10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission File Number 000-14656

REPLIGEN CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	04-2729386
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
41 Seyon Street, Bldg. 1, Suite 100 Waltham, MA	02453
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (781) 250-0111

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
		Emerging growth company	☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ☐    No  ☒

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.    Emerging growth company     ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     ☐

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of April 28, 2017.

Class	Number of Shares
Common Stock, par value $.01 per share	34,080,664

Table of Contents

		PAGE
PART I	FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016		3
	Condensed Consolidated Statements of Comprehensive Income for the Three-Month Periods Ended March 31, 2017 and 2016		4
	Condensed Consolidated Statements of Cash Flows for the Three-Month Periods Ended March 31, 2017 and 2016		5
	Notes to Unaudited Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		29
Item 4.	Controls and Procedures		30
PART II	OTHER INFORMATION		31
Item 1.	Legal Proceedings		31
Item 1A.	Risk Factors		31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		31
Item 3.	Defaults Upon Senior Securities		31
Item 4.	Mine Safety Disclosures		31
Item 5.	Other Information		31
Item 6.	Exhibits		31
Signatures			33

2

REPLIGEN CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)	March 31, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	129,663		$	122,233
Marketable securities		12,180			19,547
Accounts receivable, less reserve for doubtful accounts of $32 at March 31, 2017 and $23 at December 31, 2016		17,710			15,194
Other receivables		669			839
Inventories		23,957			24,696
Prepaid expenses and other current assets		1,620			1,644
Total current assets		185,799			184,153
Property, plant and equipment, net		15,373			14,956
Intangible assets, net		29,222			29,806
Goodwill		59,784			59,548
Restricted cash		450			450
Total assets	$	290,628		$	288,913
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,635		$	5,061
Accrued liabilities		9,116			16,014
Total current liabilities		13,751			21,075
Convertible senior notes		96,242			95,272
Deferred tax liabilities		2,188			2,103
Other long-term liabilities		1,656			1,699
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock, $.01 par value, 80,000,000 shares authorized, 34,076,544 shares at March 31, 2017 and 33,844,074 shares at December 31, 2016 issued and outstanding		341			338
Additional paid-in capital		245,961			242,036
Accumulated other comprehensive loss		(12,718	)		(13,749	)
Accumulated deficit		(56,793	)		(59,861	)
Total stockholders’ equity		176,791			168,764
Total liabilities and stockholders’ equity	$	290,628		$	288,913

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

REPLIGEN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except share and per share data)	Three months ended March 31,
	2017			2016
Revenue:
Product revenue	$	30,569		$	25,094
Royalty and other revenue		21			—
Total revenue		30,590			25,094
Operating expenses:
Cost of product revenue		13,990			11,069
Research and development		1,742			1,539
Selling, general and administrative		9,182			7,018
Contingent consideration – fair value adjustments		—			2,005
Total operating expenses		24,914			21,631
Income from operations		5,676			3,463
Investment income		96			61
Interest expense		(1,585	)		(5	)
Other expense		(120	)		(979	)
Income before income taxes		4,067			2,540
Income tax provision		999			915
Net income	$	3,068		$	1,625
Earnings per share:
Basic	$	0.09		$	0.05
Diluted	$	0.09		$	0.05
Weighted average shares outstanding:
Basic		33,891,702			33,024,681
Diluted		34,382,322			33,493,575
Other comprehensive income:
Unrealized gain on investments		4			15
Foreign currency translation gain		1,027			1,881
Comprehensive income (loss)	$	4,099		$	3,521

The accompanying notes are an integral part of these condensed consolidated financial statements.

4

REPLIGEN CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)	Three months ended March 31,
	2017			2016
Cash flows from operating activities:
Net income	$	3,068		$	1,625
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		1,582			1,150
Non-cash interest expense		970			—
Stock-based compensation expense		1,531			922
Deferred tax expense		10			—
Loss on revaluation of contingent consideration		—			2,005
Loss on disposal of assets		59			3
Changes in assets and liabilities:
Accounts receivable		(2,415	)		(1,149	)
Other receivables		172			(249	)
Inventories		851			(3,092	)
Prepaid expenses and other current assets		34			781
Accounts payable		(452	)		(1,600	)
Accrued liabilities		(4,220	)		(4,277	)
Long-term liabilities		(43	)		70
Net cash provided by (used in) operating activities		1,147			(3,811	)
Cash flows from investing activities:
Purchases of marketable securities		(28	)		(3,969	)
Redemptions of marketable securities		7,400			5,600
Purchases of property, plant and equipment		(1,295	)		(431	)
Net cash provided by investing activities		6,077			1,200
Cash flows from financing activities:
Exercise of stock options		1,333			821
Payment of contingent considerations		(1,663	)		(498	)
Net cash (used in) provided by financing activities		(330	)		323
Effect of exchange rate changes on cash and cash equivalents		536			1,409
Net increase (decrease) in cash and cash equivalents		7,430			(879	)
Cash and cash equivalents, beginning of period		122,233			54,092
Cash and cash equivalents, end of period	$	129,663		$	53,213
Supplemental disclosure of non-cash activities:
Income taxes paid	$	1,181		$	1,039
Payment of contingent consideration in common stock	$	1,062		$	875

The accompanying notes are an integral part of these condensed consolidated financial statements.

5

REPLIGEN CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Repligen Corporation (the “Company,” “Repligen” or “we”) in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnote disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Repligen Sweden AB (“Repligen Sweden”), Repligen GmbH (acquired as Atoll GmbH as of April 1, 2016 and renamed on September 20, 2016), TangenX Technology Corporation (acquired as of December 14, 2016) and Repligen Singapore Pte. Ltd. All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of only normal, recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),” which supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition, and creates a new Topic 606, Revenue from Contracts with Customers. Two adoption methods are permitted: retrospectively to all prior reporting periods presented, with certain practical expedients permitted; or retrospectively with the cumulative effect of initially adopting the ASU recognized at the date of initial application. The adoption of this ASU will include updates as provided under ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”; ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The Company intends to adopt the provisions of Topic 606 using the modified retrospective method effective January 1, 2018. The Company has commenced work to assess the impact of the new revenue standard on its principal revenue streams. The Company has not made a determination on the impact to its consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires inventory be measured at the lower of cost and net realizable value, and options that currently exist for market value be eliminated. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective prospectively for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The Company adopted the provisions of ASU 2015-11 as of January 1, 2017, and this standard did not have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for most leases. Extensive quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing contracts. The accounting applied by a lessor is largely unchanged from that applied under the current standard. The standard must be adopted using a modified retrospective transition approach and provides for certain practical expedients. This ASU is effective for public entities for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company has not yet completed its assessment of the impact of the new standard on its consolidated financial statements.

6

In March 2016, the FASB issued ASU No. 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which aims to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification of certain items on the statement of cash flows and accounting for forfeitures. This ASU is effective for public entities for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted the provisions of this ASU as of January 1, 2017. As a result of this standard, the Company increased its U.S. federal and state net operating loss carryovers by approximately $5.3 million for previously unrecognized excess tax benefits outstanding as of January 1, 2017. Since the Company maintains a full valuation allowance on its net U.S. deferred tax assets, the Company recorded a corresponding increase to the valuation allowance and the impact of adopting ASU 2016-09 on retained earnings is zero.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 203): Classification of Certain Cash Receipts and Cash Payments”. ASU No. 2016-15 addresses eight specific cash flow issues and clarifies their presentation and classification in the Statement of Cash Flows. This ASU is effective for fiscal years beginning after December 15, 2017 and is to be applied retrospectively with early adoption permitted. The Company currently classifies payments up to the amount of its contingent consideration liability recognized at the date of its acquisition as financing activities, with additional payments classified as operating activities. As a result, the Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is effective for public entities for fiscal years beginning after December 15, 2017, with early adoption permitted.

2. Acquisitions

Atoll GmbH

On April 1, 2016, the Company’s subsidiary, Repligen Sweden, acquired Atoll GmbH (“Atoll”) from UV-Cap GmbH & Co. KG (the “Seller”) pursuant to a Share Purchase Agreement (the “Atoll Share Purchase Agreement”), dated as of March 31, 2016 (such acquisition, the “Atoll Acquisition”), by and among Repligen Sweden, the Seller, and the Company, in its capacity as guarantor of the obligations of Repligen Sweden under the Atoll Share Purchase Agreement. The Atoll Acquisition was subject to certain closing conditions that did not occur until April 1, 2016. Payment for the Atoll Acquisition was denominated in Euros but is reflected here in U.S. dollars for presentation purposes.

In connection with the Atoll Acquisition, the Company issued and contributed 538,700 shares of the Company’s common stock, par value of $0.01 per share valued at $14.1 million (the “Stock Consideration”) to Repligen Sweden through a transfer by the Company on behalf of Repligen Sweden to fulfill Repligen Sweden’s obligation to deliver the Stock Consideration under the Atoll Share Purchase Agreement. The issuance of the Stock Consideration was not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. The Stock Consideration was based on the fair value of the Company’s common stock on April 1, 2016.

This acquisition strengthened Repligen’s bioprocessing business by adding a complementary extension to an existing product line while expanding its direct sales presence worldwide. On September 20, 2016, Atoll changed its name to Repligen GmbH.

The Atoll Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations.” The total purchase price of the Atoll Acquisition was $25.3 million, consisting of an upfront cash payment of $10.2 million, less $74,000 as a result of the final determination of working capital, issuance of the Stock Consideration, and a future potential milestone payment of $1.1 million if specific revenue growth targets are met for 2016. The $1.1 million potential contingent consideration had an initial probability weighted fair value at the time of the closing of the Atoll Acquisition of approximately $952,000.

Consideration Transferred

The Company accounted for the Atoll Acquisition as the purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of Atoll were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The fair value of the net assets acquired was approximately $25.3 million.

The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

7

The total consideration transferred follows (in thousands):

Cash consideration, less $74 of working capital adjustments	$	10,176
Value of common stock issued		14,138
Estimated fair value of contingent consideration		952
Total consideration transferred	$	25,266

The fair value of contingent consideration was determined based upon a probability weighted analysis of expected future milestone and settlement payments to be made to the Seller. Pursuant to the terms of the Atoll Share Purchase Agreement, the Company would make a contingent consideration payment of $1.1 million if specific revenue growth targets were met for 2016. Because the specified revenue growth targets were met for 2016, the Company made the contingent consideration payment in March 2017. No further measurement of this liability is required as of March 31, 2017.

Acquisition related costs are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. The Company incurred $1,262,000 in transaction costs related to the Atoll Acquisition. The transaction costs are included in selling, general and administrative expenses in the consolidated statements of operations.

Fair Value of Net Assets Acquired

The allocation of purchase price was based on the fair value of assets acquired and liabilities assumed as of April 1, 2016. The components and allocation of the purchase price consists of the following amounts (in thousands):

Cash and cash equivalents	$	1,409
Accounts receivable		697
Inventory		155
Other current assets		169
Fixed assets, net		114
Customer relationships		5,318
Developed technology		2,175
Non-competition agreements		57
Trademark and trade name		11
Deferred tax assets		885
Accounts payable and other liabilities assumed		(599	)
Deferred tax liabilities		(2,202	)
Goodwill		17,077
Net assets acquired	$	25,266

Of the consideration paid, $5.3 million represents the fair value of customer relationships that will be amortized over the determined useful life of 13 years and $2.2 million represents the fair value of developed technology that will be amortized over a determined useful life of 14 years. $57,000 represents the fair value of non-competition agreements and $11,000 represents the fair value of trademarks and trade names that will be amortized over a determined useful life of 2 years. The aforementioned intangible assets will be amortized on a straight-line basis.

The goodwill of $17.1 million represents future economic benefits expected to arise from synergies from combining operations, utilizing the Company’s existing sales infrastructure to increase market presence and the extension of existing customer relationships.

TangenX Technology Corporation

On December 14, 2016, the Company acquired TangenX Technology Corporation (“TangenX”), pursuant to the terms of the Share Purchase Agreement, dated as of December 14, 2016 (the “TangenX Share Purchase Agreement”), by and among the Company, John Connors and Novasep Process SAS (such acquisition, the “TangenX Acquisition”). Through the TangenX Acquisition, the Company acquired all outstanding shares and the business of TangenX, including TangenX’s innovative single-use Sius line of tangential flow filtration (“TFF”) cassettes and hardware used in downstream biopharmaceutical manufacturing processes.

TangenX™ TFF products are used in the filtration of biological drugs, thereby expanding Repligen’s filtration portfolio and complementing the OPUS^® pre-packed column product line in downstream purification.

The TangenX Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations.” The total purchase price of the TangenX Acquisition was $37.1 million in cash.

8

Consideration Transferred

The Company accounted for the TangenX Acquisition as a purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of TangenX were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The fair value of the net assets acquired was approximately $37.1 million.

The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The total consideration transferred follows (in thousands):

Cash consideration	$	37,532
Less: working capital adjustment		(467	)
Net assets acquired	$	37,065

Acquisition related costs are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. The Company incurred $1,337,000 in transaction costs related to the TangenX Acquisition. The transaction costs are included in selling, general and administrative expenses in the consolidated statements of operations.

Fair Value of Net Assets Acquired

The allocation of purchase price was based on the fair value of assets acquired and liabilities assumed as of December 14, 2016. The components and allocation of the purchase price consists of the following amounts (in thousands):

Cash and cash equivalents	$	1,218
Accounts receivable		459
Other receivables		111
Inventory		936
Other current assets		50
Fixed assets, net		215
Customer relationships		6,192
Developed technology		6,044
Non-competition agreements		21
Trademark and trade name		11
Accounts payable and other liabilities assumed		(3,083	)
Deferred tax liabilities		(4,525	)
Goodwill		29,416
Net assets acquired	$	37,065

Of the consideration paid, $6.2 million represents the fair value of customer relationships that will be amortized over the determined useful life of 13 years and $6.0 million represents the fair value of developed technology that will be amortized over a determined useful life of 20 years. $21,000 represents the fair value of non-competition agreements that will be amortized over a determined life of 5 years. $11,000 represents the fair value of trademarks and trade names that will be amortized over a determined useful life of 2 years. The aforementioned intangible assets will be amortized on a straight-line basis.

The goodwill of $29.4 million represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships.

9

Revenue, Net Income and Pro Forma Presentation

The Company recorded revenue from TangenX of $119,000 from December 15, 2016 through December 31, 2016 and $1,973,000 for the three months ended March 31, 2017. The Company has included the operating results of TangenX in its consolidated statements of operations since the December 15, 2016 acquisition date. The following table presents unaudited supplemental pro forma information as if the TangenX Acquisition had occurred as of January 1, 2016 (in thousands, except per share data):

	March 31, 2017		March 31, 2016
Total revenue		30,590		26,952
Net income		3,608		5,118
Earnings per share:
Basic	$	0.11	$	0.15
Diluted	$	0.10	$	0.15

The unaudited pro forma information for the three months ended March 31, 2017 and 2016 was calculated after applying the Company’s accounting policies and the impact of acquisition date fair value adjustments. Unaudited pro forma net income for three months ended March 31, 2017 was adjusted to exclude acquisition-related transaction costs and inventory step-up charges. The unaudited pro forma net income for the three months ended March 31, 2016 was adjusted to include acquisition-related transaction costs, inventory step-up charges, amortization of intangible assets and income tax benefits resulting from the acquisition.

These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments to reflect the pro forma results of operations as if the acquisition had occurred as of the beginning of the periods presented, such as fair value adjustments to inventory and increased amortization for the fair value of acquired intangible assets. The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities.

3. Revenue Recognition

Product Sales

The Company’s revenue recognition policy is to recognize revenues from product sales and services in accordance with ASC 605, Revenue Recognition. These standards require that revenues are recognized when persuasive evidence of an arrangement exists, product delivery, including customer acceptance when required, has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Determination of whether these criteria have been met are based on management’s judgments primarily regarding the fixed nature of the fee charged for the product delivered and the collectability of those fees. The Company has a few longstanding customers who comprise the majority of revenue and have excellent payment histories and therefore the Company does not require collateral. The Company has had no significant write-offs of uncollectible invoices in the periods presented. When more than one element such as equipment, consumables, and services are contained in a single arrangement, the Company allocates revenue between the elements based on each element’s relative selling price, provided that each element meets the criteria for treatment as a separate unit of accounting. An item is considered a separate unit of accounting if it has value to the customer on a stand-alone basis. The selling price of the undelivered elements is determined by the price charged when the element is sold separately, or in cases when the item is not sold separately, by third-party evidence of selling price or management’s best estimate of selling price.

The Company’s product revenues are from the sale of bioprocessing products, equipment devices, and related consumables used with these equipment devices to customers in the life science and biopharmaceutical industries. On product sales to end customers, revenue is recognized, net of discounts, when both the title and risk of loss have transferred to the customer, as determined by the shipping terms provided there are no uncertainties regarding acceptance, and all obligations have been completed. Generally, our product arrangements for equipment sales are multiple element arrangements, and may include services, such as installation and training, and multiple products, such as consumables and spare parts. In accordance with ASC 605-25, based on terms and conditions of the product arrangements, the Company believes that these services and undelivered products can be accounted for separately from the delivered product element, as the delivered products have value to our customers on a standalone basis. Accordingly, revenue for services not yet performed at the time of product shipment are deferred and recognized as such services are performed. The relative selling price of any undelivered products is also deferred at the time of shipment and recognized as revenue when these products are delivered. For product sales to distributors, the Company recognizes revenue for both equipment and consumables upon delivery to the distributor unless direct shipment to the end user is requested. In this case, revenue is recognized upon delivery to the end user’s location. In general, distributors are responsible for shipment to the end customer along with installation, training and acceptance of the equipment by the end customer. Sales to distributors are not contingent upon resale of the product.

10

At the time of sale, the Company also evaluates the need to accrue for warranty and sales returns. The supply agreements the Company has with its customers and the related purchase orders identify the terms and conditions of each sale and the price of the goods ordered. Due to the nature of the sales arrangements, inventory produced for sale is tested for quality specifications prior to shipment. Since the product is manufactured to order and in compliance with required specifications prior to shipment, the likelihood of sales return, warranty or other issues is largely diminished. Furthermore, there is no customer right of return in our sales agreements. Sales returns and warranty issues are infrequent and have not had a material impact on the Company’s financial statements historically.

Shipping and handling fees are recorded as a component of product revenue, with the associated costs recorded as a component of cost of product revenue.

Therapeutics Licensing Agreements

Activities under licensing agreements are evaluated in accordance with ASC 605-25 to determine if they represent a multiple element revenue arrangement. The Company identifies the deliverables included within the agreement and evaluates which deliverables represent separate units of accounting. The Company accounts for those components as separate units of accounting if the following two criteria are met:

• The delivered item or items have value to the customer on a stand-alone basis; and

• If there is a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and within the Company’s control.

Factors considered in this determination include, among other things, whether any other vendors sell the items separately and if the licensee could use the delivered item for its intended purpose without the receipt of the remaining deliverables. If multiple deliverables included in an arrangement are separable into different units of accounting, the Company allocates the arrangement consideration to those units of accounting. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. Arrangement consideration is allocated at the inception of the arrangement to the identified units of accounting based on their relative selling price. Revenue is recognized for each unit of accounting when the appropriate revenue recognition criteria are met.

Future milestone payments, if any, under a license agreement will be recognized under the provisions of ASC 605-28, which the Company adopted on January 1, 2011. The Company has elected to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is substantive if:

• It can only be achieved based in whole or in part on either the Company’s performance or the occurrence of a specific outcome resulting from the Company’s performance;

• There is substantive uncertainty at the date an arrangement is entered into that the event will be achieved; and

• It would result in additional payments being due to the entity.

The commercial milestone payments and royalty payments received under license agreements, if any, will be recognized as revenue when they are earned.

Sale of Intellectual Property to BioMarin

In January 2014, the Company entered into an asset purchase agreement (the “BioMarin Asset Purchase Agreement”) with BioMarin Pharmaceutical Inc. (“BioMarin”) to sell Repligen’s histone deacetylase inhibitor (HDACi) portfolio. Pursuant to the terms of the BioMarin Asset Purchase Agreement, the Company is entitled to receive up to $160 million in potential future milestone payments, comprised of:

• Up to $60 million related to the achievement of specified clinical and regulatory milestone events; and

• Up to $100 million related to the achievement of specified commercial sales events, specifically the first commercial sale in specific territories.

In addition, Repligen is eligible to receive royalties on sales of therapeutic products originating from the HDACi portfolio. The royalty rates are tiered and begin in the mid-single-digits for the first HDACi portfolio product and for the first non-HDACi portfolio product with lesser amounts for any backup products developed under the BioMarin Asset Purchase Agreement. The Company’s receipt of these royalties is subject to customary offsets and deductions. There are no refund provisions in this agreement. Any milestones earned upon specified clinical development or commercial sales events or future royalty payments, under the BioMarin Asset Purchase Agreement will be recognized as revenue when they are earned.

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Activities under this agreement were evaluated in accordance with ASC 605-25 to determine if they represented a multiple element revenue arrangement. The Company identified the following deliverables in the BioMarin Asset Purchase Agreement:

• The assignment by the Company to BioMarin of its intellectual property rights in the HDACi portfolio and the Scripps Agreement (the “Transferred Assets”); and

• The transfer of certain notebooks, data, documents, biological materials (if any) and other such documents in our possession that might be useful to further development of the program (the “Technology Transfer”).

Two criteria must be met in order for a deliverable to be considered a separate unit of accounting. The first criterion requires that the delivered item or items have value to the customer on a stand-alone basis. The second criterion, which relates to evaluating a general right of return, is not applicable because such a provision does not exist in the BioMarin Asset Purchase Agreement. The deliverables outlined above were deemed to have stand-alone value and to meet the criteria to be accounted for as separate units of accounting. Factors considered in this determination included, among other things, BioMarin’s right under the agreement to assign the Transferred Assets, whether any other vendors sell the items separately and if BioMarin could use the delivered item for its intended purpose without the receipt of the remaining deliverables. If multiple deliverables included in an arrangement are separable into different units of accounting, the multiple-element arrangements guidance addresses how to allocate the arrangement consideration to those units of accounting. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. Arrangement consideration is allocated at the inception of the arrangement to the identified units of accounting based on their relative selling price.

The Company evaluated the potential milestones in accordance with ASC 605-28, which allows an entity to make an accounting policy election to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. This evaluation included an assessment of the risks that must be overcome to achieve the respective milestone as well as whether the achievement of the milestone was due in part to our initial clinical work, the level of effort and investment required to achieve the respective milestone and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement. There is considerable judgment involved in determining whether a milestone satisfies all of the criteria required to conclude that a milestone is substantive. Milestones that are not considered substantive are recognized as earned if there are no remaining performance obligations or over the remaining period of performance, assuming all other revenue recognition criteria are met.

The Company believes that the $60 million of specified clinical and regulatory milestone payments are substantive. Therefore, any such milestones achieved will be recognized as revenue when earned.

Any milestones achieved upon specified commercial sales events or future royalty payments are considered contingent revenue under the BioMarin Asset Purchase Agreement, and will be recognized as revenue when they are earned as there are no undelivered elements remaining and no continuing performance obligations under the arrangement.

4. Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated other comprehensive income by component (in thousands):

(In thousands)	Unrealized gain (loss) on investments			Foreign currency translation gain (loss)			Total
Balance at December 31, 2016	$	(5	)	$	(13,744	)	$	(13,749	)
Other comprehensive income		4			1,027			1,031
Balance at March 31, 2017	$	(1	)	$	(12,717	)	$	(12,718	)

5. Earnings Per Share

The Company reports earnings per share in accordance with ASC Topic 260, “Earnings Per Share,” which establishes standards for computing and presenting earnings per share. Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares and dilutive common share equivalents then outstanding. Potential common share equivalents consist of restricted stock awards and the incremental common shares issuable upon the exercise of stock options. Under the treasury stock method, unexercised “in-the-money” stock options and warrants are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds

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are then used to purchase common shares at the average market price during the period. Share-based payment awards that entitle their holders to receive non-forfeitable dividends before vesting are considered participating securities and are considered in the calculation of basic and diluted earnings per share. There were no such participating securities outstanding during the three-month periods ended March 31, 2017 and 2016.

Basic and diluted weighted average shares outstanding were as follows:

	Three months ended March 31,
	2017		2016
Weighted average common shares		33,891,702		33,024,681
Dilutive common stock options		490,620		468,894
Weighted average common shares, assuming dilution		34,382,322		33,493,575

At March 31, 2017, there were outstanding options to purchase 805,903 shares of the Company’s common stock at a weighted average exercise price of $19.68 per share and restricted stock units to acquire 404,781 shares of the Company’s common stock. For the three months ended March 31, 2017, 458,685 options to purchase shares of the Company’s common stock, respectively, were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares, and were therefore anti-dilutive. As provided by the terms of the indenture underlying the senior convertible notes, the Company has a choice to settle the conversion obligation for the Convertible Notes in cash, shares or any combination of the two. The Company currently intends to settle the par value of the Convertible Notes in cash and any excess conversion premium in shares. The Company applies the provisions of ASC 260, Earnings Per Share, Subsection 10-45-44, to determine the diluted weighted average shares outstanding as it relates to the conversion spread on its convertible notes. Accordingly, the par value of the Convertible Notes will not be included in the calculation of diluted income per share, but the dilutive effect of the conversion premium will be considered in the calculation of diluted net income per share using the treasury stock method. The dilutive impact of the Company’s convertible notes is based on the difference between the Company’s current period average stock price and the conversion price of the convertible notes, provided there is a premium. Pursuant to this accounting standard, there is no dilution from the accreted principal of the Convertible Notes as of March 31, 2017.

At March 31, 2016, there were outstanding options to purchase 1,312,508 shares of the Company’s common stock at a weighted average exercise price of $11.50 per share. For the three- month period ended March 31, 2016, 520,030 shares of the Company’s common stock, respectively, were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares, and were therefore anti-dilutive.

6. Cash, Cash Equivalents and Marketable Securities

At March 31, 2017 and December 31, 2016, the Company’s investments included money market funds and short-term marketable securities. These marketable securities are classified as available-for-sale. Marketable securities are investments with original maturities of greater than 90 days. Long-term marketable securities are securities with maturities of greater than one year. The average remaining contractual maturity of marketable securities at March 31, 2017 was approximately 2.3 months.

Management reviewed the Company’s investments as of March 31, 2017 and December 31, 2016 and concluded that there are no securities with other than temporary impairments in the investment portfolio. The Company does not intend to sell any investments in an unrealized loss position, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

Investments in marketable securities consisted of the following at March 31, 2017 (in thousands):

	March 31, 2017
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Marketable securities:
U.S. Government and agency securities	$	402	$	—	$	—		$	402
Corporate and other debt securities		11,779		1		(2	)		11,778
Total	$	12,181	$	1	$	(2	)	$	12,180

There were no long-term marketable securities as of March 31, 2017.

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At March 31, 2017, the Company’s investments included seven securities in unrealized loss positions with a total unrealized loss of approximately $2,000 and a total fair market value of approximately $3,946,000. All investments with gross unrealized losses have been in unrealized loss positions for less than 12 months. The unrealized losses were caused primarily by current economic and market conditions. There was no change in the credit risk of the securities. There were no realized gains or losses on the investments for the three months ended March 31, 2017 and 2016.

Investments in marketable securities consisted of the following at December 31, 2016 (in thousands):

	December 31, 2016
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Marketable securities:
U.S. Government and agency securities	$	807	$	—	$	—		$	807
Corporate and other debt securities		18,745		2		(7	)		18,740
Total	$	19,552	$	2	$	(7	)	$	19,547

There were no long-term marketable securities as of December 31, 2016.

The contractual maturities of all money market funds and marketable securities are less than one year as of March 31, 2017.

7. Inventories

Inventories relate to the Company’s bioprocessing business. The Company values inventory at cost or, if lower, market value, using the first-in, first-out method. The Company reviews its inventories at least quarterly and records a provision for excess and obsolete inventory based on its estimates of expected sales volume, production capacity and expiration dates of raw materials, work-in-process and finished products. Expected sales volumes are determined based on supply forecasts provided by key customers for the next 3 to 12 months. The Company writes down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements to cost of product revenue. Manufacturing of bioprocessing finished goods is done to order and tested for quality specifications prior to shipment. Reserves for excess and obsolete inventory were approximately $385,000 at March 31, 2017 and $435,000 at December 31, 2016.

A change in the estimated timing or amount of demand for the Company’s products could result in additional provisions for excess inventory quantities on hand. Any significant unanticipated changes in demand or unexpected quality failures could have a significant impact on the value of inventory and reported operating results. During all periods presented in the accompanying financial statements, there have been no material adjustments related to a revised estimate of inventory valuations.

Work-in-process and finished products inventories consist of material, labor, outside processing costs and manufacturing overhead. Inventories consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Raw Materials	$	15,417	$	14,954
Work-in-process		2,769		2,789
Finished products		5,771		6,953
Total	$	23,957	$	24,696

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8. Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

	March 31, 2017			December 31, 2016
Leasehold improvements	$	15,196		$	14,592
Equipment		15,501			15,214
Furniture and fixtures		3,418			3,218
Construction in progress		1,142			1,264
Total property, plant and equipment		35,257			34,288
Less: accumulated depreciation		(19,884	)		(19,332	)
Property, plant and equipment, net	$	15,373		$	14,956

Depreciation expense totaled approximately $928,000 and $751,000 for the three months ended March 31, 2017 and 2016, respectively.

9. Intangible Assets

Intangible assets are amortized over their useful lives using the straight-line method, as applicable, and the amortization expense is recorded within selling, general and administrative expense in the Company’s statements of comprehensive income (loss).

During the third quarter of 2016, the Company launched its XCell^TM ATF single-use product line. The Company performed an assessment of the in-process research and development assets and their estimated useful lives to determine if any circumstances exist that would result in an impairment. The Company has determined that the fair value of these intangible assets exceeds their carrying values and are therefore not impaired; accordingly, the Company reclassified in-process research and development intangible assets to developed technology and began to amortize these intangible assets in the third quarter of 2016.

The Company reviews its indefinite-lived intangible assets not subject to amortization to determine if adverse conditions exist or a change in circumstances exists that would indicate an impairment. Intangible assets and their related useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. More frequent impairment assessments are conducted if certain conditions exist, including a change in the competitive landscape, any internal decisions to pursue new or different technology strategies, a loss of a significant customer, or a significant change in the marketplace, including changes in the prices paid for our products or changes in the size of the market for our products. An impairment results if the carrying value of the asset exceeds the estimated fair value of the asset. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company continues to believe that its intangible assets are recoverable at March 31, 2017.

Intangible assets consisted of the following at March 31, 2017 (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Weighted Average Useful Life (in years)
Technology – developed	$	12,949	$	(1,685	)		17
Patents		240		(215	)		8
Customer relationships		22,697		(5,525	)		11
Trademark		711		—			—
Other intangibles		85		(35	)		2
Total intangible assets	$	36,682	$	(7,460	)		13

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Intangible assets consisted of the following at December 31, 2016 (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Weighted Average Useful Life (in years)
Technology – developed	$	12,911	$	(1,468	)		17
Patents		240		(208	)		8
Customer relationships		22,555		(4,995	)		11
Trademark/ tradename		711		—			—
Other intangibles		84		(24	)		2
Total intangible assets	$	36,501	$	(6,695	)		13

Amortization expense for amortized intangible assets was approximately $715,000 and $399,000 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, the Company expects to record amortization expense as follows (in thousands):

Years Ending	Amortization Expense
December 31, 2017 (nine months remaining)		2,265
December 31, 2018		2,832
December 31, 2019		2,799
December 31, 2020		2,494
December 31, 2021		2,190

10. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Employee compensation	$	3,439	$	5,586
Accrued interest payable		815		204
Accrued purchases		566		382
Taxes		1,604		1,692
Contingent consideration		—		6,119
Royalties		857		248
Professional fees		494		411
Unearned revenue		441		408
Other accrued expenses		900		964
Total	$	9,116	$	16,014

11. Long Term Debt

The carrying value of the Company’s convertible senior notes is as follows:

	March 31, 2017			December 31, 2016
2.125% Convertible Senior Notes due 2021:
Principal amount	$	115,000		$	115,000
Unamortized debt discount		(15,952	)		(16,777	)
Unamortized debt issuance costs		(2,806	)		(2,951	)
Total convertible senior notes	$	96,242		$	95,272

On May 24, 2016, the Company issued $115 million aggregate principal amount of its 2.125% Convertible Senior Notes due 2021 (the “Notes”). The net proceeds from the sale of the Notes, after deducting the underwriting discounts and commissions and other related offering expenses, were approximately $111.1 million. The Notes bear interest at the rate of 2.125% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2016.

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The Notes will mature on June 1, 2021, unless earlier repurchased, redeemed or converted in accordance with their terms. Prior to March 1, 2021, the Notes will be convertible at the option of holders of the Notes only upon satisfaction of certain conditions and during certain periods, and thereafter, the notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, holders of the Notes will receive shares of the Company’s common stock, cash or a combination thereof, at the Company’s election. It is the Company’s current intent and policy to settle all conversions through combination settlement, which involves satisfying the principal amount outstanding with cash and any note conversion value over the principal amount in shares of the Company’s common stock.

The conversion rate for the Notes will initially be 31.1813 shares of the Company’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $32.07 per common share, and is subject to adjustment under the terms of the Notes. Holders of the Notes may require the Company to repurchase their Notes upon the occurrence of a fundamental change prior to maturity for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

The Company will not have the right to redeem the Notes prior to June 5, 2019, but may redeem the Notes, at its option, in whole or in part, on any business day on or after June 5, 2019 and prior to the maturity date if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides written notice of redemption. The redemption price will be equal to 100% of the principal amount of the principal amount of Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

The Notes contain customary terms and events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare 100% of the principal of, and any accrued and unpaid interest on, all of the Notes to be due and payable. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal of and accrued and unpaid interest, if any, on all of the Notes will become due and payable automatically. Notwithstanding the foregoing, the Notes provide that, to the extent the Company elects and for up to 270 days, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants consist exclusively of the right to receive additional interest on the Notes. The Company is not aware of any events of default, current events or market conditions that would allow holders to call or convert the Notes as of March 31, 2017.

The cash conversion feature of the Notes required bifurcation from the Notes and was initially accounted for as an equity instrument classified to stockholders’ equity, as the conversion feature was determined to be clearly and closely related to the Company’s stock. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and asset base and with similar maturity, the Company estimated the implied interest rate, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the Notes, which resulted in a fair value of the liability component of $96,289,000 upon issuance, calculated as the present value of implied future payments based on the $115 million aggregate principal amount. The equity component of the Notes was recognized as a debt discount, recorded in additional paid-in capital, and represents the difference between the aggregate principal of the Notes and the fair value of the Notes without conversion option on their issuance date. The debt discount is amortized to interest expense using the effective interest method over five years, or the life of the Notes. The Company assesses the equity classification of the cash conversion feature quarterly, and it is not remeasured as long as it continues to meet the conditions for equity classification.

Interest expense recognized on the Notes during the three-month period ended March 31, 2017 includes $611,000, $825,000 and $145,000 for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The effective interest rate on the Notes is 6.6%, which includes the interest on the Notes, amortization of the debt discount and debt issuance costs. As of March 31, 2017, the carrying value of the Notes was approximately $96.2 million and the fair value of the principal was approximately $144.3 million. The fair value of the Notes was determined based on the most recent trade activity of the Notes as of March 31, 2017.

12. Stock-Based Compensation

For the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense of approximately $1,531,000 and $922,000, respectively, for share-based awards granted under the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan”) and the Repligen Corporation Amended and Restated 2012 Stock Option and Incentive Plan (the “2012 Plan,” and collectively with the 2001 Plan and the 1992 Repligen Corporation Stock Option Plan, the “Plans”).

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The following table presents stock-based compensation expense included in the Company’s consolidated statements of comprehensive income (loss):

	Three Months Ended March 31,
	2017		2016
Cost of product revenue	$	141	$	60
Research and development		132		80
Selling, general and administrative		1,258		782
Total	$	1,531	$	922

The 2012 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Incentive options granted to employees under the Plans generally vest over a three to five-year period, with 20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to non-employee directors under the Plans generally vest over one year. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At March 31, 2017, options to purchase 805,903 shares and 404,781 restricted stock units were outstanding under the Plans. At March 31, 2017, 1,531,010 shares were available for future grant under the 2012 Plan.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date, and the Company uses the value of the common stock as of the grant date to value restricted stock units. The Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award, and recognizes awards with service based vesting as expense over the employee’s requisite service period on a straight-line basis. The Company has no awards that are performance-based or subject to market conditions. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

Information regarding option activity for the three months ended March 31, 2017 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Options outstanding at December 31, 2016		882,748		$	16.88
Granted		86,215			32.40
Exercised		(137,903	)		9.67
Forfeited/cancelled		(25,157	)		21.31
Options outstanding at March 31, 2017		805,903		$	19.68		7.08	$	12,706
Options exercisable at March 31, 2017		406,859		$	14.18		5.73	$	8,659
Vested and expected to vest at March 31, 2017 (1)		791,227		$	19.57		7.05	$	12,530

⁽¹⁾  Represents the number of vested options as of March 31, 2017 plus the number of unvested options expected to vest as of March 31, 2017 based on the unvested outstanding options at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on March 31, 2017 of $35.20 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on March 31, 2017.

The weighted average grant date fair value of options granted during the three months ended March 31, 2017 and 2016 was $16.46 and $13.49, respectively. The total fair value of stock options that vested during the three months ended March 31, 2017 and 2016 was approximately $1,195,000 and $645,000, respectively.

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Information regarding restricted stock unit activity for the three months ended March 31, 2017 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Restricted stock units outstanding at December 31, 2016		353,838		$	—
Granted		125,067			—
Exercised		(63,811	)		—
Forfeited/cancelled		(10,313	)		—
Restricted stock units outstanding at March 31, 2017		404,781		$	—		3.12	$	14,248
Vested and expected to vest at March 31, 2017 (1)		378,579		$	—		3.01	$	13,326

⁽¹⁾  Represents the number of vested restricted stock units as of March 31, 2017 plus the number of unvested restricted stock units expected to vest as of March 31, 2017 based on the unvested outstanding restricted stock units at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on March 31, 2017 of $35.20 per share) that would have been received by the restricted stock unit holders had all holders exercised on March 31, 2017. The aggregate intrinsic value of restricted stock units exercised during the three months ended March 31, 2017 and 2016 was approximately $2,064,000 and $1,009,000, respectively.

The weighted average grant date fair value of restricted stock units granted during the three months ended March 31, 2017 and 2016 was $32.18 and $26.05, respectively. The total grant date fair value of restricted stock units that vested during the three months ended March 31, 2017 and 2016 was approximately $1,616,000 and $742,000, respectively.

As of March 31, 2017, there was $14,921,000 of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 2.94 years.

13. Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2017 was 24.6% compared to 36.0% for the corresponding period in the prior year. For the current three month period, the effective tax rate was lower than the U.S. statutory tax rate of 34% primarily due to lower statutory tax rates in foreign jurisdictions. For the three month period ended March 31, 2016, the effective tax rate was higher than the U.S. statutory tax rate mainly due to the tax treatment of contingent consideration expense.

At December 31, 2016, the Company had net operating loss carryforwards of approximately $48,550,000 in the U.S., net operating loss carryforwards of approximately €2,287,000 (approximately $2,407,000) in Germany, federal business tax credit carryforwards of $1,745,000 and state business tax credit carryforwards of approximately $442,000 available to reduce future domestic income taxes, if any. The net operating loss and business tax credits carryforwards will continue to expire at various dates through December 2036. The net operating loss and business tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of certain changes in the ownership interest of significant stockholders.

As of December 31, 2016, the Company concluded that realization of deferred tax assets in the United States beyond December 31, 2016 is not more likely than not, and as such, the Company maintained a valuation allowance against its net U.S. deferred tax assets, after considerations for deferred tax liabilities which will not be utilized as a future source of income.

ASU 2016-09 states that previously unrecognized excess tax benefits should be recognized on a modified retrospective basis. As such, the Company increased its U.S. federal and state net operating loss carryovers by approximately $5.3 million for previously unrecognized excess tax benefits outstanding as of the beginning of the period. Since the Company maintains a full valuation allowance on its net U.S. deferred tax assets, the Company recorded a corresponding increase to the valuation allowance and the impact of adopting ASU 2016-09 on retained earnings is zero.

In the first quarter of 2017, Repligen Germany GmbH was subject to a tax examination for the years 2012 through 2015. The examination was general in nature, covering all aspects of the subsidiary’s operations prior to the Atoll Acquisition on April 1, 2016. There were no material findings as a result of this examination, and the examination was closed by the German tax authorities.

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The Company’s tax returns are subject to examination by federal, state and international taxing authorities for the following periods:

Jurisdiction	Fiscal years subject to examination
United States – federal and state	2013-2016
Sweden	2011-2016
Germany	2016

14. Fair Value Measurement

In determining the fair value of its assets and liabilities, the Company uses various valuation approaches. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1	–	Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access
Level 2	–	Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly
Level 3	–	Valuations based on inputs that are unobservable and significant to the overall fair value measurement

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

The Company’s fixed income investments are comprised of obligations of U.S. government agencies and corporate marketable securities. These investments have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data. The pricing services utilize industry standard valuation models, including both income and market based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events. At least annually, the Company validates the prices provided by third party pricing services by reviewing their pricing methods and matrices, obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active. The Company did not adjust or override any fair value measurements provided by the pricing services as of March 31, 2017.

The following fair value hierarchy table presents information about each major category of the Company’s assets measured at fair value on a recurring basis as of March 31, 2017 (in thousands):

	Fair value measurement at reporting date using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets:
Money market funds	$	85,292	$	—	$	—	$	85,292
U.S. Government and agency securities		402		—		—		402
Corporate and other debt securities		—		11,778		—		11,778
Total	$	85,694	$	11,778	$	—	$	97,472

The Company has no other assets or liabilities for which fair value measurement is either required or has been elected to be applied.

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As of December 31, 2016, the Company had accrued liabilities with a fair value of $6,119,000 related to contingent consideration in connection with the Refine and Atoll business combinations. The contingent consideration related to Refine was based on actual 2016 revenues. The contingent consideration related to Atoll was based on meeting revenue growth targets in 2016. These valuations are Level 3 valuations, as the primary inputs are unobservable. All contingent consideration liabilities were paid in the first quarter of 2017.

The following table provides a rollforward of the fair value of contingent consideration (in thousands):

Balance at December 31, 2016	$	6,119
Payments		(6,119	)
Balance at March 31, 2017	$	—

In May 2016, the Company issued $115 million aggregate principal amount of the Notes due June 1, 2021. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2016. As of March 31, 2017, the carrying value of the Notes was $96.2 million, net of unamortized discount, and the fair value of the Notes was approximately $144.3 million. The fair value of the Notes was determined based on the most recent trade activity of the Notes as of March 31, 2017. These valuations are Level 1 valuations, as the valuations are based on unadjusted quoted prices in active markets that the Company has the ability to access. The Notes are discussed in more detail in Note 11, “Long Term Debt.”

There were no re-measurements to fair value during the three months ended March 31, 2017 of financial assets and liabilities that are not measured at fair value on a recurring basis.

15. Commitments and Contingencies

Future minimum rental commitments under the Company’s leases as of March 31, 2017 are as follows (in thousands):

	Minimum Rental Commitments
2017 (nine months remaining)	$	2,028
2018		2,647
2019		2,506
2020		2,500
2021		2,467
Thereafter		1,705

16. Segment Reporting

The Company views its operations, makes decisions regarding how to allocate resources and manages its business as one operating segment. As a result, the financial information disclosed herein represents all of the material financial information related to the Company’s principal operating segment.

The following table represents the Company’s total revenue by geographic area (based on the location of the customer):

	Three months ended March 31,
	2017			2016
United States		38	%		30	%
Sweden		27	%		24	%
Ireland		10	%		4	%
United Kingdom		5	%		13	%
Other		20	%		29	%
Total		100	%		100	%

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

	Three months ended March 31,
	2017			2016
GE Healthcare		27	%		24	%
MilliporeSigma		21	%		28	%

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

	March 31, 2017			December 31, 2016
GE Healthcare		25	%		26	%
MilliporeSigma		15	%		8	%

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We are a bioprocessing-focused, global life sciences company bringing over 30 years of expertise and innovation to our customers. Our mission is to inspire advances in bioprocessing as a trusted partner in the production of biologic drugs that improve human health worldwide.

Focused on delivering cost and process efficiencies, Repligen offers innovative technologies that help set new standards in the way that our customers manufacture biologic drugs We develop and market a broad range of high-value products and flexible solutions that address critical steps in the production of biologic drugs – principally antibody-based therapeutics, recombinant proteins and vaccines – while ensuring that the highest drug quality and safety standards are upheld.

Since our strategic decision in 2012 to focus fully on building our bioprocessing business, we have expanded and diversified our product offering beyond our core Protein A affinity ligands portfolio, and believe we are well-positioned in the bioprocessing market as single-use and continuous processing technologies are increasingly adopted by biopharmaceutical manufacturers. This expansion has been through a combination of internal innovation and acquisition, with a clear focus on technology leadership as a path to market leadership. Our Proteins business today includes cell culture growth factors in addition to our longstanding Protein A ligands. In recent years, we have significantly expanded our Chromatography business, which includes our best-in-class OPUS^® pre-packed columns as well as our ELISA kits and chromatography resins. In addition, we have established an exceptional Filtration business that includes our leading XCell™ ATF and TangenX™ tangential flow filtration (“TFF”) product lines.

Our team has substantial experience in biomanufacturing and works proactively with industry leaders and customers to develop innovative solutions that address pressure points in the bioproduction process. Our bioprocessing products drive process efficiency, cost and yield improvements for our customers. In upstream processes, our XCell™ ATF filtration devices and cell culture supplements are used in clinical and commercial-stage manufacturing to improve biologic drug yields. In downstream processes, our Protein A ligands are a critical component of Protein A resins used to purify over 65 antibody-based drugs on the market and in over 300 drugs in clinical development. Also in downstream processes, our OPUS^® pre-packed chromatography columns (PPCs) are used in the purification of clinical-stage biologics, and our TangenX™ Sius™ TFF filtration cassettes are used to concentrate clinical and commercial-stage biologic drugs.

We manufacture and supply our Protein products, such as Protein A ligands, through long-term agreements with major life sciences companies, such as GE Healthcare and MilliporeSigma, who in turn produce and sell Protein A resins to end users (biopharmaceutical companies and CMOs). We manufacture and supply our cell culture supplements through a distribution agreement with MilliporeSigma.

We sell our Chromatography and Filtration products directly to biopharmaceutical companies and contract manufacturing organizations (“CMOs”). These products are manufactured or assembled internally and marketed globally through a direct commercial organization in the United States and Europe, and through a combination of direct sales and distributors in Asia. Since 2014, we have steadily invested in our global commercial organization to support our growing Chromatography and Filtration businesses; we have added 32 sales, marketing, product management, service and applications personnel to form a 39-person commercial team as of March 31, 2017.

Our commercial and R&D teams have a track record of successfully launching new products and building new markets for acquired technologies. For example, since acquiring the XCell™ ATF business in 2014, we have rapidly expanded its market penetration through increased customer interaction, product extensions and new applications that increase flexibility and convenience for customers, while streamlining their biomanufacturing workflows.

Our acquisitions since 2012 have bolstered our direct-to-customer product offering. In 2014, we acquired our market-leading XCell™ ATF line from Refine Technologies LLC. We completed two acquisitions in 2016, acquiring Atoll GmbH (“Atoll”) in April and TangenX Technology Corporation (“TangenX”) in December. The Atoll Acquisition strengthened our Chromatography business by broadening our line of OPUS^® pre-packed columns (to include lab- and process development-scale columns) and establishing a customer-facing center in Europe. The TangenX Acquisition strengthened our Filtration business, balancing our existing upstream XCell™ ATF line with a downstream line of TangenX™ Sius™ TFF filtration products.

Our internal innovation has also driven the growth of our direct-to-customer product offerings. Internally, we developed and market our process-scale OPUS^® pre-packed chromatography columns. Also through internal innovation, we have extended both our OPUS^® and XCell™ ATF product lines, to include more size options and technology features to benefit our customers. For example in 2016 we introduced OPUS^® R, a resin recovery feature on our largest OPUS^® columns, and we launched a single-use (disposable) alternative to our stainless steel XCell™ ATF Systems, XCell™ ATF Single-use.

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Many of our products are early in their adoption cycle and, together with the expansion of our commercial organization and strategic acquisitions, have contributed to product revenue expansion from $41.8 million in 2012 to $104.5 million in 2016. While all product franchises have grown, our diversification strategy has resulted in our direct product sales accounting for approximately 50% of our bioprocessing revenue in 2016, compared to approximately 20% in 2012. To meet increased demand for our products, we have increased and continue to increase the volume and scale of manufacturing at our two manufacturing facilities in the United States and Sweden and plan to expand manufacturing capacity at our newly acquired manufacturing facilities in the United States and Germany.

Customers use our products to produce initial quantities of drug for clinical studies, then scale-up to larger volumes as the drug progresses to commercial production following regulatory approval. Detailed specifications for a drug’s manufacturing process are included in applications that must be approved by regulators, such as the U.S. Food and Drug Administration (“FDA”) and the European Medicines Agency, throughout the clinical trial process and prior to final commercial approval. As a result, products that become part of the manufacturing specifications of a late-stage clinical or commercial process can be very “sticky” due to the costs and uncertainties associated with displacing them.

Critical Accounting Policies and Estimates

A “critical accounting policy” is one which is both important to the portrayal of our financial condition and results and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For additional information, please see the discussion of our critical accounting policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations and our significant accounting policies in Note 2 to the Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2016.

Results of Operations

Revenues

Revenues for the three-month periods ended March 31, 2017 and 2016 were as follows:

(in thousands, except percentages)	Three months ended March 31,
	2017		2016		$ Change		% Change
Product revenue	$	30,569	$	25,094	$	5,475		22	%
Royalty and other revenue		21		—		21		100	%
Total revenue	$	30,590	$	25,094	$	5,496		22	%

Sales of bioprocessing products for the three months ended March 31, 2017 and 2016 were $30,569,000 and $25,094,000, respectively, representing an increase of $5,475,000, or 22%. This increase was primarily due to increases in orders for our chromatography columns from our key bioprocessing customers, in addition to revenues from the Atoll Acquisition and TangenX Acquisition in the first quarter of 2017. Sales of our bioprocessing products are impacted by the timing of orders, development efforts at our customers or end-users and regulatory approvals for biologics that incorporate our products, which may result in significant quarterly fluctuations. Such quarterly fluctuations are expected, but they may not be predictive of future revenue or otherwise indicate a trend.

Costs and operating expenses

Total costs and operating expenses for the three-month periods ended March 31, 2017 and 2016 were comprised of the following:

(in thousands, except percentages)	Three months ended March 31,
	2017		2016		$ Change			% Change
Cost of product revenue	$	13,990	$	11,069	$	2,921			26	%
Research and development		1,742		1,539		203			13	%
Selling, general and administrative		9,182		7,018		2,164			31	%
Contingent consideration – fair value adjustments		—		2,005		(2,005	)		(100	%)
Total costs and operating expenses	$	24,914	$	21,631	$	3,283			15	%

Cost of product revenue was approximately $13,990,000 and $11,069,000 for the three-month periods ended March 31, 2017 and 2016, respectively, an increase of $2,921,000 or 26%. This increase is primarily due to the increased product revenue noted above. Gross margins may fluctuate over the remainder of 2017 based on expected production volume and shipments, and product mix.

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Research and development expenses were approximately $1,742,000 and $1,539,000 for the three-month periods ended March 31, 2017 and 2016, respectively, an increase of $203,000 or 13%. This increase is primarily related to the timing and scale of our various bioprocessing product development projects. Expenses generally include personnel costs, external development costs, supplies and other expenses related to our new products in development.

Selling, general and administrative expenses were approximately $9,182,000 and $7,018,000 for the three-month periods ended March 31, 2017 and 2016, respectively, an increase of $2,164,000, or 31%. This increase is primarily due to the continued buildout of our administrative infrastructure to support future growth, continued expansion of our customer-facing activities to drive sales of our bioprocessing products and additional expense resulting from our acquisitions of Atoll and TangenX.

Contingent consideration fair value adjustments were approximately $2,005,000 for the three-month period ended March 31, 2016. This fair value adjustment during the first quarter of 2016 was related to the increased probability of achieving the 2016 sales milestone under the Refine acquisition agreement. There was no such expense in the first quarter of 2017, as the contingent consideration periods for the Atoll Acquisition and Refine Acquisition ended in 2016.

Investment income

Investment income for the three-month periods ended March 31, 2017 and 2016 was as follows:

(in thousands, except percentages)	Three months ended March 31,
	2017		2016		$ Change		% Change
Investment income	$	96	$	61	$	35		57	%

Investment income includes income earned on invested cash balances. The increase in investment income in the current three-month period is attributable to higher average invested cash balances related to the receipt of proceeds from our convertible senior notes in May 2016.

Interest expense

Interest expense for the three-month periods ended March 31, 2017 and 2016 was as follows:

(in thousands, except percentages)	Three months ended March 31,
	2017			2016			$ Change			% Change
Interest expense	$	(1,585	)	$	(5	)	$	(1,580	)		(31,600	%)

Increases in interest expense in the current three-month period is attributable to interest expense on our convertible senior notes issued in May 2016.

Other expense

Other expense for the three-month periods ended March 31, 2017 and 2016 was as follows:

(in thousands, except percentages)	Three months ended March 31,
	2017			2016			$ Change		% Change
Other expense	$	(120	)	$	(979	)	$	859		88	%

Other expense was approximately $120,000 and approximately $979,000 for the three-month periods ended March 31, 2017 and 2016, respectively. The decrease in other expense was primarily attributable to foreign currency losses in the first quarter of 2016 on cash balances denominated in U.S. dollars and British pounds held and subsequently converted to local currency holdings by Repligen Sweden.

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Provision for income taxes

Provision for income taxes for the three-month periods ended March 31, 2017 and 2016 was as follows:

(in thousands, except percentages)	Three months ended March 31,
	2017		2016		$ Change		% Change
Income tax provision	$	999	$	915	$	84		9	%

For the three months ended March 31, 2017, we had income before taxes of approximately $4,067,000 and recorded a tax provision of approximately $999,000 for an effective tax rate of approximately 24.6%. The effective income tax rate is based upon the estimated income for the year and the composition of the income in different jurisdictions. The effective tax rate differs from the U.S. statutory tax rate primarily due to lower statutory tax rates in foreign jurisdictions. For the three months ended March 31, 2016, we had income before taxes of approximately $2,540,000 and recorded a tax provision of approximately $915,000 for an effective tax rate of approximately 36.0%. The effective income tax rate is based upon the estimated income for the year and the composition of the income in different jurisdictions. The effective tax rate differs from the U.S. statutory tax rate primarily due to the tax treatment of contingent consideration expense recorded in the first quarter of 2016.

Non-GAAP Financial Measures

We provide non-GAAP adjusted income from operations; adjusted net income; adjusted cost of product revenue; adjusted sales, general and administrative expense; and adjusted EBITDA as supplemental measures to GAAP measures regarding our operating performance. These financial measures exclude the impact of certain acquisition related items and, therefore, have not been calculated in accordance with GAAP. A detailed explanation and a reconciliation of each non-GAAP financial measures to its most comparable GAAP financial measures are described below.

We include this financial information because we believe these measures provide a more accurate comparison of our financial results between periods and more accurately reflect how management reviews its financial results. We excluded the impact of certain acquisition related items because we believe that the resulting charges do not accurately reflect the performance of our ongoing operations for the period in which such charges are incurred.

Adjusted Income from Operations

Adjusted income from operations is measured by taking income from operations as reported in accordance with GAAP and excluding acquisition costs, amortization of intangible assets and contingent consideration expense booked through our consolidated statements of comprehensive income. The following is a reconciliation of income from operations in accordance with GAAP to adjusted income from operations for the three-month periods ended March 31, 2017 and 2016 (in thousands):

	Three Months Ended March 31,
	2017		2016
GAAP income from operations	$	5,676	$	3,463
Adjustments to income from operations:
Acquisition costs		402		393
Intangible amortization		715		399
Contingent consideration – fair value adjustments		—		2,005
Adjusted income from operations	$	6,793	$	6,260

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Adjusted Net Income

Adjusted net income is measured by taking net income as reported in accordance with GAAP and excluding acquisition costs, amortization of intangible assets and related tax effects, contingent consideration expense and non-cash interest expense booked through our consolidated statements of comprehensive income. The following is a reconciliation of net income in accordance with GAAP to adjusted net income for the three-month periods ended March 31, 2017 and 2016:

	Three Months Ended March 31,
	2017						2016
	(in thousands) Amount			Fully Diluted Earnings per Share			(in thousands) Amount			Fully Diluted Earnings per Share
GAAP net income	$	3,068		$	0.09		$	1,625		$	0.05
Adjustments to net income:
Acquisition costs		402			0.01			393			0.01
Intangible amortization		715			0.02			399			0.01
Contingent consideration – fair value adjustments		—			—			2,005			0.06
Non-cash interest expense		970			0.03			—			—
Tax effect of intangible amortization		(101	)		(0.00	)		(104	)		(0.00	)
Adjusted net income	$	5,054		$	0.15		$	4,318		$	0.13

Adjusted EBITDA

Adjusted EBITDA is measured by taking net income as reported in accordance with GAAP, excluding investment income, interest expense, taxes, depreciation and amortization, and excluding acquisition costs and contingent consideration expenses booked through our consolidated statements of comprehensive income. The following is a reconciliation of net income in accordance with GAAP to adjusted EBITDA for the three-month periods ended March 31, 2017 and 2016 (in thousands):

	Three Months Ended March 31,
	2017			2016
GAAP net income	$	3,068		$	1,625
Adjustments to net income:
Investment income		(96	)		(61	)
Interest expense		1,585			5
Tax provision		999			915
Depreciation		928			751
Amortization		715			399
EBITDA		7,199			3,634
Other adjustments:
Acquisition costs		402			393
Contingent consideration – fair value adjustments		—			2,005
Adjusted EBITDA	$	7,601		$	6,032

Liquidity and capital resources

We have financed our operations primarily through revenues derived from product sales, research grants, proceeds and royalties from license arrangements, a litigation settlement, sales of equity securities and issuance of convertible debt. Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue.

At March 31, 2017, we had cash and marketable securities of $141,843,000 compared to $141,780,000 at December 31, 2016. A deposit for leased office space of $450,000 is classified as restricted cash and is not included in cash and marketable securities totals as of March 31, 2017 and December 31, 2016.

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Operating activities

For the three-month period ended March 31, 2017, our operating activities provided cash of $1,147,000 reflecting net income of $3,068,000 and non-cash charges totaling $4,152,000 primarily related to depreciation, amortization, non-cash interest expense and stock-based compensation charges. An increase in accounts receivable consumed $2,415,000 of cash, and was primarily due to the 22% quarter over quarter increase in revenues. A decrease in accounts payable consumed $452,000 of cash, which was primarily due to the timing of purchases and payments to vendors. Payments of accrued liabilities consumed $4,220,000 of cash, and were mainly due to the payment of contingent consideration to Refine and Atoll related to 2016 sales milestones. The remaining cash flow used in operations resulted from net favorable changes in various other working capital accounts.

For the three-month period ended March 31, 2016, our operating activities consumed cash of $3,811,000 reflecting net income of $1,625,000 and non-cash charges totaling $4,077,000 including depreciation, amortization, stock-based compensation charges and the revaluation of contingent consideration. An increase in accounts receivable consumed $1,149,000 of cash, and was primarily due to the 21% quarter over quarter increase in revenues. An increase in inventories consumed $3,092,000 of cash to support future revenues. A decrease in accounts payable consumed $1,600,000 of cash, which was primarily due to the timing of purchases and payments to vendors. Payments of accrued liabilities consumed $4,277,000 of cash, and was mainly due to the payment of contingent consideration to Refine related to 2015 sales milestones. The remaining cash flow used in operations resulted from net unfavorable changes in various other working capital accounts.

Investing activities

We place our marketable security investments in high quality credit instruments as specified in our investment policy guidelines. Our investing activities provided $6,077,000 for the three-month period ended March 31, 2017, primarily due to net redemptions of marketable securities of $7,372,000 offset by $1,295,000 used for fixed asset additions. For the three-month period ended March 31, 2016, our investing activities provided $1,200,000, primarily due to net redemptions of marketable debt securities of $1,631,000, offset by $431,000 used for fixed asset additions.

Financing activities

For the three-month period ended March 31, 2017, our financing activities used $330,000 of cash. We made contingent consideration payments of $1,663,000 related to the initial valuation of the likelihood that the 2016 XCell™ ATF sales milestones and Atoll revenue growth milestones would be achieved. These payments were partially offset by proceeds from stock option exercises totaling $1,333,000. For the three-month period ended March 31, 2016, proceeds from exercises of $821,000 were partially offset by contingent consideration payments of $498,000 related to the initial valuation of the likelihood that the 2015 XCell™ ATF sales milestone would be achieved.

We do not currently use derivative financial instruments.

Working capital increased by approximately $8,970,000 to $172,048,000 at March 31, 2017 from $163,078,000 at December 31, 2016 due to the various changes noted above.

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

• the expansion of our bioprocessing business;

• the ability to sustain sales and profits of our bioprocessing products;

• market acceptance of our new products;

• our ability to acquire additional bioprocessing products;

• the resources required to successfully integrate the acquisitions of Refine and Atoll and recognize expected synergies;

• our identification and execution of strategic acquisitions or business combinations;

• the scope of and progress made in our research and development activities;

• the extent of any share repurchase activity; and

• the success of any proposed financing efforts.

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Absent acquisitions of additional businesses, products, product candidates or intellectual property, we believe our current cash balances are adequate to meet our cash needs for at least the next twelve months. We expect operating expenses in the year ending December 31, 2017 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, continued investment in our intellectual property portfolio and future repayment of convertible debt.

We plan to continue to invest in our bioprocessing business and in key research and development activities associated with the development of new bioprocessing products. We actively evaluate various strategic transactions on an ongoing basis, including monetizing existing assets and licensing or acquiring complementary products, technologies or businesses that would complement our existing portfolio of development programs. We continue to seek to acquire such potential assets that may offer us the best opportunity to create value for our shareholders. In order to acquire such assets, we may need to seek additional financing to fund these investments. This may require the issuance or sale of additional equity or debt securities. The sale of additional equity may result in additional dilution to our stockholders. Should we need to secure additional financing to acquire a product, fund future investment in research and development, or meet our future liquidity requirements, we may not be able to secure such financing, or obtain such financing on favorable terms because of the volatile nature of the biotechnology marketplace.

Off-Balance Sheet Arrangements

We do not have any special purpose entities or off-balance sheet financing arrangements as of March 31, 2017.

Cautionary Statement Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements which are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward-looking statements in this Quarterly Report on Form 10-Q do not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form 10-Q which are not strictly historical statements, including, without limitation, express or implied statements or guidance regarding current or future financial performance and position, potential impairment of future earnings, management’s strategy, plans and objectives for future operations or acquisitions, product development and sales, litigation strategy, product candidate research, development and regulatory approval, selling, general and administrative expenditures, intellectual property, development and manufacturing plans, availability of materials and product and adequacy of capital resources and financing plans constitute forward-looking statements. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated, including, without limitation, risks associated with: the success of current and future collaborative or supply relationships, including our agreements with BioMarin, General Electric and MilliporeSigma, our ability to successfully grow our bioprocessing business, including as a result of acquisition, commercialization or partnership opportunities, and our ability to develop and commercialize products, our ability to obtain required regulatory approvals, our compliance with all Food and Drug Administration regulations, our ability to obtain, maintain and protect intellectual property rights for our products, the risk of litigation regarding our patent and other intellectual property rights, the risk of litigation with collaborative partners, our limited sales and marketing experience and capabilities, our limited manufacturing capabilities and our dependence on third-party manufacturers and value-added resellers, our ability to hire and retain skilled personnel, the market acceptance of our products, reduced demand for our products that adversely impacts our future revenues, cash flows, results of operations and financial condition, our ability to compete with larger, better financed life sciences companies, our history of losses and expectation of incurring losses, our ability to generate future revenues, our ability to successfully integrate Refine, Atoll and TangenX, our ability to raise additional capital to fund potential acquisitions, our volatile stock price, and the effects of our anti-takeover provisions. Further information on potential risk factors that could affect our financial results are included in the filings made by us from time to time with the Securities and Exchange Commission including under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2016 and in this Quarterly Report on Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate risk

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

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We generally place our marketable security investments in high quality credit instruments, as specified in our investment policy guidelines. A hypothetical 100 basis point increase in interest rates would result in an approximate $24,000 decrease in the fair value of our investments as of March 31, 2017. We believe, however, that the conservative nature of our investments mitigates our interest rate exposure, and our investment policy limits the amount of our credit exposure to any one issuer, (with the exception of U.S. agency obligations) and type of instrument. We do not expect any material loss from our marketable security investments and therefore believe that our potential interest rate exposure is limited.

Foreign exchange risk

The reporting currency of the Company is U.S. dollars. Transactions by Repligen Sweden, a wholly-owned subsidiary, may be denominated in Swedish kronor, British pound sterling, U.S. dollars, or Euros while the entity’s functional currency is the Swedish krona. Transactions by Repligen Germany GmbH, a wholly-owned subsidiary, may be denominated in U.S. dollars or Euros while the entity’s functional currency is the Euro. Certain sales transactions made by the U.S. entity related to XCell™ ATF system products are denominated in foreign currencies. Exchange gains or losses resulting from the translation between the transactional currency and the functional currency are included in net income. Fluctuations in exchange rates may adversely affect our results of operations, financial position and cash flows. We currently do not seek to hedge this exposure to fluctuations in exchange rates.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management, with the participation of the principal executive officer and the principal financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on such evaluation, the principal executive officer and principal financial officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, on a timely basis, and is accumulated and communicated to the Company’s management, including the Company’s principal executive officer and the Company’s principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control

On April 1, 2016, we completed our acquisition of Atoll GmbH, and on December 14, 2016, we completed our acquisition of TangenX Technology Corporation. As a result, we are in the process of integrating the applicable internal controls for each business into our internal control over financial reporting. Other than the foregoing, there have been no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rule 13a-15 or Rule 15d-15 that occurred in the three months ended March 31, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

30

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business. We are not currently aware of any such proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or results of operations.

ITEM 1A. RISK FACTORS

The matters discussed in this Quarterly Report on Form 10-Q include forward-looking statements that involve risks or uncertainties. These statements are neither promises nor guarantees, but are based on various assumptions by management regarding future circumstances, over many of which Repligen has little or no control. A number of important risks and uncertainties, including those identified under the caption “Risk Factors” in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2016 and subsequent filings as well as risks and uncertainties discussed elsewhere in this Quarterly Report on Form 10-Q, could cause our actual results to differ materially from those in the forward-looking statements. There are no material changes to the Risk Factors described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit Number	Document Description
3.1	Restated Certificate of Incorporation, dated June 30, 1992 and amended September 17, 1999 (filed as Exhibit 3.1 to Repligen Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1999 and incorporated herein by reference).
3.2	Amended and Restated By-Laws (filed as Exhibit 3.2 to Repligen Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 and incorporated herein by reference).
3.3	Amendment No. 1 to the Amended and Restated By-Laws (filed as Exhibit 3.1 to Repligen Corporation’s Current Report on Form 8-K filed on December 20, 2011 and incorporated herein by reference).
3.4	Amendment No. 2 to the Amended and Restated By-Laws (filed as Exhibit 3.1 to Repligen Corporation’s Current Report on Form 8-K filed on May 25, 2012 and incorporated herein by reference).
3.5	Certificate of Amendment to the Certificate of Incorporation of Repligen Corporation, effective as of May 16, 2014 (filed as Exhibit 3.1 to Repligen Corporation’s Current Report on Form 8-K filed on May 19, 2014 and incorporated herein by reference).

31

Exhibit Number	Document Description
31.1 +	Rule 13a-14(a)/15d-14(a) Certification.
31.2 +	Rule 13a-14(a)/15d-14(a) Certification.
32.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101+	The following materials from Repligen Corporation on Form 10-Q for the quarterly period ended March 31, 2017, formatted in Extensible Business Reporting Language (xBRL): (i) Condensed Consolidated Statements of Comprehensive Income (Loss), (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to Condensed Consolidated Financial Statements, tagged as blocks of text.

+ Filed herewith.

* Furnished herewith.

32

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	REPLIGEN CORPORATION
Date: May 4, 2017	By:	/S/ TONY J. HUNT
		Tony J. Hunt
		President and Chief Executive Officer
		(Principal executive officer)
		Repligen Corporation
Date: May 4, 2017	By:	/S/ JON SNODGRES
		Jon Snodgres
		Chief Financial Officer
		(Principal financial officer)
		Repligen Corporation

33

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Tony J. Hunt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Repligen Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2017

/s/ TONY J. HUNT

Tony J. Hunt

President and Chief Executive Officer

(Principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Jon Snodgres, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Repligen Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2017

/s/ JON SNODGRES

Jon Snodgres

Chief Financial Officer

(Principal financial officer)

EX-32.1

Exhibit 32.1*

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Repligen Corporation (the “Company”) on Form 10-Q for the period ending March 31, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officers of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to my knowledge, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 4, 2017	By:	/S/ TONY J. HUNT
		Tony J. Hunt
		Chief Executive Officer and President
		(Principal executive officer)
Date: May 4, 2017	By:	/S/ JON SNODGRES
		Jon Snodgres
		Chief Financial Officer
		(Principal financial officer)

* This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2017	Apr. 28, 2017
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	RGEN
Entity Registrant Name	REPLIGEN CORP
Entity Central Index Key	0000730272
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		34,080,664

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 129,663	$ 122,233
Marketable securities	12,180	19,547
Accounts receivable, less reserve for doubtful accounts of $32 at March 31, 2017 and $23 at December 31, 2016	17,710	15,194
Other receivables	669	839
Inventories	23,957	24,696
Prepaid expenses and other current assets	1,620	1,644
Total current assets	185,799	184,153
Property, plant and equipment, net	15,373	14,956
Intangible assets, net	29,222	29,806
Goodwill	59,784	59,548
Restricted cash	450	450
Total assets	290,628	288,913
Current liabilities:
Accounts payable	4,635	5,061
Accrued liabilities	9,116	16,014
Total current liabilities	13,751	21,075
Convertible senior notes	96,242	95,272
Deferred tax liabilities	2,188	2,103
Other long-term liabilities	1,656	1,699
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, $.01 par value, 5,000,000 shares authorized, no shares issued or outstanding
Common stock, $.01 par value, 80,000,000 shares authorized, 34,076,544 shares at March 31, 2017 and 33,844,074 shares at December 31, 2016 issued and outstanding	341	338
Additional paid-in capital	245,961	242,036
Accumulated other comprehensive loss	(12,718)	(13,749)
Accumulated deficit	(56,793)	(59,861)
Total stockholders' equity	176,791	168,764
Total liabilities and stockholders' equity	$ 290,628	$ 288,913

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accounts receivable, reserve for doubtful accounts	$ 32	$ 23
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	34,076,544	33,844,074
Common stock, shares outstanding	34,076,544	33,844,074

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenue:
Product revenue	$ 30,569	$ 25,094
Royalty and other revenue	21
Total revenue	30,590	25,094
Operating expenses:
Cost of product revenue	13,990	11,069
Research and development	1,742	1,539
Selling, general and administrative	9,182	7,018
Contingent consideration - fair value adjustments		2,005
Total operating expenses	24,914	21,631
Income from operations	5,676	3,463
Investment income	96	61
Interest expense	(1,585)	(5)
Other expense	(120)	(979)
Income before income taxes	4,067	2,540
Income tax provision	999	915
Net income	$ 3,068	$ 1,625
Earnings per share:
Basic	$ 0.09	$ 0.05
Diluted	$ 0.09	$ 0.05
Weighted average shares outstanding:
Basic	33,891,702	33,024,681
Diluted	34,382,322	33,493,575
Other comprehensive income:
Unrealized gain on investments	$ 4	$ 15
Foreign currency translation gain	1,027	1,881
Comprehensive income (loss)	$ 4,099	$ 3,521

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Cash flows from operating activities:
Net income	$ 3,068	$ 1,625
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,582	1,150
Non-cash interest expense	970
Stock-based compensation expense	1,531	922
Deferred tax expense	10
Loss on revaluation of contingent consideration		2,005
Loss on disposal of assets	59	3
Changes in assets and liabilities:
Accounts receivable	(2,415)	(1,149)
Other receivables	172	(249)
Inventories	851	(3,092)
Prepaid expenses and other current assets	34	781
Accounts payable	(452)	(1,600)
Accrued liabilities	(4,220)	(4,277)
Long-term liabilities	(43)	70
Net cash provided by (used in) operating activities	1,147	(3,811)
Cash flows from investing activities:
Purchases of marketable securities	(28)	(3,969)
Redemptions of marketable securities	7,400	5,600
Purchases of property, plant and equipment	(1,295)	(431)
Net cash provided by investing activities	6,077	1,200
Cash flows from financing activities:
Exercise of stock options	1,333	821
Payment of contingent considerations	(1,663)	(498)
Net cash (used in) provided by financing activities	(330)	323
Effect of exchange rate changes on cash and cash equivalents	536	1,409
Net increase (decrease) in cash and cash equivalents	7,430	(879)
Cash and cash equivalents, beginning of period	122,233	54,092
Cash and cash equivalents, end of period	129,663	53,213
Supplemental disclosure of non-cash activities:
Income taxes paid	1,181	1,039
Payment of contingent consideration in common stock	$ 1,062	$ 875

XML

Basis of Presentation

3 Months Ended

Mar. 31, 2017

Basis of Presentation

1. Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Repligen Corporation (the “Company,” “Repligen” or “we”) in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form 10-Q and Article 10 of Regulation S-X and do not include all of the information and footnote disclosures required by U.S. GAAP. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Repligen Sweden AB (“Repligen Sweden”), Repligen GmbH (acquired as Atoll GmbH as of April 1, 2016 and renamed on September 20, 2016), TangenX Technology Corporation (acquired as of December 14, 2016) and Repligen Singapore Pte. Ltd. All significant intercompany accounts and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of only normal, recurring adjustments necessary for a fair presentation of the financial position, results of operations and cash flows. The results of operations for the interim periods presented are not necessarily indicative of results to be expected for the entire year.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606),”which supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition, and creates a new Topic 606, Revenue from Contracts with Customers. Two adoption methods are permitted: retrospectively to all prior reporting periods presented, with certain practical expedients permitted; or retrospectively with the cumulative effect of initially adopting the ASU recognized at the date of initial application. The adoption of this ASU will include updates as provided under ASU 2015-14, “Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date”; ASU 2016-08, “Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; ASU 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; and ASU 2016-12, “Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients.” The Company intends to adopt the provisions of Topic 606 using the modified retrospective method effective January 1, 2018. The Company has commenced work to assess the impact of the new revenue standard on its principal revenue streams. The Company has not made a determination on the impact to its consolidated financial statements.

In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU 2015-11”). ASU 2015-11 requires inventory be measured at the lower of cost and net realizable value, and options that currently exist for market value be eliminated. ASU 2015-11 defines net realizable value as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance is effective prospectively for reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The Company adopted the provisions of ASU 2015-11 as of January 1, 2017, and this standard did not have a material impact on its consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize a right-of-use asset and a lease liability for most leases. Extensive quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of revenue and expense recognized and expected to be recognized from existing contracts. The accounting applied by a lessor is largely unchanged from that applied under the current standard. The standard must be adopted using a modified retrospective transition approach and provides for certain practical expedients. This ASU is effective for public entities for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company has not yet completed its assessment of the impact of the new standard on its consolidated financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which aims to simplify several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, classification of certain items on the statement of cash flows and accounting for forfeitures. This ASU is effective for public entities for fiscal years beginning after December 15, 2016, with early adoption permitted. The Company adopted the provisions of this ASU as of January 1, 2017. As a result of this standard, the Company increased its U.S. federal and state net operating loss carryovers by approximately $5.3 million for previously unrecognized excess tax benefits outstanding as of January 1, 2017. Since the Company maintains a full valuation allowance on its net U.S. deferred tax assets, the Company recorded a corresponding increase to the valuation allowance and the impact of adopting ASU 2016-09 on retained earnings is zero.

In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 203): Classification of Certain Cash Receipts and Cash Payments”. ASU No. 2016-15 addresses eight specific cash flow issues and clarifies their presentation and classification in the Statement of Cash Flows. This ASU is effective for fiscal years beginning after December 15, 2017 and is to be applied retrospectively with early adoption permitted. The Company currently classifies payments up to the amount of its contingent consideration liability recognized at the date of its acquisition as financing activities, with additional payments classified as operating activities. As a result, the Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business”, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This ASU is effective for public entities for fiscal years beginning after December 15, 2017, with early adoption permitted.

XML

Acquisitions

3 Months Ended

Mar. 31, 2017

Acquisitions

2. Acquisitions

Atoll GmbH

On April 1, 2016, the Company’s subsidiary, Repligen Sweden, acquired Atoll GmbH (“Atoll”) from UV-Cap GmbH & Co. KG (the “Seller”) pursuant to a Share Purchase Agreement (the “Atoll Share Purchase Agreement”), dated as of March 31, 2016 (such acquisition, the “Atoll Acquisition”), by and among Repligen Sweden, the Seller, and the Company, in its capacity as guarantor of the obligations of Repligen Sweden under the Atoll Share Purchase Agreement. The Atoll Acquisition was subject to certain closing conditions that did not occur until April 1, 2016. Payment for the Atoll Acquisition was denominated in Euros but is reflected here in U.S. dollars for presentation purposes.

In connection with the Atoll Acquisition, the Company issued and contributed 538,700 shares of the Company’s common stock, par value of $0.01 per share valued at $14.1 million (the “Stock Consideration”) to Repligen Sweden through a transfer by the Company on behalf of Repligen Sweden to fulfill Repligen Sweden’s obligation to deliver the Stock Consideration under the Atoll Share Purchase Agreement. The issuance of the Stock Consideration was not registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act. The Stock Consideration was based on the fair value of the Company’s common stock on April 1, 2016.

This acquisition strengthened Repligen’s bioprocessing business by adding a complementary extension to an existing product line while expanding its direct sales presence worldwide. On September 20, 2016, Atoll changed its name to Repligen GmbH.

The Atoll Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations.” The total purchase price of the Atoll Acquisition was $25.3 million, consisting of an upfront cash payment of $10.2 million, less $74,000 as a result of the final determination of working capital, issuance of the Stock Consideration, and a future potential milestone payment of $1.1 million if specific revenue growth targets are met for 2016. The $1.1 million potential contingent consideration had an initial probability weighted fair value at the time of the closing of the Atoll Acquisition of approximately $952,000.

Consideration Transferred

The Company accounted for the Atoll Acquisition as the purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of Atoll were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The fair value of the net assets acquired was approximately $25.3 million.

The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The total consideration transferred follows (in thousands):

Cash consideration, less $74 of working capital adjustments	$	10,176
Value of common stock issued		14,138
Estimated fair value of contingent consideration		952
Total consideration transferred	$	25,266

The fair value of contingent consideration was determined based upon a probability weighted analysis of expected future milestone and settlement payments to be made to the Seller. Pursuant to the terms of the Atoll Share Purchase Agreement, the Company would make a contingent consideration payment of $1.1 million if specific revenue growth targets were met for 2016. Because the specified revenue growth targets were met for 2016, the Company made the contingent consideration payment in March 2017. No further measurement of this liability is required as of March 31, 2017.

Acquisition related costs are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. The Company incurred $1,262,000 in transaction costs related to the Atoll Acquisition. The transaction costs are included in selling, general and administrative expenses in the consolidated statements of operations.

Fair Value of Net Assets Acquired

The allocation of purchase price was based on the fair value of assets acquired and liabilities assumed as of April 1, 2016. The components and allocation of the purchase price consists of the following amounts (in thousands):

Cash and cash equivalents	$	1,409
Accounts receivable		697
Inventory		155
Other current assets		169
Fixed assets, net		114
Customer relationships		5,318
Developed technology		2,175
Non-competition agreements		57
Trademark and trade name		11
Deferred tax assets		885
Accounts payable and other liabilities assumed		(599	)
Deferred tax liabilities		(2,202	)
Goodwill		17,077
Net assets acquired	$	25,266

Of the consideration paid, $5.3 million represents the fair value of customer relationships that will be amortized over the determined useful life of 13 years and $2.2 million represents the fair value of developed technology that will be amortized over a determined useful life of 14 years. $57,000 represents the fair value of non-competition agreements and $11,000 represents the fair value of trademarks and trade names that will be amortized over a determined useful life of 2 years. The aforementioned intangible assets will be amortized on a straight-line basis.

The goodwill of $17.1 million represents future economic benefits expected to arise from synergies from combining operations, utilizing the Company’s existing sales infrastructure to increase market presence and the extension of existing customer relationships.

TangenX Technology Corporation

On December 14, 2016, the Company acquired TangenX Technology Corporation (“TangenX”), pursuant to the terms of the Share Purchase Agreement, dated as of December 14, 2016 (the “TangenX Share Purchase Agreement”), by and among the Company, John Connors and Novasep Process SAS (such acquisition, the “TangenX Acquisition”). Through the TangenX Acquisition, the Company acquired all outstanding shares and the business of TangenX, including TangenX’s innovative single-use Sius line of tangential flow filtration (“TFF”) cassettes and hardware used in downstream biopharmaceutical manufacturing processes.

TangenX™ TFF products are used in the filtration of biological drugs, thereby expanding Repligen’s filtration portfolio and complementing the OPUS^® pre-packed column product line in downstream purification.

The TangenX Acquisition was accounted for as a purchase of a business under ASC 805, “Business Combinations.” The total purchase price of the TangenX Acquisition was $37.1 million in cash.

Consideration Transferred

The Company accounted for the TangenX Acquisition as a purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of TangenX were recorded as of the acquisition date, at their respective fair values, and consolidated with those of Repligen. The fair value of the net assets acquired was approximately $37.1 million.

The preparation of the valuation required the use of significant assumptions and estimates. Critical estimates included, but were not limited to, future expected cash flows, including projected revenues and expenses, and the applicable discount rates. These estimates were based on assumptions that the Company believes to be reasonable. However, actual results may differ from these estimates.

The total consideration transferred follows (in thousands):

Cash consideration	$	37,532
Less: working capital adjustment		(467	)
Net assets acquired	$	37,065

Acquisition related costs are not included as a component of consideration transferred, but are expensed in the periods in which the costs are incurred. The Company incurred $1,337,000 in transaction costs related to the TangenX Acquisition. The transaction costs are included in selling, general and administrative expenses in the consolidated statements of operations.

Fair Value of Net Assets Acquired

The allocation of purchase price was based on the fair value of assets acquired and liabilities assumed as of December 14, 2016. The components and allocation of the purchase price consists of the following amounts (in thousands):

Cash and cash equivalents	$	1,218
Accounts receivable		459
Other receivables		111
Inventory		936
Other current assets		50
Fixed assets, net		215
Customer relationships		6,192
Developed technology		6,044
Non-competition agreements		21
Trademark and trade name		11
Accounts payable and other liabilities assumed		(3,083	)
Deferred tax liabilities		(4,525	)
Goodwill		29,416
Net assets acquired	$	37,065

Of the consideration paid, $6.2 million represents the fair value of customer relationships that will be amortized over the determined useful life of 13 years and $6.0 million represents the fair value of developed technology that will be amortized over a determined useful life of 20 years. $21,000 represents the fair value of non-competition agreements that will be amortized over a determined life of 5 years. $11,000 represents the fair value of trademarks and trade names that will be amortized over a determined useful life of 2 years. The aforementioned intangible assets will be amortized on a straight-line basis.

The goodwill of $29.4 million represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships.

Revenue, Net Income and Pro Forma Presentation

The Company recorded revenue from TangenX of $119,000 from December 15, 2016 through December 31, 2016 and $1,973,000 for the three months ended March 31, 2017. The Company has included the operating results of TangenX in its consolidated statements of operations since the December 15, 2016 acquisition date. The following table presents unaudited supplemental pro forma information as if the TangenX Acquisition had occurred as of January 1, 2016 (in thousands, except per share data):

	March 31, 2017		March 31, 2016
Total revenue		30,590		26,952
Net income		3,608		5,118
Earnings per share:
Basic	$	0.11	$	0.15
Diluted	$	0.10	$	0.15

The unaudited pro forma information for the three months ended March 31, 2017 and 2016 was calculated after applying the Company’s accounting policies and the impact of acquisition date fair value adjustments. Unaudited pro forma net income for three months ended March 31, 2017 was adjusted to exclude acquisition-related transaction costs and inventory step-up charges. The unaudited pro forma net income for the three months ended March 31, 2016 was adjusted to include acquisition-related transaction costs, inventory step-up charges, amortization of intangible assets and income tax benefits resulting from the acquisition.

These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments to reflect the pro forma results of operations as if the acquisition had occurred as of the beginning of the periods presented, such as fair value adjustments to inventory and increased amortization for the fair value of acquired intangible assets. The pro forma information does not reflect the effect of costs or synergies that would have been expected to result from the integration of the acquisition. The pro forma information does not purport to be indicative of the results of operations that actually would have resulted had the combination occurred at the beginning of each period presented, or of future results of the consolidated entities.

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Revenue Recognition

3 Months Ended

Mar. 31, 2017

Revenue Recognition

3. Revenue Recognition

Product Sales

The Company’s revenue recognition policy is to recognize revenues from product sales and services in accordance with ASC 605, Revenue Recognition. These standards require that revenues are recognized when persuasive evidence of an arrangement exists, product delivery, including customer acceptance when required, has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Determination of whether these criteria have been met are based on management’s judgments primarily regarding the fixed nature of the fee charged for the product delivered and the collectability of those fees. The Company has a few longstanding customers who comprise the majority of revenue and have excellent payment histories and therefore the Company does not require collateral. The Company has had no significant write-offs of uncollectible invoices in the periods presented. When more than one element such as equipment, consumables, and services are contained in a single arrangement, the Company allocates revenue between the elements based on each element’s relative selling price, provided that each element meets the criteria for treatment as a separate unit of accounting. An item is considered a separate unit of accounting if it has value to the customer on a stand-alone basis. The selling price of the undelivered elements is determined by the price charged when the element is sold separately, or in cases when the item is not sold separately, by third-party evidence of selling price or management’s best estimate of selling price.

The Company’s product revenues are from the sale of bioprocessing products, equipment devices, and related consumables used with these equipment devices to customers in the life science and biopharmaceutical industries. On product sales to end customers, revenue is recognized, net of discounts, when both the title and risk of loss have transferred to the customer, as determined by the shipping terms provided there are no uncertainties regarding acceptance, and all obligations have been completed. Generally, our product arrangements for equipment sales are multiple element arrangements, and may include services, such as installation and training, and multiple products, such as consumables and spare parts. In accordance with ASC 605-25, based on terms and conditions of the product arrangements, the Company believes that these services and undelivered products can be accounted for separately from the delivered product element, as the delivered products have value to our customers on a standalone basis. Accordingly, revenue for services not yet performed at the time of product shipment are deferred and recognized as such services are performed. The relative selling price of any undelivered products is also deferred at the time of shipment and recognized as revenue when these products are delivered. For product sales to distributors, the Company recognizes revenue for both equipment and consumables upon delivery to the distributor unless direct shipment to the end user is requested. In this case, revenue is recognized upon delivery to the end user’s location. In general, distributors are responsible for shipment to the end customer along with installation, training and acceptance of the equipment by the end customer. Sales to distributors are not contingent upon resale of the product.

At the time of sale, the Company also evaluates the need to accrue for warranty and sales returns. The supply agreements the Company has with its customers and the related purchase orders identify the terms and conditions of each sale and the price of the goods ordered. Due to the nature of the sales arrangements, inventory produced for sale is tested for quality specifications prior to shipment. Since the product is manufactured to order and in compliance with required specifications prior to shipment, the likelihood of sales return, warranty or other issues is largely diminished. Furthermore, there is no customer right of return in our sales agreements. Sales returns and warranty issues are infrequent and have not had a material impact on the Company’s financial statements historically.

Shipping and handling fees are recorded as a component of product revenue, with the associated costs recorded as a component of cost of product revenue.

Therapeutics Licensing Agreements

Activities under licensing agreements are evaluated in accordance with ASC 605-25 to determine if they represent a multiple element revenue arrangement. The Company identifies the deliverables included within the agreement and evaluates which deliverables represent separate units of accounting. The Company accounts for those components as separate units of accounting if the following two criteria are met:

• The delivered item or items have value to the customer on a stand-alone basis; and

• If there is a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and within the Company’s control.

Factors considered in this determination include, among other things, whether any other vendors sell the items separately and if the licensee could use the delivered item for its intended purpose without the receipt of the remaining deliverables. If multiple deliverables included in an arrangement are separable into different units of accounting, the Company allocates the arrangement consideration to those units of accounting. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. Arrangement consideration is allocated at the inception of the arrangement to the identified units of accounting based on their relative selling price. Revenue is recognized for each unit of accounting when the appropriate revenue recognition criteria are met.

Future milestone payments, if any, under a license agreement will be recognized under the provisions of ASC 605-28, which the Company adopted on January 1, 2011. The Company has elected to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is substantive if:

• It can only be achieved based in whole or in part on either the Company’s performance or the occurrence of a specific outcome resulting from the Company’s performance;

• There is substantive uncertainty at the date an arrangement is entered into that the event will be achieved; and

• It would result in additional payments being due to the entity.

The commercial milestone payments and royalty payments received under license agreements, if any, will be recognized as revenue when they are earned.

Sale of Intellectual Property to BioMarin

In January 2014, the Company entered into an asset purchase agreement (the “BioMarin Asset Purchase Agreement”) with BioMarin Pharmaceutical Inc. (“BioMarin”) to sell Repligen’s histone deacetylase inhibitor (HDACi) portfolio. Pursuant to the terms of the BioMarin Asset Purchase Agreement, the Company is entitled to receive up to $160 million in potential future milestone payments, comprised of:

• Up to $60 million related to the achievement of specified clinical and regulatory milestone events; and

• Up to $100 million related to the achievement of specified commercial sales events, specifically the first commercial sale in specific territories.

In addition, Repligen is eligible to receive royalties on sales of therapeutic products originating from the HDACi portfolio. The royalty rates are tiered and begin in the mid-single-digits for the first HDACi portfolio product and for the first non-HDACi portfolio product with lesser amounts for any backup products developed under the BioMarin Asset Purchase Agreement. The Company’s receipt of these royalties is subject to customary offsets and deductions. There are no refund provisions in this agreement. Any milestones earned upon specified clinical development or commercial sales events or future royalty payments, under the BioMarin Asset Purchase Agreement will be recognized as revenue when they are earned.

Activities under this agreement were evaluated in accordance with ASC 605-25 to determine if they represented a multiple element revenue arrangement. The Company identified the following deliverables in the BioMarin Asset Purchase Agreement:

• The assignment by the Company to BioMarin of its intellectual property rights in the HDACi portfolio and the Scripps Agreement (the “Transferred Assets”); and

• The transfer of certain notebooks, data, documents, biological materials (if any) and other such documents in our possession that might be useful to further development of the program (the “Technology Transfer”).

Two criteria must be met in order for a deliverable to be considered a separate unit of accounting. The first criterion requires that the delivered item or items have value to the customer on a stand-alone basis. The second criterion, which relates to evaluating a general right of return, is not applicable because such a provision does not exist in the BioMarin Asset Purchase Agreement. The deliverables outlined above were deemed to have stand-alone value and to meet the criteria to be accounted for as separate units of accounting. Factors considered in this determination included, among other things, BioMarin’s right under the agreement to assign the Transferred Assets, whether any other vendors sell the items separately and if BioMarin could use the delivered item for its intended purpose without the receipt of the remaining deliverables. If multiple deliverables included in an arrangement are separable into different units of accounting, the multiple-element arrangements guidance addresses how to allocate the arrangement consideration to those units of accounting. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. Arrangement consideration is allocated at the inception of the arrangement to the identified units of accounting based on their relative selling price.

The Company evaluated the potential milestones in accordance with ASC 605-28, which allows an entity to make an accounting policy election to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. This evaluation included an assessment of the risks that must be overcome to achieve the respective milestone as well as whether the achievement of the milestone was due in part to our initial clinical work, the level of effort and investment required to achieve the respective milestone and whether the milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement. There is considerable judgment involved in determining whether a milestone satisfies all of the criteria required to conclude that a milestone is substantive. Milestones that are not considered substantive are recognized as earned if there are no remaining performance obligations or over the remaining period of performance, assuming all other revenue recognition criteria are met.

The Company believes that the $60 million of specified clinical and regulatory milestone payments are substantive. Therefore, any such milestones achieved will be recognized as revenue when earned.

Any milestones achieved upon specified commercial sales events or future royalty payments are considered contingent revenue under the BioMarin Asset Purchase Agreement, and will be recognized as revenue when they are earned as there are no undelivered elements remaining and no continuing performance obligations under the arrangement.

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2017

Accumulated Other Comprehensive Income

4. Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated other comprehensive income by component (in thousands):

(In thousands)	Unrealized gain (loss) on investments			Foreign currency translation gain (loss)			Total
Balance at December 31, 2016	$	(5	)	$	(13,744	)	$	(13,749	)
Other comprehensive income		4			1,027			1,031
Balance at March 31, 2017	$	(1	)	$	(12,717	)	$	(12,718	)

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Earnings Per Share

3 Months Ended

Mar. 31, 2017

Earnings Per Share

5. Earnings Per Share

The Company reports earnings per share in accordance with ASC Topic 260, “Earnings Per Share,” which establishes standards for computing and presenting earnings per share. Basic earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares and dilutive common share equivalents then outstanding. Potential common share equivalents consist of restricted stock awards and the incremental common shares issuable upon the exercise of stock options. Under the treasury stock method, unexercised “in-the-money” stock options and warrants are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds are then used to purchase common shares at the average market price during the period. Share-based payment awards that entitle their holders to receive non-forfeitable dividends before vesting are considered participating securities and are considered in the calculation of basic and diluted earnings per share. There were no such participating securities outstanding during the three-month periods ended March 31, 2017 and 2016.

Basic and diluted weighted average shares outstanding were as follows:

	Three months ended March 31,
	2017		2016
Weighted average common shares		33,891,702		33,024,681
Dilutive common stock options		490,620		468,894
Weighted average common shares, assuming dilution		34,382,322		33,493,575

At March 31, 2017, there were outstanding options to purchase 805,903 shares of the Company’s common stock at a weighted average exercise price of $19.68 per share and restricted stock units to acquire 404,781 shares of the Company’s common stock. For the three months ended March 31, 2017, 458,685 options to purchase shares of the Company’s common stock, respectively, were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares, and were therefore anti-dilutive. As provided by the terms of the indenture underlying the senior convertible notes, the Company has a choice to settle the conversion obligation for the Convertible Notes in cash, shares or any combination of the two. The Company currently intends to settle the par value of the Convertible Notes in cash and any excess conversion premium in shares. The Company applies the provisions of ASC 260, Earnings Per Share, Subsection 10-45-44, to determine the diluted weighted average shares outstanding as it relates to the conversion spread on its convertible notes. Accordingly, the par value of the Convertible Notes will not be included in the calculation of diluted income per share, but the dilutive effect of the conversion premium will be considered in the calculation of diluted net income per share using the treasury stock method. The dilutive impact of the Company’s convertible notes is based on the difference between the Company’s current period average stock price and the conversion price of the convertible notes, provided there is a premium. Pursuant to this accounting standard, there is no dilution from the accreted principal of the Convertible Notes as of March 31, 2017.

At March 31, 2016, there were outstanding options to purchase 1,312,508 shares of the Company’s common stock at a weighted average exercise price of $11.50 per share. For the three- month period ended March 31, 2016, 520,030 shares of the Company’s common stock, respectively, were excluded from the calculation of diluted earnings per share because the exercise prices of the stock options were greater than or equal to the average price of the common shares, and were therefore anti-dilutive.

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Cash, Cash Equivalents and Marketable Securities

3 Months Ended

Mar. 31, 2017

Cash, Cash Equivalents and Marketable Securities

6. Cash, Cash Equivalents and Marketable Securities

At March 31, 2017 and December 31, 2016, the Company’s investments included money market funds and short-term marketable securities. These marketable securities are classified as available-for-sale. Marketable securities are investments with original maturities of greater than 90 days. Long-term marketable securities are securities with maturities of greater than one year. The average remaining contractual maturity of marketable securities at March 31, 2017 was approximately 2.3 months.

Management reviewed the Company’s investments as of March 31, 2017 and December 31, 2016 and concluded that there are no securities with other than temporary impairments in the investment portfolio. The Company does not intend to sell any investments in an unrealized loss position, and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases.

Investments in marketable securities consisted of the following at March 31, 2017 (in thousands):

	March 31, 2017
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Marketable securities:
U.S. Government and agency securities	$	402	$	—	$	—		$	402
Corporate and other debt securities		11,779		1		(2	)		11,778
Total	$	12,181	$	1	$	(2	)	$	12,180

There were no long-term marketable securities as of March 31, 2017.

At March 31, 2017, the Company’s investments included seven securities in unrealized loss positions with a total unrealized loss of approximately $2,000 and a total fair market value of approximately $3,946,000. All investments with gross unrealized losses have been in unrealized loss positions for less than 12 months. The unrealized losses were caused primarily by current economic and market conditions. There was no change in the credit risk of the securities. There were no realized gains or losses on the investments for the three months ended March 31, 2017 and 2016.

Investments in marketable securities consisted of the following at December 31, 2016 (in thousands):

	December 31, 2016
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Marketable securities:
U.S. Government and agency securities	$	807	$	—	$	—		$	807
Corporate and other debt securities		18,745		2		(7	)		18,740
Total	$	19,552	$	2	$	(7	)	$	19,547

There were no long-term marketable securities as of December 31, 2016.

The contractual maturities of all money market funds and marketable securities are less than one year as of March 31, 2017.

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Inventories

3 Months Ended

Mar. 31, 2017

Inventories

7. Inventories

Inventories relate to the Company’s bioprocessing business. The Company values inventory at cost or, if lower, market value, using the first-in, first-out method. The Company reviews its inventories at least quarterly and records a provision for excess and obsolete inventory based on its estimates of expected sales volume, production capacity and expiration dates of raw materials, work-in-process and finished products. Expected sales volumes are determined based on supply forecasts provided by key customers for the next 3 to 12 months. The Company writes down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements to cost of product revenue. Manufacturing of bioprocessing finished goods is done to order and tested for quality specifications prior to shipment. Reserves for excess and obsolete inventory were approximately $385,000 at March 31, 2017 and $435,000 at December 31, 2016.

A change in the estimated timing or amount of demand for the Company’s products could result in additional provisions for excess inventory quantities on hand. Any significant unanticipated changes in demand or unexpected quality failures could have a significant impact on the value of inventory and reported operating results. During all periods presented in the accompanying financial statements, there have been no material adjustments related to a revised estimate of inventory valuations.

Work-in-process and finished products inventories consist of material, labor, outside processing costs and manufacturing overhead. Inventories consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Raw Materials	$	15,417	$	14,954
Work-in-process		2,769		2,789
Finished products		5,771		6,953
Total	$	23,957	$	24,696

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Property, Plant and Equipment

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment

8. Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

	March 31, 2017			December 31, 2016
Leasehold improvements	$	15,196		$	14,592
Equipment		15,501			15,214
Furniture and fixtures		3,418			3,218
Construction in progress		1,142			1,264
Total property, plant and equipment		35,257			34,288
Less: accumulated depreciation		(19,884	)		(19,332	)
Property, plant and equipment, net	$	15,373		$	14,956

Depreciation expense totaled approximately $928,000 and $751,000 for the three months ended March 31, 2017 and 2016, respectively.

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Intangible Assets

3 Months Ended

Mar. 31, 2017

Intangible Assets

9. Intangible Assets

Intangible assets are amortized over their useful lives using the straight-line method, as applicable, and the amortization expense is recorded within selling, general and administrative expense in the Company’s statements of comprehensive income (loss).

During the third quarter of 2016, the Company launched its XCell^TM ATF single-use product line. The Company performed an assessment of the in-process research and development assets and their estimated useful lives to determine if any circumstances exist that would result in an impairment. The Company has determined that the fair value of these intangible assets exceeds their carrying values and are therefore not impaired; accordingly, the Company reclassified in-process research and development intangible assets to developed technology and began to amortize these intangible assets in the third quarter of 2016.

The Company reviews its indefinite-lived intangible assets not subject to amortization to determine if adverse conditions exist or a change in circumstances exists that would indicate an impairment. Intangible assets and their related useful lives are reviewed at least annually to determine if any adverse conditions exist that would indicate the carrying value of these assets may not be recoverable. More frequent impairment assessments are conducted if certain conditions exist, including a change in the competitive landscape, any internal decisions to pursue new or different technology strategies, a loss of a significant customer, or a significant change in the marketplace, including changes in the prices paid for our products or changes in the size of the market for our products. An impairment results if the carrying value of the asset exceeds the estimated fair value of the asset. If the estimate of an intangible asset’s remaining useful life is changed, the remaining carrying amount of the intangible asset is amortized prospectively over the revised remaining useful life. The Company continues to believe that its intangible assets are recoverable at March 31, 2017.

Intangible assets consisted of the following at March 31, 2017 (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Weighted Average Useful Life (in years)
Technology – developed	$	12,949	$	(1,685	)		17
Patents		240		(215	)		8
Customer relationships		22,697		(5,525	)		11
Trademark		711		—			—
Other intangibles		85		(35	)		2
Total intangible assets	$	36,682	$	(7,460	)		13

Intangible assets consisted of the following at December 31, 2016 (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Weighted Average Useful Life (in years)
Technology – developed	$	12,911	$	(1,468	)		17
Patents		240		(208	)		8
Customer relationships		22,555		(4,995	)		11
Trademark/ tradename		711		—			—
Other intangibles		84		(24	)		2
Total intangible assets	$	36,501	$	(6,695	)		13

Amortization expense for amortized intangible assets was approximately $715,000 and $399,000 for the three months ended March 31, 2017 and 2016, respectively. As of March 31, 2017, the Company expects to record amortization expense as follows (in thousands):

Years Ending	Amortization Expense
December 31, 2017 (nine months remaining)		2,265
December 31, 2018		2,832
December 31, 2019		2,799
December 31, 2020		2,494
December 31, 2021		2,190

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Accrued Liabilities

3 Months Ended

Mar. 31, 2017

Accrued Liabilities

10. Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Employee compensation	$	3,439	$	5,586
Accrued interest payable		815		204
Accrued purchases		566		382
Taxes		1,604		1,692
Contingent consideration		—		6,119
Royalties		857		248
Professional fees		494		411
Unearned revenue		441		408
Other accrued expenses		900		964
Total	$	9,116	$	16,014

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Long Term Debt

3 Months Ended

Mar. 31, 2017

Long Term Debt

11. Long Term Debt

The carrying value of the Company’s convertible senior notes is as follows:

	March 31, 2017			December 31, 2016
2.125% Convertible Senior Notes due 2021:
Principal amount	$	115,000		$	115,000
Unamortized debt discount		(15,952	)		(16,777	)
Unamortized debt issuance costs		(2,806	)		(2,951	)
Total convertible senior notes	$	96,242		$	95,272

On May 24, 2016, the Company issued $115 million aggregate principal amount of its 2.125% Convertible Senior Notes due 2021 (the “Notes”). The net proceeds from the sale of the Notes, after deducting the underwriting discounts and commissions and other related offering expenses, were approximately $111.1 million. The Notes bear interest at the rate of 2.125% per annum, payable semiannually in arrears on June 1 and December 1 of each year, beginning on December 1, 2016.

The Notes will mature on June 1, 2021, unless earlier repurchased, redeemed or converted in accordance with their terms. Prior to March 1, 2021, the Notes will be convertible at the option of holders of the Notes only upon satisfaction of certain conditions and during certain periods, and thereafter, the notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date. Upon conversion, holders of the Notes will receive shares of the Company’s common stock, cash or a combination thereof, at the Company’s election. It is the Company’s current intent and policy to settle all conversions through combination settlement, which involves satisfying the principal amount outstanding with cash and any note conversion value over the principal amount in shares of the Company’s common stock.

The conversion rate for the Notes will initially be 31.1813 shares of the Company’s common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $32.07 per common share, and is subject to adjustment under the terms of the Notes. Holders of the Notes may require the Company to repurchase their Notes upon the occurrence of a fundamental change prior to maturity for cash at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

The Company will not have the right to redeem the Notes prior to June 5, 2019, but may redeem the Notes, at its option, in whole or in part, on any business day on or after June 5, 2019 and prior to the maturity date if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides written notice of redemption. The redemption price will be equal to 100% of the principal amount of the principal amount of Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date.

The Notes contain customary terms and events of default. If an event of default (other than certain events of bankruptcy, insolvency or reorganization involving the Company) occurs and is continuing, the holders of at least 25% in aggregate principal amount of the outstanding Notes may declare 100% of the principal of, and any accrued and unpaid interest on, all of the Notes to be due and payable. Upon the occurrence of certain events of bankruptcy, insolvency or reorganization involving the Company, 100% of the principal of and accrued and unpaid interest, if any, on all of the Notes will become due and payable automatically. Notwithstanding the foregoing, the Notes provide that, to the extent the Company elects and for up to 270 days, the sole remedy for an event of default relating to certain failures by the Company to comply with certain reporting covenants consist exclusively of the right to receive additional interest on the Notes. The Company is not aware of any events of default, current events or market conditions that would allow holders to call or convert the Notes as of March 31, 2017.

The cash conversion feature of the Notes required bifurcation from the Notes and was initially accounted for as an equity instrument classified to stockholders’ equity, as the conversion feature was determined to be clearly and closely related to the Company’s stock. Based on market data available for publicly traded, senior, unsecured corporate bonds issued by companies in the same industry and asset base and with similar maturity, the Company estimated the implied interest rate, assuming no conversion option. Assumptions used in the estimate represent what market participants would use in pricing the liability component, including market interest rates, credit standing, and yield curves, all of which are defined as Level 2 observable inputs. The estimated implied interest rate was applied to the Notes, which resulted in a fair value of the liability component of $96,289,000 upon issuance, calculated as the present value of implied future payments based on the $115 million aggregate principal amount. The equity component of the Notes was recognized as a debt discount, recorded in additional paid-in capital, and represents the difference between the aggregate principal of the Notes and the fair value of the Notes without conversion option on their issuance date. The debt discount is amortized to interest expense using the effective interest method over five years, or the life of the Notes. The Company assesses the equity classification of the cash conversion feature quarterly, and it is not remeasured as long as it continues to meet the conditions for equity classification.

Interest expense recognized on the Notes during the three-month period ended March 31, 2017 includes $611,000, $825,000 and $145,000 for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. The effective interest rate on the Notes is 6.6%, which includes the interest on the Notes, amortization of the debt discount and debt issuance costs. As of March 31, 2017, the carrying value of the Notes was approximately $96.2 million and the fair value of the principal was approximately $144.3 million. The fair value of the Notes was determined based on the most recent trade activity of the Notes as of March 31, 2017.

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Stock-Based Compensation

12. Stock-Based Compensation

For the three months ended March 31, 2017 and 2016, the Company recorded stock-based compensation expense of approximately $1,531,000 and $922,000, respectively, for share-based awards granted under the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan”) and the Repligen Corporation Amended and Restated 2012 Stock Option and Incentive Plan (the “2012 Plan,” and collectively with the 2001 Plan and the 1992 Repligen Corporation Stock Option Plan, the “Plans”).

The following table presents stock-based compensation expense included in the Company’s consolidated statements of comprehensive income (loss):

	Three Months Ended March 31,
	2017		2016
Cost of product revenue	$	141	$	60
Research and development		132		80
Selling, general and administrative		1,258		782
Total	$	1,531	$	922

The 2012 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Incentive options granted to employees under the Plans generally vest over a three to five-year period, with 20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to non-employee directors under the Plans generally vest over one year. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At March 31, 2017, options to purchase 805,903 shares and 404,781 restricted stock units were outstanding under the Plans. At March 31, 2017, 1,531,010 shares were available for future grant under the 2012 Plan.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date, and the Company uses the value of the common stock as of the grant date to value restricted stock units. The Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award, and recognizes awards with service based vesting as expense over the employee’s requisite service period on a straight-line basis. The Company has no awards that are performance-based or subject to market conditions. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

Information regarding option activity for the three months ended March 31, 2017 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Options outstanding at December 31, 2016		882,748		$	16.88
Granted		86,215			32.40
Exercised		(137,903	)		9.67
Forfeited/cancelled		(25,157	)		21.31
Options outstanding at March 31, 2017		805,903		$	19.68		7.08	$	12,706
Options exercisable at March 31, 2017		406,859		$	14.18		5.73	$	8,659
Vested and expected to vest at March 31, 2017 (1)		791,227		$	19.57		7.05	$	12,530

⁽¹⁾  Represents the number of vested options as of March 31, 2017 plus the number of unvested options expected to vest as of March 31, 2017 based on the unvested outstanding options at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on March 31, 2017 of $35.20 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on March 31, 2017.

The weighted average grant date fair value of options granted during the three months ended March 31, 2017 and 2016 was $16.46 and $13.49, respectively. The total fair value of stock options that vested during the three months ended March 31, 2017 and 2016 was approximately $1,195,000 and $645,000, respectively.

Information regarding restricted stock unit activity for the three months ended March 31, 2017 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Restricted stock units outstanding at December 31, 2016		353,838		$	—
Granted		125,067			—
Exercised		(63,811	)		—
Forfeited/cancelled		(10,313	)		—
Restricted stock units outstanding at March 31, 2017		404,781		$	—		3.12	$	14,248
Vested and expected to vest at March 31, 2017 (1)		378,579		$	—		3.01	$	13,326

⁽¹⁾  Represents the number of vested restricted stock units as of March 31, 2017 plus the number of unvested restricted stock units expected to vest as of March 31, 2017 based on the unvested outstanding restricted stock units at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on March 31, 2017 of $35.20 per share) that would have been received by the restricted stock unit holders had all holders exercised on March 31, 2017. The aggregate intrinsic value of restricted stock units exercised during the three months ended March 31, 2017 and 2016 was approximately $2,064,000 and $1,009,000, respectively.

The weighted average grant date fair value of restricted stock units granted during the three months ended March 31, 2017 and 2016 was $32.18 and $26.05, respectively. The total grant date fair value of restricted stock units that vested during the three months ended March 31, 2017 and 2016 was approximately $1,616,000 and $742,000, respectively.

As of March 31, 2017, there was $14,921,000 of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 2.94 years.

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Income Taxes

3 Months Ended

Mar. 31, 2017

Income Taxes

13. Income Taxes

The Company’s effective tax rate for the three months ended March 31, 2017 was 24.6% compared to 36.0% for the corresponding period in the prior year. For the current three month period, the effective tax rate was lower than the U.S. statutory tax rate of 34% primarily due to lower statutory tax rates in foreign jurisdictions. For the three month period ended March 31, 2016, the effective tax rate was higher than the U.S. statutory tax rate mainly due to the tax treatment of contingent consideration expense.

At December 31, 2016, the Company had net operating loss carryforwards of approximately $48,550,000 in the U.S., net operating loss carryforwards of approximately €2,287,000 (approximately $2,407,000) in Germany, federal business tax credit carryforwards of $1,745,000 and state business tax credit carryforwards of approximately $442,000 available to reduce future domestic income taxes, if any. The net operating loss and business tax credits carryforwards will continue to expire at various dates through December 2036. The net operating loss and business tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service and may be limited in the event of certain changes in the ownership interest of significant stockholders.

As of December 31, 2016, the Company concluded that realization of deferred tax assets in the United States beyond December 31, 2016 is not more likely than not, and as such, the Company maintained a valuation allowance against its net U.S. deferred tax assets, after considerations for deferred tax liabilities which will not be utilized as a future source of income.

ASU 2016-09 states that previously unrecognized excess tax benefits should be recognized on a modified retrospective basis. As such, the Company increased its U.S. federal and state net operating loss carryovers by approximately $5.3 million for previously unrecognized excess tax benefits outstanding as of the beginning of the period. Since the Company maintains a full valuation allowance on its net U.S. deferred tax assets, the Company recorded a corresponding increase to the valuation allowance and the impact of adopting ASU 2016-09 on retained earnings is zero.

In the first quarter of 2017, Repligen Germany GmbH was subject to a tax examination for the years 2012 through 2015. The examination was general in nature, covering all aspects of the subsidiary’s operations prior to the Atoll Acquisition on April 1, 2016. There were no material findings as a result of this examination, and the examination was closed by the German tax authorities.

The Company’s tax returns are subject to examination by federal, state and international taxing authorities for the following periods:

Jurisdiction	Fiscal years subject to examination
United States – federal and state	2013-2016
Sweden	2011-2016
Germany	2016

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Fair Value Measurement

3 Months Ended

Mar. 31, 2017

Fair Value Measurement

14. Fair Value Measurement

In determining the fair value of its assets and liabilities, the Company uses various valuation approaches. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1	–	Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access
Level 2	–	Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly
Level 3	–	Valuations based on inputs that are unobservable and significant to the overall fair value measurement

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

The Company’s fixed income investments are comprised of obligations of U.S. government agencies and corporate marketable securities. These investments have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data. The pricing services utilize industry standard valuation models, including both income and market based approaches and observable market inputs to determine value. These observable market inputs include reportable trades, benchmark yields, credit spreads, broker/dealer quotes, bids, offers, current spot rates and other industry and economic events. At least annually, the Company validates the prices provided by third party pricing services by reviewing their pricing methods and matrices, obtaining market values from other pricing sources, analyzing pricing data in certain instances and confirming that the relevant markets are active. The Company did not adjust or override any fair value measurements provided by the pricing services as of March 31, 2017.

The following fair value hierarchy table presents information about each major category of the Company’s assets measured at fair value on a recurring basis as of March 31, 2017 (in thousands):

	Fair value measurement at reporting date using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets:
Money market funds	$	85,292	$	—	$	—	$	85,292
U.S. Government and agency securities		402		—		—		402
Corporate and other debt securities		—		11,778		—		11,778
Total	$	85,694	$	11,778	$	—	$	97,472

The Company has no other assets or liabilities for which fair value measurement is either required or has been elected to be applied.

As of December 31, 2016, the Company had accrued liabilities with a fair value of $6,119,000 related to contingent consideration in connection with the Refine and Atoll business combinations. The contingent consideration related to Refine was based on actual 2016 revenues. The contingent consideration related to Atoll was based on meeting revenue growth targets in 2016. These valuations are Level 3 valuations, as the primary inputs are unobservable. All contingent consideration liabilities were paid in the first quarter of 2017.

The following table provides a rollforward of the fair value of contingent consideration (in thousands):

Balance at December 31, 2016	$	6,119
Payments		(6,119	)
Balance at March 31, 2017	$	—

In May 2016, the Company issued $115 million aggregate principal amount of the Notes due June 1, 2021. Interest is payable semi-annually in arrears on June 1 and December 1 of each year, beginning on December 1, 2016. As of March 31, 2017, the carrying value of the Notes was $96.2 million, net of unamortized discount, and the fair value of the Notes was approximately $144.3 million. The fair value of the Notes was determined based on the most recent trade activity of the Notes as of March 31, 2017. These valuations are Level 1 valuations, as the valuations are based on unadjusted quoted prices in active markets that the Company has the ability to access. The Notes are discussed in more detail in Note 11, “Long Term Debt.”

There were no re-measurements to fair value during the three months ended March 31, 2017 of financial assets and liabilities that are not measured at fair value on a recurring basis.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies

15. Commitments and Contingencies

Future minimum rental commitments under the Company’s leases as of March 31, 2017 are as follows (in thousands):

	Minimum Rental Commitments
2017 (nine months remaining)	$	2,028
2018		2,647
2019		2,506
2020		2,500
2021		2,467
Thereafter		1,705

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Segment Reporting

3 Months Ended

Mar. 31, 2017

Segment Reporting

16. Segment Reporting

The Company views its operations, makes decisions regarding how to allocate resources and manages its business as one operating segment. As a result, the financial information disclosed herein represents all of the material financial information related to the Company’s principal operating segment.

The following table represents the Company’s total revenue by geographic area (based on the location of the customer):

	Three months ended March 31,
	2017			2016
United States		38	%		30	%
Sweden		27	%		24	%
Ireland		10	%		4	%
United Kingdom		5	%		13	%
Other		20	%		29	%
Total		100	%		100	%

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

	Three months ended March 31,
	2017			2016
GE Healthcare		27	%		24	%
MilliporeSigma		21	%		28	%

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

	March 31, 2017			December 31, 2016
GE Healthcare		25	%		26	%
MilliporeSigma		15	%		8	%

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Revenue Recognition (Policies)

3 Months Ended

Mar. 31, 2017

Revenue Recognition

Revenue Recognition

Product Sales

The Company’s revenue recognition policy is to recognize revenues from product sales and services in accordance with ASC 605, Revenue Recognition. These standards require that revenues are recognized when persuasive evidence of an arrangement exists, product delivery, including customer acceptance when required, has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. Determination of whether these criteria have been met are based on management’s judgments primarily regarding the fixed nature of the fee charged for the product delivered and the collectability of those fees. The Company has a few longstanding customers who comprise the majority of revenue and have excellent payment histories and therefore the Company does not require collateral. The Company has had no significant write-offs of uncollectible invoices in the periods presented. When more than one element such as equipment, consumables, and services are contained in a single arrangement, the Company allocates revenue between the elements based on each element’s relative selling price, provided that each element meets the criteria for treatment as a separate unit of accounting. An item is considered a separate unit of accounting if it has value to the customer on a stand-alone basis. The selling price of the undelivered elements is determined by the price charged when the element is sold separately, or in cases when the item is not sold separately, by third-party evidence of selling price or management’s best estimate of selling price.

The Company’s product revenues are from the sale of bioprocessing products, equipment devices, and related consumables used with these equipment devices to customers in the life science and biopharmaceutical industries. On product sales to end customers, revenue is recognized, net of discounts, when both the title and risk of loss have transferred to the customer, as determined by the shipping terms provided there are no uncertainties regarding acceptance, and all obligations have been completed. Generally, our product arrangements for equipment sales are multiple element arrangements, and may include services, such as installation and training, and multiple products, such as consumables and spare parts. In accordance with ASC 605-25, based on terms and conditions of the product arrangements, the Company believes that these services and undelivered products can be accounted for separately from the delivered product element, as the delivered products have value to our customers on a standalone basis. Accordingly, revenue for services not yet performed at the time of product shipment are deferred and recognized as such services are performed. The relative selling price of any undelivered products is also deferred at the time of shipment and recognized as revenue when these products are delivered. For product sales to distributors, the Company recognizes revenue for both equipment and consumables upon delivery to the distributor unless direct shipment to the end user is requested. In this case, revenue is recognized upon delivery to the end user’s location. In general, distributors are responsible for shipment to the end customer along with installation, training and acceptance of the equipment by the end customer. Sales to distributors are not contingent upon resale of the product.

At the time of sale, the Company also evaluates the need to accrue for warranty and sales returns. The supply agreements the Company has with its customers and the related purchase orders identify the terms and conditions of each sale and the price of the goods ordered. Due to the nature of the sales arrangements, inventory produced for sale is tested for quality specifications prior to shipment. Since the product is manufactured to order and in compliance with required specifications prior to shipment, the likelihood of sales return, warranty or other issues is largely diminished. Furthermore, there is no customer right of return in our sales agreements. Sales returns and warranty issues are infrequent and have not had a material impact on the Company’s financial statements historically.

Shipping and handling fees are recorded as a component of product revenue, with the associated costs recorded as a component of cost of product revenue.

Therapeutics Licensing Agreements

Activities under licensing agreements are evaluated in accordance with ASC 605-25 to determine if they represent a multiple element revenue arrangement. The Company identifies the deliverables included within the agreement and evaluates which deliverables represent separate units of accounting. The Company accounts for those components as separate units of accounting if the following two criteria are met:

• The delivered item or items have value to the customer on a stand-alone basis; and

• If there is a general right of return relative to the delivered items, delivery or performance of the undelivered items is considered probable and within the Company’s control.

Factors considered in this determination include, among other things, whether any other vendors sell the items separately and if the licensee could use the delivered item for its intended purpose without the receipt of the remaining deliverables. If multiple deliverables included in an arrangement are separable into different units of accounting, the Company allocates the arrangement consideration to those units of accounting. The amount of allocable arrangement consideration is limited to amounts that are fixed or determinable. Arrangement consideration is allocated at the inception of the arrangement to the identified units of accounting based on their relative selling price. Revenue is recognized for each unit of accounting when the appropriate revenue recognition criteria are met.

Future milestone payments, if any, under a license agreement will be recognized under the provisions of ASC 605-28, which the Company adopted on January 1, 2011. The Company has elected to recognize a payment that is contingent upon the achievement of a substantive milestone in its entirety in the period in which the milestone is achieved. A milestone is substantive if:

• It can only be achieved based in whole or in part on either the Company’s performance or the occurrence of a specific outcome resulting from the Company’s performance;

• There is substantive uncertainty at the date an arrangement is entered into that the event will be achieved; and

• It would result in additional payments being due to the entity.

The commercial milestone payments and royalty payments received under license agreements, if any, will be recognized as revenue when they are earned.

Fair Value Measurement

In determining the fair value of its assets and liabilities, the Company uses various valuation approaches. The Company employs a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1	–	Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access
Level 2	–	Valuations based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active and models for which all significant inputs are observable, either directly or indirectly
Level 3	–	Valuations based on inputs that are unobservable and significant to the overall fair value measurement

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2017

Atoll GmbH

Consideration Transferred

The total consideration transferred follows (in thousands):

Cash consideration, less $74 of working capital adjustments	$	10,176
Value of common stock issued		14,138
Estimated fair value of contingent consideration		952
Total consideration transferred	$	25,266

Components and Allocation of Purchase Price

The components and allocation of the purchase price consists of the following amounts (in thousands):

Cash and cash equivalents	$	1,409
Accounts receivable		697
Inventory		155
Other current assets		169
Fixed assets, net		114
Customer relationships		5,318
Developed technology		2,175
Non-competition agreements		57
Trademark and trade name		11
Deferred tax assets		885
Accounts payable and other liabilities assumed		(599	)
Deferred tax liabilities		(2,202	)
Goodwill		17,077
Net assets acquired	$	25,266

TangenX Technology Corporation

Consideration Transferred

The total consideration transferred follows (in thousands):

Cash consideration	$	37,532
Less: working capital adjustment		(467	)
Net assets acquired	$	37,065

Components and Allocation of Purchase Price

The components and allocation of the purchase price consists of the following amounts (in thousands):

Cash and cash equivalents	$	1,218
Accounts receivable		459
Other receivables		111
Inventory		936
Other current assets		50
Fixed assets, net		215
Customer relationships		6,192
Developed technology		6,044
Non-competition agreements		21
Trademark and trade name		11
Accounts payable and other liabilities assumed		(3,083	)
Deferred tax liabilities		(4,525	)
Goodwill		29,416
Net assets acquired	$	37,065

Unaudited Supplemental Pro Forma Information

The following table presents unaudited supplemental pro forma information as if the TangenX Acquisition had occurred as of January 1, 2016 (in thousands, except per share data):

	March 31, 2017		March 31, 2016
Total revenue		30,590		26,952
Net income		3,608		5,118
Earnings per share:
Basic	$	0.11	$	0.15
Diluted	$	0.10	$	0.15

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2017

Summary of Changes in Accumulated Other Comprehensive Income

The following table summarizes the changes in accumulated other comprehensive income by component (in thousands):

(In thousands)	Unrealized gain (loss) on investments			Foreign currency translation gain (loss)			Total
Balance at December 31, 2016	$	(5	)	$	(13,744	)	$	(13,749	)
Other comprehensive income		4			1,027			1,031
Balance at March 31, 2017	$	(1	)	$	(12,717	)	$	(12,718	)

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2017

Basic and Diluted Weighted Average Shares Outstanding

Basic and diluted weighted average shares outstanding were as follows:

	Three months ended March 31,
	2017		2016
Weighted average common shares		33,891,702		33,024,681
Dilutive common stock options		490,620		468,894
Weighted average common shares, assuming dilution		34,382,322		33,493,575

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Cash, Cash Equivalents and Marketable Securities (Tables)

3 Months Ended

Mar. 31, 2017

Investments in Marketable Securities

Investments in marketable securities consisted of the following at March 31, 2017 (in thousands):

	March 31, 2017
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Marketable securities:
U.S. Government and agency securities	$	402	$	—	$	—		$	402
Corporate and other debt securities		11,779		1		(2	)		11,778
Total	$	12,181	$	1	$	(2	)	$	12,180

Investments in marketable securities consisted of the following at December 31, 2016 (in thousands):

	December 31, 2016
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss			Fair Value
Marketable securities:
U.S. Government and agency securities	$	807	$	—	$	—		$	807
Corporate and other debt securities		18,745		2		(7	)		18,740
Total	$	19,552	$	2	$	(7	)	$	19,547

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Inventories (Tables)

3 Months Ended

Mar. 31, 2017

Schedule of Inventories

Inventories consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Raw Materials	$	15,417	$	14,954
Work-in-process		2,769		2,789
Finished products		5,771		6,953
Total	$	23,957	$	24,696

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Property, Plant and Equipment (Tables)

3 Months Ended

Mar. 31, 2017

Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):

	March 31, 2017			December 31, 2016
Leasehold improvements	$	15,196		$	14,592
Equipment		15,501			15,214
Furniture and fixtures		3,418			3,218
Construction in progress		1,142			1,264
Total property, plant and equipment		35,257			34,288
Less: accumulated depreciation		(19,884	)		(19,332	)
Property, plant and equipment, net	$	15,373		$	14,956

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2017

Intangible assets

Intangible assets consisted of the following at March 31, 2017 (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Weighted Average Useful Life (in years)
Technology – developed	$	12,949	$	(1,685	)		17
Patents		240		(215	)		8
Customer relationships		22,697		(5,525	)		11
Trademark		711		—			—
Other intangibles		85		(35	)		2
Total intangible assets	$	36,682	$	(7,460	)		13

Intangible assets consisted of the following at December 31, 2016 (in thousands):

	Gross Carrying Amount		Accumulated Amortization			Weighted Average Useful Life (in years)
Technology – developed	$	12,911	$	(1,468	)		17
Patents		240		(208	)		8
Customer relationships		22,555		(4,995	)		11
Trademark/ tradename		711		—			—
Other intangibles		84		(24	)		2
Total intangible assets	$	36,501	$	(6,695	)		13

Schedule of Amortization Expense for Amortized Intangible Assets

As of March 31, 2017, the Company expects to record amortization expense as follows (in thousands):

Years Ending	Amortization Expense
December 31, 2017 (nine months remaining)		2,265
December 31, 2018		2,832
December 31, 2019		2,799
December 31, 2020		2,494
December 31, 2021		2,190

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Accrued Liabilities (Tables)

3 Months Ended

Mar. 31, 2017

Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	March 31, 2017		December 31, 2016
Employee compensation	$	3,439	$	5,586
Accrued interest payable		815		204
Accrued purchases		566		382
Taxes		1,604		1,692
Contingent consideration		—		6,119
Royalties		857		248
Professional fees		494		411
Unearned revenue		441		408
Other accrued expenses		900		964
Total	$	9,116	$	16,014

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Long Term Debt (Tables)

3 Months Ended

Mar. 31, 2017

Carrying Value of Convertible Senior Notes

The carrying value of the Company’s convertible senior notes is as follows:

	March 31, 2017			December 31, 2016
2.125% Convertible Senior Notes due 2021:
Principal amount	$	115,000		$	115,000
Unamortized debt discount		(15,952	)		(16,777	)
Unamortized debt issuance costs		(2,806	)		(2,951	)
Total convertible senior notes	$	96,242		$	95,272

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2017

Stock-Based Compensation Expense

The following table presents stock-based compensation expense included in the Company’s consolidated statements of comprehensive income (loss):

	Three Months Ended March 31,
	2017		2016
Cost of product revenue	$	141	$	60
Research and development		132		80
Selling, general and administrative		1,258		782
Total	$	1,531	$	922

Summary of Option Activity

Information regarding option activity for the three months ended March 31, 2017 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Options outstanding at December 31, 2016		882,748		$	16.88
Granted		86,215			32.40
Exercised		(137,903	)		9.67
Forfeited/cancelled		(25,157	)		21.31
Options outstanding at March 31, 2017		805,903		$	19.68		7.08	$	12,706
Options exercisable at March 31, 2017		406,859		$	14.18		5.73	$	8,659
Vested and expected to vest at March 31, 2017 (1)		791,227		$	19.57		7.05	$	12,530

⁽¹⁾  Represents the number of vested options as of March 31, 2017 plus the number of unvested options expected to vest as of March 31, 2017 based on the unvested outstanding options at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

Summary of Restricted Stock Unit Activity

Information regarding restricted stock unit activity for the three months ended March 31, 2017 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Restricted stock units outstanding at December 31, 2016		353,838		$	—
Granted		125,067			—
Exercised		(63,811	)		—
Forfeited/cancelled		(10,313	)		—
Restricted stock units outstanding at March 31, 2017		404,781		$	—		3.12	$	14,248
Vested and expected to vest at March 31, 2017 (1)		378,579		$	—		3.01	$	13,326

⁽¹⁾  Represents the number of vested restricted stock units as of March 31, 2017 plus the number of unvested restricted stock units expected to vest as of March 31, 2017 based on the unvested outstanding restricted stock units at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2017

Summary of Tax Returns Periods Subject to Examination by Federal, State and International Taxing Authorities

The Company’s tax returns are subject to examination by federal, state and international taxing authorities for the following periods:

Jurisdiction	Fiscal years subject to examination
United States – federal and state	2013-2016
Sweden	2011-2016
Germany	2016

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Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2017

Assets Measured at Fair Value on Recurring Basis

The following fair value hierarchy table presents information about each major category of the Company’s assets measured at fair value on a recurring basis as of March 31, 2017 (in thousands):

	Fair value measurement at reporting date using:
	Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)		Total
Assets:
Money market funds	$	85,292	$	—	$	—	$	85,292
U.S. Government and agency securities		402		—		—		402
Corporate and other debt securities		—		11,778		—		11,778
Total	$	85,694	$	11,778	$	—	$	97,472

Rollforward of Fair Value of Contingent Consideration

The following table provides a rollforward of the fair value of contingent consideration (in thousands):

Balance at December 31, 2016	$	6,119
Payments		(6,119	)
Balance at March 31, 2017	$	—

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2017

Future Minimum Rental Commitments under Company's Leases

Future minimum rental commitments under the Company’s leases as of March 31, 2017 are as follows (in thousands):

	Minimum Rental Commitments
2017 (nine months remaining)	$	2,028
2018		2,647
2019		2,506
2020		2,500
2021		2,467
Thereafter		1,705

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Segment Reporting (Tables)

3 Months Ended

Mar. 31, 2017

Percentage of Revenue from Significant Customers

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

	Three months ended March 31,
	2017			2016
GE Healthcare		27	%		24	%
MilliporeSigma		21	%		28	%

Total Revenue

Percentage by Geographic Area or Significant Customers

The following table represents the Company’s total revenue by geographic area (based on the location of the customer):

	Three months ended March 31,
	2017			2016
United States		38	%		30	%
Sweden		27	%		24	%
Ireland		10	%		4	%
United Kingdom		5	%		13	%
Other		20	%		29	%
Total		100	%		100	%

Accounts Receivable

Percentage by Geographic Area or Significant Customers

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

	March 31, 2017			December 31, 2016
GE Healthcare		25	%		26	%
MilliporeSigma		15	%		8	%

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Basis of Presentation - Additional Information (Detail) - ASU No. 2016-09 - U S Federal And State Jurisdiction $ in Millions	Jan. 01, 2017 USD ($)
Revisions [Line Items]
Net operating loss carry forwards	$ 5.3
Increase in valuation allowance	5.3
Impact of adopting ASU 2016-09 on retained earnings	$ 0.0

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Acquisitions - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended	3 Months Ended	12 Months Ended
	Dec. 14, 2016	Apr. 01, 2016	Dec. 31, 2016	Mar. 31, 2017	Dec. 31, 2016
Business Acquisition [Line Items]
Common stock, par value			$ 0.01	$ 0.01	$ 0.01
Finite lived intangible asset, useful life				13 years	13 years
Goodwill			$ 59,548	$ 59,784	$ 59,548
Customer relationships
Business Acquisition [Line Items]
Finite lived intangible asset, useful life				11 years	11 years
Technology - developed
Business Acquisition [Line Items]
Finite lived intangible asset, useful life				17 years	17 years
Atoll GmbH
Business Acquisition [Line Items]
Stock consideration		538,700
Common stock, par value		$ 0.01
Value of common stock issued		$ 14,138
Business combination, consideration transferred		25,266
Cash consideration		10,176
Working capital adjustments		74
Earnout consideration		1,100
Estimated fair value of contingent consideration		952
Fair value of net assets acquired		25,266
Business acquisition, transaction costs		1,262
Goodwill		17,077
Atoll GmbH | Up Front Payment
Business Acquisition [Line Items]
Cash consideration		10,200
Atoll GmbH | Customer relationships
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets		$ 5,318
Finite lived intangible asset, useful life		13 years
Atoll GmbH | Technology - developed
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets		$ 2,175
Finite lived intangible asset, useful life		14 years
Atoll GmbH | Non-competition agreements
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets		$ 57
Finite lived intangible asset, useful life		2 years
Atoll GmbH | Trademark
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets		$ 11
Finite lived intangible asset, useful life		2 years
TangenX Technology Corporation
Business Acquisition [Line Items]
Business combination, consideration transferred	$ 37,065
Cash consideration	37,532
Working capital adjustments	467
Fair value of net assets acquired	37,065
Business acquisition, transaction costs	1,337
Goodwill	29,416
Business acquisition, revenue			$ 119	$ 1,973
TangenX Technology Corporation | Customer relationships
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets	$ 6,192
Finite lived intangible asset, useful life	13 years
TangenX Technology Corporation | Technology - developed
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets	$ 6,044
Finite lived intangible asset, useful life	20 years
TangenX Technology Corporation | Non-competition agreements
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets	$ 21
Finite lived intangible asset, useful life	5 years
TangenX Technology Corporation | Trademark
Business Acquisition [Line Items]
Fair value of acquired finite lived intangible assets	$ 11
Finite lived intangible asset, useful life	2 years

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Consideration Transferred (Detail) - USD ($) $ in Thousands	Dec. 14, 2016	Apr. 01, 2016
Atoll GmbH
Business Acquisition [Line Items]
Cash consideration		$ 10,176
Value of common stock issued		14,138
Working capital adjustment		(74)
Estimated fair value of contingent consideration		952
Total consideration transferred		$ 25,266
TangenX Technology Corporation
Business Acquisition [Line Items]
Cash consideration	$ 37,532
Working capital adjustment	(467)
Total consideration transferred	$ 37,065

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Consideration Transferred (Parenthetical) (Detail) $ in Thousands	Apr. 01, 2016 USD ($)
Atoll GmbH
Business Acquisition [Line Items]
Working capital adjustment	$ 74

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Components and Allocation of Purchase Price (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016	Dec. 14, 2016	Apr. 01, 2016
Business Acquisition [Line Items]
Goodwill	$ 59,784	$ 59,548
Atoll GmbH
Business Acquisition [Line Items]
Cash and cash equivalents				$ 1,409
Accounts receivable				697
Inventory				155
Other current assets				169
Fixed assets, net				114
Deferred tax assets				885
Accounts payable and other liabilities assumed				(599)
Deferred tax liabilities				(2,202)
Goodwill				17,077
Net assets acquired				25,266
Atoll GmbH | Customer relationships
Business Acquisition [Line Items]
Business combination, intangible assets				5,318
Atoll GmbH | Technology - developed
Business Acquisition [Line Items]
Business combination, intangible assets				2,175
Atoll GmbH | Non-competition agreements
Business Acquisition [Line Items]
Business combination, intangible assets				57
Atoll GmbH | Trademark
Business Acquisition [Line Items]
Business combination, intangible assets				$ 11
TangenX Technology Corporation
Business Acquisition [Line Items]
Cash and cash equivalents			$ 1,218
Accounts receivable			459
Other receivables			111
Inventory			936
Other current assets			50
Fixed assets, net			215
Accounts payable and other liabilities assumed			(3,083)
Deferred tax liabilities			(4,525)
Goodwill			29,416
Net assets acquired			37,065
TangenX Technology Corporation | Customer relationships
Business Acquisition [Line Items]
Business combination, intangible assets			6,192
TangenX Technology Corporation | Technology - developed
Business Acquisition [Line Items]
Business combination, intangible assets			6,044
TangenX Technology Corporation | Non-competition agreements
Business Acquisition [Line Items]
Business combination, intangible assets			21
TangenX Technology Corporation | Trademark
Business Acquisition [Line Items]
Business combination, intangible assets			$ 11

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Unaudited Supplemental Pro Forma Information (Detail) - TangenX Technology Corporation - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Business Acquisition [Line Items]
Total revenue	$ 30,590	$ 26,952
Net income	$ 3,608	$ 5,118
Basic	$ 0.11	$ 0.15
Diluted	$ 0.10	$ 0.15

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Revenue Recognition - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)
Clinical Development
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Potential milestone payments to be received	$ 60
Milestone payment substantive	60
Initial Commercial Sales
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Potential milestone payments to be received	100
BioMarin Pharmaceutical, Inc. | Asset Purchase Agreement
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Potential milestone payments to be received	$ 160

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Change in Accumulated Other Comprehensive Income (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ 168,764
Other comprehensive income	1,031
Ending Balance	176,791
Unrealized Gain (Loss) on Investments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(5)
Other comprehensive income	4
Ending Balance	(1)
Foreign Currency Translation Gain (Loss)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(13,744)
Other comprehensive income	1,027
Ending Balance	(12,717)
Accumulated Other Comprehensive Income (Loss)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(13,749)
Ending Balance	$ (12,718)

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Earnings Per Share - Additional Information (Detail) - $ / shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016
Earnings Per Share [Line Items]
Participating securities outstanding	0	0
Stock options, outstanding	805,903		882,748
Stock options, weighted average exercise price	$ 19.68		$ 16.88
Common stock excluded from calculation of diluted earnings per share	458,685	520,030
Option To Purchase Common Stock
Earnings Per Share [Line Items]
Stock options, outstanding	805,903	1,312,508
Stock options, weighted average exercise price	$ 19.68	$ 11.50
Restricted Stock Units (RSUs)
Earnings Per Share [Line Items]
Common stock excluded from calculation of diluted earnings per share	404,781

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Basic and Diluted Weighted Average Shares Outstanding (Detail) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Weighted Average Number of Shares Outstanding [Line Items]
Weighted average common shares	33,891,702	33,024,681
Dilutive common stock options	490,620	468,894
Weighted average common shares, assuming dilution	34,382,322	33,493,575

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Cash, Cash Equivalents and Marketable Securities - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017 USD ($) Investment	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Cash, cash equivalents and marketable securities [Line Items]
Long-term marketable securities, minimum original maturity term	1 year
Marketable securities, average remaining contractual maturity period	2 months 9 days
Long-term marketable securities	$ 0		$ 0
Number of debt securities in unrealized loss positions | Investment	7
Debt securities in unrealized loss positions, total unrealized loss	$ 2,000
Debt securities in unrealized loss positions, total fair market value	3,946,000
Credit risk	0
Gain (loss) on investments	$ 0	$ 0
Minimum
Cash, cash equivalents and marketable securities [Line Items]
Short-term marketable securities, minimum original maturity term	90 days

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Investments in Marketable Securities (Detail) - Marketable securities - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 12,181	$ 19,552
Gross Unrealized Gain	1	2
Gross Unrealized Loss	(2)	(7)
Fair Value	12,180	19,547
U.S. Government and agency securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	402	807
Fair Value	402	807
Corporate and other debt securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	11,779	18,745
Gross Unrealized Gain	1	2
Gross Unrealized Loss	(2)	(7)
Fair Value	$ 11,778	$ 18,740

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Inventories - Additional Information (Detail) - USD ($)	Mar. 31, 2017	Dec. 31, 2016
Inventory [Line Items]
Reserves for excess and obsolete inventory	$ 385,000	$ 435,000

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Schedule of Inventories (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Inventory [Line Items]
Raw materials	$ 15,417	$ 14,954
Work-in-process	2,769	2,789
Finished products	5,771	6,953
Total	$ 23,957	$ 24,696

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Property, Plant and Equipment (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Leasehold improvements	$ 15,196	$ 14,592
Equipment	15,501	15,214
Furniture and fixtures	3,418	3,218
Construction in progress	1,142	1,264
Total property, plant and equipment	35,257	34,288
Less: accumulated depreciation	(19,884)	(19,332)
Property, plant and equipment, net	$ 15,373	$ 14,956

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Property, Plant and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Property, Plant and Equipment [Line Items]
Depreciation expense of property and equipment	$ 928	$ 751

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Other Intangible Assets (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Intangible Assets [Line Items]
Gross Carrying Amount	$ 36,682	$ 36,501
Accumulated Amortization	$ (7,460)	$ (6,695)
Weighted Average Useful Life (in years)	13 years	13 years
Technology - developed
Intangible Assets [Line Items]
Gross Carrying Amount	$ 12,949	$ 12,911
Accumulated Amortization	$ (1,685)	$ (1,468)
Weighted Average Useful Life (in years)	17 years	17 years
Patents
Intangible Assets [Line Items]
Gross Carrying Amount	$ 240	$ 240
Accumulated Amortization	$ (215)	$ (208)
Weighted Average Useful Life (in years)	8 years	8 years
Customer relationships
Intangible Assets [Line Items]
Gross Carrying Amount	$ 22,697	$ 22,555
Accumulated Amortization	$ (5,525)	$ (4,995)
Weighted Average Useful Life (in years)	11 years	11 years
Other intangibles
Intangible Assets [Line Items]
Gross Carrying Amount	$ 85	$ 84
Accumulated Amortization	$ (35)	$ (24)
Weighted Average Useful Life (in years)	2 years	2 years
Trademark
Intangible Assets [Line Items]
Gross Carrying Amount, indefinite lived intangible assets	$ 711
Trademark
Intangible Assets [Line Items]
Gross Carrying Amount, indefinite lived intangible assets		$ 711

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Intangible Assets - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Finite-Lived Intangible Assets [Line Items]
Amortization expense	$ 715	$ 399

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Amortization Expense for Amortized Intangible Assets (Detail) $ in Thousands	Mar. 31, 2017 USD ($)
Finite-Lived Intangible Assets [Line Items]
Amortization Expense, December 31, 2017 (nine months remaining)	$ 2,265
Amortization Expense, December 31, 2018	2,832
Amortization Expense, December 31, 2019	2,799
Amortization Expense, December 31, 2020	2,494
Amortization Expense, December 31, 2021	$ 2,190

XML

Schedule of Accrued Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Schedule of Accrued Liabilities [Line Items]
Employee compensation	$ 3,439	$ 5,586
Accrued interest payable	815	204
Accrued purchases	566	382
Taxes	1,604	1,692
Contingent consideration		6,119
Royalties	857	248
Professional fees	494	411
Unearned revenue	441	408
Other accrued expenses	900	964
Total	$ 9,116	$ 16,014

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Carrying Value of Convertible Senior Notes (Detail) - 2.125% Convertible Senior Notes due 2021 - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Principal amount	$ 115,000	$ 115,000
Unamortized debt discount	(15,952)	(16,777)
Unamortized debt issuance costs	(2,806)	(2,951)
Total convertible senior notes	$ 96,242	$ 95,272

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Carrying Value of Convertible Senior Notes (Parenthetical) (Detail) - 2.125% Convertible Senior Notes due 2021	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	May 24, 2016
Debt Instrument [Line Items]
Notes, interest rate	2.125%		2.125%
Notes, due date	Jun. 01, 2021	Jun. 01, 2021

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Long Term Debt - Additional Information (Detail)		3 Months Ended	12 Months Ended
	May 24, 2016 USD ($) d $ / shares	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($)
Debt Instrument [Line Items]
Proceeds from issuance of convertible senior notes, net of costs		$ 111,100,000
Accretion of the debt discount		$ 970,000
2.125% Convertible Senior Notes due 2021
Debt Instrument [Line Items]
Notes issued	$ 115,000,000
Notes, interest rate	2.125%	2.125%
Notes, frequency of periodic payment		Semi-annually
Notes, date of first required payment		Dec. 01, 2016
Notes, due date		Jun. 01, 2021	Jun. 01, 2021
Notes conversion ratio per $1,000 principal amount	31.1813
Notes initial conversion price | $ / shares	$ 32.07
Debt covenants debt default holder percent to declare all notes due minimum	25.00%
Number of days within which entity fails to satisfy obligations considered as event of default	270 days
Notes issued, fair value	$ 96,289,000
Contractual coupon interest		$ 611,000
Accretion of the debt discount		825,000
Amortization of the debt issuance costs		$ 145,000
Effective interest rate on the Notes		6.60%
Notes, carrying value		$ 96,242,000	$ 95,272,000
Fair value of the note		$ 144,300,000
2.125% Convertible Senior Notes due 2021 | On any business day on or after June 5, 2019 and prior to the maturity date
Debt Instrument [Line Items]
Notes threshold percentage of stock price trigger	130.00%
Notes threshold trading days | d	20
Notes threshold consecutive trading days	30 days
Notes redemption price	100.00%

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Stock-Based Compensation - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2012	Dec. 31, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,531	$ 922
Stock options, outstanding	805,903			882,748
Number of shares available for future grant	1,531,010
Closing price of common stock	$ 35.20
Weighted average grant date fair value of share-based awards granted	$ 16.46	$ 13.49
Total fair value of stock options vested	$ 1,195	$ 645
Total unrecognized compensation cost	$ 14,921
Unrecognized compensation cost, weighted average remaining requisite service period	2 years 11 months 9 days
Employee Stock Option | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive options, vesting period			3 years
Employee Stock Option | Minimum | Vest Over Three Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive options, vesting percentage			20.00%
Employee Stock Option | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive options, vesting period			5 years
Incentive options, term			10 years
Employee Stock Option | Maximum | Vest Over Five Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive options, vesting percentage			33.00%
Non-Employee Directors
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive options, vesting period			1 year
Option To Purchase Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock options, outstanding	805,903	1,312,508
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock units, outstanding	404,781			353,838
Closing price of common stock	$ 35.20
Aggregate intrinsic value of restricted stock units exercised	$ 2,064	$ 1,009
Weighted average grant date fair value of restricted stock units granted	$ 32.18	$ 26.05
Total grant date fair value of restricted stock units vested	$ 1,616	$ 742

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Stock-Based Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 1,531	$ 922
Cost of product revenue
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	141	60
Research and development
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	132	80
Selling, general and administrative
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock-based compensation expense	$ 1,258	$ 782

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Summary of Option Activity (Detail) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) $ / shares shares
Options Outstanding
Options outstanding at December 31, 2016 | shares	882,748
Granted | shares	86,215
Exercised | shares	(137,903)
Forfeited/cancelled | shares	(25,157)
Options outstanding at March 31, 2017 | shares	805,903
Options exercisable at March 31, 2017 | shares	406,859
Vested and expected to vest at March 31, 2017 | shares	791,227	[1]
Weighted-Average Exercise Price Per Share
Options outstanding at December 31, 2016 | $ / shares	$ 16.88
Granted | $ / shares	32.40
Exercised | $ / shares	9.67
Forfeited/cancelled | $ / shares	21.31
Options outstanding at March 31, 2017 | $ / shares	19.68
Options exercisable at March 31, 2017 | $ / shares	14.18
Vested and expected to vest at March 31, 2017 | $ / shares	$ 19.57	[1]
Weighted-Average Remaining Contractual Term (in years)
Options outstanding at March 31, 2017	7 years 29 days
Options exercisable at March 31, 2017	5 years 8 months 23 days
Vested and expected to vest at March 31, 2017	7 years 18 days	[1]
Aggregate Intrinsic Value
Options outstanding at March 31, 2017 | $	$ 12,706
Options exercisable at March 31, 2017 | $	8,659
Vested and expected to vest at March 31, 2017 | $	$ 12,530	[1]

[1] Represents the number of vested options as of March 31, 2017 plus the number of unvested options expected to vest as of March 31, 2017 based on the unvested outstanding options at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

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Summary of Option Activity (Parenthetical) (Detail) - Employee Stock Option	Mar. 31, 2017
Awards Granted to Non-Executive Level Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated forfeiture rates	8.00%
Awards Granted to Executive Level Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated forfeiture rates	3.00%

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Summary of Restricted Stock Unit Activity (Detail) - Restricted Stock Units (RSUs) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($) shares
Options Outstanding
Restricted stock units outstanding at December 31, 2016	353,838
Granted	125,067
Exercised	(63,811)
Forfeited/cancelled	(10,313)
Restricted stock units outstanding at March 31, 2017	404,781
Vested and expected to vest at March 31, 2017	378,579	[1]
Weighted-Average Remaining Contractual Term (in years)
Restricted stock units outstanding at March 31, 2017	3 years 1 month 13 days
Vested and expected to vest at March 31, 2017	3 years 4 days	[1]
Aggregate Intrinsic Value
Restricted stock units outstanding at March 31, 2017 | $	$ 14,248
Vested and expected to vest at March 31, 2017 | $	$ 13,326	[1]

[1] Represents the number of vested restricted stock units as of March 31, 2017 plus the number of unvested restricted stock units expected to vest as of March 31, 2017 based on the unvested outstanding restricted stock units at March 31, 2017 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

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Summary of Restricted Stock Unit Activity (Parenthetical) (Detail) - Restricted Stock Units (RSUs)	Mar. 31, 2017
Awards Granted to Non-Executive Level Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated forfeiture rates	8.00%
Awards Granted to Executive Level Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Estimated forfeiture rates	3.00%

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Income Taxes - Additional Information (Detail) € in Thousands, $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016 USD ($)	Jan. 01, 2017 USD ($)	Dec. 31, 2016 EUR (€)
Income Taxes [Line Items]
Effective tax rate	24.60%	36.00%
U.S. statutory tax rate	34.00%	34.00%
Latest Tax Year
Income Taxes [Line Items]
Net operating loss and business tax credit carry forwards expiration date			At various dates through December 2036
Domestic Tax Authority
Income Taxes [Line Items]
Business tax credits carry forwards			$ 1,745
State
Income Taxes [Line Items]
Business tax credits carry forwards			442
ASU No. 2016-09 | U S Federal And State Jurisdiction
Income Taxes [Line Items]
Net operating loss carry forwards				$ 5,300
Increase in valuation allowance				5,300
Impact of adopting ASU 2016-09 on retained earnings				$ 0
United States
Income Taxes [Line Items]
Net operating loss carry forwards			48,550
Germany
Income Taxes [Line Items]
Net operating loss carry forwards			$ 2,407		€ 2,287

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Summary of Tax Returns Periods Subject to Examination by Federal, State and International Taxing Authorities (Detail)	3 Months Ended
	Mar. 31, 2017
United States | Earliest Tax Year [Member]
Income Tax Examination [Line Items]
Fiscal year subject to examination	2013
United States | Latest Tax Year
Income Tax Examination [Line Items]
Fiscal year subject to examination	2016
Sweden | Earliest Tax Year [Member]
Income Tax Examination [Line Items]
Fiscal year subject to examination	2011
Sweden | Latest Tax Year
Income Tax Examination [Line Items]
Fiscal year subject to examination	2016
Germany | Latest Tax Year
Income Tax Examination [Line Items]
Fiscal year subject to examination	2016

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Major Category of Assets Measured at Fair Value on Recurring Basis (Detail) - Fair Value, Measurements, Recurring $ in Thousands	Mar. 31, 2017 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	$ 97,472
Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	85,292
U.S. Government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	402
Corporate and other debt securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	11,778
Quoted prices in active markets for identical assets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	85,694
Quoted prices in active markets for identical assets (Level 1) | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	85,292
Quoted prices in active markets for identical assets (Level 1) | U.S. Government and agency securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	402
Significant other observable inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	11,778
Significant other observable inputs (Level 2) | Corporate and other debt securities
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Assets	$ 11,778

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Fair Value Measurement - Additional Information (Detail) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	May 24, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair value of other assets	$ 0
Fair value of other liabilities	$ 0
Accrued liability contingent consideration		$ 6,119,000
2.125% Convertible Senior Notes due 2021
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Principal amount			$ 115,000,000
Notes, due date	Jun. 01, 2021	Jun. 01, 2021
Notes, frequency of periodic payment	Semi-annually
Notes, date of first required payment	Dec. 01, 2016
Total convertible senior notes	$ 96,242,000	$ 95,272,000
Fair value of convertible senior notes	$ 144,300,000

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Rollforward of Fair Value of Contingent Consideration (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance at December 31, 2016	$ 6,119
Payments	(6,119)
Balance at March 31, 2017	$ 0

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Future Minimum Rental Commitments under Company's Leases (Detail) $ in Thousands	Mar. 31, 2017 USD ($)
Operating Leased Assets [Line Items]
2017 (nine months remaining)	$ 2,028
2018	2,647
2019	2,506
2020	2,500
2021	2,467
Thereafter	$ 1,705

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Segment Reporting - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2017 Segment
Segment Reporting Information [Line Items]
Number of operating segment	1

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Percentage of Revenue by Geographic Area (Detail) - Geographic Concentration Risk - Total Revenue	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Concentration Risk [Line Items]
Revenues, percentage by country	100.00%	100.00%
United States
Concentration Risk [Line Items]
Revenues, percentage by country	38.00%	30.00%
Sweden
Concentration Risk [Line Items]
Revenues, percentage by country	27.00%	24.00%
Ireland
Concentration Risk [Line Items]
Revenues, percentage by country	10.00%	4.00%
United Kingdom
Concentration Risk [Line Items]
Revenues, percentage by country	5.00%	13.00%
Other
Concentration Risk [Line Items]
Revenues, percentage by country	20.00%	29.00%

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Percentage of Revenue from Significant Customers (Detail) - Customer Concentration Risk - Sales Revenue	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
GE Healthcare
Revenue, Major Customer [Line Items]
Revenue from significant customers as a percentage of total revenue	27.00%	24.00%
MilliporeSigma
Revenue, Major Customer [Line Items]
Revenue from significant customers as a percentage of total revenue	21.00%	28.00%

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Percentage of Accounts Receivable by Significant Customers (Detail) - Customer Concentration Risk - Accounts Receivable	3 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
GE Healthcare
Concentration Risk [Line Items]
Accounts receivable, percentage by customer	25.00%	26.00%
MilliporeSigma
Concentration Risk [Line Items]
Accounts receivable, percentage by customer	15.00%	8.00%