking
With This Rating Services in the past 12 months
Analyst believes shares will appreciate by 20% or more over
the next 6-12 months and should significantly outperform
Strong Buy the broader market averages.
(SB)
10.71% 0.00%
Analyst believes the risk of long-term capital impairment is
below-average.
Analyst believes shares will appreciate in a range of 10% to
the upper teens over the next 6-12 months and will
Buy (B) outperform the broader capital market averages. 42.86% 1.19%
Analyst believes the risk of long-term capital impairment is
below-average, but not as low as it is for Strong Buy.
Analyst believes the current stock price fairly discounts the
companys prospects over the next 6-12 months, give or take
Neutral (N) 10%, and will trade in-line with the broader market averages. 46.43% 0.00%
Analyst believes the risk of permanent capital impairment is
about average.
Analyst expects the stock price to decline 10% or more over
Sell (S) the next 6-12 months and to underperform the broader 0.00% 0.00%
market averages.

All rights reserved. This report may not be produced or distributed in full or in part without the prior written permission of CL King & Associates.

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Equity Research

Uncovering Hidden Investment Opportunities Since 1972

November 13, 2017 Company Initiation Report

WBENC certified Albany Boston New York City Member FINRA/SIPC

Repligen Corporation (RGEN $34.73)

Source: Company reports Source: FactSet Inc.

Earnings Estimates: ($ per share) Investment Thesis Highlights:

FINANCIAL SUMMARY Non-GAAP

David Westenberg, CFA

David Westenberg, CFA

Figure 1: Repligens Product Development and Acquisition History

Source: Company website

In addition, Repligens products have the opportunity to displace existing methods of

David Westenberg, CFA

Competes in Large and Growing Biologics Markets, Where mAbs and

Figure 2: Growth in Global mAb Market Over Time

Source: Investor presentation

David Westenberg, CFA

Source: Investor presentation

Figure 4: The Growth of the Biopharmaceutical Market Is Driven by mAbs

Source: Investor presentation

Figure 5: Monoclonal Antibody Approvals in the U.S. and Europe

Source: Investor presentation

David Westenberg, CFA

Similarly, there are a number of generic-producing and specialty pharma companies

To take advantage of this, Repligens strategy includes platforming of its products,

Source: Investor presentation (Guidance as of 11/9/2017)

Furthermore, two of the points of Repligens internal strategy include geographical

David Westenberg, CFA

Figure 7: Cross-Country Analysis of Access to Biologic Drugs

Source: Secondary research, Deloitte Subject Matter Advisors, Deloitte analysis

Room for, and Focus on, Margin Expansion

We also see significant operating leverage. Because Repligen sells business-to-

David Westenberg, CFA

Figure 8: 2017 Guidance and Long-Term (2020) Goals

Source: Investor presentation (Guidance as of 11/9/2017)

An Increasingly Diversified Company/Additional Synergies from

David Westenberg, CFA

Source: Company filings; CL King & Associates estimates

The Spectrum acquisition also represents a broadening of Repligens prospects.

David Westenberg, CFA

Figure 10: End-Markets Prior to and Post the Spectrum Acquisition

Source: Investor presentation

Source: Investor presentation

David Westenberg, CFA

Figure 12: Current Salesforce Distribution

Source: Investor presentation

Valuation Is at a Premium, but Not Unreasonable, Given the Growth and

David Westenberg, CFA

History and Comps

David Westenberg, CFA

Figure 14: Historical Cash Flow and Forward Assumptions

Long Term Assumptions

Source: FactSet Inc.; Company reports; CL King & Associates estimates

Figure 15: Valuation Ranges at Different Discount and Growth Rates

EBITDA Exit Multiple

8.0% $32.72 $36.73 $40.75 $44.76 $48.78 $52.79 $56.81

David Westenberg, CFA

Figure 16: Earnings Multiple Valuation

Source: FactSet Inc.

David Westenberg, CFA

Source: Yahoo Finance, FactSet Inc.

Figure 18: Repligen Compared to Companies in and Around Bioprocessing

EPS P/E Multiples