REPLIGEN CORP (RGEN) FY 2024 MD&A

Results of Operations

The following discussion of the financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and the related footnotes thereto.

Revenues

Total revenues for years ended December 31, 2024 and 2023 were comprised of the following:

Product revenues

Since 2016, we have been increasingly focused on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers. These direct sales have represented 89.7% of our total product revenue during 2024 compared to 85.8% of our total product revenue in 2023. Sales of our bioprocessing products can be impacted by the timing of large-scale production orders and the regulatory approvals for such antibodies, which may result in significant quarterly fluctuations.

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Product revenues were comprised of the following:

Revenue from the sale of our products which make up our filtration, chromatography, process analytics and proteins franchises comes from the sale of a number of products as described in Part I, Item 1. “Business - Our Products” of this report. Other revenue primarily consists of revenue from the sale of our operating room products to hospitals as well as freight revenue.

In 2024, product revenue increased by $2.2 million, or 0.3%, as compared to 2023. The change is primarily driven by an increase of $31.6 million in our Filtration product revenue led by the success our of XCell ATF business. This increase was primarily offset by a decrease in our Proteins product revenue of $29.0 million, caused by headwinds in demand as Cytiva (a standalone operating company owned by Danaher Corporation) has moved certain ligand production in-house.

Royalty revenues

Royalty revenues for all periods presented relate to royalties received from a third-party systems manufacturer associated with our OPUS® chromatography columns. Royalty revenues are variable and are dependent on sales generated by our partner.

Costs and operating expenses

Total costs and operating expenses for the years ended December 31, 2024 and 2023 were comprised of the following:

Cost of goods sold

In 2024, cost of goods sold increased $5.9 million, or 1.7%, compared to 2023, including an incremental $12.5 million of inventory adjustments compared to the prior year to reflect inventory at net realizable value, and an incremental $6.1 million charge compared to the prior year related to manufacturing facilities closed and equipment abandoned. These increases were partially offset by a decrease in accelerated depreciation of $3.8 million and a decrease in severance and employee related costs from restructuring of $1.2 million. See Note 6, “Restructuring Activities and Other Inventory-Related Charges” of this report for more information on the restructuring activities to simplify and streamline our organization and strengthen our overall effectiveness of our operations (“Restructuring Plan”). Our restructuring and other inventory-related activities include consolidating a portion of our manufacturing facilities between certain U.S. locations, writing-off abandoned equipment with the rationalization of excess production line capacity, discontinuing the sale of certain product SKUs, and evaluating the net realizable value of finished goods and raw materials. The non-cash inventory write-off in 2024 is the result of the Company discontinuing the sale of certain product SKUs and is also the result of the further evaluation of inventory positions in unusually turbulent market supply conditions. Where the value of finished goods and raw materials exceeded

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the projected requirements to be used before reaching their expiration date, or in a reasonable time horizon, they were written down to their realizable value.

The increase in restructuring changes was partially offset by a decrease in employee-related costs unrelated to the restructuring activities in 2024, as compared to 2023.

Gross margin was 43.3% in 2024, compared to 44.0% in 2023. The reduction in gross margin in 2024 as compared to 2023, is primarily due to restructuring activities as noted above during 2024 to simplify and streamline our organization and strengthen the overall effectiveness of our operations, which were $13.6 million higher in 2024 than 2023. Partially offsetting this increase in costs, margins increased as a result of a change in product mix.

Research and development expenses

R&D expenses are related to bioprocessing products, which include personnel, supplies and other research expenses. Due to the fact that these various programs share personnel and fixed costs, we do not track all of our expenses or allocate any fixed costs by program, and therefore, have not provided historical costs incurred by project.

R&D expenses increased $0.5 million, or 1.1%, during 2024, compared to 2023. The increase during the periods is primarily due to a $1.8 million increase in employee-related costs, partially offset by a decrease in product development costs of $1.4 million.

R&D expense also includes payments made to expand our proteins product offering through our development agreement with Navigo Proteins GmbH (“Navigo”). Such expenses were $3.1 million in 2024, $3.8 million in 2023, and $2.6 million in 2022 in the form of milestone payments to Navigo.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses include the costs associated with selling our commercial products and costs required to support our marketing efforts, including legal, accounting, patent, shareholder services, amortization of intangible assets and other administrative functions.

SG&A costs increased by $44.8 million, or 20.5%, in 2024, as compared to 2023 primarily due to $22.4 million in costs associated with the modification of our former Chief Executive Officer’s (“CEO”) unvested equity awards resulting from the announcement of his transition from CEO to Executive Chair of our Board, which was announced on June 12, 2024 and effective September 1, 2024. For more information on the former CEO’s transition to Executive Chair of our Board, see Note 13, “Stockholders’ Equity - Chief Executive Officer Accounting Modifications” included in this report. In addition, employee-related costs increased $15.9 million, and rent increased $5.9 million primarily related to the expansion of our Waltham headquarters.

Contingent consideration

Contingent consideration represents the change in fair value of the contingent consideration obligation included in current and noncurrent contingent consideration on the consolidated balance sheets as of the end of each period. Remeasurement of the contingent consideration obligation is done each quarter and the carrying value of the obligation is adjusted to the current fair value through our consolidated statements of comprehensive income. In 2024, 2023 and 2022, actual and expected results and a change in market inputs used to calculate the discount rate, resulted in adjustments to the fair value of the contingent consideration obligation for the years ended December 31, 2024, 2023 and 2022 of $3.2 million, ($30.6) million, and ($28.7) million, respectively.

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Other income (expenses), net

The table below provides detail regarding our other income (expenses), net:

Investment income

Investment income includes income earned on invested cash balances. Our investment income increased by $11.7 million in 2024, as compared to 2023 due to having higher average invested cash balances since December 31, 2023. We expect investment income to vary based on changes in the amount of funds invested and fluctuation of interest rates.

Interest expense

Interest expense in 2024 is primarily from contractual coupon interest on the convertible debt outstanding as of December 31, 2024. On December 14, 2023, we entered into a privately negotiated exchange and subscription agreement with certain holders of the 2019 Notes and certain new investors pursuant to which we issued $600.0 million aggregate principal amount of the 2023 Notes. Interest expense in 2024 includes $0.1 million of interest on the 2019 Notes, compared to $1.0 million of interest expense on the 2019 Notes in 2023. Interest expense in 2024 also includes $6.0 million of contractual coupon interest on the 2023 Notes for which there were no comparable amounts in 2023 as well as $13.7 million in accretion of the $82.1 million debt discount on the modified notes, which includes the accretion of an increase in principal and the accretion of increased fair value of the conversion option in 2024, for which there were no comparable costs in 2023. See Note 15, “Convertible Senior Notes,” to our consolidated financial statements included in this report for more information on this transaction.

Loss on extinguishment of debt

In 2023, as part of the Exchange Transaction, we exchanged $217.7 million in aggregate principal amount of the 2019 Notes for $309.9 million in aggregate principal amount of the 2023 Notes. Upon evaluation of the Exchange Transaction, approximately $29.6 million, of the $217.7 million in aggregate principal amount of the 2019 Notes were deemed extinguished. As a result, we recorded a $12.7 million loss on extinguishment of debt in our consolidated statements of comprehensive income in 2023, which includes a $12.6 million write-off for the increase in principal of the converted notes being extinguished and a $0.1 million write-off of unamortized debt issuance costs related to the converted notes being extinguished. No such transactions occurred in 2024.

Amortization of debt issuance costs

Amortization of debt issuance costs decreased during 2024, as compared to 2023. Transaction costs related to the issuance of the 2019 Notes and the 2023 Notes are amortized to amortization of debt issuance costs on the consolidated statements of comprehensive income. Any third-party costs directly related to the modification or exchange are expensed as incurred. Therefore, in 2023, we recorded $6.4 million to amortization of debt issuance costs, which included $6.2 million of debt issuance costs directly related to the modified notes and $0.2 million of amortization of the capitalized debt issuance costs.

Other income (expenses), net

The changes in other expenses, net in 2024, as compared to 2023, is primarily attributable to realized and unrealized foreign currency gains and losses related to transactions with customers and vendors, as well as the revaluation impact of intercompany loans with subsidiaries.

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Income tax (benefit) provision

Income tax (benefit) provision for the years ended December 31, 2024 and 2023 was as follows:

For year ended December 31, 2024, we recorded an income tax benefit of $1.5 million. The effective tax rate was 5.6% for 2024 and is based upon the net loss for the year ended December 31, 2024 and the composition of income in different jurisdictions. The difference in effective tax rates between 2024 and 2023 was primarily due to a loss before income taxes and nonrecurring nondeductible loss on extinguishment of debt and debt discount that occurred in 2023.

Liquidity and Capital Resources

We have financed our operations primarily through revenues derived from product sales, and the issuance of the Notes and public offerings. Most recently, the 2023 Notes issued in in December 2023. Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue.

At December 31, 2024, we had cash and cash equivalents of $757.4 million compared to cash and cash equivalents of $751.3 million at December 31, 2023. There were no restrictions on cash as of December 31, 2024 and 2023.

In 2024, we acquired Tantti for $54.8 million in cash, net of cash acquired. In connection with the acquisitions, the Company has an obligation to pay up to $54.5 million (undiscounted) in contingent consideration earnout payments in cash over a three-year earnout period beginning January 1, 2025 and ending December 31, 2027. See Note 3, “Fair Value Measurements,” and Note 5, “Acquisitions,” for additional information.

On December 14, 2023, the Company issued $600.0 million aggregate principal amount of its 2023 Notes in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with a limited number of holders of its outstanding 2019 Notes and certain other qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Securities Act”). Pursuant to the Exchange and Subscription Agreements, the Company exchanged $217.7 million of its 2019 Notes for $309.9 million aggregate principal amount of the 2023 Notes (the “Exchange Transaction”) and issued $290.1 million aggregate principal amount of the 2023 Notes (the “Subscription Transactions”) for $290.1 million in cash. Proceeds from the Subscription Transactions amounted to $276.1 million after debt issuance costs of $13.9 million. The 2023 Notes are senior, unsecured obligations of the Company, and bear interest at a rate of 1.00% per year. Interest is payable semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2024. The 2023 Notes will mature on December 15, 2028, unless earlier redeemed, repurchased or converted. During the fourth quarter of 2024, the closing price of the Company's common stock did not exceed 130% of the conversion price of the 2023 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the 2023 Notes are not convertible at the option of the holders of the 2023 Notes during the fourth quarter of 2024, the quarter immediately following the quarter when the conditions are met, as stated in the indenture governing the 2023 Notes. For more information on the 2023 Notes, see Note 15, Convertible Senior Notes, to this report.

In 2024, we had lease arrangements for certain equipment and facilities including corporate and manufacturing sites. As of December 31, 2024, the Company had fixed lease payment obligations of $195.5 million, with $24.9 million payable within 12 months. See Note 7, “Leases,” for additional information.

In 2024, we had other purchase obligations primarily consisting of purchase commitments with certain vendors and open purchase orders for the procurement of raw materials for manufacturing. As of December 31, 2024, the Company had other purchase obligations of $31.0 million, payable within 12 months.

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Cash flows

Operating activities

For 2024, our operating activities provided cash of $175.4 million reflecting net loss of $25.5 million and non-cash charges totaling $140.0 million primarily related to depreciation, intangible amortization, amortization of debt discount and issuance costs, contingent consideration fair value adjustments, deferred income taxes, stock-based compensation charges, loss on disposal of fixed assets, and right of use asset amortization. A decrease in inventory contributed $56.9 million to the change in working capital, of which $36.1 million was related to the Restructuring Plan and other inventory-related charges. Accounts payable and accrued expenses provided $19.0 million due to the timing of payments to vendors. Partially offsetting these favorable changes, accounts receivable increased $14.0 million due to timing of sales and receipts from customers.

For 2023, our operating activities provided cash of $113.9 million reflecting net income of $35.6 million and non-cash charges totaling $98.4 million primarily related to amortization of inventory step-up charges, depreciation expense, intangible amortization expense, amortization of debt discount and issuance costs, contingent consideration fair value adjustments, deferred income taxes, stock-based compensation charges, loss on extinguishment of debt and operating lease right of use asset amortization. A decrease in inventory provided $41.0 million of which $23.6 million was related to the Restructuring Plan. An increase in prepaid expenses, primarily related to prepaid taxes and insurance as well as subscriptions, consumed $13.3 million. A decrease in accounts payable and accrued expenses consumed $31.3 million and was due to the timing of payments to vendors as well as the payment of employee bonuses related to 2022 during 2023. The remaining cash provided by operating activities resulted from favorable changes in various other working capital accounts.

Investing activities

Our investing activities consumed $86.4 million of cash in 2024, primarily due to $54.8 million in cash (net of cash received) used for the 2024 acquisition of Tantti Laboratory Inc. Capital expenditures consumed $29.9 million in 2024, including $4.2 million of capitalized costs related to our internal-use software for 2024. In addition, in November 2024, the Company amended the License Agreement (the “Daylight Agreement”) with DRS Daylight Solutions, Inc. (“Daylight”) to extend the License Agreement one additional year for a one-time payment of $3.0 million.

Our investing activities consumed $123.3 million of cash in 2023, primarily due to $186.6 million in cash (net of cash received) used for the 2023 acquisitions of Metenova and FlexBiosys, in the aggregate. Capital expenditures consumed $39.0 million in 2023, as we continue to increase our manufacturing capacity worldwide. Of these expenditures, $2.8 million represented capitalized costs related to our internal-use software for 2023. These uses of cash were partially offset by the maturity of our short-term investment in U.S. treasury securities in June 2023, which provided cash of $102.3 million.

Financing activities

In 2024, cash consumed by financing activities was $82.9 million, driven primarily by the repayment of the 2019 Notes of $69.9 million, $9.9 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units, and $7.3 million paid to settle the cash portion of the contingent earnout obligation related to our acquisition of Avitide in September 2021. These payments were partially offset by proceeds received from stock option exercises during the period.

In 2023, cash provided by financing activities of $249.0 million included $290.1 million of proceeds from the issuance of the 2023 Notes in December 2023 and proceeds from stock option exercises during 2023 were $1.1 million. Offsetting these activities was

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$14.4 million for the buyback of 92,090 shares of our common stock, $13.2 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units, $7.3 million paid for debt issuance costs related to the 2023 Notes and the payment of $7.3 million to settle the cash portion of the First Earnout Year contingent earnout obligation related to our acquisition of Avitide in September 2021.

Effect of exchange rate changes on cash, cash equivalents and restricted cash

The effect of exchange rate changes on cash during 2024 is a result of the strengthening of the U.S. dollar against the Swedish krona by 9%, the strengthening of the U.S. dollar against the Euro by 6% and the strengthening of the U.S. dollar against the British pound by 2%.

Capital Requirements

Our future capital requirements will depend on many factors, including the following:

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the expansion of our bioprocessing business;

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the ability to sustain sales and profits of our bioprocessing products and successfully integrate them into our business;

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our ability to acquire additional bioprocessing products;

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the scope of and progress made in our R&D activities;

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the scope of investment in our intellectual property portfolio;

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contingent consideration earnout payments resulting from our acquisitions;

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the extent of any share repurchase activity;

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the success of any proposed financing efforts;

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general economic and capital markets;

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change in accounting standards;

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the impact of inflation on our operations, including our expenditures on raw material and freight charges;

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fluctuations in foreign currency exchange rates; and

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costs associated with our ability to comply with emerging environmental, social and governance standards.

Absent acquisitions of additional products, product candidates or intellectual property, we believe our current cash balances and future cash flow from operations are adequate to meet our cash needs for at least the next 24 months. We expect operating expenses in 2025 to increase as we continue to expand our bioprocessing business. We expect to incur continued spending related to the development and expansion of our bioprocessing product lines and expansion of our commercial capabilities for the foreseeable future. Our future capital requirements may include, but are not limited to, purchases of property, plant and equipment, the acquisition of additional bioprocessing products and technologies to complement our existing manufacturing capabilities, and continued investment in our intellectual property portfolio.

We plan to continue to invest in our bioprocessing business and in key R&D activities associated with the development of new bioprocessing products. We actively evaluate various strategic transactions on an ongoing basis, including licensing or acquiring complementary products, technologies or businesses that would complement our existing portfolio. 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. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, for example, due to acquisition-related financing needs or lower demand for our products, among potential other events, we may seek to sell common or preferred equity or convertible debt securities, enter into a credit facility or another form of third-party funding, or seek other debt funding. The sale of equity and convertible debt securities may result in dilution to our shareholders, and those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or

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other debt could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to relinquish valuable rights. We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available on reasonable terms, if at all.

Net Operating Loss Carryforwards

At December 31, 2024, we had federal net operating loss carryforwards of $19.3 million, state net operating loss carryforwards of $11.9 million, and foreign net operating loss carryforwards of $26.0 million. The federal net operating loss carryforwards have unlimited carryforward periods and do not expire. The state net operating loss carryforwards will expire at various dates through 2044. Approximately $4.8 million of the foreign net operating loss carryforwards have unlimited carryforward periods and do not expire, while $21.2 million of the foreign net operating loss carryforwards will expire at various dates through 2034. We had federal and state business tax credit carryforwards of $6.6 million available to reduce future federal and state income taxes. The business tax credit carryforwards will expire at various dates through 2044. Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service, state and foreign jurisdictions and may be limited in the event of certain changes in the ownership interest of significant stockholders.

Foreign Earnings

As of December 31, 2024, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $266.2 million. Because $5.7 million of such earnings have previously been subject to the one-time transition tax on foreign earnings required by the Tax Cuts and Jobs Act enacted in December 2017, any additional taxes due with respect to such earnings or the excess of the amount for financial reporting over the tax basis of our foreign investments would generally be limited to foreign and state taxes. At December 31, 2024, we have not provided for taxes on outside basis differences of our foreign subsidiaries as it is not practicable and we have the ability and intent to indefinitely reinvest the undistributed earnings of our foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict our plan to indefinitely reinvest.

Effects of Inflation

Our assets are primarily monetary, consisting of cash and cash equivalents and marketable securities. Because of their liquidity, these assets are not directly affected by inflation. Since we intend to retain and continue to use our equipment, furniture, fixtures and office equipment, computer hardware and software 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 compensation and contract services, which could increase our level of expenses and the rate at which we use our resources.