(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

Registrant’s ~~telephone number, including area code:(781) 250-0111~~Telephone Number, Including Area Code

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 RegulationS-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, anon-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule12b-2 of the Exchange Act. ~~(Check one)~~:

~~Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-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 Rule12b-2~~ ~~of the Securities Exchange Act of 1934.~~

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

The number of shares outstanding of ~~each of~~ the ~~issuer’s classes of~~registrant’s common stock ~~as of November 2, 2017.~~on October 27, 2023 was 55,832,013.

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


	Three months ended September 30,						Nine months ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except share and per share data)	2017			2016			2017			2016
													2023			2022			2023			2022
Revenue:
Product revenue	$	36,514		$	24,677		$	99,516		$	78,942
Products													$	141,156		$	200,708		$	482,910		$	614,668
Royalty and other revenue		66			—			108			—			36			33			111			106

Total revenue		36,580			24,677			99,624			78,942			141,192			200,741			483,021			614,774
Operating expenses:
Costs and operating expenses:
Cost of product revenue		19,987			11,242			47,913			34,955			104,634			86,514			265,786			255,130
Research and development		2,001			1,886			5,603			5,316			10,577			10,228			32,437			32,823
Selling, general and administrative		14,998			7,127			35,365			22,286			55,465			53,643			160,601			162,592
Contingent consideration – fair value adjustments		—			675			—			3,317

Total operating expenses		36,986			20,930			88,881			65,874

Income (loss) from operations		(406	)		3,747			10,743			13,068
Contingent consideration														(34,292	)		(2,309	)		(31,266	)		(11,604	)
Total costs and operating expenses														136,384			148,076			427,558			438,941
Income from operations														4,808			52,665			55,463			175,833
Other income (expenses):
Investment income		102			97			308			234			6,662			2,177			18,112			2,962
Interest expense		(1,618	)		(1,555	)		(4,804	)		(2,198	)		(269	)		(329	)		(813	)		(892	)
Other income (expense)		(100	)		(75	)		(548	)		(979	)

Income (loss) before income taxes		(2,022	)		2,214			5,699			10,125
Amortization of debt issuance costs														(459	)		(455	)		(1,373	)		(1,360	)
Other income (expenses)														895			(6,591	)		1,500			(10,389	)
Other income (expenses), net														6,829			(5,198	)		17,426			(9,679	)
Income before income taxes														11,637			47,467			72,889			166,154
Income tax (benefit) provision		(6,691	)		1,059			(10,476	)		3,474			(6,535	)		7,062			5,824			28,924
Net income													$	18,172		$	40,405		$	67,065		$	137,230
Earnings per share:
Basic													$	0.33		$	0.73		$	1.20		$	2.48
Diluted (Note 12)													$	0.32		$	0.71		$	1.18		$	2.39
Weighted average common shares outstanding:
Basic														55,766			55,498			55,688			55,432
Diluted (Note 12)														56,940			57,304			56,933			57,598

Net income	$	4,669		$	1,155		$	16,175		$	6,651		$	18,172		$	40,405		$	67,065		$	137,230

Earnings per share:
Basic	$	0.11		$	0.03		$	0.44		$	0.20

Diluted	$	0.11		$	0.03		$	0.43		$	0.20

Weighted average shares outstanding:
Basic		41,236,554			33,779,141			36,435,591			33,485,448

Diluted		42,563,002			34,312,887			37,386,333			34,011,534

Other comprehensive income:
Unrealized gain (loss) on investments		—			74			5			89
Foreign currency translation gain (loss)		2,025			(386	)		7,097			(1,019	)

Other comprehensive income (loss):
Foreign currency translation adjustment														(6,382	)		(18,170	)		(9,177	)		(38,375	)
Comprehensive income	$	6,694		$	843		$	23,277		$	5,721		$	11,790		$	22,235		$	57,888		$	98,855

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

Summary of Significant Accounting Policies

Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by Repligen Corporation (the ~~“Company,”~~“Company”, “Repligen”, “our” or “we”) in accordance with generally accepted accounting principles accepted in the United States (“~~U.S.~~ GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), for Quarterly Reports on Form10-Q and Article 10 of RegulationS-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 Form10-K for the fiscal year ended December 31, ~~2016.~~2022, which was filed with the SEC on February 22, 2023 (“Form 10-K”).

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~~periods. The business and economic uncertainty resulting from government-mandated actions in response to the COVID-19 pandemic, including all subsequent variants of the SARS-CoV-2 coronavirus ("COVID-19"), global geopolitical conflicts, supply chain challenges, cost pressure and the overall effects of the current high inflation environment on customers' purchasing patterns has made such estimates more difficult to calculate. Accordingly, 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 on April 1, 2016 and renamed on September 20, 2016), Repligen Singapore Pte. Ltd., our former subsidiary, TangenX Technology Corporation (“TangenX,” acquired on December 14, 2016 and merged into the Company as of June 30, 2017) and Spectrum LifeSciences, LLC (“Spectrum,” acquired on August 1, 2017).subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company made no material changes in the application of its significant accounting policies that were disclosed in its Form 10-K. In the opinion of ~~management,~~the Company, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of only normal, recurring adjustments necessary for a fair presentation of ~~the~~its financial position as of September 30, 2023, its results of operations for the three and nine months ended September 30, 2023 and 2022 and cash ~~flows.~~flows for the three and nine months ended September 30, 2023 and 2022. 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 ASUNo. 2014-09,~~ ~~“Revenue from Contracts with Customers (Topic 606),”which supersedes the revenue recognition requirements in~~Recent Accounting Standards ~~Codification Topic 605,~~~~Revenue Recognition~~,Updates

We consider the applicability 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”; ASU2016-08,~~ ~~“Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)”; ASU2016-10,~~ ~~“Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing”; and ASU2016-12,~~ “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 substantially completed its assessment of the impact of ~~the new revenue standard on the current contracts of~~ all principal revenue streams except those related to the recently acquired business of Spectrum. The Company will complete its assessment of the impact of the new revenue standard on Spectrum’s revenue arrangements in the fourth quarter of 2017. The Company is currently updating its revenue recognition policies and procedures and developing a framework for the newly required financial statement disclosures. While the Company has not made a final determination on the impact of this new revenue standard to its consolidated financial statements, it does not expect this impact to be material.

~~In July 2015, the FASB issued ASUNo. 2015-11,~~ ~~“Inventory (Topic 330): Simplifying the Measurement of Inventory” (“ASU2015-11”~~Accounting Standards Updates ("ASU" or "ASUs"). ~~ASU2015-11~~ ~~requires inventory be measured at the lower of cost and net realizable value, and options that currently exist for market value be eliminated. ASU2015-11~~ 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 January 2016, the FASB issued ASUNo. 2016-01,~~ ~~“Financial Instruments - Overall (Subtopic825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities.” (“ASU2016-01”)~~ This guidance changes how entities measure equity investments that do not result in consolidation and are not accounted for under the equity method. Entities will be required to measure these investments at fair value at the end of each reporting period and recognize changes in fair value in net income. A practicability

exception will be available for equity investments that do not have readily determinable fair values; however, the exception requires the Company to consider relevant transactions that can be reasonably known to identify any observable price changes that would impact the fair value. This guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP. This guidance is effective for annual periods beginning after December 15, 2017, and is applicable to the Company in 2018. Upon adoption, the Company will be required to recognize unrealized gains and losses on its equity securities directly through the Company’s consolidated statements of operations, whereas these equity securities currently are designated as available for sale, and unrealized gains and losses are recognized within accumulated other comprehensive income.

~~In February 2016, the FASB issued ASU No.2016-02, “Leases~~ ~~(Topic 842)” (“ASU2016-02”).~~ ~~ASU2016-02~~ ~~requires lessees to recognize aright-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 assessed the impact of the new standard on its consolidated financial statements, but does expect this new standard to have a material impact on the Company’s ~~consolidated balance sheet.~~

~~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 maintained a full valuation allowance on its net U.S. deferred tax assets as of the adoption date, 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 ASUNo. 2016-15,~~ ~~“Statement of Cash Flows (Topic 203): Classification of Certain Cash Receipts and Cash Payments”. ASUNo. 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~~condensed consolidated financial statements.

~~In January 2017, the FASB issued ASU No.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. The Company does not expect the adoption of ASU~~2017-01~~ ~~to have a material impact on the Company’s consolidated financial statements.~~

~~In January 2017, the FASB issued ASUNo. 2017-04,~~ “Intangibles–Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” eliminating the requirement to calculate the implied fair value, essentially eliminating step two from the goodwill impairment test. The new standard requires goodwill impairment to be based upon the results of step one of the impairment test, which is defined as the excess of the carrying value of a reporting unit over its fair value. The impairment charge will be limited to the amount of goodwill allocated to that reporting unit. The standard is effective for the Company on a prospective basis beginning on January 1, 2020, with early adoption permitted. This new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

~~2. Acquisitions~~

~~Acquisition of Spectrum LifeSciences, LLC~~

On August 1, 2017, the Company completed the acquisition of Spectrum pursuant to the terms of the Agreement and Plan of Merger and Reorganization, dated as of June 22, 2017 (such acquisition, the “Spectrum Acquisition”).

~~Spectrum is a diversified filtration company with a differentiated portfolio of hollow fiber cartridges,bench-top~~ ~~to commercial scale filtration and perfusion systems and a broad portfolio of disposable andsingle-use~~ solutions. Spectrum’s products are primarily used for the filtration, isolation, purification and concentration of monoclonal antibodies, vaccines, recombinant proteins, diagnostic products and cell therapies where the company offers both standard and customized solutions to its bioprocessing customers.

~~Spectrum’s filtration products include its KrosFlo~~^® ~~line of hollow-fiber cartridges, tangential flow filtration (TFF) systems andsingle-use~~ ~~flow path consumables, as well as its Spectra/Por~~^® ~~portfolio of laboratory dialysis products and itsPro-Connex~~^®~~single-use~~ ~~hollow fiberModule-Bag-Tubing~~ ~~(MBT) sets. Outside of filtration, the company sells its Spectra/Chrom~~^® ~~liquid chromatography products for research applications. These bioprocessing products account for the majority of Spectrum revenues. Spectrum also offers a line of operating room products.~~

The Spectrum Acquisition was accounted for as a purchase of a business under ASC 805, Business Combinations. The Spectrum Acquisition was funded through payment of approximately $122.9 million in cash, 6,153,995 unregistered shares of the Company’s common stock totaling $247.6 million and an estimated working capital adjustment of approximately $1.0 million for a total purchase price of $371.5 million.

~~Consideration Transferred~~

The Company accounted for the Spectrum Acquisition as a purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets of Spectrum were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. The fair value of the net assets acquired was approximately $371.5 million.

The estimated consideration and preliminary purchase price information has been prepared using a preliminary valuation. 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
   $ 122,932
Equity consideration
   247,575
Working capital adjustment
   955


Net assets acquired
   $ 371,462

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 has incurred $3,378,000 and $5,761,000 in costs related to the Spectrum Acquisition for the three- and nine-month periods ended September 30, 2017, respectively. These costs are primarily 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 August 1, 2017, based on the preliminary valuation. The components and allocation of the purchase price consists of the following amounts (in thousands):

Cash and cash equivalents
   $ 9,990
Accounts receivable
   5,124
Inventory
   13,774
Prepaid expenses and other assets
   547
Fixed assets
   6,015
Deferred tax assets
   1,102
Customer relationships
   78,400
Developed technology
   38,560
Trademark and tradename
   2,160
Non-competition agreements
   960
Goodwill
   265,084
Accounts payable
   (1,142 )
Unrecognized tax benefit
   (576 )
Accrued liabilities
   (5,535 )
Deferred tax liabilities, net
   (43,001 )


Fair value of net assets acquired
   $ 371,462

Of the consideration paid, $78.4 million represents the fair value of customer relationships that will be amortized over the weighted average determined useful life of 16 years, and $38.6 million represents the fair value of developed technology that will be amortized over a determined useful life of 20 years. $960,000 represents the fair value of~~non-competition~~ agreements that will be amortized over a determined life of 3 years. $2.2 million represents the fair value of trademarks and trade names that are determined to have an indefinite useful life. The aforementioned intangible assets will be amortized on a straight-line basis.

The goodwill of $265.1 million represents future economic benefits expected to arise from synergies from combining operations and commercial organizations to increase market presence and the extension of existing customer relationships. None of the goodwill recorded is expected to be deductible for income tax purposes.

The purchase price allocation is subject to adjustment as purchase accounting is preliminary as of September 30, 2017. The final purchase price allocation will be determined upon completion of a final valuation analysis, and the fair value allocation of assets acquired and liabilities assumed could differ materially from the preliminary valuation analysis. The final allocation may include, but not be limited to, changes in the fair value of property, plant and equipment; changes in allocations to intangible assets and goodwill; changes in deferred tax assets and liabilities; and changes in the values of other assets and liabilities.

~~Revenue, Net Income and Pro Forma Presentation~~

The Company recorded revenue from Spectrum of $7,550,000 from August 1, 2017 through September 30, 2017. The Company has included the operating results of Spectrum in its consolidated statements of operations since the August 1, 2017 acquisition date. The following table presents unaudited supplemental pro forma information as if the Spectrum Acquisition had occurred as of January 1, 2016 (in thousands, except per share data):

   Nine months ended
September 30, 2017
Total revenue
   $ 121,301
Net income
   $ 14,994


Earnings per share:

Basic
   $ 0.36


Diluted
   $ 0.36

Prior to the Spectrum Acquisition, Spectrum did not generate monthly or quarterly financial statements that were prepared in accordance with U.S. GAAP. Therefore, the effort to create Spectrum interim financial information for 2016 would be administratively impracticable. As a result, the unaudited supplemental pro forma information for the nine-month period ended September 30, 2016 has been omitted.

The unaudited pro forma information for the nine-month period ended September 30, 2017 was calculated after applying the Company’s accounting policies and the impact of acquisition date fair value adjustments. The unaudited pro forma net income for the nine-month period ended September 30, 2017 was adjusted to exclude acquisition-related transaction costs, retention costs solely related to the acquisition, the impact of the fair value step-up to inventory and the release of the valuation allowance on the Company’s deferred tax assets, as these expenses would have been incurred in the prior year assuming the Spectrum Acquisition closed on January 1, 2016.

These pro forma condensed consolidated financial results include certain adjustments to reflect the pro forma results of operations as if the acquisition had occurred as of January 1, 2016. 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 combinations occurred at the beginning of the period presented, or of future results of the consolidated entities.

~~TangenX Technology Corporation~~

On December 14, 2016, the Company acquired TangenX, pursuant to the terms of the Share Purchase Agreement, dated as of December 14, 2016, 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. Effective June 30, 2017, TangenX was legally merged with and into the Company.~~

~~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 the Company. 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
   (382 )


Net assets acquired
   $ 37,150

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 $0 and $376,000 in transaction costs for the three- and nine-month periods ended September 30, 2017, respectively, and $935,000 in transaction costs for the year ended December 31, 2016 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
   29,501


Net assets acquired
   $ 37,150

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 2 years. $11,000 represents the fair value of trademarks and trade names that will be amortized over a determined useful life of 5 years. The aforementioned intangible assets will be amortized on a straight-line basis.

The goodwill of $29.5 million represents future economic benefits expected to arise from synergies from combining operations and the extension of existing customer relationships. None of the goodwill recorded is expected to be deductible for income tax purposes.

~~Atoll GmbH~~

~~On April 1, 2016, the Company’s subsidiary, Repligen Sweden, acquired Atoll GmbH (“Atoll”) fromUV-Cap~~ GmbH & Co. KG (“UV Cap”) 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, UV Cap, 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 “Atoll 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 Atoll Stock Consideration under the Atoll Share Purchase Agreement. The issuance of the Atoll 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 Atoll 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 Atoll Stock Consideration, and a milestone payment of $1.1 million for achievement of specific revenue growth targets 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 the Company. The fair value of the net assets acquired was approximately $25.3 million.

~~The total consideration transferred follows (in thousands):~~

Cash consideration, less $74 of working capital adjustments
   $ 10,176
Equity consideration
   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 UV Cap. 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 September 30, 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 $1,307,000 in transaction costs in 2016 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. None of the goodwill recorded is expected to be deductible for income tax purposes.

~~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 ASC605-25~~ 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 ASC605-28,~~ 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 themid-single-digits~~ ~~for the first HDACi portfolio product and for the firstnon-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 ASC605-25~~ ~~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 ASC605-28,~~ 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
   5    7,097    7,102






Balance at September 30, 2017
   $ —      $ (6,647 )    $ (6,647 )

~~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- and nine-month periods ended September 30, 2017 and 2016.

~~Basic and diluted weighted average shares outstanding were as follows:~~

   Three months ended
September 30,    Nine months ended
September 30,
   2017    2016    2017    2016
Weighted average common shares
   41,236,554    33,779,141    36,435,591    33,485,448
Dilutive common stock options and restricted stock units
   484,242    533,746    454,340    526,086
Dilutive effect of senior convertible notes
   842,206    —      496,402    —








Weighted average common shares, assuming dilution
   42,563,002    34,312,887    37,386,333    34,011,534

At September 30, 2017, there were outstanding options to purchase 749,669 shares of the Company’s common stock at a weighted average exercise price of $20.84 per share and 515,468 restricted stock units. For the three- and nine-month periods ended September 30, 2017, 162,544 and 326,572 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 Company’s 2.125% Convertible Senior Notes due 2021 (the “Notes”), the Company has a choice to settle the conversion obligation for the Notes in cash, shares or any combination of the two. The Company currently intends to settle the face value of the Notes in cash and any excess conversion premium in shares. During the third quarter of 2017, the closing price of the Company’s common stock exceeded 130% of the conversion price of the Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the Notes are convertible at the option of the holders of the Notes during the fourth quarter of 2017; however, no holders have elected to convert any of their Notes as of the date of this filing. The Company applies the provisions of ASC 260,~~Earnings Per Share,~~ ~~Subsection10-45-44,~~ to determine the diluted weighted average shares outstanding as it relates to the conversion spread on the Notes. Accordingly, the face value of the Notes is not included in the calculation of diluted income per share, but the dilutive effect of the conversion premium is considered in the calculation of diluted net income per share using the treasury stock method. The share figures in the table above represent the estimated incremental shares that would be issued related to the conversion premium, assuming conversion of all the outstanding Notes as of September 30, 2017.

At September 30, 2016, there were outstanding options to purchase 1,198,673 shares of the Company’s common stock at a weighted average exercise price of $12.03 per share. For the three- and nine-month periods ended September 30, 2016, 253,754 and 348,608 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. The Company applies the provisions of ASC 260,~~Earnings Per Share,~~ ~~Subsection10-45-44,~~ to determine the diluted weighted average shares outstanding as it relates to the conversion spread on the Notes. Accordingly, the face value of the Notes is not included in the calculation of diluted income per share. There is no dilutive effect of the conversion premium on the Notes for the three- and nine-month periods ended September 30, 2016, as the weighted average price of the Company’s common stock was less than the conversion price of the Notes

~~6. Cash, Cash Equivalents and Marketable Securities~~

~~At September 30, 2017, the Company did not have any marketable securities.~~

~~As of December 31, 2016, the Company’s investments included money market funds and short-term marketable securities. These marketable securities were classified asavailable-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.~~

~~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.~~

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

~~7. Inventories~~

~~Inventories relate to the Company’s bioprocessing business. The Company values inventory at cost or, if lower, market value, using thefirst-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 $406,000 at September 30, 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):~~

   September 30,
2017    December 31,
2016
Raw Materials
   $ 22,235    $ 14,954
Work-in-process
   3,633    2,789
Finished products
   12,795    6,953




Total
   $ 38,663    $ 24,696

~~8. Property, Plant and Equipment~~

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

   September 30, 2017    December 31, 2016
Land
   $ 1,021    $ —
Buildings
   768    —
Leasehold improvements
   15,743    14,592
Equipment
   19,543    15,214
Furniture and fixtures
   4,111    3,218
Construction in progress
   3,286    1,264




Total property, plant and equipment
   44,472    34,288
Less: accumulated depreciation
   (22,416 )    (19,332 )




Property, plant and equipment, net
   $ 22,056    $ 14,956

~~Depreciation expense totaled approximately $2,988,000 and $2,360,000 for the nine-month periods ended September 30, 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.

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 September 30, 2017.

~~Intangible assets consisted of the following at September 30, 2017 (in thousands):~~

   Gross Carrying
Amount    Accumulated
Amortization    Weighted
Average
Useful Life
(in years)
Technology – developed
   $ 51,775    $ (2,491 )    19
Patents
   240    (230 )    8
Customer relationships
   102,090    (7,774 )    15
Trademark – indefinite lived
   2,860    —      —
Other intangibles
   1,062    (116 )    3






Total intangible assets
   $ 158,027    $ (10,611 )    16

~~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 $3,476,000 and $1,484,000 for the nine-month periods ended September 30, 2017 and 2016, respectively.~~ As of September 30, ~~2017,~~2023, there were no accounting standards or ASUs recently issued or effective during the ~~Company expects to record amortization expense as follows (in thousands):~~

Years Ending
   Amortization Expense
December 31, 2017 (three months remaining)
   $ 2,625
December 31, 2018
   10,308
December 31, 2019
   10,214
December 31, 2020
   9,619
December 31, 2021
   9,046

~~10. Accrued Liabilities~~

~~Accrued liabilities consist of the following (in thousands):~~

   September 30, 2017    December 31, 2016
Employee compensation
   $ 6,497    $ 5,586
Accrued interest payable
   806    204
Accrued purchases
   448    382
Taxes
   591    1,692
Contingent consideration
   —      6,119
Royalties
   1,064    248
Professional fees
   734    411
Accrued warranty
   528    178
Unearned revenue
   1,299    408
Other accrued expenses
   1,826    786




Total
   $ 13,793    $ 16,014

~~11. Convertible Senior Notes~~

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

   September 30, 2017    December 31, 2016
2.125% Convertible Senior Notes due 2021:

Principal amount
   $ 115,000    $ 115,000
Unamortized debt discount
   (14,261 )    (16,777 )
Unamortized debt issuance costs
   (2,508 )    (2,951 )




Total convertible senior notes
   $ 98,231    $ 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 eachfiscal 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 businessthat would have a material effect 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~~Company's condensed consolidated financial statements 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.disclosures.

Fair Value Measurements

During the third quarter of 2017, the closing price of the Company’s common stock exceeded 130% of the conversion price of the Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the Notes are convertible at the option of the holders of the Notes during the fourth quarter of 2017. As a result, the Company reclassified the carrying value of the Notes to current liabilities from long term liabilities on the Company’s consolidated balance sheet as of September 30, 2017. In the event the closing price conditions are met in the fourth quarter of 2017 or a future fiscal quarter, the Notes will be convertible at a holder’s option during the immediately following fiscal quarter. As of September 30, 2017, the~~if-converted~~ ~~value of the Notes exceeded the aggregate principal amount by approximately $39.8 million. As of the date of this filing, none of the Notes have been converted by the holders of such Notes.~~

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 September 30, 2017, except as noted below.

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 September 30, 2017 includes $611,000, $852,000 and $150,000 for the contractual coupon interest, the accretion of the debt discount and the amortization of the debt issuance costs, respectively. Interest expense recognized on the Notes during the nine-month period ended September 30, 2017 includes $1,833,000, $2,516,000 and $442,000 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 September 30, 2017, the carrying value of the Notes was approximately $98.2 million and the fair value of the principal was approximately $154.8 million. The fair value of the Notes was determined based on the most recent trade activity of the Notes as of September 30, 2017.

~~12. Equity and Stock-Based Compensation~~

~~Public Offering of Common Stock~~

On July 3, 2017, the Company completed a public offering in which 2,807,017 shares of its common stock were sold to the public at a price of $42.75 per share. The underwriters were granted an option, which they exercised in full, to purchase an additional 421,052 shares of the Company’s common stock. The total proceeds from this offering, net of underwriting discounts, commissions and other offering expenses, totaled approximately $129.3 million.

~~Stock-Based Compensation~~

For the three-month periods ended September 30, 2017 and 2016, the Company recorded stock-based compensation expense of approximately $1,817,000 and $1,282,000, 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 Company recorded stock-based compensation expense of approximately $4,845,000 and $3,341,000 for the nine-month periods ended September 30, 2017 and 2016, respectively, for share-based awards granted under the Plans.

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

   Three months ended
September 30,    Nine months ended
September 30,
   2017    2016    2017    2016
Cost of product revenue
   $ 197    $ 116    $ 491    $ 260
Research and development
   127    177    338    362
Selling, general and administrative
   1,493    989    4,016    2,719








Total
   $ 1,817    $ 1,282    $ 4,845    $ 3,341

The 2012 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Employee grants 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 tonon-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 September 30, 2017, options to purchase 749,669 shares and 515,468 restricted stock units were outstanding under the Plans. At September 30, 2017, 1,228,987 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. The Company recognizes expense on awards with service based vesting over the employee’s requisite service period on a straight-line basis. In the third quarter of 2017, the Company issued performance stock units to certain individuals related to the Spectrum Acquisition which are tied to the achievement of certain revenue and gross margin metrics and the passage of time. The Company recognizes expense on performance based awards over the vesting period of each tranche when it is probable that the performance metrics will be achieved. 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 nine-month period ended September 30, 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
   101,844    33.38
Exercised
   (201,966 )    10.08
Forfeited/cancelled
   (32,957 )    20.31



Options outstanding at September 30, 2017
   749,669    $ 20.84    6.72    $ 13,205



Options exercisable at September 30, 2017
   423,217    $ 15.86    5.53    $ 9,602



Vested and expected to vest at September 30, 2017⁽¹⁾
   739,381    $ 20.74    6.70    $ 13,065

⁽¹⁾

Represents the number of vested options as of September 30, 2017 plus the number of unvested options expected to vest as of September 30, 2017 based on the unvested outstanding options at September 30, 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~~various valuation approaches in ~~the table above represents the totalpre-tax~~ ~~intrinsic value (the difference between the closing price of the common stock on September 30, 2017 of $38.32 per share and the exercise price of eachin-the-money~~ ~~option) that would have been received by the option holders had all option holders exercised their options on September 30, 2017.~~

The weighted average grant date fair value of options granted during the nine-month periods ended September 30, 2017 and 2016 was $16.94 and $13.55, respectively. The total fair value of stock options that vested during the nine-month periods ended September 30, 2017 and 2016 was approximately $2,074,000 and $1,590,000, respectively.

~~Information regarding restricted stock unit and performance stock unit activity for the nine-month period ended September 30, 2017 under the Plans is summarized below:~~

   Units
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
   279,054    —
Exercised
   (100,221 )    —
Forfeited/cancelled
   (17,203 )    —



Restricted stock units outstanding at September 30, 2017
   515,468    $ —      2.80    $ 19,753



Vested and expected to vest at September 30, 2017⁽¹⁾
   488,104    $ —      2.66    $ 18,704

⁽¹⁾

Represents the number of vested restricted stock units as of September 30, 2017 plus the number of unvested restricted stock units expected to vest as of September 30, 2017 based on the unvested outstanding restricted stock units at September 30, 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 totalpre-tax~~ intrinsic value (equal to the closing price of the common stock on September 30, 2017 of $38.32 per share) that would have been received by the restricted stock unit holders had all restricted stock units vested on September 30, 2017. The aggregate intrinsic value of restricted stock units vested during the nine-month periods ended September 30, 2017 and 2016 was approximately $3,480,000 and $1,479,000, respectively.

The weighted average grant date fair value of restricted stock units granted during the nine-month periods ended September 30, 2017 and 2016 was $36.85 and $26.28, respectively. The total grant date fair value of restricted stock units that vested during the nine-month periods ended September 30, 2017 and 2016 was approximately $2,565,000 and $1,315,000, respectively.

As of September 30, 2017, there was $18,114,000 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 2.66 years.

~~13. Income Taxes~~

The Company’s effective tax rate for the three- and nine-month periods ended September 30, 2017 was 330.9% and (183.8%), respectively, compared to 47.8% and 34.3%, respectively, for the corresponding periods in the prior year.

In the second quarter of 2017, the Company completed a sale of intellectual property to Repligen Sweden AB that allowed for the Company to utilize certain of its U.S. deferred tax assets. Accordingly, the Company reduced its valuation allowance on its U.S. deferred tax assets by approximately $9,200,000 in the second quarter of 2017 and recorded a $5,625,000 tax benefit on the Company’s consolidated statement of operations as a result of the sale of the intellectual property.

In the third quarter of 2017, in conjunction with the Spectrum Acquisition, the Company determined that its U.S. deferred tax assets were more likely than not to be realized after considering deferred tax liabilities related to the acquired intangible assets. Accordingly, the Company reduced its valuation allowance on its U.S. deferred tax assets by approximately $6,611,000 in the third quarter of 2017.

For the three- and nine-month periods ended September 30, 2017, the effective tax rate differed from the U.S. statutory tax rate of 34% primarily due to valuation allowance releases related to the sale of intellectual property, the Spectrum Acquisition and lower statutory tax rates on foreign profits. For the three-month period ended September 30, 2016, the effective tax rate was higher than the U.S. statutory tax rate of 34% primarily due to unbenefited domestic losses, partially offset by lower statutory tax rates in foreign jurisdictions.

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. While an IRC Section 382 study was completed in the second quarter of 2017, and no current limitations were identified, use of these net operating loss and business tax credit carryforwards may be limited in the future based on certain changes in the ownership interest of significant stockholders.

~~ASU2016-09~~ states that previously unrecognized excess tax benefits related to stock based compensation 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 as of January 1, 2017 for previously unrecognized stock based compensation excess tax benefits outstanding as of the beginning of the period. Because the Company maintained a full valuation allowance on its U.S. deferred tax assets at that date, the Company recorded a corresponding increase to the valuation allowance as of January 1, 2017, 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~~		~~2014-2016~~
~~Sweden~~		~~2011-2016~~
~~Germany~~		~~2016~~
~~Netherlands~~		~~2012-2016~~

~~14. Fair Value Measurement~~

In determining the fair value of its assets and ~~liabilities, the Company uses various valuation approaches.~~liabilities. 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~~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.

Cash, Cash Equivalents and Marketable Securities Held to Maturity

The ~~Company’s fixed income investments have historically comprised~~following table summarizes the Company's cash, cash equivalents and marketable securities held to maturity as of ~~obligations~~September 30, 2023 and December 31, 2022 (amounts in thousands):


	As of September 30, 2023
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash and money market funds	$	630,779	$	—	$	—	$	630,779
Total cash and cash equivalents	$	630,779	$	—	$	—	$	630,779

	As of December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Cash and cash equivalents:
Cash and money market funds	$	523,458	$	—	$	—	$	523,458
Total cash and cash equivalents		523,458		—		—		523,458
Marketable securities held to maturity:
U.S. treasury bills – short-term		100,299		24		—		100,323
Total cash, cash equivalents and marketable securities	$	623,757	$	24	$	—	$	623,781

During the fourth quarter 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,2022, the Company ~~validates applicable prices provided~~purchased $100.0 million of 6-month U.S. treasury bills with the positive intent and ability to hold them until maturity. Therefore, the Company classified this investment as held to maturity and stated it at amortized cost on the condensed consolidated balance sheet. These U.S. treasury bills matured in June 2023. The amortized cost and the fair value of the Company's held to maturity securities by ~~third party pricing services by reviewing their pricing methods~~contractual maturity at December 31, 2022 is summarized below:


	December 31, 2022
	Amortized Costs		Estimated Fair Value
Maturity of one year or less	$	100,299	$	100,323
Total	$	100,299	$	100,323

Fair Value Measured on a Recurring Basis

Financial assets and ~~matrices, obtaining market values from other pricing sources, analyzing pricing data~~financial liabilities measured at fair value on a recurring basis consist of the following as of September 30, 2023 and December 31, 2022 (amounts in ~~certain instances and confirming that the relevant markets are active.~~thousands):


	As of September 30, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	389,473	$	—	$	—	$	389,473
Liabilities:
Short-term contingent consideration	$	—	$	—	$	12,589	$	12,589
Long-term contingent consideration	$	—	$	—	$	13,759	$	13,759

	As of December 31, 2022
	Level 1		Level 2		Level 3		Total
Assets:
Money market accounts	$	343,929	$	—	$	—	$	343,929
Liabilities:
Short-term contingent consideration	$	—	$	—	$	13,950	$	13,950
Long-term contingent consideration	$	—	$	—	$	51,559	$	51,559

Contingent Consideration – Earnouts

As of September 30, ~~2017,~~2023, the ~~Company had no assets or liabilities for which fair value measurement is either~~maximum amount of future contingent consideration (undiscounted) that we could be 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~~pay in connection with the ~~Refine~~completed acquisitions of Avitide, Inc. ("Avitide") in September 2021 and ~~Atoll business combinations. The~~FlexBiosys, Inc. ("FlexBiosys") in April 2023, was $125.0 million over a three-year earnout period and $42.0 million over a two-year earnout period, respectively. Refer to Note 4, "Acquisitions" included in Part II, Item 8, “Financial Statements and Supplementary Data” to our Form 10-K and Note 3, "Acquisition of FlexBiosys, Inc.," to this report for additional information on the contingent consideration ~~related~~earnouts.

During 2023, expected results and a change in market inputs used to ~~Refine was based on actual 2016 revenues. The contingent consideration related to Atoll was based on meeting revenue growth targets~~calculate the discount rate, resulted in ~~2016. These valuations are Level 3 valuations,~~a decrease in amounts reported as of September 30, 2023. A reconciliation of the ~~primary inputs are unobservable. All contingent consideration liabilities were paid~~change in ~~the first quarter of 2017.~~

~~The following table provides a rollforward of~~ the fair value of contingent consideration ~~(in~~– earnouts is included in the following table (amounts in thousands):

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


Balance at September 30, 2017
   $ —


Balance at December 31, 2022	$	65,509
Acquisition date fair value of contingent consideration earnout		6,632
Payment of contingent consideration earnout		(14,527	)
Decrease in fair value of contingent consideration earnouts		(31,266	)
Balance at September 30, 2023	$	26,348

The recurring Level 3 fair value measurement of our contingent consideration earnout that we expect to be required to settle our 2023, 2024 and 2025 contingent consideration obligations for Avitide and FlexBiosys include the following significant unobservable inputs (amounts in thousands, except percent data):


Contingent Consideration Earnout	Fair Value as of September 30, 2023		Valuation Technique	Unobservable Input	Range	Weighted Average(1)
				Probability of
				Success	100%	100%
Commercialization-based payments	$	19,383	Monte Carlo Simulation	Earnout Discount Rate	7.1%	7.1%

				Volatility	13.1%-24.6%	21.7%

Revenue and Volume- based payments	$	1,460	Monte Carlo Simulation	Revenue & Volume Discount Rate	5.1%-9.3%	8.2%
				Earnout Discount Rate	6.1%-7.1%	6.5%
				Probability of Success	100%	100%
Manufacturing line expansions	$	5,505	Probability-weighted present value	Earnout Discount Rate	6.1%-6.4%	6.3%

(1)

Unobservable inputs were weighted by the relative fair value of the contingent consideration liability.

Fair Value Measured on a Nonrecurring Basis

During the three and nine months ended September 30, 2023, there were no re-measurements to the fair value of financial assets and liabilities that are measured at fair value on a nonrecurring basis.

Acquisition of FlexBiosys, Inc.

On April 17, 2023, the Company completed its acquisition of all of the outstanding equity interests in FlexBiosys, pursuant to an Equity Purchase Agreement ("EPA") with FlexBiosys, TSAP Holdings Inc. ("NJ Seller"), Gayle Tarry and Stanley Tarry, as individuals (collectively with NJ Seller, the "Sellers"), and Stanley Tarry, in his capacity as the representative of the Sellers (the "FlexBiosys Acquisition").

FlexBiosys, which is headquartered in Branchburg, New Jersey, offers expert design and custom manufacturing of single-use bioprocessing products and a comprehensive range of products that include bioprocessing bags, bottles, and tubing assemblies. These products will complement and expand our fluid management portfolio of offerings.

Consideration transferred

The FlexBiosys Acquisition was accounted for as a purchase of a business under ASC 805, "Business Combinations," and the Company engaged a third-party valuation firm to assist with the valuation of FlexBiosys. Under the terms of the EPA, all outstanding equity interests of FlexBiosys were acquired for consideration with a value totaling $41.0 million. The FlexBiosys Acquisition was funded through payment of $29.0 million in cash, which includes $6.3 million deposited in escrow for future payments, the issuance of 31,415 unregistered shares of the Company's common stock totaling $5.4 million and contingent consideration with fair value of approximately $6.6 million.

Under the acquisition method of accounting, the assets acquired and liabilities assumed of FlexBiosys were recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. The fair value of the net assets acquired is estimated to be $14.1 million, the fair value of the intangible assets acquired is estimated to be $12.6 million and the residual goodwill is estimated to be $14.3 million. The estimated consideration and preliminary purchase price information has been prepared using a preliminary valuation. Acquisition-related costs are not included as a component of consideration transferred but are expensed in the periods in which costs are incurred. The Company has incurred $0.9 million of transaction and integration costs associated with the FlexBiosys Acquisition from the date of acquisition to September 30, 2023 with $0.5 million of the transaction and integration costs incurred during the three months ended September 30, 2023. The transaction costs are

included in operating expenses in the consolidated statements of comprehensive income for the three and nine months ended September 30, 2023.

Fair Value of Net Assets Acquired

The preliminary allocation of purchase price is based on the fair value of assets acquired and liabilities assumed as of the acquisition date. As of September 30, 2023, the purchase accounting for this acquisition had not been finalized. As additional information becomes available, the Company may further revise its preliminary purchase price allocation during the remainder of the measurement period. Besides tax implications of the purchase price allocation, the final allocation may result in changes to other assets and liabilities.

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


Cash and cash equivalents	$	1,090
Accounts receivable		683
Inventory		667
Prepaid expenses and other current assets		35
Property and equipment		12,034
Operating lease right of use asset		3,537
Customer relationships		2,530
Developed technology		9,860
Trademark and tradename		30
Non-competition agreements		220
Goodwill		14,321
Other long-term assets		10
Accounts payable		(136	)
Accrued liabilities		(314	)
Operating lease liability		(39	)
Operating lease liability, long-term		(3,498	)
Fair value of net assets acquired	$	41,030

During the third quarter of 2023, the Company recorded an immaterial net working capital adjustment related to the FlexBiosys Acquisition, which is included in goodwill in the table above.

Acquired Goodwill

The goodwill of $14.3 million represents future economic benefits expected to arise from anticipated synergies from the integration of FlexBiosys into the Company. These synergies include operating efficiencies and strategic benefits projected to be achieved as a result of the FlexBiosys Acquisition. Substantially all of the goodwill recorded is expected to be deductible for income tax purposes.

Intangible Assets

The following table sets forth the components of the identified intangible assets associated with the FlexBiosys Acquisition and their estimated useful lives:


	Useful life	Fair Value
		(Amounts in thousands)

Customer relationships	12 years	$	2,530
Developed technology	16 years		9,860
Trademark and tradename	4 years		30
Non-competition agreements	5 years		220
		$	12,640

Restructuring Plan

As previously disclosed, in July 2023 the Board of Directors authorized the Company's management team to undertake restructuring activities to simplify and streamline our organization and strengthen the overall effectiveness of our operations (the

"Restructuring Plan"). In ~~May 2016,~~addition to the initial streamlining and re-balancing efforts contemplated in July, the Company is undertaking further restructuring activities (collectively, the "Restructuring Plan") which include consolidating a portion of our manufacturing operations between certain U.S. locations, discontinuing the sale of certain product SKUs, and evaluating raw materials and components secured during the 2020-2022 COVID-19 pandemic period (the "COVID-19 Period") to meet increasing demand during a challenging supply chain environment in the industry. These activities are expected to be substantially completed by the end of 2023.

The Company recorded pre-tax costs of $24.0 million for the three and nine months ended September 30, 2023, related to the Restructuring Plan and for the full year of 2023 the Company expects to record charges of approximately $26 million, with the remaining costs in the fourth quarter related to remaining severance and employee-related costs. Approximately $21 million will be non-cash, relating primarily to an inventory write-off to adjust inventory to net realizable value and accelerated depreciation on equipment related to the shutdown of manufacturing facilities and production lines, the remaining costs will be cash expenses, primarily related to severance and employee-related costs.

The Company recorded pre-tax costs of $24.0 million for the three and nine months ended September 30, 2023 related to the Restructuring Plan and for the full year of 2023 the Company expects to record charges of approximately $26 million.

The following table summarizes the charges related to restructuring activities by type of cost:


	Three and Nine Months Ended September 30, 2023
	Severance & Employee-Related Costs		Inventory Write-Off		Accelerated Depreciation		Facility and Other Exit Costs		Total
	(Amounts in thousands)
Cost of product revenue	$	1,654	$	17,185	$	3,788	$	84	$	22,711
Research and development		34		—		1		—		35
Selling, general and administrative		1,142		—		27		97		1,266
	$	2,830	$	17,185	$	3,816	$	181	$	24,012

Severance and employee-related costs under the Restructuring Plan are associated with actual headcount reductions. Costs incurred include cash severance and non-cash severance, including other termination benefits. Severance and other termination benefit packages are based on established benefit arrangements or local statutory requirements and we recognized the contractual component of these benefits when payment was probable and could be reasonably estimated.

The inventory write-off includes the impact of the Company discontinuing the sale of certain product SKUs and the impact of having proactively secured materials during the COVID-19 Period to meet accelerated demand during a challenging supply chain environment in the industry. Where demand has reduced, finished goods and raw materials, whose value exceeded the projected requirements to be used before reaching their expiration date, were written down to their realizable value. The Restructuring Plan also includes the closing of manufacturing facilities and production lines, which included inventory that could not be repurposed.

Non-cash charges for accelerated depreciation were recognized on long-lived assets that were taken out of service before the end of their normal service due to the shutdown of manufacturing facilities and production lines, in which case depreciation estimates were revised to reflect the use of the assets over their shortened useful life.

The restructuring accrual is included in accrued liabilities in the condensed consolidated balance sheet as of September 30, 2023 and the balance is expected to be paid by the end of 2023. Activity related to the Restructuring Plan for the nine months ended September 30, 2023 was as follows (amounts in thousands):


	Restructuring Costs		Amounts Paid in the Nine Months Ended September 30, 2023			Non-Cash Restructuring Items			Restructuring Liability

Severance & employee-related costs	$	2,830	$	(2,478	)	$	(214	)	$	138
Inventory write-off		17,185		—		$	(17,185	)		—
Accelerated depreciation		3,816		—		$	(3,816	)		—
Facility exit and other exit costs		181		(171	)	$	(10	)		—
Total	$	24,012	$	(2,649	)	$	(21,225	)	$	138

Revenue Recognition

Disaggregation of Revenue

Revenues for the three and nine months ended September 30, 2023 and 2022 were as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Amounts in thousands)
Product revenue	$	141,156	$	200,708	$	482,910	$	614,668
Royalty and other income		36		33		111		106
Total revenue	$	141,192	$	200,741	$	483,021	$	614,774

When disaggregating revenue, the Company considered all of the economic factors that may affect its revenues. Because substantially all of its revenues are from bioprocessing customers, there are no differences in the nature, timing and uncertainty of the Company’s revenues and cash flows from any of its product lines. However, given that the Company’s revenues are generated in different geographic regions, regulatory, economic and geopolitical factors within those regions could impact the nature, timing and uncertainty of the Company’s revenues and cash flows. In addition, a significant portion of the Company’s revenue is generated from a small number of customers; therefore, economic factors specific to these customers could impact the nature, timing and uncertainty of the Company’s revenues and cash flows.

Disaggregated revenue from contracts with customers by geographic region and revenue from significant customers can be found in Note 14, “Segment Reporting,” included in this report.

For more information regarding our product revenue, see Note 6, “Revenue Recognition” included in Part II, Item 8, “Financial Statements and Supplementary Data” to our Form 10-K.

Contract Balances from Contracts with Customers

The following table provides information about receivables and deferred revenue from contracts with customers as of September 30, 2023 (amounts in thousands):


	September 30,		December 31,
	2023		2022
Balances from contracts with customers only:
Accounts receivable	$	106,158	$	116,247
Deferred revenue (included in accrued liabilities and other noncurrent liabilities in the condensed consolidated balance sheets)	$	11,447	$	19,631
Revenue recognized during periods presented relating to:
The beginning deferred revenue balance	$	16,999	$	13,390

The timing of revenue recognition, billings and cash collections results in the accounts receivable and deferred revenue balances on the Company’s condensed consolidated balance sheets.

Goodwill and Intangible Assets

Goodwill

The following table represents the change in the carrying value of goodwill for the nine months ended September 30, 2023 (amounts in thousands):


Balance at December 31, 2022	$	855,513
Acquisition of FlexBiosys, Inc.		14,355
Measurement period adjustment – FlexBiosys		(34	)
Cumulative translation adjustment		(582	)
Balance at September 30, 2023	$	869,252

During each of the fourth quarters of 2022, 2021 and 2020, the company completed its annual assessments and concluded that goodwill was not impaired in any of those years. The Company has not identified any "triggering" events which indicate an impairment of goodwill in the three and nine months ended September 30, 2023.

Intangible Assets

Indefinite-lived intangible assets are reviewed for impairment at least annually. There has been no impairment of the Company’s intangible assets for the periods presented.

Intangible assets, net, consisted of the following at September 30, 2023:


	September 30, 2023
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
	(Amounts in thousands)
Finite-lived intangible assets:
Technology – developed	$	200,188	$	(40,093	)	$	160,095		16
Patents		240		(240	)		—		8
Customer relationships		255,113		(78,929	)		176,184		15
Trademarks		7,709		(1,653	)		6,056		19
Other intangibles		3,026		(2,332	)		694		4
Total finite-lived intangible assets		466,276		(123,247	)		343,029		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—
Total intangible assets	$	466,976	$	(123,247	)	$	343,729

Intangible assets, net, consisted of the following at December 31, 2022:


	December 31, 2022
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Weighted Average Useful Life (in years)
	(Amounts in thousands)
Finite-lived intangible assets:
Technology – developed	$	190,463	$	(30,992	)	$	159,471		16
Patents		240		(240	)		—		8
Customer relationships		252,934		(66,559	)		186,375		15
Trademarks		7,682		(1,319	)		6,363		19
Other intangibles		2,811		(2,044	)		767		4
Total finite-lived intangible assets		454,130		(101,154	)		352,976		16
Indefinite-lived intangible asset:
Trademarks		700		—			700		—
Total intangible assets	$	454,830	$	(101,154	)	$	353,676

Amortization expense for finite-lived intangible assets was $7.5 million and $6.6 million for each of the three months ended September 30, 2023 and 2022, respectively, and $22.4 million and $19.8 million for each of the nine months ended September 30,

2023 and 2022, respectively. As of September 30, 2023, the Company expects to record the following amortization expense in future periods (amounts in thousands):


	Estimated
	Amortization
For the Years Ended December 31,	Expense
2023 (remaining three months)	$	7,504
2024		29,558
2025		29,220
2026		29,192
2027		29,159
2028 and thereafter		218,396
Total	$	343,029

Consolidated Balance Sheet Detail

Inventories, net

Inventories, net consists of the following:


	September 30,		December 31,
	2023		2022
	(Amounts in thousands)
Raw materials	$	128,894	$	149,438
Work-in-process		5,630		6,183
Finished products		76,848		82,656
Total inventories, net	$	211,372	$	238,277

Property, Plant and Equipment

Property, plant and equipment consist of the following:


	September 30,			December 31,
	2023			2022
	(Amounts in thousands)
Land	$	950		$	1,003
Buildings		1,637			1,599
Leasehold improvements		124,925			115,672
Equipment		111,625			94,613
Furniture, fixtures and office equipment		8,786			8,307
Computer hardware and software		35,359			29,813
Construction in progress		37,679			31,553
Other		410			420
Total property, plant and equipment		321,371			282,980
Less – Accumulated depreciation		(119,753	)		(92,307	)
Total property, plant and equipment, net	$	201,618		$	190,673

Accrued Liabilities

Accrued liabilities consist of the following:


	September 30,		December 31,
	2023		2022
	(Amounts in thousands)
Employee compensation	$	13,727	$	33,522
Deferred revenue		10,879		19,283
Income taxes payable		2,446		2,459
Other		15,491		15,856
Total accrued liabilities	$	42,543	$	71,120

Convertible Senior Notes

0.375% Convertible Senior Notes due 2024

On July 19, 2019, the Company issued ~~$115~~$287.5 million aggregate principal pursuant to the 2019 Notes, which includes the underwriters’ exercise in full of an option to purchase an additional $37.5 million aggregate principal amount of 2019 Notes (the “Notes Offering”). The net proceeds of the Notes ~~due June 1, 2021.~~ Offering, after deducting underwriting discounts and commissions and other related offering expenses payable by the Company, were approximately $278.5 million. The 2019 Notes are senior, unsecured obligations of the Company, and bear interest at a rate of 0.375% per year. Interest is payable semi-annually in arrears on ~~June 1~~January 15 and ~~December 1~~July 15 of each year, beginning on ~~December 1, 2016.~~January 15, 2020. The 2019 Notes will mature on July 15, 2024, unless earlier repurchased or converted in accordance with their terms.

During the third quarter of 2023, the closing price of the Company’s common stock exceeded 130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the 2019 Notes are convertible at the option of the holders of the 2019 Notes during the fourth quarter of 2023, the quarter immediately following the quarter when the conditions are met, as stated in the terms of the 2019 Notes. These conditions have been met each quarter since the third quarter of 2020. As a result, $0.1 million aggregate principal amount of the 2019 Notes have been requested for conversion by the note holders since the issuance of the 2019 Notes and all conversions have settled as of September 30, ~~2017,~~2023. The conversions resulted in the issuance of a nominal number of shares of the Company’s common stock to the note holders. Because the 2019 Notes mature within one year of the report date, the Company classifies the carrying value of the 2019 Notes as current liabilities on the Company’s condensed consolidated balance sheets at September 30, 2023.

The net carrying value of the liability component of the 2019 Notes is as follows:



	September 30, 2023			December 31, 2022
	(Amounts in thousands)
0.375% Convertible Senior Notes due 2024:
Principal amount	$	287,437		$	287,470
Unamortized debt issuance costs		(1,481	)		(2,855	)
Net carrying amount	$	285,956		$	284,615

The following table sets forth total interest expense recognized related to the 2019 Notes:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(Amounts in thousands)
Contractual interest expense	$	269		$	270		$	808		$	809
Amortization of debt issuance costs		459			455			1,373			1,360
Total	$	728		$	725		$	2,181		$	2,169
Effective interest rate of the liability component		1.0	%		1.0	%		1.0	%		1.0	%

At September 30, 2023 and December 31, 2022, the carrying value of the 2019 Notes was ~~approximately $98.2~~$286.0 million and $284.6 million, respectively, net of unamortized discount, and the fair value of the 2019 Notes was ~~approximately $154.8 million.~~$405.3 million and $452.0 million, respectively. The fair value of the 2019 Notes was determined based on the most recent trade activity of the 2019 Notes at September 30, 2023 and December 31, 2022.

Stockholders’ Equity

Stock Option and Incentive Plans

Under the Company’s current 2018 Stock Option and Incentive Plan (the “2018 Plan”), the number of shares of the Company’s common stock that were reserved and available for issuance is 2,778,000, plus the number of shares of common stock that were available for issuance under the Company’s previous equity plans. The shares of common stock underlying any awards under the 2018 Plan and previous equity plans (together, the “Plans”) that are forfeited, canceled or otherwise terminated (other than by

exercise) shall be added back to the shares of stock available for issuance under the 2018 Plan. At September 30, 2023, 1,704,118 shares were available for future grants under the 2018 Plan.

Stock Issued for Earnout Payment

In May 2023, the Company issued 42,621 shares of its common stock to former securityholders of Avitide to satisfy the contingent consideration obligation established under the Agreement and Plan of Merger and Reorganization (the "Avitide Agreement") which the Company entered into as part of the acquisition of Avitide in September 2021. See Note 4, "Acquisitions", included in Part II, Item 8 "Financial Statements and Supplemental Data" to our Form 10-K, for additional information on the acquisition of Avitide and the contingent consideration. The shares represent 50% of the earnout consideration earned in the First Earnout Year (as defined in the Avitide Agreement).

Stock-Based Compensation

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Amounts in thousands)
Cost of product revenue	$	393	$	610	$	1,506	$	1,847
Research and development		700		534		2,095		1,955
Selling, general and administrative		5,280		5,010		15,509		17,252
Total stock-based compensation	$	6,373	$	6,154	$	19,110	$	21,054

Stock Options

Information regarding option activity for the nine months ended September 30, 2023 under the Plans is summarized below:


	Shares			Weighted average exercise price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Options outstanding at December 31, 2022		609,965		$	71.74
Granted		66,069		$	173.08
Exercised		(22,872	)	$	15.52
Forfeited/expired/cancelled		(2,000	)	$	199.71
Options outstanding at September 30, 2023		651,162		$	83.60
Options exercisable at September 30, 2023		371,782		$	61.46
Vested and expected to vest at September 30, 2023(1)		637,673		$	83.18		5.73	$	53,173

(1)

Represents the number of vested options as of September 30, ~~2017. These valuations~~2023 plus the number of unvested options expected to vest as of September 30, 2023 based on the unvested outstanding options at September 30, 2023 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 September 30, 2023, the last business day of the third quarter of 2023, of $159.01 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 September 30, 2023. The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2023 and 2022 was $3.4 million and $9.8 million, respectively.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2023 and 2022 was $85.70 and $76.64, respectively.

Stock Units

The fair value of stock units is calculated using the closing price of the Company’s common stock on the date of grant. The Company recognizes expense on awards with service-based vesting over the employee’s requisite service period on a straight-line basis. The Company recognizes expense on performance-based awards over the vesting period based on the probability that the performance metrics will be achieved. Information regarding stock unit activity, which includes activity for restricted stock units and performance stock units, for the nine months ended September 30, 2023 under the Plans is summarized below:


	Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2022		531,034		$	142.57
Awarded		175,475		$	174.86
Vested		(173,714	)	$	118.70
Forfeited/cancelled		(53,920	)	$	179.53
Unvested at September 30, 2023		478,875		$	188.41
Vested and expected to vest at September 30, 2023(1)		411,646		$	153.79

(1)

Represents the number of vested stock units as of September 30, 2023 plus the number of unvested stock units expected to vest as of September 30, 2023 based on the unvested outstanding stock units at September 30, 2023 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 of stock units vested during the nine months ended September 30, 2023 and 2022 was $32.3 million and $40.4 million, respectively.

The weighted average grant date fair value of stock units granted during the nine months ended September 30, 2023 and 2022 was $174.86 and $191.55, respectively.

As of September 30, 2023, there was $66.0 million 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 2.88 years. The Company expects 2,156,681 unvested options and stock units to vest over the next five years.

10.

Commitments and Contingencies

Collaboration Agreements

The Company licenses certain technologies that are, ~~Level 1 valuations,~~or may be, incorporated into its technology under several agreements and also has entered into several clinical research agreements that require the Company to fund certain research projects. Generally, the license agreements require the Company to pay annual maintenance fees and royalties on product sales once a product has been established using the technologies. Research and development expenses associated with license agreements were immaterial amounts for the three and nine months ended September 30, 2023 and 2022.

In June 2018, the Company secured an agreement with Navigo Proteins GmbH (“Navigo”) for the exclusive co-development of multiple affinity ligands for which the Company holds commercialization rights. The Company is manufacturing and supplying the first of these ligands, NGL-Impact®, exclusively to Purolite Life Sciences, an Ecolab Inc. company (“Purolite”), who is pairing the Company’s high-performance ligand with Purolite’s agarose jetting base bead technology used in their Jetted A50 Protein A resin product. The Company also signed a long-term supply agreement with Purolite for NGL-Impact and other potential additional affinity ligands that may advance from the Company’s Navigo collaboration. In September 2020, the Company and Navigo successfully completed co-development of an affinity ligand targeting the SARS-CoV-2 spike protein, to be utilized in the purification of vaccines for the COVID-19 pandemic, including emerging variants of the SARS-CoV-2 coronavirus. The Company has proceeded with scaling up and manufacturing this ligand and the development and validation of the related affinity chromatography resin, which is marketed by the Company. In September 2021, the Company and Navigo successfully completed co-development of a novel affinity ligand that addresses aggregation issues associated with pH sensitive antibodies and Fc-fusion proteins. The Company is manufacturing and supplying this ligand, NGL-Impact® HipH, to Purolite. The Navigo and Purolite agreements are supportive of the Company’s strategy to secure and reinforce the Company’s proteins business. The Company made royalty payments to Navigo of $0.8 million and $0.4 million for the three months ended

September 30, 2023 and 2022, respectively, and payments of $3.1 million and $1.5 million for the nine months ended September 30, 2023 and 2022, respectively.

Legal Proceedings

From time to time, in the normal course of its operations, the Company is subject to litigation matters and claims relating to employee relations, business practices and patent infringement. Litigation can be expensive and disruptive to normal business operations. Moreover, the results of complex legal proceedings are difficult to predict, and the Company's view of these matters may change in the future as the ~~valuations are~~litigation and events related thereto unfold. The Company expenses legal fees as incurred. The Company records a provision for contingent losses when it is both probably that a liability has been incurred and the amount of the loss can be reasonably estimated. An unfavorable outcome to any legal matter, if material, could have an adverse effect on the Company's operations or its financial results.

11.

Income Taxes

For the three and nine months ended September 30, 2023, the Company recorded an income tax benefit of $(6.5) million and an income tax provision of $5.8 million, respectively. The Company’s effective tax rate for the three and nine months ended September 30, 2023 was (56.2%) and 8.0%, respectively, compared to 14.9% and 17.4% for the corresponding periods in the prior year.

On August 16, 2022, the United States enacted the Inflation Reduction Act of 2022 ("Inflation Reduction Act"), which, among other things, implements a 15% alternative minimum tax on global adjusted financial statement income of certain large corporations, a 1% excise tax on net stock repurchases and several tax incentives to promote clean energy and was effective beginning in 2023. We evaluated the provisions of the Inflation Reduction Act and no provision had a material effect on our consolidated financial position or results of operations.

12.

Earnings Per Share

A reconciliation of basic and diluted weighted average shares outstanding is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Amounts in thousands, except per share data)
Numerator:
Net income	$	18,172	$	40,405	$	67,065	$	137,230
Effect of dilutive securities:
Charges associated with convertible debt instruments, net of tax		—		—		—		387
Numerator for diluted earnings per share – net income available to common stockholders after the effect of dilutive securities	$	18,172	$	40,405	$	67,065	$	137,617

Denominator:
Weighted average shares used in computing net income per share – basic		55,766		55,498		55,688		55,432
Effect of dilutive shares:
Options and stock units		439		673		469		663
Convertible Senior Notes		735		1,131		776		1,501
Dilutive effect of unvested performance stock units		-		2		-		2
Dilutive potential common shares		1,174		1,806		1,245		2,166
Denominator for diluted earnings per share – adjusted weighted average shares used in computing net income per share – diluted		56,940		57,304		56,933		57,598

Earnings per share:
Basic	$	0.33	$	0.73	$	1.20	$	2.48
Diluted	$	0.32	$	0.71	$	1.18	$	2.39

For the three and nine months ended September 30, 2023, 301,404 shares and 328,179 shares, respectively, of the Company’s common stock were excluded from the calculation of diluted EPS 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. Comparatively, for the three and nine months ended September 30, 2022, 112,179 shares and 149,187 shares, respectively, were considered anti-dilutive.

In July 2019, the Company issued $287.5 million aggregate principal amount of the 2019 Notes. As provided by the terms of the indenture underlying the 2019 Notes, prior to March 4, 2022, conversion of the 2019 Notes could have been settled in cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. On March 4, 2022, we entered into the Second Supplemental Indenture for the 2019 Notes, which irrevocably elected to settle the conversion of the 2019 Notes using a combination of cash and shares of the Company’s common stock, settling the par value of the 2019 Notes in cash and any excess conversion premium in shares.

As provided by the terms of the Second Supplemental Indenture underlying the 2019 Notes, the Company irrevocably elected to settle the conversion obligation for the 2019 Notes in a combination of cash and shares of the Company's common stock. This means the Company will settle the par value of the 2019 Notes in cash and any excess conversion premium in shares. The Company adopted ASU 2020-06 effective January 1, 2022. Under ASU 2020-06, the Company is required to reflect the dilutive effect of the convertible securities by application of the "if-converted" method, which means the denominator of the EPS calculation would include the total number of shares assuming the 2019 Notes had been fully converted at the beginning of the period. Prior to March 4, 2022, the Company had the choice to settle the conversion of the 2019 Notes in cash, stock or a combination of the two. Therefore, from January 1, 2022 (the date the Company adopted ASU 2020-06) to March 4, 2022, the Company included 3,474,429 shares in the denominator of the EPS calculation, applying the if converted method. Subsequent to March 4, 2022, after the Second Supplemental Indenture became effective, the Company irrevocably elected to settle the conversion obligation for the 2019 Notes in a combination of cash and shares of the Company's common stock, and from March 5, 2022 forward, only the excess premium will be settled with shares. Under the if-converted method of calculating dilutive shares, the Company was also required to exclude amortization of debt issuance costs and interest charges applicable to the convertible debt from the numerator of the dilutive EPS calculation for the period from January 1, 2022 to March 4, 2022, as if the interest on convertible debt was never recognized for that period. For the three months ended March 31, 2022, the Company excluded interest charges of $0.4 million (net of tax) from the numerator.

Prior to the adoption of ASU 2020-06, the Company applied the provisions of ASC 260, “Earnings Per Share,” Subsection 10-45-44, to determine the diluted weighted average shares outstanding as it related to the conversion spread on its convertible notes. Accordingly, the par value of the 2019 Notes was not included in the calculation of diluted income per share, but the dilutive effect of the conversion premium was considered in the calculation of diluted net income per share using the treasury stock method. The dilutive impact of the 2019 Notes was based on ~~unadjusted quoted prices~~the difference between the Company’s current period average stock price and the conversion price of the 2019 Notes, provided there was a premium. Pursuant to this accounting standard, there was no dilution from the accreted principal of the 2019 Notes. For the three and nine months ended September 30, 2023, the dilutive effect of the conversion premium included in ~~active markets that~~the calculation of diluted earnings was 735,150 shares and 776,339 shares, respectively. For the three and nine months ended September 30, 2022, the dilutive effect of the conversion premium included in the calculation of diluted earnings was 1,130,530 shares and 1,500,717 shares, respectively.

13.

Related Party Transactions

Certain facilities leased by our subsidiary, Spectrum LifeSciences LLC ("Spectrum") are owned by the Roy T. Eddleman Living Trust (the "Trust"). As of September 30, 2023, the Trust owned greater than 5% of the Company’s outstanding shares. Therefore, the Company ~~has~~considers the ~~ability~~Trust to ~~access.~~be a related party. The ~~Notes are discussed~~lease amounts paid to the Trust prior to the public offering were negotiated in ~~more detail in Note 11, “Long Term Debt~~.”

~~There were nore-measurements~~ ~~to fair value during~~connection with the acquisition of Spectrum. The Company incurred rent expense totaling $0.1 million and $0.2 million respectively for each of the three months ended September 30, ~~2017 of financial assets~~2023 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 September 30, 2017 are as follows (in thousands):~~

   Minimum Rental
Commitments
2017 (three months remaining)
   $ 939
2018
   3,644
2019
   3,367
2020
   3,060
2021
   2,751
Thereafter
   2,319

~~16. Related Party Transactions~~

In July 2017, in conjunction with the Spectrum Acquisition, the Board of Directors engaged one of the Company’s independent directors to serve as the chairperson of the Spectrum Integration Committee. In this role, this Director will work directly with the Company’s executive team on general integration strategy and focus on the integration of Spectrum’s operations and commercial organization with the Company. As of September 30, 2017, the Company has accrued approximately $95,000 of expense2022 related to ~~this director’s services.~~

Additionally, certain facilities leased by Spectrum are owned by the former owner of Spectrum, who currently holds greater than 10% of the Company’s outstanding common stock. The lease amounts paid to this shareholder were negotiated in connection with the Spectrum Acquisition. The Company hasthese leases and incurred rent expense ~~totaling $134,000~~of $0.5 million for each of the ~~three-month period~~nine months ended September 30, ~~2017 related~~2023 and 2022.

14.

Segment Reporting

Operating segments are components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker ("CODM") in deciding how to ~~these leases.~~allocate resources and assess performance. Our Chief Executive Officer ("CEO") has been identified as the CODM.

~~17. Segment Reporting~~21

The Company views its operations, makes decisions regarding how to allocate resources and manages its business as one operating segment and one ~~operating~~reportable segment. Our CODM evaluates financial information on a consolidated basis. As a result, the required financial segment information ~~disclosed herein represents all~~can be found in the consolidated condensed financial statements of the ~~material financial information related to the Company’s principal operating segment.~~Company disclosed herein.

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

   Three months ended
September 30, Nine months ended
September 30,
   2017 2016 2017 2016
United States
   45 % 45 % 40 % 40 %
Sweden
   15 % 23 % 23 % 29 %
United Kingdom and Ireland
   10 % 11 % 13 % 14 %
Other
   30 % 21 % 24 % 17 %


Total
   100 % 100 % 100 % 100 %


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Revenue by customers' geographic locations:
North America		49	%		42	%		44	%		42	%
Europe		34	%		35	%		36	%		38	%
APAC/Other		17	%		23	%		20	%		20	%
Total revenue		100	%		100	%		100	%		100	%

~~Revenue~~Concentrations of Credit Risk and Significant Customers

Financial instruments that subject the Company to significant concentrations of credit risk primarily consist of cash and cash equivalents, marketable securities and accounts receivable. Per the Company’s investment policy, cash equivalents and marketable securities are invested in financial instruments with high credit ratings and credit exposure to any one issue, issuer (with the exception of U.S. Treasury obligations) and type of instrument is limited. At September 30, 2023 and December 31, 2022, the Company had no investments associated with foreign exchange contracts, options contracts or other foreign hedging arrangements.

Concentration of credit risk with respect to accounts receivable is limited to customers to whom the Company makes significant sales. While a reserve for the potential write-off of accounts receivable is maintained, the Company has not written off any significant accounts to date. To control credit risk, the Company performs regular credit evaluations of its customers’ financial condition.

There was no revenue from ~~significant~~ customers ~~as a percentage~~that represented 10% or more of the ~~Company’s~~Company's total revenue ~~is as follows:~~for the three and nine months ended September 30, 2023 and 2022.

   Three months ended
September 30, Nine months ended
September 30,
   2017 2016 2017 2016
GE Healthcare
   17 % 23 % 24 % 29 %
MilliporeSigma
   14 % 28 % 18 % 30 %

No accounts receivable balance from a specific customer represented 10% or more of the Company's total trade accounts receivable at September 30, 2023. Significant accounts receivable balances ~~as a percentage~~representing 10% or more of the ~~Company’s~~Company's accounts receivable and royalties at December 31, 2022 came from our accounts receivable balance outstanding with Purolite, an Ecolab Inc. company, which was 12.7% of our total trade accounts receivable balance.

15.

Subsequent Event

Acquisition of Metenova Holding AB

On October 2, 2023, Repligen Sweden AB, a subsidiary of the Company completed its acquisition of all of the outstanding equity interests in Metenova Holding AB ("Metenova"), pursuant to a Share Sale and Purchase Agreement with, inter alia, Metenova for approximately $173 million in cash and the Company's equity. Metenova will further strengthen our fluid management portfolio with its magnetic mixing and drive train technologies that are widely used by global biopharmaceutical companies and contract development and manufacturing organizations.

The Company will account for the acquisition of Metenova as ~~follows:~~a purchase of business under the acquisition method of accounting and has engaged a third-party valuation firm to assist with the valuation of the business acquired. The estimated purchase price allocation for the acquisition of Metenova will be included in the Annual Report on Form 10-K for the year ended December 31, 2023.

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

Repligen and its subsidiaries, collectively doing business as Repligen Corporation (“Repligen”, “we”, “our”, or the “Company”) is a ~~bioprocessing-focused,~~ global life sciences company ~~bringing over 30 years~~that develops and commercializes highly innovative bioprocessing technologies and systems that increase efficiencies and flexibility in the process of ~~expertise~~manufacturing biological drugs.

As the overall market for biologics continues to grow and ~~innovation~~expand, our customers – primarily large biopharmaceutical companies and contract development and manufacturing organizations and other life sciences companies (integrators) – face critical production cost, capacity, quality and time pressures. Built to address these concerns, our ~~customers. Our mission is~~products help set new standards for the way biologics are manufactured. We are committed to ~~inspire~~inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies, recombinant proteins, vaccines and cell and gene therapies – that ~~improve~~are improving human health worldwide.

~~Focused on delivering cost and process efficiencies, we offer innovative~~ Increasingly, our technologies ~~that help set new standards~~are being implemented to overcome challenges 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~~processing plasmid DNA (a starting material for the production of ~~biologic drugs – principally antibody-based therapeutics, recombinant proteins~~mRNA) and ~~vaccines – while ensuring that~~gene delivery vectors such as lentivirus and adeno-associated viral vectors. For more information regarding our business, products and acquisitions, see Part I, Item 1, “Business” included in our 2022 Annual Report on Form 10-K (“Form 10-K”), which was filed with the ~~highest drug quality~~Securities and ~~safety standards are upheld.~~Exchange Commission (“SEC”) on February 22, 2023.

~~Since our strategic decision in 2012 to focus fully on building our~~We currently operate as one bioprocessing business, with a comprehensive suite of products to serve both upstream and downstream processes in biological drug manufacturing. Building on over 40 years of industry expertise, we have ~~expanded~~developed a broad and diversified product portfolio that reflects our passion for innovation and the customer-first culture that drives our entire organization. We continue to capitalize on opportunities to maximize the value of our product ~~offering beyond~~platform through both organic growth initiatives (internal innovation and commercial leverage) and targeted acquisitions.

As a result of our ~~core Protein A affinity ligands portfolio,~~global presence, a significant portion of our revenue and ~~believe we~~expenses is denominated in currencies other than the U.S. dollar. We are ~~well-positioned~~therefore subject to non-U.S. exchange exposure. Exchange rates can be volatile and a substantial weakening or strengthening of foreign currencies against the U.S. dollar could increase or reduce our revenue and gross profit margin and impact the comparability of results from period to period.

We have experienced, and expect to continue to experience, cost inflation, primarily in raw materials, and other supply chain costs, as a result of global macroeconomic trends, including global geopolitical conflicts and labor shortages. Actions taken to mitigate supply chain disruptions and inflation, including price increases and productivity improvements, have generally been successful in offsetting the ~~bioprocessing market assingle-use~~ ~~and continuous processing technologies are increasingly adopted by biopharmaceutical manufacturers. This expansion has been through a combination~~impact of internal innovations and acquisitions. 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.~~these trends. In addition, decreasing demand for COVID-19 vaccinations is driving a reduction in future demand of our products related to these vaccines. We expect that these trends will continue to impact our results for the rest of 2023.

On April 17, 2023, we ~~have established a Filtration business that includes our leading XCell™ ATF and TangenX™ tangential flow filtration (“TFF”) product lines, and with our~~completed the acquisition of ~~Spectrum,~~all of the outstanding equity interests in FlexBiosys, Inc. ~~(“Spectrum”~~("FlexBiosys"), pursuant to an Equity Purchase Agreement ("EPA") ~~on August 1, 2017 we added a diverse line~~with FlexBiosys, TSAP Holdings Inc. ("NJ Seller"), Gayle Tarry and Stanley Tarry, as individuals (collectively with NJ Seller, the "Sellers"), and Stanley Tarry, in his capacity as the representative of ~~hollow fiber TFF~~the Sellers (the "FlexBiosys Acquisition").

FlexBiosys, which is headquartered in Branchburg, New Jersey, offers expert design and custom manufacturing of single-use bioprocessing products and ~~systems.~~a comprehensive range of products that include bioprocessing bags, bottles, and tubing assemblies. These products will complement and expand our fluid management portfolio of offerings.

On October 2, 2023, we completed the acquisition of all of the outstanding equity interests in ~~biomanufacturing~~Metenova Holding AB ("Metenova"), pursuant to a Share Sale and ~~works~~Purchase Agreement with, ~~industry leaders~~inter alia, Metenova for approximately $173 million in cash and ~~customers to develop innovative solutions~~the Company's equity. Metenova will further strengthen our fluid management portfolio with its magnetic mixing and

drive train technologies 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 widely 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 70 antibody-based drugs on the market and 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™ flat sheet TFF filtration cassettes are used to concentrate clinical and commercial-stage biologic drugs. Spectrum KrosFlo™ TFF systems are used downstream in ultrafiltration and diafiltration applications as well as microfiltration applications. In perfusion (continuous) processes, Spectrum KrosFlo™ TFF is upstream in cell retention applications.

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 toby global biopharmaceutical companies and contract development and manufacturing ~~organizations (“CMOs”). We manufacture and supply our cell culture supplements through a distribution agreement with MilliporeSigma.~~organizations.

We sell our Chromatography and Filtration products directly to biopharmaceutical companies and CMOs. These products are manufactured or assembled internally and marketed globally through a direct commercial organization in the United States (US) 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~~40-person~~ ~~commercial team as of September 30, 2017. The acquisition of Spectrum further expands our commercial organization in the US and Europe, and adds a direct sales presence in Asia Pacific regions.~~

Our commercial and R&D teams have a track record of launching new products and building new markets for acquired technologies. For example, since acquiring the XCell™ ATF business in 2014, we have 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 ourdirect-to-customer~~ product offering. In 2014, we acquired our XCell™ ATF line from Refine Technologies LLC. We completed two acquisitions in 2016, acquiring Atoll GmbH (“Atoll”) in April (the “Atoll Acquisition”) and TangenX Technology Corporation (“TangenX”) in December (the “TangenX Acquisition”). The Atoll Acquisition strengthened our Chromatography business by broadening our line of OPUS^®~~pre-packed~~ ~~columns (to includelab-~~ 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. On August 1, 2017, we acquired Spectrum, a leader in bioprocess filtration with expertise in hollow fiber technology based in Rancho Dominguez, California (the “Spectrum Acquisition”). We believe the addition of Spectrum will strengthen our Filtration business and support our flagship XCell™ ATF product line with an extensive consumables portfolio. We also believe the Spectrum Acquisition will help diversify our markets beyond monoclonal antibody manufacturing, into vaccine and recombinant protein production.

~~Our internal innovation has also driven the growth of ourdirect-to-customer~~ ~~product offerings. Internally, we develop 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 asingle-use~~ ~~(disposable) alternative to our stainless steel XCell™ ATF Systems, XCell™ ATFSingle-use.~~ Notably, the Spectrum Acquisition satisfies a strategic goal of owning the hollow fiber filter cartridges that can be used in our XCell™ ATF devices. Spectrum has historically been a key supplier of these filters to us.

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 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, thenscale-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.

On August 1, 2017, the Company completed the Spectrum Acquisition for approximately $122.9 million in cash, 6,153,995 unregistered shares of the Company’s common stock totaling $247.6 million and an estimated working capital adjustment of approximately $1.0 million for a total purchase price of $371.5 million, subject to further adjustment based on working capital adjustment provisions, and indemnification obligations of holders of equity securities of Spectrum receiving merger consideration.

~~Spectrum’s filtration products include its KrosFlo~~^® ~~line of hollow-fiber cartridges, TFF systems andsingle-use~~ ~~flow path consumables, as well as its Spectra/Por~~^® ~~portfolio of laboratory dialysis products and itsPro-Connex~~^®~~single-use~~ ~~hollow fiberModule-Bag-Tubing~~ ~~(MBT) sets. Outside of filtration, the company sells its Spectra/Chrom~~^® ~~liquid chromatography products for research applications. These bioprocessing products account for the majority of Spectrum revenues. Spectrum also offers a line of operating room products.~~

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~~a description of our critical accounting policies that affect our more significant judgments and estimates used in the preparation of our consolidated financial statements, refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations and our significant accounting policies in Note 2, "Summary of Significant Accounting Policies",to the ~~Financial Statements~~consolidated financial statements included in our ~~Annual Report on~~ Form~~10-K~~ 10-K.

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

~~Revenues for the three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 were as follows:

Since 2016, we have been increasingly focused on selling our products directly to customers in the ~~current three-~~pharmaceutical industry and ~~nine-month periods,~~to our contract manufacturers. These direct sales represented approximately 88.4% and 86.2% of our product revenue for each of the three months ended September 30, 2023 and 2022, respectively, ~~compared to~~and represented 85.6% and 87.5% of our product revenue for each of the ~~corresponding periods in the prior year. This increase was primarily due to increases in orders for our XCell ATF systems~~nine months ended September 30, 2023 and ~~OPUSpre-packed~~ ~~chromatography columns from our key bioprocessing customers, in addition to revenues from the Spectrum Acquisition, Atoll Acquisition and TangenX Acquisition in 2017.~~2022, respectively. Sales of our bioprocessing products ~~are~~can be impacted by the timing of large-scale production orders ~~development efforts at our customers orend-users~~and the regulatory approvals for ~~biologics that incorporate our products,~~such antibodies, which may result in significant quarterly fluctuations. ~~Such quarterly fluctuations~~

Revenues from our filtration franchise include the sales of our XCell ATF® systems and consumables; Spectrum filtration systems, including KrosFlo®; SIUS® filtration products and systems; the fluid management assemblies and components offered by Engineered Molding Technology LLC, Non-Metallic Solutions, Inc., ARTeSYN Biosolutions Ireland Limited ("ARTeSYN"), Bio-Flex Solutions, L.L.C. and FlexBiosys; the hollow fiber membrane technology offered by Polymem S.A., and our ARTeSYN filtration systems. Revenue from our chromatography products includes the sale of our OPUS pre-packed chromatography columns, ELISA test kits and chromatography systems from Spectrum and ARTeSYN. Revenue from proteins products includes the sale of our Protein A ligands and cell culture growth factors, and sales of affinity products, including adeno-associated virus resins offered by Avitide, Inc. ("Avitide"). Revenue from our process analytics products includes the sale of our SoloVPE®, FlowVPE® and FlowVPX® systems, consumables and service. Other revenue primarily consists of sales of our operating room products to hospitals as well as freight revenue.

During the three and nine months ended September 30, 2023, product revenue decreased by $60.0 million, or 29.7%, and $131.8 million, or 21.4%, respectively, as compared to the same periods of 2022. This is mainly due to a decrease in revenue from programs related to COVID-19 as customers continue to repurpose inventory initially purchased for COVID-19 therapeutics and vaccines. This primarily affected our filtration products. Partially offsetting these revenue declines were price increases and strong performances within the Chromatography and Process Analytics franchises during the nine months ended September 30, 2023, as compared to the same period of 2022. Specifically, revenue from sale of chromatography systems and flowpaths as well as slope spectroscopy systems, consumables and service.

Royalty and other revenues in the three and nine months ended September 30, 2023 and 2022 relate to royalties received from a third-party systems manufacturer associated with our OPUS PD chromatography columns. Royalty revenues are ~~expected, but they may not be predictive~~variable and are dependent on sales generated by our partners.

Costs of ~~future revenue or otherwise indicate a trend.~~Product Revenue and Operating Expenses

Total costs and operating expenses for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 were comprised of the following:

Cost of product revenue increased ~~77.8%~~20.9% and ~~37.1%~~4.2% in the ~~current three-~~three and ~~nine-month periods,~~nine months ended September 30, 2023, respectively, compared to the ~~corresponding~~same periods ~~in the prior year. This~~of 2022. The increase is primarily due to restructuring charges, including a $17.2 million inventory write-off to adjust inventory to net realizable value, a $3.8 million charge for accelerated depreciation on equipment related to manufacturing facilities to be closed and $1.7 million in severance and other charges during the ~~increased~~third quarter of 2023 as a result of our restructuring activities, which commenced in July 2023. See Note 4, "Restructuring Plan" of this report for more information on the Restructuring Plan. Our restructuring activities include the closing of manufacturing facilities, discontinuing the sale of certain product ~~revenues noted above;~~SKUs, and evaluating raw materials and components secured during the ~~impact of the Spectrum Acquisition, the Atoll Acquisition and the TangenX Acquisition; and product mix. Gross margins may fluctuate~~2020-2022 COVID-19 pandemic period (the "COVID-19 Period') to meet increasing demand during a challenging supply chain environment in the ~~fourth quarters~~industry. Where demand has reduced, finished goods and raw materials, whose value exceeded the projected requirements to be used before reaching their expiration date, were written down to their net realizable value. The inventory write-off includes reserved values which may be recoverable in future periods, if salvageable. In addition, there was an increase due to cost inflation, primarily in raw materials as well as freight charges due to fuel costs and carrier market conditions during the three and nine months ended September 30, 2023, compared to the same periods of ~~2017 based on expected~~2022. Also, our occupancy costs and depreciation expense increased during the three and nine months ended September 30, 2023, as compared to the same periods of 2022, due to expanded facilities and manufacturing equipment being placed into service throughout 2022 and 2023. These increases were partially offset by a decrease in costs associated with lower revenue as well as a decrease in employee-related costs not related to the restructuring activities in the three and nine months ended September 30, 2023, as compared to the same periods of 2022.

Gross margin was 25.9% and 56.9% in the three months ended September 30, 2023 and 2022, respectively and gross margin was 45.0% and 58.5% in the nine months ended September 30, 2023 and 2022, respectively. The reduction in gross margin in the three and nine months ended September 30, 2023, as compared to the same periods of 2022, is primarily due to restructuring activities as noted above during the third quarter of 2023 to simplify and streamline our organization and strengthen the overall effectiveness of our operations. In addition, lower margins were a result of lower overall sales and production ~~volume~~volumes, and a change in product ~~mix.~~mix, where we saw a significant decline in revenue associated with higher-margin consumable products due to the decrease in COVID-19 vaccine demand. We also experienced an increase in manufacturing costs from an increase in occupancy costs due to added capacity, an increase in depreciation expense, and an increase in freight charges from cost inflation.

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

R&D expenses increased ~~6.1%~~$0.3 million during the three months ended September 30, 2023 and ~~5.4% in~~decreased $0.4 million for the ~~current three- and nine-month periods, respectively,~~nine months ended September 30, 2023, compared to the ~~corresponding~~same periods of 2022. For the three month period, the increase in

employee-related costs during the period from an increase in headcount since the ~~prior year. This increase is primarily related to~~end of the ~~timing and scale~~third quarter of ~~our various bioprocessing product development projects~~2022 as well as an increase in depreciation expense and spending on new product development more than offset a decrease in occupancy costs ~~related~~for facilities where R&D work is performed. For the nine month period, the decrease in occupancy costs for facilities where R&D work is performed more than offset the increase in employee-related costs, an increase in depreciation expense and spending on new product development.

R&D expense also includes payments made to ~~continuing projects assumed~~expand our proteins product offering through our agreement with Navigo Proteins GmbH (“Navigo”). Such expenses were $0.8 million and $3.1 million, respectively, for the three and nine months ended September 30, 2023, as ~~part~~compared to $0.3 million and $1.4 million, respectively, for the same periods in 2022, in the form of milestone payments to Navigo.

We expect our R&D expenses for the ~~Spectrum Acquisition. Expenses generally include personnel costs, external development costs, supplies and other expenses related~~remainder of 2023 to ~~our~~gradually increase to support new ~~products in~~product development.

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

SG&A costs increased ~~110.4%~~by $1.8 million, or 3.4% during the three months ended September 30, 2023 and ~~58.7% in~~decreased $2.0 million, or 1.2%, during the ~~current three- and nine-month periods, respectively,~~nine months ended September 30, 2023, as compared to the ~~corresponding~~same periods of 2022. Both the three and nine month periods include an increase in SG&A costs related to the operations of FlexBiosys, which have been included in our results of operations since the acquisition date in April 2023 and $1.3 million in one-time costs incurred from restructuring activities during the third quarter, for which there were no comparable costs in the ~~prior~~same periods of 2022. For the three-month period, there was also an increase in professional fees related to the FlexBiosys Acquisition, compared to the same period last year. ~~This increase is primarily due to additional expense resulting from our acquisitions of Spectrum, Atoll and TangenX,~~Partially offsetting these increases was a decrease in employee-related costs during the ~~continued buildout of our administrative infrastructure to support future growth, and the continued expansion of our customer-facing activities to drive sales of our bioprocessing products.~~

~~Contingent consideration fair value adjustments were approximately $675,000 and $3,317,000 for the three- and nine-month periods~~three months ended September 30, ~~2016. These~~2023, as compared to the same period of 2022. For the nine-month period, the increases in SG&A costs related to FlexBiosys operations and restructuring were more than offset by a decrease in in the amount of commissions paid out resulting from lower revenue and a decrease in employee-related costs.

Contingent consideration benefit represents the change in fair value ~~adjustments were related to the increased probability~~ of ~~achieving the 2016 sales milestone under the Refine acquisition agreement. There was no such expense in 2017, as~~ the contingent consideration ~~periods~~obligation included in current and noncurrent contingent consideration on the consolidated balance sheets as of the end of each period. Remeasurement of the contingent consideration obligation is done each quarter and the carrying value of the obligation is adjusted to the current fair value through our condensed consolidated statements of comprehensive income. Expected results and a change in market inputs used to calculate the discount rate, resulted in a change to the benefit reported for the ~~Atoll Acquisition and Refine Acquisition ended in 2016.~~

~~Investment income for the three- and nine-month periods~~three months ended September 30, ~~2017~~2023 and ~~2016 was as follows:~~2022 of ($34.3) million and ($2.3) million, respectively, and ($31.3) million and ($11.6) million for the nine months ended September 30, 2023 and 2022, respectively.

Investment income includes income earned on invested cash balances. ~~Increases in~~Our investment income inincreased by $4.5 million and $15.2 million for the ~~current three-~~three and ~~nine-month periods,~~nine months ended September 30, 2023, respectively, compared to the ~~corresponding~~same periods ~~in the prior year are mainly attributable~~of 2022 due to ~~higher average~~an increase in interest rates ~~and higher~~on average invested cash balances ~~related~~since September 30, 2022, as well as interest earned on U.S. treasury bills purchased at the end of 2022. We expect investment income to vary based on changes in the ~~receipt~~amount of ~~proceeds~~funds invested and fluctuation of interest rates.

Interest expense in the three and nine months ended September 30, 2023 and 2022 is primarily from ~~the issuance of~~ our ~~2.125%~~0.375% Convertible Senior Notes due ~~2021~~2024 (the ~~“Notes”~~“2019 Notes”) ~~in May 2016 and our issuance of common stock~~, which were issued in July ~~2017.~~

2019. Interest expense for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017 and 2016 was as follows:~~2023 includes the contractual coupon interest on the 2019 Notes.

~~Increases in interest expense in the current three- and nine-month periods, respectively, compared to the corresponding periods in the prior year are attributable to interest expense~~Transaction costs related to the issuance of the 2019 Notes and attributable to the liability component of the 2019 Notes are included in ~~May 2016.~~amortization of debt issuance costs on the condensed consolidated statements of comprehensive income.

~~Other income (expense) for~~The change in other expenses during the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017 and 2016 was as follows:~~

~~Changes in other income (expense) in the current three- and nine-month periods, respectively,~~2023, compared to the ~~corresponding~~same periods ~~in the prior year are~~of 2022, is primarily attributable to realized foreign currency gains and losses related to ~~amounts due fromnon-Swedish~~ ~~kronor-based~~transactions with customers and ~~cash balances denominated in U.S. dollars and British pounds held by our Sweden operations.~~vendors.

Income tax (benefit) provision for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 was as follows:

For the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017,~~2023, we ~~had losses before taxes of ($2,022,000) and~~recorded an income ~~before taxes of $5,699,000, respectively, and recorded a~~ tax benefit of ~~($6,691,000)~~$(6.5) million and ~~($10,476,000),~~an income tax provision of $5.8 million, respectively. The effective tax rate was ~~330.9%~~(56.2%) and ~~(183.8%)~~8.0% for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017,~~2023, respectively, and is based upon the estimated income for the year ending December 31, 2023 and the composition of ~~the~~ income in different jurisdictions. The difference in effective tax rates between the periods was primarily due to lower income before taxes and increased benefits from business tax credits, nontaxable contingent consideration and a deductible foreign exchange loss on certain long-term intercompany debt, partially offset by lower foreign-derived intangible income and nondeductible executive compensation. Our effective tax rate for the three and nine months ended September 30, 2023 was lower than the U.S. statutory ~~tax~~ rate of ~~34%~~21% primarily due to ~~a benefit~~business tax credits, foreign-derived intangible income, windfall tax benefits on stock option exercise and the vesting of ~~approximately $6,611,000 related to the release of the valuation allowance on deferred tax assets held in the U.S. resulting from the Spectrum Acquisition in the third quarter of 2017~~stock units, nontaxable contingent consideration and a ~~benefit of approximately $5,625,000 related to the reduction of the Company’s valuation allowance~~deductible foreign exchange loss on ~~its deferred tax assets resulting from the sale of~~ certain ~~intellectual property to Repligen Sweden AB in the second quarter of 2017.~~long-term intercompany debt.

For the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2016,~~2022, we ~~had~~recorded an income ~~before taxes of $2,214,000 and $10,125,000, respectively, and recorded a~~ tax provision of ~~$1,059,000~~$7.1 million and ~~$3,474,000,~~$28.9 million, respectively. The effective tax rate was ~~47.8%~~14.9% and ~~34.3%~~17.4% for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2016,~~2022, respectively, and is based upon the estimated income for the year ending December 31, 2022 and the composition of ~~the~~ income in different jurisdictions. ~~The~~Our effective tax rate infor the ~~prior year is~~three and nine months ended September 30, 2022 was lower than the U.S. statutory ~~tax~~ rate of 21% primarily due to ~~lower statutory~~business tax ~~rates in foreign jurisdictions~~credits, foreign-derived intangible income and windfall tax benefits on stock option exercise and the vesting of stock units.

On August 16, 2022, the United States enacted the Inflation Reduction Act of 2022 ("Inflation Reduction Act"), which, among other things, implements a 15% alternative minimum tax ~~treatment~~on global adjusted financial statement income of ~~contingent consideration expense~~certain large corporations, a 1% excise tax on net stock repurchases and ~~related payments.~~

We providenon-GAAP adjusted income from ~~operations,~~operations; adjusted net ~~income,~~income; and adjusted EBITDA as supplemental measures to GAAP, measures regarding our operating performance. These financial measures exclude the items detailed below and, therefore, have not been calculated in accordance with GAAP. A detailed explanation and a reconciliation of eachnon-GAAP financial measure to its most comparable GAAP financial measure are provided 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~~results and measures the performance of our ongoing operations for the ~~period~~periods in which such charges are incurred.

~~In the first quarter of 2017, we began deducting intangible amortization in our presentation ofnon-GAAP~~ ~~financial metrics. Thenon-GAAP~~ ~~financial metrics included in our Quarterly Reports on Form10-Q~~ ~~for the quarter ended September 30, 2016 do not deduct intangible amortization. However, we have included a deduction for thenon-GAAP~~ ~~financial metrics below for the three- and nine-month periods ended September 30, 2016 for comparability. As a result, thenon-GAAP~~ ~~financial metrics below differ from those included in our Quarterly Reports on Form10-Q~~ ~~for the quarter ended September 30, 2016.~~

~~Adjusted~~Non-GAAP adjusted income from operations is measured by taking income from operations as reported in accordance with GAAP and excluding acquisition and integration costs, ~~inventorystep-up~~ ~~charges, amortization of intangible assets and~~restructuring costs, contingent consideration ~~expense~~fair value adjustments and intangible amortization booked through our condensed consolidated statements of comprehensive income.

The following is a reconciliation of income from operations in accordance with GAAP to non-GAAP adjusted income from operations for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2023 and ~~2016 (in thousands):~~2022:

~~Adjusted~~Non-GAAP adjusted net income and adjusted earnings per share is measured by taking net income as reported in accordance with GAAP and excluding acquisition and integration costs, ~~inventorystep-up~~ ~~charges,~~restructuring costs, contingent consideration fair value adjustments, intangible amortization, amortization of ~~intangible assets~~debt issuance costs and ~~related~~the tax effects ~~contingent consideration expense,non-cash~~ ~~interest expense and the partial release~~ of ~~the valuation allowance on our deferred tax assets booked through our consolidated statements of comprehensive income.~~

these items. The following ~~is a reconciliation~~are reconciliations of net income and fully diluted earnings per share in accordance with GAAP to non-GAAP adjusted net income and adjusted fully diluted earnings per share for the ~~three-month periods~~three and nine months ended September 30, ~~2017~~2023 and ~~2016:~~2022:

~~The following is a reconciliation of net income in accordance with GAAP tonon-GAAP~~ ~~adjusted net income for the nine-month periods ended September 30, 2017 and 2016:~~

Adjusted EBITDA is measured by taking net income as reported in accordance with GAAP, excluding investment income, interest expense, ~~taxes,~~amortization of debt issuance costs, income tax provision, depreciation and amortization, ~~and excluding~~ acquisition and integration costs, ~~inventorystep-up~~ ~~charges~~restructuring costs and contingent consideration ~~expenses~~fair value adjustments booked through our condensed consolidated statements of comprehensive income.

The following is a reconciliation of net income in accordance with GAAP to adjusted EBITDA for the ~~three-~~three and ~~nine-month periods~~nine months ended September 30, ~~2017~~2023 and ~~2016 (in thousands):~~2022:

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~~the issuance of ~~convertible debt.~~the 2019 Notes in July 2019 and the issuance of common stock in our December 2020, July 2019 and May 2019 public offerings. Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue.

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver. Subsequently, the U.S. Treasury, Federal Reserve and FDIC announced that SVB depositors would have access to all of their money. We have a banking relationship with SVB and hold cash, cash

equivalents and marketable securities of less than $0.1 million as of September 30, 2023 in SVB depository accounts to cover short-term operational payments. While we have not experienced any losses in such accounts, the recent failure of SVB caused us to utilize our accounts at other financial institutions in order to mitigate potential operational risks stemming from the temporary inability to access funds in our SVB operating accounts. As a result of bank failures, such as SVB, our access to funding sources in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired and could negatively impact the financial institutions with which we have direct arrangements, or the financial services industry or economy in general.

At September 30, ~~2017,~~2023, we had cash and cash equivalents of ~~$159,666,000~~$630.8 million compared to cash and ~~marketable securities~~cash equivalents of ~~$141,780,000~~$523.5 million 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 September 30, 2017 and December 31, 2016.~~2022.

In July 2017, we completed a public offering in which 2,807,017 shares of our common stock were sold to the public at a price of $42.75 per share. The underwriters were granted an option, which they exercised in full, to purchase an additional 421,052 shares of our common stock. The total proceeds from this offering, net of underwriting discounts, commissions and other offering expenses, totaled approximately $129.3 million.

~~On August 1, 2017, we completed our acquisition of Spectrum for approximately $122.9 million in cash and 6,153,995 unregistered shares of the Company’s common stock.~~

During the third quarter of ~~2017,~~2023, the closing price of ~~the Company’s~~our common stock exceeded 130% of the conversion price of the 2019 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter. As a result, the 2019 Notes are convertible at the option of the holders of the 2019 Notes during the fourth quarter of ~~2017.~~2023, the quarter immediately following the quarter when the conditions are met, as stated in the terms of the 2019 Notes. These conditions have been met each quarter since the third quarter of 2020. As a result, $0.1 million aggregate principal amount of the 2019 Notes ~~with~~have been requested for conversion by the note holders since the issuance of the 2019 Notes and all conversions have settled as of September 30, 2023. The conversions resulted in the issuance of a ~~face value~~nominal number of ~~$115 million and a~~shares of our common stock to the note holders. Since the 2019 Notes mature within one year of the report date, we classify the carrying value of ~~$98.2 million are classified~~the 2019 Notes as current liabilities on ~~the Company’s~~our condensed consolidated balance sheet at September 30, 2023.

As discussed in Note 4, "Restructuring Plan" to this report, in July 2023, the Board of Directors authorized our management to undertake restructuring activities to simplify and streamline our organization and strengthen the overall effectiveness of our operations (the "Restructuring Plan"). Cash payments of $2.6 million related to the Restructuring Plan were made during the three and nine months ended September 30, 2023, with approximately $1 million to $2 million of expected costs remaining as of September 30, ~~2017. It is~~2023. We expect to make substantially all remaining restructuring payments pursuant to the Company’s policy and intent to settle the face value of the Notes in cash and any excess conversion premium in shares of our common stock. As of the date of this filing, none of the Notes have been convertedRestructuring Plan by the ~~holders~~end of ~~such Notes.~~2023.

For the ~~nine-month period~~nine months ended September 30, ~~2017,~~2023, our operating activities provided cash of ~~$2,233,000~~$84.9 million reflecting net income of ~~$16,175,000~~$67.1 million andnon-cash charges totaling ~~$1,115,000~~$29.2 million primarily related to depreciation, amortization, contingent consideration fair value adjustments, deferred income taxes, non-cash interest ~~expense,~~income and stock-based compensation charges. A decrease in accounts receivable provided $8.3 million of cash and was primarily driven by lower revenue. Additionally, we had a decrease in inventory manufactured that provided $26.0 million of which $17.2 million was related to the Restructuring Plan. An increase in prepaid expenses, primarily related to prepaid taxes and subscriptions consumed $10.7 million. A decrease in accounts payable and accrued expenses consumed $36.9 million and was due to the timing of payments to vendors as well as the payment of employee bonuses related to 2022 during the nine months ended September 30, 2023. The remaining cash provided by operating activities resulted from favorable changes in various other working capital accounts.

For the nine months ended September 30, 2022, our operating activities provided cash of $110.2 million reflecting net income of $137.2 million and non-cash charges totaling $49.3 million primarily related to depreciation, amortization, contingent consideration adjustments, deferred ~~tax expense~~income taxes and stock-based compensation charges. An increase in accounts receivable consumed ~~$8,472,000~~$8.6 million of cash and was primarily driven by the 27.0% year-to-date increase in revenues. Additionally, we had an increase in inventory manufactured of $64.3 million to support expected increases in future revenue. Accounts payable decreased

$10.1 million due to timing of payments to vendors. Offsetting these uses of cash was a $4.1 million net increase in operating lease liabilities due to new operating leases entered into during 2022 and a $3.0 million increase in accrued liabilities due to the increase in revenues and timing of cash receipts from customers. Payments of accrued liabilities consumed $6,089,000 of cash, and were mainly due to the payment of contingent consideration to Refine and Atoll related to 2016 sales milestones and the payment of certain Spectrum liabilities in the third quarter of 2017.expected costs, including corporate income taxes. The remaining cash ~~flow provided by operations~~used in operating activities resulted from ~~net~~ unfavorable changes in various other working capital accounts.

Our investing activities provided $46.6 million of cash during the ~~nine-month period~~nine months ended September 30, ~~2016, our operating activities provided cash of $5,567,000 reflecting net income of $6,651,000 andnon-cash~~ ~~charges totaling $12,148,000 including depreciation, amortization,non-cash~~ ~~interest expense, stock-based compensation charges, deferred tax expenses and the revaluation of contingent consideration. An increase in accounts receivable consumed $3,270,000 of cash, and was~~2023, primarily due to the ~~timing~~maturity of our short-term investment in U.S. treasury securities in June 2023, which provided cash ~~receipts from customers. An increase~~of $102.3 million. We used $27.8 million in ~~inventories~~

~~consumed $6,457,000 of~~ cash to support future revenues. Decreases in accounts payable consumed $1,918,000 of cash, and were due primarily due to purchasing activity and timing of cash payments to vendors. Payments of accrued liabilities consumed $2,389,000 of cash, and was mainly due to the payment of contingent consideration to Refine related to 2015 sales milestones.

~~Our investing activities consumed $97,075,000 of cash for the nine-month period ended September 30, 2017, primarily due to the payment of cash consideration of $112,941,000~~ (net of cash received) for the ~~Spectrum Acquisition~~FlexBiosys Acquisition. Capital expenditures consumed $27.8 million in 2023 as we continue to increase our manufacturing capacity worldwide. Of these expenditures, $2.7 million represented capitalized costs related to our internal-use software for the nine months ended September 30, 2023.

Our investing activities consumed $111.9 million of cash during the nine months ended September 30, 2022 mainly due to $67.0 million of capital expenditures in 2022 as we continue to increase our manufacturing capacity worldwide. Of these expenditures, $2.6 million represented capitalized costs related to our internal-use software for the nine months ended September 30, 2022. In addition, in September 2022, the Company paid a one-time, non-refundable, non-creditable upfront payment to Daylight as required under a License Agreement for the commercialization and ~~$3,686,000 used~~sale of Culpeo® QCL-IR Liquid Analyzer.

Our financing activities consumed $19.2 million of cash for ~~fixed asset additions,~~the nine months ended September 30, 2023, primarily for $12.2 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units and the payment of $7.3 million to settle the cash portion of the First Earnout Year contingent earnout obligation related to our acquisition of Avitide in September 2021. This was partially offset by net redemptions of marketable securities of $19,552,000. For the nine-month period ended September 30, 2016, our investing activities consumed $13,878,000 for the nine-month period ended September 30, 2016. On April 1, 2016 we paid approximately $8.8 million (net of cash received) as cash consideration for the acquisition of Atoll, $3,462,000 used for fixed asset additions and net purchases of marketable securities of $1,694,000.

For the nine-month period ended September 30, 2017, our financing activities provided $129,642,000 of cash. In July 2017, we completed a public offering in which 2,807,017 shares of our common stock were sold to the public at a price of $42.75 per share. The underwriters were granted an option, which they exercised in full, to purchase an additional 421,052 shares of our common stock. The total proceeds ~~from this offering, net of underwriting discounts, commissions and other offering expenses, totaled approximately $129.3 million. Proceeds~~received from stock option exercises induring the ~~nine-month period~~period.

Our financing activities consumed $13.1 million of cash during the nine months ended September 30, ~~2017 were $2,035,000,~~2022, which included cash disbursed in relation to shares withheld to cover employee income taxes due upon the vesting and release of restricted stock units of $15.8 million. This was partially offset by ~~contingent consideration payments~~proceeds received from stock option exercises during the period of $1,702,000 related to the initial valuation of the likelihood that the 2016 XCell™ ATF sales milestones and Atoll revenue growth milestones would be achieved. For the nine-month period ended September 30, 2016, our financing activities provided $112,202,000 of cash. In May 2016, we received net proceeds of $111.1 million from the issuance of the Notes. Proceeds from exercises of stock options totaling $1,630,000 were partially offset by contingent consideration payments of $498,000 which stemmed from the initial valuation of the likelihood that the 2015 ATF sales milestone would be achieved.$2.8 million.

Working capital ~~decreased~~increased by ~~approximately $50,330,000~~$21.2 million to ~~$112,748,000~~$615.1 million at September 30, ~~2017~~2023 from ~~$163,078,000~~$593.9 million at December 31, ~~2016~~2022 due to the various changes noted above as well as the reclassification of the Notes to current liabilities from long term liabilities, as these Notes are convertible at the option of the holders of these Notes in the fourth quarter of 2017.above.

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

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 ~~twelve~~the next 24 months from the date of this ~~filing, even if all of the Notes are converted by the holders of those Notes in the fourth quarter of 2017.~~filing. We expect operating expenses for the rest of the year to increase as we ~~integrate Spectrum into our business,~~ continue to ~~develop~~expand our bioprocessing business. We expect to incur continued spending related to

the development and ~~expand~~expansion of our bioprocessing product lines and ~~expand~~expansion of our commercial capabilities for the foreseeable future. Our future capital requirements may include, but are not limited to, purchases of property, plant and equipment, the acquisition of additional bioprocessing products and technologies to complement our existing manufacturing capabilities and continued investment in our intellectual property ~~portfolio and future repayment of convertible debt.~~portfolio.

We plan to continue to invest in our bioprocessing business and in key ~~research and development~~R&D 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.~~portfolio. We continue to seek to acquire such potential assets that may offer us the best opportunity to create value for our shareholders. In order to acquire such assets, we may need to seek additional financing to fund these investments. ~~This~~If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of any such acquisition-related financing needs or lower demand for our products, we may ~~require the issuance~~seek to sell common or ~~sale of additional~~preferred equity or convertible debt ~~securities.~~securities, enter into a credit facility or another form of third-party funding, or seek other debt funding. The sale of ~~additional~~ equity and convertible debt securities may result in ~~additional~~ dilution to our ~~stockholders. Should~~shareholders, and those securities may have rights senior to those of our common shares. If we ~~need~~raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt could contain covenants that would restrict our operations. Any other third-party funding arrangement could require us to ~~secure~~relinquish valuable rights. We may require additional ~~financing to acquire a product, fund future investment in research and development, or meet~~capital beyond our ~~future liquidity requirements, we~~currently anticipated amounts. Additional capital may not be ~~able to secure such financing, or obtain such financing~~available on ~~favorable~~reasonable terms, ~~because~~if at all.

At December 31, 2022, the Company had federal net operating loss carryforwards of $42.9 million, state net operating loss carryforwards of $0.8 million and foreign net operating loss carryforwards of $4.9 million. Federal net operating loss carryforwards of $7.3 million will expire at various dates through 2037. The state net operating loss carryforwards will expire at various dates through 2041, while the ~~volatile nature of the biotechnology marketplace.~~

Weforeign net operating loss carryforwards do not expire. The other $35.6 million of federal net operating loss carryforwards have ~~any special purpose entities oroff-balance~~ ~~sheet financing arrangements~~unlimited carryforward periods. We had state business tax credits carryforwards of $3.8 million available to reduce future domestic income taxes. The state business tax credits carryforwards will expire at various dates through 2042. Net operating loss and business tax credit carryforwards are subject to review and possible adjustment by the Internal Revenue Service, state and foreign tax authorities and may be limited in the event of certain changes in the ownership interest of significant shareholders.

Our assets are primarily monetary, consisting of cash, cash equivalents and marketable securities. Because of their liquidity, these assets are not directly affected by inflation. Since we intend to retain and continue to use our equipment, furniture, fixtures and office equipment, computer hardware and software and leasehold improvements, we believe that the incremental inflation related to replacement costs of such items will not materially affect our operations. However, the rate of inflation affects our expenses, such as those for employee compensation and contract services, which could increase our level of ~~September 30, 2017.~~expenses and the rate at which we use our resources.

This Quarterly Report on Form10-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 Form10-Q do not constitute guarantees of future performance. Investors are cautioned that statements in this Quarterly Report on Form10-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, expectations and beliefs for recently-completed acquisitions, product development and sales, ~~litigation strategy,~~restructuring activities and the expected results thereof, product candidate research, development and regulatory approval, ~~selling, general and administrative~~SG&A expenditures, intellectual property, development and manufacturing plans, availability of materials and product and adequacy of capital resources, ~~and~~our financing plans and the projected continued impact of, and response to, COVID-19 constitute forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about the industry and markets in which the Company operates, and management’s beliefs and assumptions. The Company undertakes no obligation to publicly update or revise the statements in light of future developments. In addition, other written and

oral statements that constitute forward-looking statements may be made by the Company or on the Company’s behalf. Words such as “expect,” “seek,” “anticipate,” “intend,” “plan,” “believe,” “could,” “estimate,” “may,” “target,” “project,” or variations of such words and similar expressions are intended to identify 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:~~with the following: the success of current and future collaborative or supply relationships, including our agreements with ~~BioMarin, GE Healthcare~~Cytiva, MilliporeSigma and ~~MilliporeSigma,~~Purolite Life Sciences, an Ecolab Inc. company; our ability to successfully grow our bioprocessing business, including as a result of acquisitions, commercialization or partnership opportunities, and our ability to develop and commercialize ~~products,~~products; our ability to obtain required regulatory ~~approvals,~~approvals; our compliance with all U.S. Food and Drug Administration regulations, our ability to obtain, maintain and protect intellectual property rights for our ~~products,~~products; the risk of litigation regarding our patent and other intellectual property ~~rights,~~rights; the risk of litigation with collaborative ~~partners,~~partners; our ~~limited sales and marketing experience and capabilities, our limited~~ manufacturing capabilities and our dependence on third-party manufacturers and value-added ~~resellers,~~resellers; our ability to hire and retain skilled ~~personnel,~~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,~~condition; our ability to integrate acquired businesses successfully into our business and achieve the expected benefits of the acquisitions; our ability to compete with larger, better financed life sciences ~~companies,~~companies; our history of losses and expectation of incurring ~~losses,~~losses; our ability to generate future ~~revenues,~~revenues; our ability to successfully integrate ~~Refine, Atoll, TangenX and Spectrum,~~our recently acquired businesses; our ability to raise additional capital to fund potential ~~acquisitions,~~acquisitions; our volatile stock ~~price,~~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~~SEC including under the ~~section~~sections entitled “Risk Factors” in our ~~Annual Report on~~ Form~~10-K~~ ~~for the year ended December 31, 2016 and in our Quarterly Report on Form10-Q~~ ~~for the quarter ended June 30, 2017.~~ 10-K.

We have historically ~~invested funds~~held investments in commercial paper, U.S. ~~Government~~treasury and ~~agency~~government securities as well as corporate bonds and other debt securities. As a result, we have been 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. Our investment portfolio consists of cash and cash equivalents (cash and money market funds) that total $630.8 million at September 30, 2023. We held marketable securities (U.S. treasury bills) of $100.3 million, which were included in short-term marketable securities on the consolidated balance sheet as of December 31, 2022. These marketable securities matured in June 2023.

Our cash equivalent investments (money market funds) have short-term maturity periods that dampen the impact of market or interest rate risk. As a result, a hypothetical 100 basis point increase in interest rates would have no effect on our cash position as of September 30, ~~2017, we do not have any such investments; however, we may seek to invest funds~~2023.

We manage our investment portfolio in ~~similar investment vehicles in the future, as specified in~~accordance with our investment policy ~~guidelines. Our~~or approval by the Board of Directors. The primary objectives of our investment policy ~~limits~~are to preserve principal, maintain a high degree of liquidity to meet operating and other needs, and obtain competitive returns subject to prevailing market conditions without significantly increasing risk. To achieve this objective, we maintain our portfolio of cash equivalents and marketable securities in high-quality securities, including money market funds and U.S. treasury bills. The U.S. treasury bills were classified as held-to-maturity at December 31, 2022 and consequently were recorded at amortized cost on our consolidated balance sheet in accordance with accounting principles generally accepted in the ~~amount of~~United States. These marketable securities matured in June 2023. We do not expect any material loss from our ~~credit~~marketable security investments and therefore believe that our potential interest rate exposure ~~to any one issuer, (with the exception of U.S. agency obligations) and type of instrument.~~is limited.

The reporting currency of the Company is U.S. dollars, and the functional currency of each of our foreign subsidiaries is its respective local currency. Our foreign currency exposures include the Swedish ~~kronor,~~krona, Euro, British pound, Chinese yuan, Japanese yen, Singapore dollar, South Korean won and Indian rupee; of these, the primary foreign currency exposures are the Swedish ~~kronor,~~krona, Euro and ~~British pound.~~Chinese yuan. 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.

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 Rules13a-15(e) or15d-15(e) under the ~~Securities~~ Exchange ~~Act of 1934, as amended (the “Exchange Act”)~~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~~at 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.reasonable assurance level.

~~We acquired Spectrum LifeSciences, LLC (“Spectrum”~~In connection with our initiative to integrate and enhance our global information technology systems and business processes, we continued the phased implementation of a new enterprise resource planning ("ERP") ~~on August 1, 2017.~~system. The ~~financial results~~Company is implementing the ERP system in phases through 2024. The implementation of ~~Spectrum are included in our unaudited condensed consolidated financial statements as~~the ERP system is expected to, among other things, automate a number of ~~September 30, 2017~~accounting and ~~for~~reporting processes and activities, thereby decreasing the ~~quarter then ended. The Spectrum business represented approximately 57%~~amount of ~~our total assets as~~manual processes previously required. As a result of ~~September 30, 2017 and approximately $7.6 million of revenue and ($2.0) million of net loss, respectively, for the quarter then ended. As~~ this ~~acquisition occurred in the third quarter of 2017, the scope of our assessment of our~~implementation, we modified certain existing internal ~~control~~controls over financial reporting does not include Spectrum. This exclusion is in accordance with the SEC’s general guidance that an assessment of a recently acquired business may be omitted from our scope in the year of acquisition.

Additionally, on December 14, 2016, we completed our acquisition of TangenX Technology Corporation (“TangenX”). On June 30, 2017 we legally merged TangenX into Repligen Corporation. We continue to integrate TangenX into our control environment, internal control processas well as implemented new controls and procedures related to ~~conform to those of Repligen.~~the new ERP systems.

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 Rule13a-15 or Rule15d-15 that occurred in the three months ended September 30, ~~2017~~2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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.

The matters discussed in this Quarterly Report onForm 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~~“Risk Factors” in Part I, Item 1A inof our ~~Annual Report on~~Form 10-K for the ~~year~~period ended December 31, ~~2016~~2022 and in subsequent filings, ~~as well as risks and uncertainties discussed elsewhere in~~including this Quarterly Report onForm 10-Q, could cause our actual results to differ materially from those in the forward-looking statements. ~~There~~Other than as indicated below, there are no material changes to the ~~Risk Factors~~risk factors described in our ~~Annual Report on~~Form 10-K for the ~~fiscal year~~period ended December 31, ~~2016~~2022.

Our corporate restructuring and the associated headcount reduction may not result in anticipated savings, could result in total costs and expenses that are greater than expected and could disrupt our ~~Quarterly Report on Form10-Q~~ ~~for~~business.

In July 2023, our Board of Directors authorized the ~~quarter ended June 30, 2017.~~

~~Pursuant~~Company's management team to undertake restructuring activities to simplify and streamline our organization and strengthen the ~~Agreement and Plan~~overall effectiveness of Merger and Reorganization described in Note 2 to Condensed Consolidated Financial Statements, on August 1, 2017, the Company issued 6,153,995 unregistered shares of the Company’s common stock valued at $247.6 million asour operations (the "Restructuring Plan"). As part of the ~~consideration~~Restructuring Plan, we are consolidating a portion of our manufacturing business between certain U.S. locations and also are reducing our headcount. We may not realize, in full or in part, the anticipated benefits, savings and improvements in our cost structure from our restructuring efforts due to unforeseen difficulties, delays or unexpected costs. If we are unable to realize the expected operational efficiencies and cost savings from the restructuring, our operating results and financial condition could be adversely affected. Furthermore, the Restructuring Plan may be disruptive to our operations. For example, our headcount reductions could yield unanticipated consequences, such as increased difficulties in implementing our business strategy, including retention of our remaining employees.

Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely affect our current and projected business operations and our financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. Since that date, SVB has announced they have been acquired by First Citizens Bank and have resumed mostly normal operations. Similarly, on March 12, 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. If any of our lenders or counterparties to any such instruments were to be placed into receivership, we may be unable to access such funds. We have a banking relationship with SVB and hold cash, cash equivalents and marketable securities of less than $0.1 million as of September 30, 2023 in SVB depository accounts to cover short-term operational payments. While we have not experienced any losses in such accounts, the recent failure of SVB caused us to utilize our accounts at other financial institutions in order to mitigate potential operational risks stemming from the temporary inability to access funds in our SVB operating accounts. In addition, if any of our customers, suppliers or other parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

Inflation and rapid increases in interest rates have led to a decline in the trading value of previously issued government securities with interest rates below current market interest rates. Although the U.S. Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to $25 billion of loans to financial institutions secured by certain of such government securities held by financial institutions to mitigate the risk of potential losses on the sale of such instruments,

widespread demands for customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed the ~~Company’s acquisition~~capacity of ~~Spectrum.~~such program. Additionally, there is no guarantee that the U.S. Department of Treasury, FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the closure of other banks or financial institutions, or that they would do so in a timely fashion.

Although we assess our banking and customer relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect the Company, the financial institutions with which the Company has credit agreements or arrangements directly, or the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry. These factors could involve financial institutions or financial services industry companies with which the Company has financial or business relationships, but could also include factors involving financial markets or the financial services industry generally. The ~~issuance is~~results of events or concerns that involve one or more of these factors could include a variety of material and adverse impacts on our current and projected business operations and our financial condition and results of operations.

In addition, investor concerns regarding the U.S. or international financial systems could result in less favorable commercial financing terms, including higher interest rates or costs and tighter financial and operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not ~~registered under~~described above, could have material adverse impacts on our liquidity and our current and/or projected business operations and financial condition and results of operations.

In addition, any further deterioration in the ~~Securities Act~~macroeconomic economy or financial services industry, could lead to losses or defaults by our suppliers, which in turn, could have a material adverse effect on our current and/or projected business operations and results of ~~1933, as amended (the “Securities Act”), in reliance upon the exemption from registration provided by Rule 506(b) of Regulation D.~~operations and financial condition.

† Indicates a management contract or a compensatory plan, contract or arrangement.

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.


~~Delaware~~		~~04-2729386~~
~~(State or other jurisdiction of~~ ~~incorporation or organization)~~		~~(I.R.S. Employer~~ ~~Identification No.)~~


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)~~Principal Executive Offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, par value $0.01 per share	RGEN	The Nasdaq Global Select Market


~~Large accelerated filer~~		☒		~~Accelerated filer~~		☐


Large accelerated filer		Accelerated filer	
Non-accelerated filer		~~☐ (Do not check if a smaller reporting company)~~		Smaller reporting company		☐ 

				Emerging growth company		☐


~~Class~~		~~Number of Shares~~
~~Common Stock, par value $.01 per share~~		~~43,565,306~~


				PAGE
PART I -	FINANCIAL INFORMATION

~~Item 1.~~		~~Unaudited Condensed Consolidated Financial Statements~~
Item 1.	Financial Statements (interim periods unaudited)

	Condensed Consolidated Balance Sheets as of September 30, ~~2017~~2023 and December 31, ~~2016~~2022			3

		Condensed Consolidated Statements of Comprehensive Income for the ~~Three-~~Three and ~~Nine-Month Periods~~Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022			4

		Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022		5

	Condensed Consolidated Statements of Cash Flows for the ~~Nine-Month Periods~~Nine Months Ended September 30, ~~2017~~2023 and ~~2016~~2022			5	7

		Notes to Unaudited Condensed Consolidated Financial Statements			6
			8

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
			23

Item 3.		Quantitative and Qualitative Disclosures About Market Risk			33


Item 4.		Controls and Procedures			34

~~PART II OTHER INFORMATION~~			35

~~Item 1.~~PART II -	OTHER INFORMATION	~~Legal Proceedings~~			35

~~Item 1A.~~		~~Risk Factors~~			35

Item 2.1.		Legal Proceedings		35

Item 1A.	Risk Factors		35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds			35
			36

Item 3.		Defaults Upon Senior Securities			35
			36

Item 4.		Mine Safety Disclosures			35
			36
~~Item 5.~~		~~Other Information~~			35

Item 6.5.		~~Exhibits~~Other Information			35	36

Item 6.	Exhibits		37

Signatures				37	38

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

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


(in thousands, except share data)	September 30, 2017			December 31, 2016
Assets
Current assets:
Cash and cash equivalents	$	159,666		$	122,233
Marketable securities		—			19,547
Accounts receivable, less reserve for doubtful accounts of $32 at September 30, 2017 and $23 at December 31, 2016		29,479			15,194
Other receivables		598			839
Inventories		38,663			24,696
Prepaid expenses and other current assets		2,789			1,644

Total current assets		231,195			184,153

Property, plant and equipment, net		22,056			14,956
Intangible assets, net		147,416			29,806
Goodwill		326,652			59,548
Restricted cash		450			450
Other assets		6,467			—

Total assets	$	734,236		$	288,913

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	6,423		$	5,061
Accrued liabilities		13,793			16,014
Convertible senior notes, current portion		98,231			—

Total current liabilities		118,447			21,075
Convertible senior notes		—			95,272
Deferred tax liabilities		37,347			2,103
Other long-term liabilities		1,573			1,699
Commitments and contingencies (Note 15)
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, 43,559,081 shares at September 30, 2017 and 33,844,074 shares at December 31, 2016 issued and outstanding		436			338
Additionalpaid-in capital		626,766			242,036
Accumulated other comprehensive loss		(6,647	)		(13,749	)
Accumulated deficit		(43,686	)		(59,861	)

Total stockholders’ equity		576,869			168,764

Total liabilities and stockholders’ equity	$	734,236		$	288,913


	Nine months ended September 30,
(In thousands)	2017			2016
Cash flows from operating activities:
Net income	$	16,175		$	6,651
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		6,374			3,844
Non-cash interest expense		2,958			1,320
Stock-based compensation expense		4,845			3,341
Deferred tax expense		(13,062	)		326
Loss on revaluation of contingent consideration		—			3,317
Gain on sale of fixed assets		—			(15	)
Loss on disposal of assets		64			25
Changes in assets and liabilities:
Accounts receivable		(8,472	)		(3,270	)
Other receivables		196			20
Inventories		699			(6,457	)
Prepaid expenses and other current assets		(739	)		820
Other assets		(704	)		—
Accounts payable		159			(1,918	)
Accrued liabilities		(6,089	)		(2,389	)
Long-term liabilities		(171	)		(48	)

Net cash provided by operating activities		2,233			5,567

Cash flows from investing activities:
Acquisition of Spectrum, Inc., net of cash received		(112,941	)		—
Acquisition of Atoll GmbH, net of cash received		—			(8,767	)
Purchases of marketable securities		(48	)		(21,394	)
Redemptions of marketable securities		19,600			19,700
Proceeds from sale of fixed assets		—			45
Purchases of property, plant and equipment		(3,686	)		(3,462	)

Net cash used in investing activities		(97,075	)		(13,878	)

Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		129,309			—
Proceeds from issuance of convertible senior notes, net of issuance costs		—			111,070
Exercise of stock options		2,035			1,630
Payment of contingent considerations		(1,702	)		(498	)

Net cash provided by financing activities		129,642			112,202

Effect of exchange rate changes on cash and cash equivalents		2,633			(332	)

Net increase in cash and cash equivalents		37,433			103,559
Cash and cash equivalents, beginning of period		122,233			54,092

Cash and cash equivalents, end of period	$	159,666		$	157,651

Supplemental disclosure ofnon-cash activities:
Income taxes paid	$	3,555		$	2,888

Interest paid	$	1,222		$	—

Payment of contingent consideration in common stock	$	1,062		$	875

Stock tendered for acquisition of Spectrum, Inc.	$	247,575		$	—

Stock tendered for acquisition of Atoll GmbH	$	—		$	14,135


	Three Months Ended September 30, 2023
	Common Stock
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders' Equity
Balance at June 30, 2023		55,744,896		$	557		$	1,561,393		$	(37,189	)	$	446,165	$	1,970,926
Net income		—			—			—			—			18,172		18,172
Issuance of common stock for debt conversion		2			—			(10	)		—			—		(10	)
Exercise of stock options and vesting of stock units		36,195			1			293			—			—		294
Tax withholding on vesting of restricted stock units		(6,387	)		(0	)		(1,038	)		—			—		(1,038	)
Issuance of common stock pursuant to the acquisition of FlexBiosys, Inc.		—			—			222			—			—		222
Stock-based compensation expense		—			—			6,373			—			—		6,373
Translation adjustment		—			—			—			(6,382	)		—		(6,382	)
Balance at September 30, 2023		55,774,706		$	558		$	1,567,233		$	(43,571	)	$	464,337	$	1,988,557


	Three Months Ended September 30, 2022
	Common Stock
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders' Equity
Balance at June 30, 2022		55,465,918		$	555		$	1,533,762		$	(37,091	)	$	308,138	$	1,805,364
Net income		—			—			—			—			40,405		40,405
Issuance of common stock for debt conversion		3			(0	)		(0	)							(0	)
Exercise of stock options and vesting of stock units		59,112			0			2,321			—			—		2,321
Tax withholding on vesting of restricted stock units		(5,387	)		(0	)		(1,070	)							(1,070	)
Stock-based compensation expense		—			—			6,154			—			—		6,154
Translation adjustment		—			—			—			(18,170	)		—		(18,170	)
Other		—			—			105			—			—		105
Balance at September 30, 2022		55,519,646		$	555		$	1,541,272		$	(55,261	)	$	348,543	$	1,835,109


	Nine Months Ended September 30, 2023
	Common Stock
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2022		55,557,698		$	556		$	1,547,266		$	(34,394	)	$	397,272	$	1,910,700
Net income		—			—			—			—			67,065		67,065
Issuance of common stock for debt conversion		8			0			(13	)		—			—		(13	)
Exercise of stock options and vesting of stock units		212,589			3			353			—			—		356
Tax withholding on vesting of restricted stock units		(69,625	)		(1	)		(12,177	)		—			—		(12,178	)
Issuance of common stock pursuant to the acquisition of FlexBiosys, Inc.		31,415			0			5,465			—			—		5,465
Issuance of common stock pursuant to the Avitide, Inc. contingent consideration earnout payment		42,621			0			7,229			—			—		7,229
Stock-based compensation expense		—			—			19,110			—			—		19,110
Translation adjustment		—			—			—			(9,177	)		—		(9,177	)
Balance at September 30, 2023		55,774,706		$	558		$	1,567,233		$	(43,571	)	$	464,337	$	1,988,557


	Nine Months Ended September 30, 2022
	Common Stock
	Number of Shares			Par Value			Additional Paid-In Capital			Accumulated Other Comprehensive Loss			Retained Earnings		Total Stockholders' Equity
Balance at December 31, 2021		55,321,457		$	553		$	1,572,340		$	(16,886	)	$	194,060	$	1,750,067
Impact of the adoption of ASU 2020-06		—			—			(39,070	)		—			17,253		(21,817	)
Net income		—			—			—			—			137,230		137,230
Issuance of common stock for debt conversion		15			0			(5	)		—			—		(5	)
Exercise of stock options and vesting of stock units		281,839			3			2,781			—			—		2,784
Tax withholding on vesting of restricted stock units		(83,665	)		(1	)		(15,828	)		—			—		(15,829	)
Stock-based compensation expense		—			—			21,054			—			—		21,054
Translation adjustment		—			—			—			(38,375	)		—		(38,375	)
Balance at September 30, 2022		55,519,646		$	555		$	1,541,272		$	(55,261	)	$	348,543	$	1,835,109


Cash consideration	$	122,932
Equity consideration		247,575
Working capital adjustment		955

Net assets acquired	$	371,462


Cash and cash equivalents	$	9,990
Accounts receivable		5,124
Inventory		13,774
Prepaid expenses and other assets		547
Fixed assets		6,015
Deferred tax assets		1,102
Customer relationships		78,400
Developed technology		38,560
Trademark and tradename		2,160
Non-competition agreements		960
Goodwill		265,084
Accounts payable		(1,142	)
Unrecognized tax benefit		(576	)
Accrued liabilities		(5,535	)
Deferred tax liabilities, net		(43,001	)

Fair value of net assets acquired	$	371,462


	Nine months ended September 30, 2017
Total revenue	$	121,301
Net income	$	14,994

Earnings per share:
Basic	$	0.36

Diluted	$	0.36


Cash consideration	$	37,532
Less: working capital adjustment		(382	)

Net assets acquired	$	37,150


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		29,501

Net assets acquired	$	37,150


Cash consideration, less $74 of working capital adjustments	$	10,176
Equity consideration		14,138
Estimated fair value of contingent consideration		952

Total consideration transferred	$	25,266


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


(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		5			7,097			7,102

Balance at September 30, 2017	$	—		$	(6,647	)	$	(6,647	)


	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


	September 30, 2017			December 31, 2016
Land	$	1,021		$	—
Buildings		768			—
Leasehold improvements		15,743			14,592
Equipment		19,543			15,214
Furniture and fixtures		4,111			3,218
Construction in progress		3,286			1,264

Total property, plant and equipment		44,472			34,288
Less: accumulated depreciation		(22,416	)		(19,332	)

Property, plant and equipment, net	$	22,056		$	14,956


	Gross Carrying Amount		Accumulated Amortization			Weighted Average Useful Life (in years)
Technology – developed	$	51,775	$	(2,491	)		19
Patents		240		(230	)		8
Customer relationships		102,090		(7,774	)		15
Trademark – indefinite lived		2,860		—			—
Other intangibles		1,062		(116	)		3

Total intangible assets	$	158,027	$	(10,611	)		16


Years Ending	Amortization Expense
December 31, 2017 (three months remaining)	$	2,625
December 31, 2018		10,308
December 31, 2019		10,214
December 31, 2020		9,619
December 31, 2021		9,046


	September 30, 2017			December 31, 2016
2.125% Convertible Senior Notes due 2021:
Principal amount	$	115,000		$	115,000
Unamortized debt discount		(14,261	)		(16,777	)
Unamortized debt issuance costs		(2,508	)		(2,951	)

Total convertible senior notes	$	98,231		$	95,272


	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		101,844			33.38
Exercised		(201,966	)		10.08
Forfeited/cancelled		(32,957	)		20.31

Options outstanding at September 30, 2017		749,669		$	20.84		6.72	$	13,205

Options exercisable at September 30, 2017		423,217		$	15.86		5.53	$	9,602

Vested and expected to vest at September 30, 2017⁽¹⁾		739,381		$	20.74		6.70	$	13,065


	Units 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		279,054			—
Exercised		(100,221	)		—
Forfeited/cancelled		(17,203	)		—

Restricted stock units outstanding at September 30, 2017		515,468		$	—		2.80	$	19,753

Vested and expected to vest at September 30, 2017⁽¹⁾		488,104		$	—		2.66	$	18,704


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~~measurement.


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

Balance at September 30, 2017	$	—


	Minimum Rental Commitments
2017 (three months remaining)	$	939
2018		3,644
2019		3,367
2020		3,060
2021		2,751
Thereafter		2,319


	September 30, 2017			December 31, 2016
GE Healthcare		20	%		26	%
MilliporeSigma		11	%		8	%


	Three months ended September 30,									Nine months ended September 30,
(in thousands, except percentages)	2017		2016		$ Change		% Change			2017		2016		$ Change		% Change
Product revenue	$	36,514	$	24,677	$	11,837		48.0	%	$	99,516	$	78,942	$	20,574		26.1	%
Royalty and other revenue		66		—		66		100.0	%		108		—		108		100.0	%

Total revenues	$	36,580	$	24,677	$	11,903		48.2	%	$	99,624	$	78,942	$	20,682		26.2	%


	Three Months Ended September 30,				Increase/(Decrease)						Nine Months Ended September 30,				Increase/(Decrease)
	2023		2022		$ Change			% Change			2023		2022		$ Change			% Change
	(Amounts in thousands, except for percentage data)
Revenue:
Products	$	141,156	$	200,708	$	(59,552	)		(29.7	%)	$	482,910	$	614,668	$	(131,758	)		(21.4	%)
Royalty and other		36		33		3			9.1	%		111		106		5			4.7	%
Total revenue	$	141,192	$	200,741	$	(59,549	)		(29.7	%)	$	483,021	$	614,774	$	(131,753	)		(21.4	%)


Exhibit Number		Document Description

3.1		Restated Certificate of Incorporation, dated ~~September~~June 30, 1992 and amended September 17, 1999 (filed as Exhibit 3.1 to Repligen Corporation’s Quarterly Report on Form10-Q for the quarter ended September 30, 1999 and incorporated herein by reference).

3.2		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 Form8-K filed on May 19, 2014 and incorporated herein by reference).

3.3		~~Second~~Certificate of Amendment to the Certificate of Incorporation of Repligen Corporation, effective as of May 19, 2023 (filed as Exhibit 3.1 to Repligen Corporation's Current Report on Form 8-K filed on May 22, 2023 and incorporated herein by reference).

3.4		Third Amended and Restated Bylaws (filed as Exhibit 3.1 to Repligen Corporation’s Current Report on Form8-K filed on ~~May 23, 2017~~January 28, 2021 and incorporated herein by reference).