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What changed in REPLIGEN CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of REPLIGEN CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+324 added−372 removedSource: 10-K (2025-03-14) vs 10-K (2024-02-22)

Top changes in REPLIGEN CORP's 2024 10-K

324 paragraphs added · 372 removed · 232 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

80 edited+19 added−31 removed87 unchanged
Biggest changeOur principal executive offices are located at 41 Seyon Street, Waltham, Massachusetts 02453, our website is www.repligen.com and our telephone number is (781) 250-0111. 2023 Acquisitions Metenova Holding AB On October 2, 2023, our subsidiary, Repligen Sweden AB, acquired Metenova from the former shareholders of Metenova (the “Metenova Seller”) pursuant to a Share Sale and Purchase Agreement (the “Share Purchase Agreement”), dated as of September 23, 2023 (such acquisition, the “Metenova Acquisition”), by and among Repligen Sweden AB, the Metenova Seller, and us, in our capacity as guarantor of the obligations of Repligen Sweden AB under the Share Purchase Agreement.
Biggest changeOur principal executive offices are located at 41 Seyon Street, Waltham, Massachusetts 02453, our website is www.repligen.com and our telephone number is (781) 250-0111. 2024 Acquisition Tantti Laboratory Inc. On December 2, 2024, the Company's subsidiary, Repligen Sweden AB acquired Tantti Laboratory Inc.
For example, we entered into a 15-year exclusive License Agreement with Daylight (the “Daylight Agreement”), giving us exclusive license and commercialization rights to use certain technology and 15 intellectual property subject to conditions set forth in the Daylight Agreement.
For example, we entered into a 15-year exclusive License Agreement with Daylight (the “Daylight Agreement”), giving us exclusive license and commercialization rights to use certain technology and intellectual property subject to conditions set forth in the Daylight Agreement.
With the same software, hardware, controls and cGMP compliance built into every system, and with pre-assembled flow kits for error-free installation, the KrosFlo RS platform offers operational 4 simplicity that can easily be scalable from lab- through production-scale use. KrosFlo FS systems integrate over 10 components with specifications to process volumes between 140 milliliters and 500 liters.
With the same software, hardware, controls and cGMP compliance built into every system, and with pre-assembled flow kits for error-free installation, the KrosFlo RS platform offers operational simplicity that can easily be scalable from lab- through production-scale use. KrosFlo FS systems integrate over 10 components with specifications to process volumes between 140 milliliters and 500 liters.
We are deeply committed to corporate responsibility and transparency, and we continue to factor sustainability into our business decisions and integrate its core principles into our daily operations. In establishing a formal approach to ESG, we joined the United Nations Global Compact in 2020 in support of its Ten Principles related to human rights, labor, the environment, and anti-corruption.
We are deeply committed to corporate responsibility and 12 transparency, and we continue to factor sustainability into our business decisions and integrate its core principles into our daily operations. In establishing a formal approach to ESG, we joined the United Nations Global Compact in 2020 in support of its Ten Principles related to human rights, labor, the environment, and anti-corruption.
We were incorporated in 1981 and became a publicly traded company in 1986. Our common stock is listed on the Nasdaq Global Market under the symbol “RGEN”. We have approximately 1,800 employees and operate globally with offices and manufacturing sites located at multiple locations in the United States, Europe and Asia.
We were incorporated in 1981 and became a publicly traded company in 1986. Our common stock is listed on the Nasdaq Global Market under the symbol “RGEN”. We have approximately 1,800 employees and operate globally with offices and manufacturing sites located at multiple locations in the United 8 States, Europe and Asia.
Our EAP offers employees and their eligible dependents counseling and well-being resources 24 hours a day, seven days a week by phone, online or via the mobile site. 12 Our environmental health and safety policy advances our vision of zero workplace incidents and our efforts to reduce our environmental impacts.
Our EAP offers employees and their eligible dependents counseling and well-being resources 24 hours a day, seven days a week by phone, online or via the mobile site. Our environmental health and safety policy advances our vision of zero workplace incidents and our efforts to reduce our environmental impacts.
In alignment with our integrated systems strategy, the system includes ProConnex flow paths to integrate advanced fluid management technologies including overmolded connections, pump heads, tubing filters and sensors in a single-use device. Flow paths easily attach to the system to simplify operation and increase process efficiency.
In alignment with our integrated systems strategy, the system includes ProConnex flow paths to integrate advanced fluid management technologies including overmolded 4 connections, pump heads, tubing filters and sensors in a single-use device. Flow paths easily attach to the system to simplify operation and increase process efficiency.
TFF is a rapid and efficient method for the concentration and formulation of biomolecules that is widely used in many applications in biopharmaceutical development and manufacturing. Our TangenX FS TFF cassettes feature high performing-membrane chemistries that offer superior selectivity for a wide range of applications.
TFF is a rapid and efficient method for the concentration and formulation of biomolecules that is widely used in many applications in biopharmaceutical development and manufacturing. Our TangenX FS TFF cassettes feature high performing-membrane chemistries 3 that offer superior selectivity for a wide range of applications.
We intend to expand our global commercial presence by continuing to selectively build out our global sales, marketing, field applications and services infrastructure. 10 • Operational efficiency . We seek to expand operating margins through capacity utilization and process optimization strategies designed to increase our manufacturing yields.
We intend to expand our global commercial presence by continuing to selectively build out our global sales, marketing, field applications and services infrastructure. • Operational efficiency . We seek to expand operating margins through capacity utilization and process optimization strategies designed to increase our manufacturing yields.
We maintain customer-facing centers in both the United States and Europe for our OPUS column customers, and offer a premier ability to pack any of hundreds of chromatography capture resins available, as per our customers’ choice.
We maintain customer-facing and manufacturing centers in both the United States and Europe for our OPUS column customers, and offer a premier ability to pack any of hundreds of chromatography capture resins available, as per our customers’ choice.
In 2023, the results of our mergers and acquisitions and R&D efforts are reflected in our ability to offer more integrated solutions across the bioproduction workflow. Our commercial approach is shifting from “individual product” to “whole system” sales that can support entire unit operations, the management of fluids between unit operations, and in-line advanced analytics.
In 2024, the results of our mergers and acquisitions and R&D efforts are reflected in our ability to offer more integrated solutions across the bioproduction workflow. Our commercial approach is shifting from “individual product” to “whole system” sales that can support entire unit operations, the management of fluids between unit operations, and in-line advanced analytics.
See Note 13, “ Commitments and Contingencies” to our consolidated financial statements included in this report for more information on this license agreement. Competition Our bioprocessing products compete on the basis of value proposition, performance, quality, cost effectiveness, and application suitability with numerous established technologies.
See Note 14, “ Commitments and Contingencies” to our consolidated financial statements included in this report for more information on this license agreement. Competition Our bioprocessing products compete on the basis of value proposition, performance, quality, cost effectiveness, and application suitability with numerous established technologies.
Our Market Opportunity Bioprocessing Addressable Market The global addressable market for bioprocessing products is estimated to be approximately $20 billion of which we estimate Repligen’s addressable market to be approximately $12 billion at year end 2023. This market includes bioprocessing products used to manufacture therapeutic antibodies, recombinant proteins and vaccines, as well as C&GTs.
Our Market Opportunity Bioprocessing Addressable Market The global addressable market for bioprocessing products is estimated to be approximately $20 billion of which we estimate Repligen’s addressable market to be approximately $12 billion at year end 2024. This market includes bioprocessing products used to manufacture therapeutic antibodies, recombinant proteins and vaccines, as well as C&GTs.
Our primary chromatography assembly and manufacturing sites are located in Waltham, Massachusetts, Ravensburg, Germany and Breda, the Netherlands. Our primary filtration manufacturing sites, including manufacturing of fluid management systems, products and consumables, are located in Marlborough, Massachusetts; Rancho Dominguez, California; Clifton Park, New York; Auburn, Massachusetts; Waterford, Ireland; Tallinn, Estonia and Toulouse, France.
Our primary chromatography assembly and manufacturing sites are located in Waltham, Massachusetts, Ravensburg, Germany and Breda, the Netherlands. Our primary filtration manufacturing sites, including manufacturing of fluid management systems, products and consumables, are located in Marlborough, Massachusetts; Rancho Dominguez, California; Clifton Park, New York; Auburn, Massachusetts; Waterford, Ireland; Juri, Estonia and Toulouse, France.
Outside the United States, we have manufacturing sites in Estonia, France, Germany, Ireland, the Netherlands and Sweden. The proteins products we provide are manufactured at our sites in Waltham, Massachusetts and Lund, Sweden. Native Protein A ligands and our growth factor products are manufactured in Lund, while recombinant Protein A ligands are manufactured in both Waltham and Lund.
Outside the United States, we have manufacturing sites in Estonia, France, Germany, Ireland, the Netherlands, Sweden, and Taiwan. The protein products we provide are manufactured at our sites in Waltham, Massachusetts and Lund, Sweden. Native Protein A ligands and our growth factor products are manufactured in Lund, while recombinant Protein A ligands are manufactured in both Waltham and Lund.
This means how we conduct ourselves and our global work is more than just a matter of policy and law; it’s a reflection of our core principles. Our Second Amended and Restated Code of Business Conduct and Ethics reflects Repligen’s five core principles – (1) trustworthiness, (2) respectfulness, (3) responsibility, (4) fairness and (5) corporate citizenship.
This means how we conduct ourselves and our global work is more than just a matter of policy and law; it’s a reflection of our core principles. Our Code of Business Conduct and Ethics reflects Repligen’s five core principles – (1) trustworthiness, (2) respectfulness, (3) responsibility, (4) fairness and (5) corporate citizenship.
We are committed to inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies (“mAbs”) and mAb derivatives, recombinant proteins, vaccines, and cell and gene therapies (“C&GT”) – that are improving human health worldwide.
We are committed to inspiring advances in bioprocessing as a trusted partner in the production of critical biologic drugs – including monoclonal antibodies (“mAbs”) and mAb derivatives, recombinant proteins, RNA-based therapeutics and vaccines, and cell and gene therapies (“C&GT”) – that are improving human health worldwide.
We cannot be certain that the research, development and commercialization efforts of our competitors will not render any of our existing or potential products obsolete. Manufacturing A majority of our 19 manufacturing sites are located in the United States (California, Massachusetts, New Jersey, New Hampshire, New York and Texas).
We cannot be certain that the research, development and commercialization efforts of our competitors will not render any of our existing or potential products obsolete. Manufacturing A majority of our 16 manufacturing sites are located in the United States (California, Massachusetts, New Hampshire, New Jersey, and New York).
Shifting to Integrated Solutions Since 2012, we have completed 13 acquisitions across our four franchises, building a base of technology assets that we can improve upon and/or develop next-generation versions of through our internal R&D team. Our acquisition strategy is purposeful, considering the potential for integration with our internally-developed technologies, and across products and franchises.
Shifting to Integrated Solutions Since 2012, and through year end 2024, we have completed 14 acquisitions across our four franchises, building a base of technology assets that we can improve upon and/or develop next-generation versions of through our internal R&D team. Our acquisition strategy is purposeful, considering the potential for integration with our internally-developed technologies, and across products and franchises.
As further described below, we own or have exclusive rights to at least 263 active patent grants and 369 pending patent applications in the United States and other foreign jurisdictions including Australia, Canada, China, France, Germany, India, Japan, South Korea, Sweden and the United Kingdom.
As further described below, we own or have exclusive rights to at least 207 active patent grants and 142 pending patent applications in the United States and other foreign jurisdictions including Australia, Canada, China, France, Germany, India, Japan, South Korea, Sweden and the United Kingdom.
In France, 64 employees are under the relevant national and local collective bargaining agreements for metallurgy, comprising approximately 4% of our total workforce. Code of Business Conduct and Ethics Repligen is committed to conducting business in accordance with the highest ethical standards.
In France, 55 employees are under the relevant national and local collective bargaining agreements for metallurgy, comprising approximately 3% of our total workforce. Code of Business Conduct and Ethics Repligen is committed to conducting business in accordance with the highest ethical standards.
In 2023, we introduced next-generation XCell ® Large-Scale controllers, enabling increased process intensification through dual-operation of ATF devices from a single controller, and through advance monitoring and control of flow rates with smart sensor 3 technology.
In 2023, we introduced next-generation XCell ® Large-Scale controllers, enabling increased process intensification through dual-operation of two ATF devices from a single controller, and through advanced monitoring and control of flow rates with smart sensor technology.
Our Commercial Team To support our sales goals for our direct-to-consumer products, we have invested in our commercial organization. Since 2018, we have significantly expanded our global commercial organization from 103, to a commercial team of 342 employees as of December 31, 2023.
Our Commercial Team To support our sales goals for our direct-to-consumer products, we have invested in our commercial organization. Since 2018, we have significantly expanded our global commercial organization from 103, to a commercial team of 334 employees as of December 31, 2024.
Our facility in Marlborough, is focused on XCell ATF and FS TFF products, while in Rancho Dominguez the focus is on Spectrum HF, TFDF and ProConnex products. Our process analytics products are manufactured in Bridgewater, New Jersey. Our operating room products are manufactured in Irving, Texas.
Our facility in Marlborough, is focused on XCell ATF, FS TFF, Spectrum HF products, while in Rancho Dominguez the focus is on Spectrum HF, TFDF and ProConnex products. Our process analytics products are manufactured in Bridgewater, New Jersey..
KrosFlo ® RPM ™ Systems with integrated FlowVPX ® Technology In 2022, we completed the development of a HF system that combines KrosFlo TFF with FlowVPX Real-Time Process Management (“RPM” ® ) technology, enabling “walk-away automation” of downstream UF/DF processes. Toward the end of 2022, we launched KrosFlo DR2i RPM for low-volume, high concentration applications.
KrosFlo ® RPM ™ Systems with integrated CTech™ FlowVPX ® Technology In 2022, we completed the development of a hollow fiber system that combines KrosFlo TFF with CTech FlowVPX Real-Time Process Management (“RPM” ® ) technology, enabling “walk-away automation” of downstream UF/DF processes. Toward the end of 2022, we launched KrosFlo KR2i RPM for low-volume, high concentration applications.
As of December 31, 2023, over 150 mAbs were approved by the U.S. Food and Drug Administration (“FDA”) to treat a diverse range of diseases. 9 Biological R&D remains robust, with more than 2,000 active mAb clinical trials ongoing to address a wide range of medical conditions.
As of December 31, 2024, over 180 mAbs were approved by the U.S. Food and Drug Administration (“FDA”) to treat a wide range of diseases. Biological R&D remains robust, with more than 2,000 active mAb clinical trials ongoing to address a wide range of medical conditions.
(“C Technologies”), we hold patent grants to various slope spectroscopy instruments, including interactive variable pathlength devices and related methods of use. C Technologies’ scientists are continually developing new analytical tools using our state-of-the-art slope spectroscopy technology, for which we continue to file patent applications.
Process Analytics Through our 2019 acquisition of C Technologies, Inc. (“C Technologies”), we hold patent grants to various slope spectroscopy instruments, including interactive variable pathlength devices and related methods of use. C Technologies’ scientists are continually developing new analytical tools using our state-of-the-art slope spectroscopy technology, for which we continue to file patent applications.
We also provide corporate governance, such as our Second Amended and Restated Code of Business Conduct and Ethics and other information, including our 2022 Sustainability Report, free of charge, through our website. Our filings with the SEC may be accessed through the SEC’s Electronic Data Gathering, Analysis and Retrieval system at www.sec.gov . 17
We also provide corporate governance, such as our Code of Business Conduct and Ethics and other information, including our 2023 Sustainability Report, free of charge, through our website. Our filings with the SEC may be accessed through the SEC’s Electronic Data Gathering, Analysis and Retrieval system at www.sec.gov . 16
We regularly conduct engagement surveys to gain insight on employee perspectives. Additional channels for employee engagement include Company-wide all-hands meetings led by our Chief Executive Officer (“CEO”) and site town halls ran by site leaders. We are committed to colleague recognition, which includes acknowledging, appreciating and celebrating each other's contributions and achievements.
Additional channels for employee engagement include Company-wide all-hands meetings led by our Chief Executive Officer (“CEO”) and site town halls ran by site leaders. We are committed to colleague recognition, which includes acknowledging, appreciating and celebrating each other's contributions and achievements.
Monoclonal Antibody Market Antibody-based biologics alone accounted for approximately $175 billion of global biopharma revenue in 2022. Industry sources project the mAbs market to grow in the range of approximately 10% to 12% annually through 2026, driven by new approvals and expanded clinical uses for marketed antibodies, as well as the emergence of biosimilar versions of originator mAbs.
Monoclonal Antibody Market Antibody-based biologics alone accounted for approximately $250 billion of global biopharma revenue in 2024. Industry sources project the mAbs market to grow in the range of approximately 8% to 10% annually through 2027, driven by new approvals and expanded clinical uses for marketed antibodies, as well as the emergence of biosimilar versions of originator mAbs.
The impact of RPS was seen during 2022 and into 2023 in productivity savings, customer lead-time reductions, manufacturing capacity expansions, product quality improvements and significant reductions in manufacturing scrap at several key sites. There are a number of programs setup using RPS over the next twelve months.
The impact of RPS has been seen in productivity savings, customer lead-time reductions, manufacturing capacity expansions, product quality improvements and significant reductions in manufacturing scrap at several key sites. There are a number of programs setup using RPS over the next twelve months.
Our corporate headquarters are located in Waltham, Massachusetts, with additional administrative and manufacturing operations worldwide. The majority of our 19 manufacturing sites and assembly centers are located in the United States (California, Massachusetts, New Hampshire, New Jersey, New York and Texas). Outside the United States, we have sites in Estonia, France, Germany, Ireland, the Netherlands and Sweden.
Our corporate headquarters are located in Waltham, Massachusetts, with additional administrative and manufacturing operations worldwide. A majority of our 16 manufacturing sites are located in the United States (California, Massachusetts, New Hampshire, New Jersey, and New York). Outside the United States, we have manufacturing sites in Estonia, France, Germany, Ireland, the Netherlands, Sweden, and Taiwan.
The following table represents the Company’s total revenue by geographic area (based on the location of the customer): For the Years Ended December 31, 2023 2022 2021 Revenue by customers' geographic locations: North America 44 % 43 % 41 % Europe 37 % 37 % 40 % APAC/Other 19 % 20 % 19 % Total revenue 100 % 100 % 100 % There was no revenue from customers that represented 10% or more of the Company's total revenue for the years ended December 31, 2023 and 2022.
The following table represents the Company’s total revenue by geographic area (based on the location of the customer): For the Years Ended December 31, 2024 2023 2022 Revenue by customers' geographic locations: North America 50 % 44 % 43 % Europe 34 % 36 % 37 % APAC/Other 16 % 20 % 20 % Total revenue 100 % 100 % 100 % There was no revenue from customers that represented 10% or more of the Company's total revenue for the years ended December 31, 2024, 2023 and 2022.
We have established talent acquisition processes, as well as training and employee engagement resources, including the formation of inclusive workforce initiatives, to drive the principles of diversity and inclusion at all levels of our organization starting with our Board of Directors (“Board”) and our Leadership team.
We have rigorous, established talent acquisition processes, as well as training and employee engagement resources, including inclusive workforce initiatives, to drive the principles of “belonging” for all employees at all levels of our organization starting with our Board of Directors (“Board”) and our Leadership team.
As part of our capacity expansion activities, we have added a site in Hopkinton, Massachusetts that serves as an assembly center for single-use products and will also have the capacity to manufacture our protein products when the current buildout is completed.
As part of our capacity expansion activities, we have added a site in Hopkinton, Massachusetts that serves as an assembly center for single-use products and the capacity to manufacture our protein products.
We are not including the information contained on our website as a part of, or incorporating it by reference into, this Form 10-K.
Available Information We maintain a website with the address www.repligen.com. We are not including the information contained on our website as a part of, or incorporating it by reference into, this Form 10-K.
We have consistently introduced disruptive new products that solve for specific bioprocessing challenges faced by customers. Our growth strategy continues to expand our geographic scope and customer base and broaden the applications of our technologies.
We are committed to sustainable innovation and have earned a reputation as an innovation leader in bioprocessing. We have consistently introduced disruptive new products that solve for specific bioprocessing challenges faced by customers. Our growth strategy continues to expand our geographic scope and customer base and broaden the applications of our technologies.
Statements by the FDA are supported by industry reports that estimate annual revenue growth of over 20% for the C&GT market over the next several years. This scientifically advanced therapeutic approach has unique manufacturing challenges that many of our products can help address.
Statements by the FDA are supported by industry reports that estimate annual revenue growth of over 20% for new modalities markets over the next several years. The scientifically advanced therapeutic approaches have unique manufacturing challenges that many of our products can help address.
In addition, following the acquisition of Avitide in September 2021, we continue to file multiple patent applications globally covering affinity ligands. Trademarks We procure and maintain trademark registrations globally for the Repligen trademark and our various product brands.
These include ligands for antibody purification, as well as ligands for purifying COVID-19 vaccines. 14 In addition, following the acquisition of Avitide in September 2021, we continue to file multiple patent applications globally covering affinity ligands. Trademarks We procure and maintain trademark registrations globally for the Repligen trademark and our various product brands.
The resins AVIPure ® -AAV9; AVIPure ® -AAV8; and AVIPure ® -AAV2, were developed by Avitide and are specific to the major adeno-associated virus (“AAV”) C&GT vectors used today. AAV vectors are the leading platform for gene delivery for the treatment of a variety of human diseases.
In February 2022, we launched three advanced affinity chromatography resins for use in gene therapy manufacturing workflows. The resins AVIPure®-AAV9; AVIPure®-AAV8; and AVIPure®-AAV2, were developed by Avitide and are specific to the major adeno-associated virus (“AAV”) C&GT vectors used today. AAV vectors are the leading platform for gene delivery for the treatment of a variety of human diseases.
We manufacture multiple forms of Protein A ligands under 7 long-term supply agreements with major life sciences companies including Cytiva (a standalone operating company owned by Danaher Corporation), MilliporeSigma and Purolite, an Ecolab Inc. company (“Purolite”), who in turn sell their Protein A chromatography resins to end users (mAb manufacturers).
Historically, we manufactured multiple forms of Protein A ligands under long-term supply agreements with major life sciences companies including Cytiva (a standalone operating company owned by Danaher Corporation), MilliporeSigma and Ecolab Life Sciences (“Ecolab”) for their Purolite (“Purolite”) resin business. These life sciences companies in turn sell their chromatography resins to end users (pharmaceutical developers and manufacturers).
Cell and Gene Therapy Market C&GT has emerged in the past few years to become a rapidly growing area of biological drug development, with an estimated global market of greater than $7 billion in 2022, and over 3,000 active clinical trials underway at year-end 2023 according to industry sources.
New modalities have emerged in the past few years to become a rapidly growing area of biological drug development, with an estimated global market of greater than $15 billion in 2024, and over 3,000 active clinical trials underway at year-end 2024 according to industry sources.
In order to stimulate increased cell growth and maximize overall yield from a bioreactor, manufacturers often add growth factors, such as insulin, to their cell culture media.
Growth Factors Most biopharmaceuticals are produced through an upstream mammalian cell culture process. In order to stimulate increased cell growth and maximize overall yield from a bioreactor, manufacturers often add growth factors, such as insulin, to their cell culture media.
Key benefits include: the elimination of manual dilutions and sample transfers from process development/manufacturing to labs, rapid time to results (minutes versus hours), improved precision, built-in data quality for improved reporting and validation, and ease of use.
Use of slope spectroscopy systems delivers multiple process benefits for our biopharmaceutical manufacturing customers, compared to traditional UV-Vis approaches. Key benefits include: the elimination of manual dilutions and sample transfers from process development/manufacturing to labs, rapid time to results (minutes versus hours), improved precision, built-in data quality for improved reporting and validation, and ease of use.
PROTEINS Our proteins franchise is represented by our Protein A affinity ligands and viral vector affinity ligands and resins. Our proteins franchise also includes cell culture growth factor products, which are a key component of cell culture media used in upstream bioprocessing to increase cell density and improve product yield.
PROTEINS Our proteins franchise is represented by our affinity ligands and resins used to purify a wide range of biological drugs including monoclonal antibodies and new modalities. Our proteins franchise also includes cell culture growth factor products, which are a key component of cell culture media used in upstream bioprocessing to increase cell density and improve product yield.
The N&CG Committee meets regularly and reviews and advises on ESG strategy and apprises the full Board in order to ensure that our ESG program and 13 strategy align with the Company's mission.
Oversight of ESG Matters The Nominating and Corporate Governance (“N&CG”) Committee of our Board oversees our ESG program. The N&CG Committee meets regularly and reviews and advises on ESG strategy and apprises the full Board in order to ensure that our ESG program and strategy align with the Company's mission.
We believe we are well positioned to participate in C&GT production, particularly in the manufacture of plasmids and viral vectors. Within the C&GT market, mRNA-based therapeutic programs have become an area of focus and investment by several large biopharmaceutical companies, following the regulatory approval of mRNA-based vaccines for the COVID-19 pandemic, including all subsequent variants of the SARS-CoV-2 coronavirus (“COVID-19”).
We believe we are well positioned to participate in new modalities production, particularly in the manufacture of plasmids and viral vectors. Within new modalities, market, mRNA-based therapeutic programs have 9 become an area of focus and investment by several large biopharmaceutical companies, following the regulatory approval of mRNA-based vaccines during the COVID-19 pandemic.
We have a long-term supply agreement with Purolite for NGL-Impact and potential additional affinity ligands that may advance from our Navigo collaboration. Our Purolite Agreement In October 2022, we extended our long-term supply agreement with Purolite through 2032 and broadened its scope to include affinity ligands targeting antibody fragments in addition to those targeting mAbs and Fc-fusion proteins.
Our Purolite Agreement In October 2022, we extended our long-term supply agreement with Purolite Purolite through 2032 and broadened its scope to include affinity ligands targeting antibody fragments in addition to those targeting mAbs and Fc-fusion proteins.
PROCESS ANALYTICS Our process analytics products complement and support our filtration, chromatography and proteins franchises as they allow end-users to make at-line or in-line absorbance measurements allowing for the determination of protein concentration in filtration, chromatography formulation and fill-finish applications.
PROCESS ANALYTICS Our process analytics products complement and support our filtration, chromatography and proteins franchises as they allow end-users to make at-line or in-line absorbance measurements allowing for the determination of protein concentration in filtration, chromatography formulation and fill-finish applications. 6 SoloVPE ® Device Our SoloVPE slope spectroscopy system is the industry standard for offline and at-line absorbance measurements for protein concentration determination in process development, manufacturing and quality control settings.
In collaboration with all key business functions, the mandate of this globally focused role is to consider our existing ESG initiatives, understand stakeholder perspectives, identify business-relevant areas of opportunity to make a positive impact on global ESG efforts, and work collaboratively to drive initiatives designed to accelerate our ESG progress and stretch our ESG ambition.
In collaboration with all key business functions, the mandate of this globally focused role is to consider our existing ESG initiatives, understand stakeholder perspectives, identify business-relevant areas of opportunity to make a positive impact on global ESG efforts, and work collaboratively to drive initiatives designed to accelerate our ESG progress and stretch our ESG ambition. 13 Intellectual Property We are committed to protecting our intellectual property through a combination of patents, trade secrets, copyrights and trademarks, as well as confidentiality and material transfer agreements.
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. We are manufacturing and supplying this ligand, NGL-Impact ® HipH, to Purolite for use in a platform use resin product.
We manufacture and exclusively supply the first of these ligands, NGL-Impact® A, to Purolite, for use with their Purolite™ Praesto™ Jetted A50 Protein A resin product. 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.
Pursuant to our collaboration with Navigo, we also have multiple patent grants and multiple pending patent applications globally covering Protein A-based affinity ligands through our collaboration with Navigo. These include ligands for antibody purification, as well as ligands for purifying COVID-19 vaccines.
Pursuant to our collaboration with Navigo, we also have multiple patent grants and multiple pending patent applications globally covering Protein A-based affinity ligands through our collaboration with Navigo.
The main driver of growth in this portfolio is our OPUS ® pre-packed column (“PPC”) product line. In addition to OPUS, with our acquisition of ARTeSYN in 2020, we added chromatography systems to our offerings, providing greater flexibility and market opportunity as we scale and expand our systems portfolio.
In addition to OPUS, with our acquisition of ARTeSYN in 2020, we added chromatography systems to our offerings, providing greater flexibility and market opportunity as we scale and expand our systems portfolio.
This includes 277 people in field positions (sales, field applications and field service), 38 people in customer service and 27 in marketing. Geographically, 173 members of our commercial team are located in North America, 89 in Europe and 80 in Asia-Pacific (“APAC”) regions.
This includes 273 people in field positions (sales, field applications and field service), 37 people in customer service and 24 10 in marketing. Geographically, 170 members of our commercial team are located in North America, 92 in Europe and 72 in Asia-Pacific (“APAC”) regions.
As a result of these activities, we closed manufacturing sites in Newton, New Jersey and Oceanside, California. We utilize our facilities in Waltham, Massachusetts and Lund, Sweden to carry out fermentation and recovery operations, and purification, immobilization, packaging and quality control testing of our protein-based bioprocessing products.
We utilize our facilities in Waltham, Massachusetts and Lund, Sweden to carry out fermentation and recovery operations, and purification, immobilization, packaging and quality control testing of our protein-based bioprocessing products.
We have one collective bargaining agreement with two unions that covers 82 employees in Sweden, comprising approximately 5% of our total workforce. We renewed this collective bargaining agreement in March 2023, and it expires at the end of March 2025.
Each of our employees has signed a confidentiality agreement. None of our U.S. employees are covered by collective bargaining agreements. We have one collective bargaining agreement with two unions that covers 75 employees in Sweden, comprising approximately 4% of our total workforce. We renewed this collective bargaining agreement in March 2023, and it expires at the end of March 2025.
The acquisition of Polymem accelerated our HF manufacturing buildout and added a Europe-based HF manufacturing center of excellence. With our acquisition of BioFlex Solutions LLC (“BioFlex”) and Newton T&M Corp.
The Polymem business complements our Spectrum HF product line, which includes KrosFlo HF TFF systems and ProConnex fluid management. The acquisition of Polymem accelerated our HF manufacturing buildout and added a Europe-based HF manufacturing center of excellence. With our acquisition of BioFlex Solutions LLC (“BioFlex”) and Newton T&M Corp.
Protein A Affinity Ligands We are a leading provider of Protein A affinity ligands to other life sciences companies (integrators), whose final products are Protein A resins. Protein A ligands are an essential “binding” component of Protein A affinity chromatography resins used in the purification of virtually all mAb-based drugs on the market or in development.
Protein A Affinity Ligands Protein A ligands are the essential “binding” component of Protein A affinity chromatography resins used in the purification of virtually all mAb-based drugs on the market or in development.
Additional chromatography products include our affinity capture resins, such as CaptivA ® Protein A resins, which are used in a small number of commercial drug processes and our ELISA test kits, used by quality control departments to detect and measure the presence of leached Protein A and/or growth factor in the final product.
Additional chromatography products include our ELISA test kits, used by quality control departments to detect and measure the presence of leached Protein A and/or growth factor in the final product. Our chromatography ligand and resin products are part of our Proteins portfolio.
We continually seek to improve upon these technologies and have multiple new patent filings including patents covering next generation TFDF filters, next generation ATF filtration technologies, and proprietary reduced cost system components.
Filtration For our filtration franchise, our patent grants include coverage for ATF filtration, TFDF and TFF HF and FS systems, membranes, filters, mixers, flow paths and single-use technologies. We continually seek to improve upon these technologies and have multiple new patent filings including patents covering next generation TFDF filters, next generation ATF filtration technologies, and proprietary reduced cost system components.
Since 2012, we have purposely built a highly diversified portfolio of products offered under these franchises, developing high-value technologies that enable more efficient drug manufacturing processes for our customers, through internal research and development (“R&D”) programs and strategic acquisitions. We are committed to sustainable innovation and have earned a reputation as an innovation leader in bioprocessing.
Our Products Our bioprocessing business is comprised of four main franchises: Filtration (including Fluid Management); Chromatography; Process Analytics; and Proteins. Since 2012, we have purposely built a highly diversified portfolio of products offered under these franchises, developing high-value technologies that enable more efficient drug manufacturing processes for our customers, through internal research and development (“R&D”) programs and strategic acquisitions.
Our Second Amended and Restated Code of Business Conduct and Ethics applies to all Repligen employees, including those who are integrated into the Company through acquisitions. Inclusive Workforce Repligen maintains a resolute commitment to fostering a diverse and inclusive workplace.
Our Code of Business Conduct and Ethics applies to all Repligen employees, including those who are 11 integrated into the Company through acquisitions. The full text of our Code of Business Conduct and Ethics is posted on our website and can be found at www.repligen.com. Inclusive Workforce Repligen maintains a resolute commitment to fostering an inclusive workplace.
In addition, we maintain a business continuity management system that focuses on key areas such as contingency planning, security stocks and off-site storage of raw materials and finished goods to ensure continuous supply of our products. 16 Available Information We maintain a website with the address www.repligen.com .
We practice continuous improvement initiatives based on routine internal audits as well as external feedback and audits performed by our partners and customers. In addition, we maintain a business continuity management system that focuses on key areas such as contingency planning, security stocks and off-site storage of raw materials and finished goods to ensure continuous supply of our products.
In the case of employees and consultants, the agreements generally provide that all inventions conceived by the individual in the course of employment or rendering services to Repligen shall be our exclusive property and must be assigned to Repligen. 14 Filtration For our filtration franchise, our patent grants include coverage for, ATF filtration, TFDF and TFF HF and FS systems, membranes, filters, mixers flow paths and single-use technologies.
In the case of employees and consultants, the agreements generally provide that all inventions conceived by the individual in the course of employment or rendering services to Repligen shall be our exclusive property and must be assigned to Repligen.
Our Affinity Ligand Collaborations In June 2018, we entered into an agreement with Navigo Proteins GmbH (“Navigo”) for the exclusive co-development of multiple affinity ligands for which Repligen holds commercialization rights. We manufacture and exclusively supply the first of these ligands, NGL-Impact ® A, to Purolite, for use with their Praesto ® Jetted A50 Protein A resin product.
Cytiva has fully transitioned to in-house manufacturing for their ligand needs, however we continue to manufacture our ligands for integrators including Purolite. Our Affinity Ligand Collaborations 7 In June 2018, we entered into an agreement with Navigo Proteins GmbH (“Navigo”) for the exclusive co-development of multiple affinity ligands for which Repligen holds commercialization rights.
With our acquisition of Metenova Holding AB (“Metenova”) on October 2, 2023, we strengthened our fluid management portfolio with the addition of magnetic mixing and drive train technologies that are widely used by global biopharmaceutical companies and contract development and manufacturing organizations.
With our acquisition of Metenova Holding AB (“Metenova”) on October 2, 2023, we strengthened our fluid management portfolio with the addition of magnetic mixing and drive train technologies that are widely used by global biopharmaceutical companies and contract development and manufacturing organizations. 5 The growth of our filtration business has allowed us to substantially increase our direct sales presence in Europe and Asia and diversify our end markets to include all biologic classes, including mAbs, vaccines, recombinant proteins and C&GT.
We also have multiple patent grants pertaining to our single-use replacement valves and liners used in combination with our modular configurable encapsulated flow systems to provide sterilized flow paths for various bioprocessing applications. Process Analytics Through our 2019 acquisition of C Technologies, Inc.
We also have multiple patent grants pertaining to our single-use replacement valves and liners used in combination with our modular configurable encapsulated flow systems to provide sterilized flow paths for various bioprocessing applications. Through the Tantti Acquisition in 2024, our patent portfolio includes macroporous resin and mirocarrier structures, These products permit alternative chromatography solutions by offering convective mass transport.
XCell ATF systems are available in a wide range of sizes that can easily scale from laboratory use through full production with bioreactors as large as 5,000 liters. Through internal innovation, we developed and launched single-use formats of the original stainless steel XCell ATF devices to address increasing industry demand for single-use sterile systems with “plug-and-play” technology.
XCell ATF systems are available in a wide range of sizes that can easily scale from laboratory use through full production with bioreactors as large as 5,000 liters.
(“Polymem”) on July 1, 2021, we further expanded our HF membrane and module production capabilities and added core R&D, engineering and production expertise in HF technology for both industrial and bioprocessing markets. The Polymem business complements our Spectrum HF product line, which includes KrosFlo HF TFF systems and ProConnex fluid management.
Strengthening our Filtration Franchise through Acquisitions With our acquisition of Polymem S.A. (“Polymem”) on July 1, 2021, we further expanded our HF membrane and module production capabilities and added core R&D, engineering and production expertise in HF technology for both industrial and bioprocessing markets.
SoloVPE ® Device Our SoloVPE slope spectroscopy system is the industry standard for offline and at-line absorbance measurements for protein concentration determination in process development, manufacturing and quality control settings. 6 FlowVPE ® Device Our FlowVPE slope spectroscopy system enhances the power of slope spectroscopy and provides in-line protein concentration measurement for filtration, chromatography and fill-finish applications.
FlowVPE ® Device Our FlowVPE slope spectroscopy system enhances the power of slope spectroscopy and provides in-line protein concentration measurement for filtration, chromatography and fill-finish applications. A key benefit of this in-line solution is the ability to monitor a manufacturing process in real time.
We believe our focus on talent identification, development, engagement and succession planning has been particularly successful in developing a deep and diverse talent pipeline. Employee Engagement and Development Our goal is to develop and maintain a talented, engaged and diverse workforce that has a positive impact on our performance and on our customers.
Employee Engagement and Development Our goal is to develop and maintain a talented, engaged and inclusive workforce that has a positive impact on our performance and on our customers. We regularly conduct engagement surveys to gain insight on employee perspectives.
FlowVPX offers reliable real-time results with integrated ease for concentration measurements during every stage of the downstream GMP-compliant production-scale biologics manufacturing. Use of slope spectroscopy systems delivers multiple process benefits for our biopharmaceutical manufacturing customers, compared to traditional UV-Vis approaches.
FlowVPX ® System FlowVPX slope spectroscopy system is our next-generation FlowVPE launched at the beginning of 2021 and designed to meet the rigors of regulatory GMP requirements. FlowVPX offers reliable real-time results with integrated ease for concentration measurements during every stage of the downstream GMP-compliant production-scale biologics manufacturing.
(“Daylight”) in September 2022, we obtained the exclusive right to use Daylight's quantum cascade laser technology (“QCL”), including its Culpeo ® QCL-IR Liquid Analyzer (“Culpeo”) specifically in the field of bioprocessing. Culpeo is a compact, intelligent spectrometer that uses the power of QCL to analyze and identify chemicals. Our in-licensing of these rights complements our existing process analytics franchise.
Culpeo ® QCL-IR Liquid Analyzer Pursuant to a 15-year license agreement that we entered into with DRS Daylight Solutions, Inc. (“Daylight”) in September 2022, we obtained the exclusive right to use Daylight's quantum cascade laser technology (“QCL”), including its Culpeo ® QCL-IR Liquid Analyzer (“Culpeo”) specifically in the field of bioprocessing.
This acquisition was a major step forward in building our proteins franchise, moving Repligen into affinity resin solutions for C&GT and other emerging modalities. In February 2022, we launched three advanced affinity chromatography resins for use in gene therapy manufacturing workflows.
Adeno-Associated Virus Affinity Ligands and Resins from Avitide In September 2021, we completed our strategic acquisition of Avitide, a market leader in affinity ligand discovery and development. This acquisition was a major step forward in building our proteins franchise, moving Repligen into affinity resin solutions for C&GT and other emerging modalities.
Repligen will continue to receive access to Purolite's leading-edge base bead technology, as we proceed with the development and commercialization of novel affinity resins focused on new modalities and C&GT. mAb Fragment Affinity Ligands and Resins from Avitide Our acquisition of Avitide also led to our development and 2022 launch of AVIPure ® CH1, a cross-linked agarose-based resin specifically engineered for the capture of the CH1 region of antigen-binding fragments (“Fabs”) from human immunoglobins (“IgGs”) and mAbs.
Repligen will continue to receive access to Purolite's leading-edge base bead technology, as we proceed with the development and commercialization of novel affinity resins focused on new modalities and C&GT.
Since the debut of the KrosFlo KR2i RPM (2 mL-15L) system, we expanded the KrosFlo RPM offering, introducing KrosFlo FS-15 RPM (150mL-15L) toward the end of 2023. The portfolio continues to expand to cover a wide range of volumes from lab-to production-scale requirements.
Since the debut of the KrosFlo KR2i RPM (2 mL-15L) system, we expanded the KrosFlo RPM offering, introducing KrosFlo FS-15 RPM (150mL-15L) toward the end of 2023. In 2024 we introduced KrosFlo RS-10 – the first bench sacle TFF system built specifically for cGMP production, with end-to-end automation.
Revenue from Pfizer Inc. accounted for 10% of total revenue for the year ended December 31, 2021. 11 Human Capital Employees Repligen performs in a highly competitive industry and recognizes that our continued success hinges upon our ability to attract, develop and retain a diverse team of talented individuals.
Human Capital Employees Repligen performs in a highly competitive industry and recognizes that our continued success hinges upon our ability to attract, develop and retain an inclusive team of talented individuals. We place high value on the satisfaction and well-being of our employees and operate with fair labor standards and industry-competitive compensation and benefits globally.
We believe KrosFlo RPM solutions provide key process insights to users to reduce cycling time and minimize batch risks, both highly value attributes for bioprocessing users. Culpeo ® QCL-IR Liquid Analyzer Pursuant to a 15-year license agreement that we entered into with DRS Daylight Solutions, Inc.
The KrosFlo RPM Sytems portfolio continues to expand to cover a wide range of volumes from lab-to production-scale requirements. We believe KrosFlo RPM solutions provide key process insights to users to reduce cycling time and minimize batch risks, both highly value attributes for bioprocessing users.
With our five acquisitions since the beginning of 2021, we gained manufacturing sites in Molndal, Sweden (Metenova), Branchburg, New Jersey (FlexBiosys), Toulouse, France (Polymem) and Lebanon, New Hampshire (Avitide).
With our six acquisitions since the beginning of 2021, we gained manufacturing sites in Molndal, Sweden (Metenova), Toulouse, France (Polymem), Lebanon, New Hampshire (Avitide), and Taoyuan City, Taiwan (Tantti). We undertook restructuring activities in 2023 that continued into 2024 and included consolidating a portion of our manufacturing operations between certain U.S. locations and discontinuing the sale of certain product SKUs.
In our hiring practices, we strive to hire the most qualified person for the job and believe that, over time, this will lead to an increasingly diverse workforce.
We believe that our employees should reflect the communities in which we live, work, and serve. In our hiring practices, we strive to hire the most qualified person for the job by ensuring that qualified, inclusive slates of applicants are identified and considered for all roles within our workforce.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met, including objectives that may involve our reliance on third-party advisors and professionals.
Biggest changeAny system of internal controls, however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that the objectives of the system are met, including objectives that may involve our reliance on third-party advisors and professionals As discussed below in Part II, Item 9A, “Controls and Procedures,” of this report, we have identified material weaknesses in our internal control over financial reporting related to (i) controls related to revenue recognition specific to the evaluation of accounting for contract terms, (ii) information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements, and (iii) business process-level controls related to inventory valuation and the financial statement close process either in a timely manner or with an appropriate precision threshold.
Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: • difficulties in integrating new operations, technologies, products, and personnel; • problems maintaining uniform procedures, controls and policies with respect to our financial accounting systems; • lack of synergies or the inability to realize expected synergies and cost-savings; • difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience; • underperformance of any acquired technology, product, or business relative to our expectations and the price we paid; • negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges; • the potential loss of key employees, customers, and strategic partners of acquired companies; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity securities to finance or as consideration for any acquisitions that dilute the ownership of our stockholders; • the issuance of equity securities to finance or as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions; • any collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us; 19 • diversion of management’s attention and company resources from existing operations of the business; • inconsistencies in standards, controls, procedures, and policies; • assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities that are difficult to identify or accurately quantify; and • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
Any acquisition involves numerous risks and operational, financial, and managerial challenges, including the following, any of which could adversely affect our business, financial condition, or results of operations: • difficulties in integrating new operations, technologies, products, and personnel; • problems maintaining uniform procedures, controls and policies with respect to our financial accounting systems; • lack of synergies or the inability to realize expected synergies and cost-savings; • difficulties in managing geographically dispersed operations, including risks associated with entering foreign markets in which we have no or limited prior experience; • underperformance of any acquired technology, product, or business relative to our expectations and the price we paid; • negative near-term impacts on financial results after an acquisition, including acquisition-related earnings charges; • the potential loss of key employees, customers, and strategic partners of acquired companies; • claims by terminated employees and shareholders of acquired companies or other third parties related to the transaction; • the assumption or incurrence of additional debt obligations or expenses, or use of substantial portions of our cash; • the issuance of equity securities to finance or to use as consideration for any acquisitions that dilute the ownership of our stockholders; • the issuance of equity securities to finance or to use as consideration for any acquisitions may not be an option if the price of our common stock is low or volatile which could preclude us from completing any such acquisitions; • any collaboration, strategic alliance and licensing arrangement may require us to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us; • diversion of management’s attention and company resources from existing operations of the business; 18 • inconsistencies in standards, controls, procedures, and policies; • assumption of, or exposure to, historical liabilities of the acquired business, including unknown contingent or similar liabilities that are difficult to identify or accurately quantify; and • risks associated with acquiring intellectual property, including potential disputes regarding acquired companies’ intellectual property.
The IRA includes several provisions that will impact our business to varying degrees, including provisions that create a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, impose new manufacturer financial liability on all drugs in Medicare Part D, allow the U.S. government to negotiate Medicare Part B and Part D pricing for certain high-cost drugs and biologics without generic or biosimilar competition, require companies to pay rebates to Medicare for drug prices that increase faster than inflation, and delay the rebate rule that would require pass through of pharmacy benefit manager rebates to beneficiaries.
The IRA includes several provisions that will impact our business to varying degrees, including provisions that create a $2,000 out-of-pocket cap for Medicare Part D beneficiaries, impose new manufacturer financial liability on all drugs in Medicare Part D, allow the U.S. government to negotiate Medicare Part B and Part D pricing for certain high-cost drugs and biologics without generic or biosimilar competition, require companies to pay 28 rebates to Medicare for drug prices that increase faster than inflation, and delay the rebate rule that would require pass through of pharmacy benefit manager rebates to beneficiaries.
Risks related to these increased foreign operations include: • fluctuations in foreign currency exchange rates, which may affect the costs incurred in international operations and foreign acquisitions and could harm our results of operations and financial condition; • changes in general economic and political conditions in countries where we operate, particularly as a result of ongoing economic instability within foreign jurisdictions; • the occurrence of a trade war, or other governmental action related to tariffs or trade agreements; • differing protection of intellectual property, technology and data in foreign jurisdictions; 22 • difficulty in staffing and managing widespread operations; • being subject to complex and restrictive employment and labor laws and regulations, as well as union and works council restrictions; • changes in tax laws or rulings in the United States or other foreign jurisdictions that may have an adverse impact on our effective tax rate; • being subject to burdensome foreign laws and regulations, including regulations that may place an increased tax burden on our operations; • being subject to longer payment cycles from customers and experiencing greater difficulties in timely accounts receivable collections; and • required compliance with a variety of foreign laws and regulations, such as data privacy requirements, real estate and property laws, anti-competition regulations, import and trade restrictions, export requirements, U.S. laws such as the Foreign Corrupt Practices Act of 1977 (the “FCPA”) and the U.S.
Risks related to these increased foreign operations include: • fluctuations in foreign currency exchange rates, which may affect the costs incurred in international operations and foreign acquisitions and could harm our results of operations and financial condition; • changes in general economic and political conditions in countries where we operate, particularly as a result of ongoing economic instability within foreign jurisdictions; • the occurrence of a trade war, or other governmental action related to tariffs or trade agreements; • differing protection of intellectual property, technology and data in foreign jurisdictions; • difficulty in staffing and managing widespread operations; 21 • being subject to complex and restrictive employment and labor laws and regulations, as well as union and works council restrictions; • changes in tax laws or rulings in the United States or other foreign jurisdictions that may have an adverse impact on our effective tax rate; • being subject to burdensome foreign laws and regulations, including regulations that may place an increased tax burden on our operations; • being subject to longer payment cycles from customers and experiencing greater difficulties in timely accounts receivable collections; and • required compliance with a variety of foreign laws and regulations, such as data privacy requirements, real estate and property laws, anti-competition regulations, import and trade restrictions, export requirements, U.S. laws such as the Foreign Corrupt Practices Act of 1977 (the “FCPA”) and the U.S.
Although we 26 believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with the Board, they would apply even if an offer rejected by our board was considered beneficial by some stockholders. Additionally, certain of our contracts with third parties allow for termination upon specified change of control transactions.
Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with the Board, they would apply even if an offer rejected by our board was considered beneficial by some stockholders. Additionally, certain of our contracts with third parties allow for termination upon specified change of control transactions.
Risks Related to Our Business We compete with life sciences, pharmaceutical and biotechnology companies who are capable of developing new approaches that could make our products and technology obsolete. The bioprocessing market is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.
Risks Related to Our Business We compete with life sciences, pharmaceutical and biotechnology companies that are capable of developing new approaches that could make our products and technology obsolete. The bioprocessing market is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants.
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.
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 Plan, our operating results and financial condition could be adversely affected.
If we are found to be in violation of U.S. sanctions or export control laws, it could result in substantial fines and penalties for us and for the individuals working for us. We may also be adversely affected through other penalties, reputational harm, loss of access to certain markets, or otherwise.
If we are found to be in violation of 27 U.S. sanctions or export control laws, it could result in substantial fines and penalties for us and for the individuals working for us. We may also be adversely affected through other penalties, reputational harm, loss of access to certain markets, or otherwise.
To date, we have not experienced material losses or disruptions to our operations related to climate change, and we do not anticipate that these risks will have a material impact to our Company in the near term. 28 Health care reform measures could adversely affect our business.
To date, we have not experienced material losses or disruptions to our operations related to climate change, and we do not anticipate that these risks will have a material impact to our Company in the near term. Health care reform measures could adversely affect our business.
For example, it could: • make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors who have less debt; and • limit our ability to borrow additional amounts for working capital and other general corporate purposes, including to fund possible acquisitions of, or investments in, complementary businesses, products, services and technologies. 21 Any of these factors could materially and adversely affect our business, financial condition and results of operations.
For example, it could: • make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation; • limit our flexibility in planning for, or reacting to, changes in our business and our industry; • place us at a disadvantage compared to our competitors who have less debt; and • limit our ability to borrow additional amounts for working capital and other general corporate purposes, including to fund possible acquisitions of, or investments in, complementary businesses, products, services and technologies. 20 Any of these factors could materially and adversely affect our business, financial condition and results of operations.
Any sustainability disclosures we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, product quality, supply chain management, and workforce inclusion and diversity.
Any sustainability disclosures we make may include our policies and practices on a variety of social and ethical matters, including corporate governance, environmental compliance, employee health and safety practices, human capital management, product quality, supply chain management, and workforce inclusion.
If we should encounter delays or difficulties in securing, reconfiguring or revalidating the materials required for our products, our business related to these products and our financial condition, results of operations and reputation could be adversely affected.
If we should encounter delays or difficulties in securing, reconfiguring or 19 revalidating the materials required for our products, our business related to these products and our financial condition, results of operations and reputation could be adversely affected.
There is no assurance that our actual income tax liability will not be materially different than what is reflected in our income tax provisions and accruals as a result of changes in tax laws.
There is no assurance that our actual income tax liability will not be materially different than what is reflected in our income tax (benefit) provisions and accruals as a result of changes in tax laws.
Patents that may be granted to us in certain foreign countries may be subject to opposition proceedings brought by third parties or result in suits by us, which may be costly and result in adverse consequences for us. 31 In some cases, litigation or other proceedings may be necessary to assert claims of infringement, to enforce patents issued to us or our licensors, to protect trade secrets, know-how or other intellectual property rights we own or to determine the scope and validity of the proprietary rights of third parties.
Patents that may be granted to us in certain foreign countries may be subject to opposition proceedings brought by third parties or result in suits by us, which may be costly and result in adverse consequences for us. 32 In some cases, litigation or other proceedings may be necessary to assert claims of infringement, to enforce patents issued to us or our licensors, to protect trade secrets, know-how or other intellectual property rights we own or to determine the scope and validity of the proprietary rights of third parties.
Our inability to manage successfully the geographically and culturally diverse, and substantially larger combined organization could materially adversely affect our operating results and, as a result, the market price of our common stock. Our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates. We conduct a large portion of our business in international markets.
Our inability to manage successfully the geographically and culturally expansive, and substantially larger combined organization could materially adversely affect our operating results and, as a result, the market price of our common stock. Our results of operations could be negatively affected by potential fluctuations in foreign currency exchange rates. We conduct a large portion of our business in international markets.
These factors could involve financial institutions or 24 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.
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.
We also face significant competition in the hiring and retention of such personnel from other companies, research and academic institutions, government and other organizations who have superior funding and resources. The loss of key personnel or our inability to hire and retain skilled personnel could materially adversely affect our product development efforts and our business.
We also face significant competition in the hiring and retention of such personnel from other companies, research and academic institutions, government and other organizations that have superior funding and resources. The loss of key personnel or our inability to hire and retain skilled personnel could materially and adversely affect our product development efforts and our business.
In addition, a deterioration in diplomatic relations between the United States and any country where we conduct business could adversely affect our future operations and lead to a decline in profitability. We may be unable to efficiently manage our growth as a larger and more geographically diverse organization.
In addition, a deterioration in diplomatic relations between the United States and any country where we conduct business could adversely affect our future operations and lead to a decline in profitability. We may be unable to efficiently manage our growth as a larger and more geographically expansive organization.
ITEM 1A. RI SK FACTORS Investors should carefully consider the risk factors described below before making an investment decision. If any of the events described in the following risk factors occur, our business, financial condition or results of operations could be materially harmed.
ITEM 1A. RISK FACTORS Investors should carefully consider the risk factors described below before making an investment decision. If any of the events described in the following risk factors occur, our business, financial condition or results of operations could be materially harmed.
Furthermore, if any of our current or future products compete with those of any of our largest customers, these 18 customers may place fewer orders with us or cease placing orders with us, which would negatively affect our revenues and operating results.
Furthermore, if any of our current or future products compete with those of any of our largest customers, these 17 customers may place fewer orders with us or cease placing orders with us, which would negatively affect our revenues and operating results.
Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely and there can be no assurance that any measures we take will prevent cyber-attacks or security breaches that could adversely affect our business. Changes in laws and regulations governing the privacy and protection of data and personal information could adversely affect our business.
Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely and there can be no assurance that any measures we take will prevent cyber-attacks or security incidents or compromises that could adversely affect our business. Changes in laws and regulations governing the privacy and protection of data and personal information could adversely affect our business.
As a part of our growth strategy, we may make selected acquisitions of complementary products and/or businesses, such as our most recent acquisitions of Metenova Holding AB and FlexBiosys, Inc.
As a part of our growth strategy, we may make selected acquisitions of complementary products and/or businesses, such as our most recent acquisitions of Tantti Laboratory Inc., Metenova Holding AB and FlexBiosys, Inc.
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 $0.1 million as of December 31, 2023 in SVB depository accounts to cover short-term operational payments.
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 $0.3 million as of December 31, 2024 in SVB depository accounts to cover short-term operational payments.
Complying with export control and sanctions regulations may be time-consuming and may result in the delay or loss of sales opportunities or impose other costs.
Complying with export control and sanction regulations may be time-consuming and may result in the delay or loss of sales opportunities or impose other costs.
Complying with these laws may impose significant costs or otherwise require us to divert resources or implement changes to our business processes, and any actual or perceived non-compliance could result in significant penalties, claims and reputational damage. 30 Additionally, we face risks from evolving and uncertain privacy standards in our industry.
Complying with these European data protection laws may impose significant costs or otherwise require us to divert resources or implement changes to our business processes, and any actual or perceived non-compliance could result in significant penalties, claims and reputational damage. Additionally, we face risks from evolving and uncertain privacy standards in our industry.
As of December 31, 2023, $69.7 million in aggregate principal amount of the 2019 Notes remain outstanding. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors that may be beyond our control.
As of December 31, 2024, $600.0 million in aggregate principal amount of the 2023 Notes remain outstanding. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors that may be beyond our control.
A material cyber-attack or security breach could cause interruptions in our operations and could result in a material disruption of our business operations, damage to our reputation or a loss of revenues.
A material cyber-attack or security incident or compromise could cause interruptions in our operations and could result in a material disruption of our business operations, damage to our reputation or a loss of revenues.
Washington’s My Health My Data Act requires regulated entities to obtain consent to collect health information, grants consumers certain rights, including to request deletion, and provides for robust enforcement mechanisms, including enforcement by the state attorney-general and by litigants through a private right of action for consumer claims.
Washington’s My Health My Data Act, which went into effect in March 2024, requires regulated entities to obtain consent to collect health information, grants consumers certain rights, including to request deletion, and provides for robust enforcement mechanisms, including enforcement by the state attorney-general and by litigants through a private right of action for consumer claims.
The law also created a new regulatory agency in California and that agency’s finalized and proposed regulations are continuing to change the standard of privacy protection we are required to meet. More than a dozen other states, including Virginia, Colorado and Connecticut, have passed similar privacy laws that are or will be implemented and enforced by various state regulators.
The law also created a new regulatory agency in California and that agency’s finalized and proposed regulations are continuing to change the standard of privacy protection we are required to meet. Numerous other states have passed similar consumer privacy laws that are or will be implemented and enforced by various state regulators.
For the fiscal year ended December 31, 2023, 38.5% of our revenues were denominated in foreign currencies with the primary foreign currency exposures being the Swedish krona, Euro and Chinese yuan.
For the fiscal year ended December 31, 2024, 37.0% of our revenues were denominated in foreign currencies with the primary foreign currency exposures being the Swedish krona, Euro and Chinese yuan.
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.
The 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. 23 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.
In addition, any further deterioration in the 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 operations and financial condition.
In addition, any further deterioration in the global economy or financial services industry, including but not limited to the change in the U.S. presidential administration, or increased U.S. trade tariffs and trade disputes with other countries 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 operations and financial condition.
Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
Violations of the FCPA may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the government may seek to hold us liable for successor liability FCPA violations committed by any companies in which we invest or that we acquire.
Any inability to provide reliable financial reports or prevent fraud could harm our business. We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies. In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting.
Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies.
Risks Related to Data and Privacy Our internal computer systems, or those of our customers, collaborators or other contractors, may be subject to cyber-attacks or security breaches, which could result in a material disruption of our product development programs.
Changes in these rules or their interpretation or changes in underlying assumptions, estimates, or judgments could significantly change our reported or expected financial performance or financial condition. 29 Risks Related to Data and Privacy Our internal computer systems, or those of our customers, collaborators or other contractors, may be subject to cyber-attacks or security incidents or compromises, which could result in a material disruption of our product development programs.
Anti-takeover provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of our management, and anti-takeover or change of control contract termination rights may frustrate or prevent any attempts by a third-party to acquire or attempt to acquire us.
Anti-takeover provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of the Board, which is responsible for appointing the members of our management, and anti-takeover or change of control contract termination rights may frustrate or prevent any attempts by a third-party to acquire or attempt to acquire us. 26 Risks Related to Tax Matters The enactment of legislation implementing changes in taxation of international business activities, the adoption of other corporate tax reform policies, or changes in tax legislation or policies, or interpretations thereof, could materially impact our financial position and results of operations.
Any of these catastrophic events may have a strong negative impact on our employees, facilities, partners, suppliers, distributors or customers, and could decrease demand for our products, create delays and inefficiencies in our supply chain and make it difficult or impossible for us to deliver products to our customers. 23 In addition, a catastrophic event that results in the destruction or disruption of our data centers or our critical business or information technology systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected.
Any of these catastrophic events may have a strong negative impact on our employees, facilities, partners, suppliers, distributors or customers, and could decrease demand for our products, create delays and inefficiencies in our supply chain and make it difficult or impossible for us to deliver products to our customers.
As we expand our customer base, these requirements may vary from customer to customer, further increasing the cost of compliance and doing business. Risks Related to Our Products and Technology Risks Related to Our Intellectual Property If we are unable to obtain or maintain our intellectual property, we may not be able to succeed commercially.
Risks Related to Our Products and Technology Risks Related to Our Intellectual Property If we are unable to obtain or maintain our intellectual property, we may not be able to succeed commercially.
Additionally, for taxable years beginning after December 31, 2020, the deductibility of such deferral net operating losses is limited to 80% of our taxable income in any future taxable year. 27 Risks Related to Government Regulation Risks Related to Regulations and Compliance We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations.
Risks Related to Government Regulation Risks Related to Regulations and Compliance We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations.
As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of December 31, 2023. We have designed and are implementing a remediation plan for the material weakness.
As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective as of December 31, 2024.
Transitioning to a new supplier for our products would be time-consuming and expensive, may result in interruptions in our operations, could affect the performance specifications of our product lines or could require that we revalidate the materials. 20 There can be no assurance that we will be able to secure alternative materials and bring such materials online and revalidate them without experiencing interruptions in our workflow.
The use of materials furnished by these replacement suppliers would require us to alter our operations related to the XCell ATF systems. Transitioning to a new supplier for our products would be time-consuming and expensive, may result in interruptions in our operations, could affect the performance specifications of our product lines or could require that we revalidate the materials.
We operate on a global basis with offices or activities in Japan, South Korea, China, India, Europe and North America. Our operations and sales outside of the United States have increased as a result of our strategic acquisitions and the continued expansion of our commercial organization.
Our operations and sales outside of the United States have increased as a result of our strategic acquisitions and the continued expansion of our commercial organization.
In addition, the government may seek to hold us liable for successor liability FCPA violations committed by any companies in which we invest or that we acquire. 29 Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
Changes in accounting standards and subjective assumptions, estimates, and judgments by management related to complex accounting matters could significantly affect our financial results or financial condition.
In addition, federal and state legislators and regulators are imposing new and heightened protections for health and other sensitive information that could impact our business.
Like the CCPA, these laws grant consumers rights in relation to their personal information and impose new obligations on regulated businesses, including, in some instances, broader data security requirements. In addition, federal and state legislators and regulators are imposing new and heightened protections for health and other sensitive information that could impact our business.
Our business, financial condition and results from operations could be adversely affected by disruptions in the global economy caused by geopolitical events, such as the ongoing conflicts between Russia and Ukraine and Israel and Palestine. Global conflicts could increase costs and limit availability of fuel, energy, and other resources we depend upon for our business operations.
Global conflicts could increase costs and limit availability of fuel, energy, and other resources we depend upon for our business operations.
Broad market and industry factors, including potentially worsening economic conditions, may adversely affect the market price of our common stock, regardless of our actual operating performance. 25 If we fail to maintain an effective system of internal controls, we may not be able to accurately report financial results or prevent fraud.
Broad market and industry factors, including potentially worsening economic conditions, may adversely affect the market price of our common stock, regardless of our actual operating performance. 24 We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain effective internal control over financial reporting, which may result in a material misstatement of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.
Patent litigation and other proceedings may also absorb significant management time, attention and resources. 32 Risks Related to Our Products The market may not be receptive to our new bioprocessing products upon their introduction.
Patent litigation and other proceedings may also absorb significant management time, attention and resources. ITEM 1B. UNRESOLVE D STAFF COMMENTS None.
Removed
The use of materials furnished by these replacement suppliers would require us to alter our operations related to the XCell ATF systems.
Added
There can be no assurance that we will be able to secure alternative materials and bring such materials online and revalidate them without experiencing interruptions in our workflow.
Removed
As a result of the satisfaction of one of the conversion triggers, the 2019 Notes are convertible at the option of the holders thereof during the calendar quarter ending March 31, 2024.
Added
Furthermore, the Restructuring Plan may be disruptive to our operations.
Removed
Because the 2019 Notes mature within one year of the report date, the Company classifies the carrying value of the 2019 Notes of $69.5 million as current liabilities on the Company's consolidated balance sheets at December 31, 2023.
Added
Further restructuring and cost-cutting activities may be required and could yield unintended consequences and costs, such as a reduction in morale among our remaining employees, adverse effects to our reputation as both an employer and with respect to customers, the loss of institutional knowledge and expertise, and increased likelihood of turnover of key members of management and employees, all of which can impede our ability to successfully implement our business strategy, and consequently, our business, financial condition, and results of operations could be materially and adversely affected.
Removed
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. Our exposure to political, economic and other risks that arise from operating a multinational business has and may continue to increase.
Added
Our exposure to political, economic and other risks that arise from operating a multinational business has and may continue to increase. We operate on a global basis with offices or activities in Japan, South Korea, China, India, Taiwan, Europe and North America.
Removed
The 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.
Added
In addition, a catastrophic event that results in the destruction or disruption of our data centers or our critical business or information technology systems would severely affect our ability to conduct normal business operations and, as a result, our operating results would be adversely affected. 22 Our business, financial condition and results from operations could be adversely affected by disruptions in the global economy caused by geopolitical events, such as the ongoing conflicts between Russia and Ukraine and Israel and Palestine.
Removed
If we identify a material weakness in our internal control over financial reporting, our ability to meet our reporting obligations and the trading price of our stock could be negatively affected. Effective internal controls are necessary to provide reliable financial reports and to assist in the effective prevention of fraud.
Added
For example, increased tariffs on essential materials could raise production costs and reduce profitability if we are unable to pass these costs on to customers. Additionally, retaliatory trade measures by other countries could limit our access to key international markets, restricting revenue growth.
Removed
If we, or our independent registered public accounting firm, determine that our internal control over financial reporting are not effective, discover areas that need improvement in the future or discover a material weakness, these shortcomings could have an adverse effect on our business and financial results, and the price of our common stock could be negatively affected.
Added
Any delays or disruptions in our supply chain due to geopolitical tensions, regulatory changes, or trade disputes could adversely affect our ability to manufacture and deliver products, potentially impacting our financial performance and customer relationships.
Removed
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
Added
In addition, we are required under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting.
Removed
Accordingly, a material weakness increases the risk that the financial information we report contains material errors.
Added
Following identification of these material weaknesses, and as part of our commitment to strengthen our internal control over financial reporting, we are implementing remedial actions under the oversight of the Audit Committee of our Board to address these deficiencies.
Removed
If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence in the reliability of our financial statements, which could lead to a decline in our stock price.
Added
Our remediation activities will include the following: Our remediation activities include the following with respect to revenue recognition: • Designing and implementing new internal controls to validate there is a complete listing of revenue contracts that have non-standard terms, which require incremental accounting analysis under ASC 606. • Designing and implementing new internal controls evaluating the accounting for contract amendments, including amendments accounted for as contract modifications. • Enhancing and expanding our existing revenue recognition control procedures and attributes when evaluating the accounting impact of non-standard contract terms and contract modifications. • Increased education for internal resources on accounting for contracts within the scope of ASC 606 and deploying enablers to facilitate documentation of accounting analyses and conclusions.
Removed
Failure to comply with reporting requirements could also subject us to sanctions and/or investigations by the Securities and Exchange Commission, the Nasdaq Global Select Market or other regulatory authorities. We have previously implemented several significant enterprise resource planning (“ERP”) modules and expect to implement additional ERP modules in the future.
Added
Our remediation activities will include the following with respect to IT general controls: • Reassessing the operating effectiveness of internal controls related to the program and data change management and user access processes; and • Expanding the management and governance over IT system controls.
Removed
The implementation of the ERP system represents a change in our internal control over financial reporting.
Added
Our remediation activities will include the following with respect to certain business process-level controls: • Reassessing the operating effectiveness of these controls, including precision thresholds, timely execution, and documentation requirements for control owners; • Assessing the frequency of our control monitoring activities to ensure that they are conducted in a timely manner; and • Hiring additional staff, including external experts, to enhance the performance, documentation, and monitoring of such controls.
Removed
Although we continue to monitor and assess our internal controls in the new ERP system environment as changes are made and new modules are implemented, and we have taken additional steps to modify and enhance the design and effectiveness of our internal control over financial reporting, there is a risk that deficiencies may occur that could aggregate to a material weakness.
Added
This includes providing training for control owners setting out expectations as it relates to the control risk and design, execution and monitoring of such controls, including enhancements to the documentation to evidence the execution of the control.
Removed
As discussed below in Part II, Item 9A, “Controls and Procedures,” of this report, we identified a material weakness in our internal control over financial reporting related to the accounting for deferred income taxes on the December 2023 exchange of a portion of our 2019 Notes and issuance of our 2023 Notes.
Added
We will continue to monitor the design and operating effectiveness of these and other processes, procedures and controls and make any further changes management determines appropriate.
Removed
However, we may not be successful in remediating this material weakness in the near-term, or at all, particularly in light of the infrequency with which we are likely to undertake the types of transactions that could test our remediation efforts, or be able to identify and remediate any additional control deficiency, including any material weakness, that may arise in the future.
Added
While we are undertaking efforts to remediate these material weaknesses, the material weaknesses will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced 25 controls are operating effectively.
Removed
If we fail to remediate the material weakness or any future deficiencies or fail to otherwise maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties or shareholder litigation.
Added
At this time, we cannot predict the success of such efforts or the outcome of our assessment of the remediation efforts. We can give no assurance that our efforts will remediate these material weaknesses in our internal control over financial reporting, or that additional material weaknesses will not be identified in the future.
Removed
In addition, failure to maintain adequate internal controls could result in financial statements that do not accurately reflect our operating results or financial condition and could prevent us from preparing and filing financial statements within required time periods.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

9 edited+3 added−1 removed1 unchanged
Biggest changeCybersecurity Risk Management and Strategy We maintain a cybersecurity program, which is informed by industry standards, that includes processes for identification, assessment, and management of cybersecurity risks. We conduct periodic risk assessments, including with support from external vendors, to assess our cyber program, identify areas of enhancement, and develop strategies for the mitigation of cyber risks.
Biggest changeWe conduct periodic risk assessments, including with support from external vendors, to assess our cyber program, identify areas of enhancement, and develop strategies for the mitigation of cyber risks. We also conduct regular security penetration testing and have established a vulnerability management process supported by security testing, for the treatment of identified security risks based on severity.
Our IT Infrastructure & Operations team is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks through various means, including by leveraging managed security service providers and other third-party security software and technology services.
Our IT Infrastructure & Security Operations team is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks through various means, including by leveraging managed security service providers and other third-party security software and technology services .
ITEM 1C. CYBERSECURITY Governance Related to Cybersecurity Risks Our Board of Directors (“Board”) holds overall oversight responsibility for the Company’s strategy and risk management, including in relation to cybersecurity risks. Our Board exercises its oversight function through the Audit Committee, which oversees the management of risk exposure across various areas, including data security risks, in accordance with its charter.
ITEM 1C. CYBERSECURITY Governance Related to Cybersecurity Risks 33 Our Board of Directors (“Board”) holds overall oversight responsibility for the Company’s strategy and risk management, including in relation to cybersecurity risks. Our Board exercises its oversight function through the Audit Committee, which oversees the management of risk exposure across various areas, including data security risks, in accordance with its charter.
We engage employees in our cybersecurity efforts through a quarterly process for employees to complete security and awareness training as well as periodic simulated phishing campaigns. We also conduct specific training and tabletop exercises for key personnel involved in cybersecurity risk management.
We engage employees in our cybersecurity efforts through a quarterly process for employees to complete mandatory security and awareness training as well as monthly simulated phishing campaigns. We also conduct specific training and tabletop exercises for key personnel involved in cybersecurity risk management.
The Audit Committee receives quarterly reports from our Chief Information Officer (“CIO”) on the status of the Company’s cybersecurity program, including measures implemented to monitor and address cybersecurity risks and threats, as appropriate. Under the leadership of our general counsel, we have constituted an enterprise risk management committee (“ERMC”) composed of senior management, including the CIO and other senior executives.
The Audit Committee receives quarterly reports from our Chief Information Officer (“CIO”) on the status of the Company’s cybersecurity program, including measures implemented to monitor and address cybersecurity risks and threats, as appropriate. Our enterprise risk management committee (“ERMC”) is composed of senior management, including the CIO and other senior executives.
In addition, we institute processes and technologies for the monitoring of security alerts from internal parties and external resources, including from information security research sources. We also have implemented processes and technologies for network monitoring and data loss prevention procedures.
In addition, we institute processes and technologies for the monitoring of security alerts from internal parties and external resources, including from information security research sources. We also have implemented processes and technologies for network monitoring and data loss prevention procedures. We have been subject to cybersecurity incidents in the past, including the publicly disclosed July 2024 security incident.
Our IT Infrastructure & Operations team manages the day-to-day administration of our cybersecurity program. We also work with a managed security service provider to monitor for vulnerabilities and threats, which are reported to the IT Infrastructure & Operations team and up to the CIO and other members of senior management, where appropriate.
Our CIO has over twenty years of information technology experience. Our IT Infrastructure & Security Operations teams manage the day-to-day administration of our cybersecurity program. We also work with a managed security service provider to monitor for vulnerabilities and threats.
We also conduct regular security testing and have established a vulnerability management process supported by security testing, for the treatment of identified security risks based on severity. Third-parties that access, process, collect, share, create, store, transmit or destroy our information or have access to our systems may have additional contractual controls.
Third-parties that access, process, collect, share, create, store, transmit or destroy our information or have access to our systems may have additional contractual controls.
Although risks from cybersecurity threats have to date not materially affected us, our business strategy, results of operations or financial condition, we have, from time to time, experienced threats and security incidents relating to our and our third party vendors’ information systems. See Item 1A, ”Risk Factors,” to this report for more information. 34
Although we do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents have materially affected us, our business strategy, results of operations or financial condition, there is no guarantee that past security incidents and any future incidents will not have a material impact on our business strategy, results of operations, or financial condition in the future.
Removed
We maintain processes to inform and update management and, as needed, the Audit Committee, about security incidents that may pose a significant risk for the business, as applicable.
Added
The service provider has the authority to take actions to remediate critical and high vulnerabilities, and these are reported to the IT Infrastructure & Security Operations team and up to the CIO and other members of senior management, where appropriate.
Added
Cybersecurity Risk Management and Strategy We maintain a cybersecurity program, which is informed by industry standards, that includes processes for identification, assessment, and management of cybersecurity risks and which is integrated into our larger enterprise-wide risk management program .
Added
See Item 1A, “Risk Factors,” to this report for more information. 34

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−2 removed0 unchanged
Biggest changePR OPERTIES Our material office, manufacturing and warehouse leases are detailed below: Location Square Feet Principal Use Lease Expiration Waltham, Massachusetts 182,243 Corporate headquarters, manufacturing, research and development, marketing and administrative offices October 31, 2030 Marlborough, Massachusetts 130,700 Manufacturing operations November 30, 2033 Rancho Dominguez, California 68,908 Manufacturing, research and development, marketing and administrative operations July 15, 2035 Toulouse, France 67,285 (1) Manufacturing and administrative operations March 31, 2032 Lund, Sweden 65,240 Manufacturing and administrative operations December 31, 2026 Hopkinton, Massachusetts 64,000 Manufacturing, assembly site July 13, 2034 Bridgewater, New Jersey 57,739 Manufacturing and administrative operations February 1, 2034 Compton, California 54,060 Warehouse May 31, 2029 Waterford, Ireland 50,311 Manufacturing, administrative operations and assembly site January 31, 2037 Clifton Park, New York 34,386 Manufacturing operations November 30, 2029 Lebanon, New Hampshire 31,313 Research and development and administrative operations July 31, 2026 (1) On April 1, 2023, we expanded our space in Toulouse, France by approximately 4,000 square feet for additional office and warehouse space.
Biggest changePR OPERTIES Our material office, manufacturing and warehouse leases are detailed below: Location Square Feet Principal Use Lease Expiration Waltham, Massachusetts 182,243 Corporate headquarters, manufacturing, research and development, marketing and administrative offices October 31, 2030 Rancho Dominguez, California 140,983 (1) Manufacturing, research and development, marketing and administrative operations July 15, 2035 Shrewsbury, Massachusetts 139,000 (2) Warehouse January 31, 2034 Marlborough, Massachusetts 130,700 Manufacturing operations November 30, 2033 Jüri, Estonia 76,000 (3) Office, manufacturing and storage space March 13, 2024 Toulouse, France 67,285 Manufacturing and administrative operations March 31, 2032 Lund, Sweden 65,240 Manufacturing and administrative operations December 31, 2026 Hopkinton, Massachusetts 64,000 Manufacturing, assembly site July 13, 2034 Bridgewater, New Jersey 57,739 Manufacturing and administrative operations February 1, 2034 Compton, California 54,060 Warehouse May 31, 2029 Waterford, Ireland 50,311 Manufacturing, administrative operations and assembly site January 31, 2037 Clifton Park, New York 34,386 Manufacturing operations November 30, 2029 Lebanon, New Hampshire 31,313 Research and development and administrative operations July 31, 2026 (1) On December 1, 2024, we expanded our Rancho Dominguez facilities, adding an additional 72,000 square feet.
During the year ended December 31, 2023, we incurred total rental costs for all facilities of $25.1 million.
(2) On February 1, 2024, we leased approximately 139,000 square feet of primarily warehouse space in Shrewsbury, Massachusetts. (3) On January 1, 2024, we leased approximately 76,000 square feet of office, manufacturing and storage space in Jüri, Estonia. During the year ended December 31, 2024, we incurred total rental costs for all facilities of $28.8 million.
Removed
The Company entered into a lease agreement to lease approximately 76,000 square feet of office, manufacturing and storage space in Jüri, Estonia. The Company gained access to the space and the right to control the use of the space was conveyed effective January 1, 2024.
Removed
In addition to the above, the Company also entered into a lease agreement to lease approximately 139,000 square foot of primarily warehouse space in Shrewsbury, Massachusetts. The Company gained access to the space and the right to control the use of the space was conveyed effective February 1, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−0 removed9 unchanged
Biggest changePlan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 1,123,450 (1) $ 85.97 (2) 1,671,408 (1) Includes 649,130 shares of common stock issuable upon the exercise of outstanding options and 474,320 shares of common stock issuable upon the vesting of stock units, which include restricted stock units and performance stock units.
Biggest changePlan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted- average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (b) (c) Equity compensation plans approved by security holders 1,131,790 (1) $ 98.64 (2) 1,479,932 (1) Includes 661,178 shares of common stock issuable upon the exercise of outstanding options and 470,612 shares of common stock issuable upon the vesting of stock units, which include restricted stock units and performance stock units.
The 2008 Repurchase Program has no set expiration date and may be suspended or discontinued at any time. We did not repurchase any shares of common stock under the 2008 Repurchase Program during the year ended December 31, 2023. In prior years, we repurchased a total of 592,827 shares, leaving 657,173 shares remaining under this authorization.
The 2008 Repurchase Program has no set expiration date and may be suspended or discontinued at any time. We did not repurchase any shares of common stock under the 2008 Repurchase Program during the year ended December 31, 2024. In prior years, we repurchased a total of 592,827 shares, leaving 657,173 shares remaining under this authorization.
Equity Compensation Plan Information The following table sets forth information as of December 31, 2023, regarding shares of common stock that may be issued under the Company’s equity compensation plans, consisting of the Amended and Restated 2012 Stock Option and Incentive Plan and the 2018 Stock Option and Incentive Plan.
Equity Compensation Plan Information The following table sets forth information as of December 31, 2024, regarding shares of common stock that may be issued under the Company’s equity compensation plans, consisting of the Amended and Restated 2012 Stock Option and Incentive Plan and the 2018 Stock Option and Incentive Plan.
See Note 14, “ Convertible Senior Notes,” included in this report for more information on the issuance.
See Note 15, “ Convertible Senior Notes,” included in this report for more information on the issuance.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2018 to December 31, 2023. The comparisons shown in the graph below are based upon historical data.
The graph tracks the performance of a $100 investment in our common stock and in each index (with the reinvestment of all dividends) from December 31, 2019 to December 31, 2024. The comparisons shown in the graph below are based upon historical data.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “RGEN.” Stockholders and Dividends As of February 16, 2024, there were 259 stockholders of record of our common stock.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information for Common Stock Our common stock is traded on the Nasdaq Global Select Market under the symbol “RGEN.” Stockholders and Dividends As of March 11, 2025, there were 222 stockholders of record of our common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

82 edited+18 added−67 removed78 unchanged
Biggest changeOther income (expenses), net The table below provides detail regarding our other income (expenses), net: For the Years Ended December 31, 2023 vs 2022 2023 2022 $ Change % Change (Amounts in thousands, except for percentage data) Investment income $ 24,135 $ 6,978 $ 17,157 245.9 % Interest expense (1,951 ) (1,162 ) (789 ) 67.9 % Loss on extinguishment of debt (12,676 ) — (12,676 ) 100.0 % Amortization of debt issuance costs (8,075 ) (1,815 ) (6,260 ) 344.9 % Other income (expenses) 8,123 (9,531 ) 17,654 (185.2 )% Total other income (expenses), net $ 9,556 $ (5,530 ) $ 15,086 (272.8 )% 47 Investment income Investment income includes income earned on invested cash balances.
Biggest changeIn 2024, 2023 and 2022, actual and expected results and a change in market inputs used to calculate the discount rate, resulted in adjustments to the fair value of the contingent consideration obligation for the years ended December 31, 2024, 2023 and 2022 of $3.2 million, ($30.6) million, and ($28.7) million, respectively. 46 Other income (expenses), net The table below provides detail regarding our other income (expenses), net: For the Years Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change (Amounts in thousands, except for percentage data) Investment income $ 35,827 $ 24,135 $ 11,692 48.4 % Interest expense (20,731 ) (2,503 ) (18,228 ) 728.2 % Loss on extinguishment of debt — (12,676 ) 12,676 100.0 % Amortization of debt issuance costs (1,843 ) (8,075 ) 6,232 (77.2 )% Other income (expenses) (5,174 ) 8,123 (13,297 ) (163.7 )% Total other income (expenses), net $ 8,079 $ 9,004 $ (925 ) (10.3 )% Investment income Investment income includes income earned on invested cash balances.
Estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
Estimates of variable consideration and the determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available. Sales, value add, and other taxes collected on behalf of third parties are excluded from revenue.
The Company estimates the fair value of the contingent consideration earnouts using the Monte Carlo Simulation and updates the fair value of the contingent consideration at each reporting period based on the estimated probability of achieving the earnout targets and applying a discount rate that captures the risk associated with the expected contingent payments.
The Company estimates the fair value of the contingent consideration earnouts using a Monte Carlo Simulation and updates the fair value of the contingent consideration at each reporting period based on the estimated probability of achieving the earnout targets and applying a discount rate that captures the risk associated with the expected contingent payments.
Investing activities Our investing activities consumed $123.3 million of cash in 2023, primarily due to $186.6 million in cash (net of cash received) used for the 2023 acquisitions of Metenova and FlexBiosys, in the aggregate. Capital expenditures consumed $39.0 million in 2023, as we continue to increase our manufacturing capacity worldwide.
Our investing activities consumed $123.3 million of cash in 2023, primarily due to $186.6 million in cash (net of cash received) used for the 2023 acquisitions of Metenova and FlexBiosys, in the aggregate. Capital expenditures consumed $39.0 million in 2023, as we continue to increase our manufacturing capacity worldwide.
Capital Requirements Our future capital requirements will depend on many factors, including the following: • the expansion of our bioprocessing business; 53 • the ability to sustain sales and profits of our bioprocessing products and successfully integrate them into our business; • our ability to acquire additional bioprocessing products; • the scope of and progress made in our R&D activities; • the scope of investment in our intellectual property portfolio; • contingent consideration earnout payments resulting from our acquisitions; • the extent of any share repurchase activity; • the success of any proposed financing efforts; • general economic and capital markets; • change in accounting standards; • the impact of inflation on our operations, including our expenditures on raw material and freight charges; • fluctuations in foreign currency exchange rates; and • costs associated with our ability to comply with emerging environmental, social and governance standards.
Capital Requirements Our future capital requirements will depend on many factors, including the following: • the expansion of our bioprocessing business; • the ability to sustain sales and profits of our bioprocessing products and successfully integrate them into our business; • our ability to acquire additional bioprocessing products; • the scope of and progress made in our R&D activities; • the scope of investment in our intellectual property portfolio; • contingent consideration earnout payments resulting from our acquisitions; • the extent of any share repurchase activity; • the success of any proposed financing efforts; • general economic and capital markets; • change in accounting standards; • the impact of inflation on our operations, including our expenditures on raw material and freight charges; • fluctuations in foreign currency exchange rates; and • costs associated with our ability to comply with emerging environmental, social and governance standards.
Debt accounting In December 2023, we issued $600.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (“2023 Notes”) in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and 42 Subscription Agreements”) with a limited number of holders of our outstanding 0.375% Convertible Senior Notes due 2024 (“2019 Notes”) and certain other qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.
Debt accounting In December 2023, we issued $600.0 million aggregate principal amount of 1.00% Convertible Senior Notes due 2028 (“2023 Notes”) in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with a limited number of holders of our outstanding 0.375% Convertible Senior Notes due 2024 (“2019 Notes”) and certain other qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended.
Offsetting these activities was $14.4 million for the buyback of 92,090 shares of our common stock, $13.2 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units, $7.3 million paid for debt issuance costs related to the 2023 Notes and the payment of $7.3 million to settle the cash portion of the First Earnout Year contingent earnout obligation related to our acquisition of Avitide in September 2021.
Offsetting these activities was 49 $14.4 million for the buyback of 92,090 shares of our common stock, $13.2 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units, $7.3 million paid for debt issuance costs related to the 2023 Notes and the payment of $7.3 million to settle the cash portion of the First Earnout Year contingent earnout obligation related to our acquisition of Avitide in September 2021.
There has been no impairment of our intangible assets for the periods presented. 41 Goodwill We test goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value.
There has been no impairment of our intangible assets for the periods presented. Goodwill We test goodwill for impairment on an annual basis and between annual tests if events and circumstances indicate it is more likely than not that the fair value of a reporting unit is less than its carrying value.
The sale of equity and convertible debt securities may result in dilution to our shareholders, and those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or other debt could contain covenants that would restrict our operations.
The sale of equity and convertible debt securities may result in dilution to our shareholders, and those securities may have rights senior to those of our common shares. If we raise additional funds through the issuance of preferred stock, convertible debt securities or other debt financing, these securities or 50 other debt could contain covenants that would restrict our operations.
We are subject to a territorial tax system under the Tax Cuts and Jobs Act enacted in December 2017, in which we are required to provide for tax on 44 Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries.
We are subject to a territorial tax system under the Tax Cuts and Jobs Act enacted in December 2017, in which we are required to provide for tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries.
To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the 39 transaction price utilizing the expected value method or the most likely amount method, depending on the facts and circumstances relative to the contract.
To the extent the transaction price includes variable consideration, we estimate the amount of variable consideration that should be included in the transaction price utilizing the expected value method or the most likely amount method, depending on the facts and circumstances relative to the contract.
The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions determined by management. Any excess of purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill.
The fair value of identifiable intangible assets is based on detailed valuations that use information and assumptions determined by management. Any excess of 40 purchase price over the fair value of the net tangible and intangible assets acquired is allocated to goodwill.
A decrease in inventory provided $41.0 million of which $23.6 million was related to the Restructuring Plan. An increase in prepaid expenses, primarily related to prepaid taxes and insurance as well as subscriptions, consumed $13.0 million.
A decrease in inventory provided $41.0 million of which $23.6 million was related to the Restructuring Plan. An increase in prepaid expenses, primarily related to prepaid taxes and insurance as well as subscriptions, consumed $13.3 million.
The remaining debt issuance costs of $7.8 million as well as $0.7 million of unamortized costs carried over from the 2019 Notes at the exchange date, were capitalized within long-term debt (as a contra-liability) in our consolidated balance sheets as of December 31, 2023 and will be amortized as an adjustment to amortization of debt issuance costs over the five-year term of the 2023 Notes in our consolidated statement of comprehensive income.
The remaining debt issuance costs of $7.8 million as well as $0.7 million of unamortized costs carried over from the 2019 Notes at the exchange date, were capitalized within long-term debt (as a contra-liability) in our consolidated balance sheets and will be amortized as an adjustment to amortization of debt issuance costs over the five-year term of the 2023 Notes in our consolidated statement of comprehensive income.
"Business" including “Overview”, “Our Products”, “2023 Acquisitions”, “2021 Acquisitions” and “Our Market Opportunity” sections therein. Macroeconomic Trends As a result of our global presence, a significant portion of our revenue and expenses is denominated in currencies other than the U.S. dollar. We are therefore subject to non-U.S. exchange exposure.
"Business" including “Overview”, “Our Products”, “2024 Acquisitions”, “2023 Acquisitions” and “Our Market Opportunity” sections therein. Macroeconomic Trends As a result of our global presence, a significant portion of our revenue and expenses is denominated in currencies other than the U.S. dollar. We are therefore subject to non-U.S. exchange exposure.
At December 31, 2023, we have not provided for taxes on outside basis differences of our foreign subsidiaries as it is not practicable and we have the ability and intent to indefinitely reinvest the undistributed earnings of our foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict our plan to indefinitely reinvest.
At December 31, 2024, we have not provided for taxes on outside basis differences of our foreign subsidiaries as it is not practicable and we have the ability and intent to indefinitely reinvest the undistributed earnings of our foreign subsidiaries, and there are no needs for such earnings in the United States that would contradict our plan to indefinitely reinvest.
In addition, decreasing demand for vaccines for the COVID-19 pandemic, including all subsequent variants of the SARS-CoV-1 coronavirus (“COVID-19”) 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 2024 as well.
In addition, decreasing demand for vaccines for the COVID-19 pandemic, including all subsequent variants of the SARS-CoV-1 coronavirus (“COVID-19”) 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 2025 as well.
See Note 14, “Convertible Senior Notes,” to our consolidated financial statements included in this report for more information on this transaction. Loss on extinguishment of debt In 2023, as part of the Exchange Transaction, we exchanged $217.7 million in aggregate principal amount of the 2019 Notes for $309.9 million in aggregate principal amount of the 2023 Notes.
See Note 15, “Convertible Senior Notes,” to our consolidated financial statements included in this report for more information on this transaction. Loss on extinguishment of debt In 2023, as part of the Exchange Transaction, we exchanged $217.7 million in aggregate principal amount of the 2019 Notes for $309.9 million in aggregate principal amount of the 2023 Notes.
We recognize product revenue under the terms of each customer agreement upon transfer of control to the customer, which occurs at a point in time. 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 in our consolidated statements of comprehensive income.
We recognize product revenue under the terms of each customer agreement upon transfer of control to the customer, which occurs at a point in time. Shipping and handling fees are recorded as a component of product revenue, with the associated costs recorded as a component of cost of goods sold in our consolidated statements of comprehensive income.
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 definite-lived intangible assets are recoverable at December 31, 2023. Indefinite-lived intangible assets are tested for impairment at least annually.
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 definite-lived intangible assets are recoverable at December 31, 2024. Indefinite-lived intangible assets are tested for impairment at least annually.
Based on the assessment, we concluded that it was more likely than not that the estimated fair value of our reporting unit for 2023, 2022 and 2021 was higher than its carrying value for such years, and that the performance of the quantitative impairment test was not required. Therefore, no impairment was required for any of the periods presented.
Based on the assessment, we concluded that it was more likely than not that the estimated fair value of our reporting unit for 2024, 2023 and 2022 was higher than its carrying value for such years, and that the performance of the quantitative impairment test was not required. Therefore, no impairment was required for any of the periods presented.
We write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements to cost of product revenue in our consolidated statements of comprehensive income. Manufacturing of bioprocessing finished goods is done to order and tested for quality specifications prior to shipment.
We write down inventory that has become obsolete, inventory that has a cost basis in excess of its expected net realizable value, and inventory in excess of expected requirements to cost of goods sold in our consolidated statements of comprehensive income. Manufacturing of bioprocessing finished goods is done to order and tested for quality specifications prior to shipment.
During the fourth quarter of 2023, the closing price of 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.
During the fourth 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.
Interest expense Interest expense in 2023 is primarily from contractual coupon interest on the convertible debt outstanding as of December 31, 2023.
Interest expense Interest expense in 2024 is primarily from contractual coupon interest on the convertible debt outstanding as of December 31, 2024.
A decrease in accounts payable and accrued expenses consumed $37.7 million and was due to 52 the timing of payments to vendors as well as the payment of employee bonuses related to 2022 during 2023. The remaining cash provided by operating activities resulted from favorable changes in various other working capital accounts.
A decrease in accounts payable and accrued expenses consumed $31.3 million and was due to the timing of payments to vendors as well as the payment of employee bonuses related to 2022 during 2023. The remaining cash provided by operating activities resulted from favorable changes in various other working capital accounts.
Interest expense in 2023 also includes $0.3 million of contractual coupon interest on the 2023 Notes for which there were no comparable amounts in 2022 as well as $0.6 million in accretion of the $82.1 million debt discount on the modified notes, which includes the accretion of an increase in principal and the accretion of increased fair value of the conversion option in 2023, for which there were no comparable costs in 2022.
Interest expense in 2024 also includes $6.0 million of contractual coupon interest on the 2023 Notes for which there were no comparable amounts in 2023 as well as $13.7 million in accretion of the $82.1 million debt discount on the modified notes, which includes the accretion of an increase in principal and the accretion of increased fair value of the conversion option in 2024, for which there were no comparable costs in 2023.
Goodwill is tested for impairment as of December 31 st of each year, or more frequently as warranted by events or changes in circumstances mentioned above. Accounting guidance also permits an optional qualitative assessment for goodwill to determine whether it is more likely than not that the carrying value of a reporting unit exceeds its fair value.
Goodwill is tested for impairment as of October 1 of each year, or more frequently as warranted by events or changes in circumstances mentioned above. Accounting guidance also permits an optional qualitative assessment for goodwill to 41 determine whether it is more likely than not that the carrying value of a reporting unit exceeds its fair value.
Interest expense in 2023 includes $1.0 million of interest on the 2019 Notes, compared to $1.1 million of interest expense on the 2019 Notes in 2022.
Interest expense in 2024 includes $0.1 million of interest on the 2019 Notes, compared to $1.0 million of interest expense on the 2019 Notes in 2023.
Absent acquisitions of additional products, product candidates or intellectual property, we believe our current cash balances are adequate to meet our cash needs for at least the next 24 months. We expect operating expenses in 2024 to increase as we continue to expand our bioprocessing business.
Absent acquisitions of additional products, product candidates or intellectual property, we believe our current cash balances and future cash flow from operations are adequate to meet our cash needs for at least the next 24 months. We expect operating expenses in 2025 to increase as we continue to expand our bioprocessing business.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information pertaining to fiscal years 2022 and 2021 was included in the Company’s Annual Report on Form 10-K (“Form 10-K”) for the year ended December 31, 2022, on pages 37 through 53 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the Securities and Exchange Commission on February 22, 2023.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Information pertaining to fiscal years 2023 and 2022 was included in the Company’s Annual Report on Form 10-K/A (“Form 10-K/A”) for the year ended December 31, 2023, on pages 36 through 50 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the Securities and Exchange Commission on November 18, 2024 and Form 10-K for the year ended December 31, 2022, on pages 37 through 53 under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which was filed with the Securities and Exchange Commission on February 22, 2023, respectively.
Revenue recognition We generate revenue 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. Under Accounting Standards Codification No.
Revenue recognition We generate revenue 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.
(“ASC”) 606, “ Revenue from Contracts with Customers,” revenue is recognized when, or as, obligations under the terms of a contract are satisfied, which occurs when control of the promised products or services is transferred to customers.
Under Accounting Standards Codification (“ASC”) Topic 606, “Revenue from Contracts with Customers,” revenue is recognized when, or as, obligations under the terms of a contract are 39 satisfied, which occurs when control of the promised products or services is transferred to customers.
For the years ended December 31, 2023, 2022 and 2021, we recorded stock-based compensation expense of $25.6 million, $27.3 million and $27.5 million, respectively, for share-based awards granted under all of the Company’s stock plans. As of December 31, 2023, there was $63.8 million of total unrecognized compensation cost related to unvested share-based awards.
For the years ended December 31, 2024, 2023 and 2022, we recorded stock-based compensation expense of $48.1 million, $25.6 million and $27.3 million, respectively, for share-based awards granted under all of the Company’s stock plans. 43 As of December 31, 2024, there was $56.5 million of total unrecognized compensation cost related to unvested share-based awards.
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 decreased $1.2 million, or 2.8%, during 2023, compared to 2022.
Due to the fact that these various programs share personnel and fixed costs, we do not track all of our expenses or allocate any fixed costs by program, and therefore, have not provided historical costs incurred by project. R&D expenses increased $0.5 million, or 1.1%, during 2024, compared to 2023.
This cost is expected to be recognized over a weighted average remaining requisite service period of 2.84 years. We expect 2,185,873 unvested options and stock units to vest over the next five years.
This cost is expected to be recognized over a weighted average remaining requisite service period of 2.7 years. We expect 2,305,232 unvested options and stock units to vest over the next five years.
Contracts with customers may contain multiple performance obligations. For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately.
For such arrangements, the transaction price is allocated to each performance obligation based on the estimated relative standalone selling prices of the promised products or services underlying each performance obligation. We determine standalone selling prices based on the price at which the performance obligation is sold separately.
Financing activities In 2023, cash provided by financing activities of $249.0 million included $290.1 million of proceeds from the issuance of the 2023 Notes in December 2023 and proceeds from stock option exercises during 2023 were $1.1 million.
These payments were partially offset by proceeds received from stock option exercises during the period. In 2023, cash provided by financing activities of $249.0 million included $290.1 million of proceeds from the issuance of the 2023 Notes in December 2023 and proceeds from stock option exercises during 2023 were $1.1 million.
Intangible assets and goodwill Intangible assets Intangible assets with a definite life are amortized over their useful lives using the straight-line method and the amortization expense is recorded within cost of product revenue, R&D and selling, general and administrative expense in the consolidated statements of comprehensive income.
Intangible assets and goodwill Intangible assets Intangible assets with a definite life are amortized over their useful lives using the straight-line method and the amortization expense is recorded within cost of goods sold, research and development, and selling, general and administrative expense in the consolidated statements of comprehensive income.
See Note 5, “ Restructuring Plan” of this report for more information on the restructuring activities to simplify and streamline our organization and strengthen our overall effectiveness of our operations (“Restructuring Plan”).
See Note 6, “ Restructuring Activities and Other Inventory-Related Charges” of this report for more information on the restructuring activities to simplify and streamline our organization and strengthen our overall effectiveness of our operations (“Restructuring Plan”).
Effect of exchange rate changes on cash, cash equivalents and restricted cash The effect of exchange rate changes on cash during 2023 is a result of the strengthening of the Swedish krona against the U.S. dollar by 3%, the strengthening of the Euro against the U.S. dollar by 3% and the strengthening of the British pound against the U.S. dollar by 5%.
Effect of exchange rate changes on cash, cash equivalents and restricted cash The effect of exchange rate changes on cash during 2024 is a result of the strengthening of the U.S. dollar against the Swedish krona by 9%, the strengthening of the U.S. dollar against the Euro by 6% and the strengthening of the U.S. dollar against the British pound by 2%.
The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. We operate as one reporting unit. We performed a qualitative assessment for our reporting unit as of December 31, 2023, 2022 and 2021.
The quantitative assessment considers whether the carrying amount of a reporting unit exceeds its fair value, in which case an impairment charge is recorded to the extent the reporting unit’s carrying value exceeds its fair value. We operate as one reporting unit.
Where demand has reduced, finished goods and raw materials, whose value exceeded the projected requirements to be used before reaching their expiration date, were adjusted down to their net realizable value.
Where demand has reduced, finished goods and raw materials, whose value exceeded the projected requirements to be used before reaching their expiration date, or in a reasonable time horizon, were written down to their realizable value.
Pursuant to the Exchange and Subscription Agreements, we exchanged $217.7 million aggregate principal amount of the 2019 Notes for $309.9 million in aggregate principal amount of the 2023 Notes (the "Exchange Transaction") and issued $290.1 million aggregate principal amount of the 2023 Notes (the "Subscription Transactions") for $290.1 million in cash.
Pursuant to the Exchange and Subscription Agreements, the Company exchanged $217.7 million of its 2019 Notes for $309.9 million aggregate principal amount of the 2023 Notes (the “Exchange Transaction”) and issued $290.1 million aggregate principal amount of the 2023 Notes (the “Subscription Transactions”) for $290.1 million in cash.
“ Business - Our Products” of this report. Other revenue primarily consists of revenue from the sale of our operating room products to hospitals as well as freight revenue. For 2023, product revenue decreased by $162.8 million, or 20.3%, as compared to 2022.
“ Business - Our Products” of this report. Other revenue primarily consists of revenue from the sale of our operating room products to hospitals as well as freight revenue. In 2024, product revenue increased by $2.2 million, or 0.3%, as compared to 2023.
Prior to the close of business on the business day immediately preceding September 15, 2028, the 2023 Notes will be convertible at the option of the holders of 2023 Notes only upon the satisfaction of specified conditions and during certain periods into cash up to their principal amount, and into cash, shares of the Company's common stock or a combination of cash and the Company's common stock, at the Company's election, for the conversion value above the principal amount, if any.
The carrying value of the 2023 Notes of $525.6 million is included in long-term debt on our consolidated balance sheets as of December 31, 2024. 42 Prior to the close of business on the business day immediately preceding September 15, 2028, the 2023 Notes will be convertible at the option of the holders of 2023 Notes only upon the satisfaction of specified conditions and during certain periods into cash up to their principal amount, and into cash, shares of the Company's common stock or a combination of cash and the Company's common stock, at the Company's election, for the conversion value above the principal amount, if any.
Amortization of debt issuance costs Transaction costs related to the issuance of the 2019 Notes and the 2023 Notes are amortized to amortization of debt issuance costs on the consolidated statements of comprehensive income. Amortization of debt issuance costs increased during 2023, as compared to 2022.
No such transactions occurred in 2024. Amortization of debt issuance costs Amortization of debt issuance costs decreased during 2024, as compared to 2023. Transaction costs related to the issuance of the 2019 Notes and the 2023 Notes are amortized to amortization of debt issuance costs on the consolidated statements of comprehensive income.
The effective tax rate was 35.2% for 2023 and is based upon the income for the year ended December 31, 2023 and the composition of income in different jurisdictions.
The effective tax rate was 5.6% for 2024 and is based upon the net loss for the year ended December 31, 2024 and the composition of income in different jurisdictions.
We review our inventory at least quarterly and record a provision for excess and obsolete inventory based on our estimates of expected sales volume, production capacity and expiration dates of raw materials, work-in-process and finished products.
Inventories We value inventory at cost or, if lower, net realizable value, using the first-in, first-out method. We review our inventory at least quarterly and record a provision for excess and obsolete inventory based on our estimates of expected sales volume, production capacity and expiration dates of raw materials, work-in-process and finished products.
The 2023 Notes are senior, unsecured obligations of the Company, and bear interest at a rate of 1.00% per year. Interest is payable semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2024.
Proceeds from the Subscription Transactions amounted to $276.1 million after debt issuance costs of $13.9 million. The 2023 Notes are senior, unsecured obligations of the Company, and bear interest at a rate of 1.00% per year. Interest is payable semi-annually in arrears on each June 15 and December 15, commencing on June 15, 2024.
The reduction in gross margin in 2023 as compared to 2022, is primarily due to restructuring activities as noted above during 2023 to simplify and streamline our organization and strengthen the 46 overall effectiveness of our operations for which there were no comparable costs in 2022.
The reduction in gross margin in 2024 as compared to 2023, is primarily due to restructuring activities as noted above during 2024 to simplify and streamline our organization and strengthen the overall effectiveness of our operations, which were $13.6 million higher in 2024 than 2023.
In 2023, we recorded a $23.6 million in inventory adjustments, which included the impact of the Company discontinuing the sale of certain product SKUs and the impact of having proactively secured materials during the 2020-2022 COVID-19 pandemic period (the “COVID-19 Period”) to meet accelerated demand during a challenging supply chain environment in the industry.
In 2024, we recorded $36.0 million in inventory adjustments, which includes the impact of the Company discontinuing the sale of certain product SKUs and the impact of having proactively secured materials during the pandemic to meet accelerated demand during a challenging supply chain environment in the industry.
Applying the practical expedient in paragraph 606-10-32-18, we do not assess whether a significant financing component exists if the period between when we perform our obligations under the contract and when the customer pays is one year or less. None of our contracts contained a significant financing component as of December 31, 2023.
We do not assess whether a significant financing component exists if the period between when we perform our obligations under the contract and when the customer pays is one year or less. None of our contracts contained a significant financing component as of December 31, 2024. Contracts with customers may contain multiple performance obligations.
Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service, state and foreign jurisdictions and may be limited in the event of certain changes in the ownership interest of significant stockholders. 54 Foreign Earnings As of December 31, 2023, we have accumulated undistributed earnings generated by our foreign subsidiaries of approximately $212.4 million.
Net operating loss carryforwards and available tax credits are subject to review and possible adjustment by the Internal Revenue Service, state and foreign jurisdictions and may be limited in the event of certain changes in the ownership interest of significant stockholders.
Therefore, in 2023, we recorded $6.4 million to amortization of debt issuance costs in accordance to this guidance, which included $6.2 million of debt issuance costs directly related to the modified notes and $0.2 million of amortization of the capitalized debt issuance costs.
Any third-party costs directly related to the modification or exchange are expensed as incurred. Therefore, in 2023, we recorded $6.4 million to amortization of debt issuance costs, which included $6.2 million of debt issuance costs directly related to the modified notes and $0.2 million of amortization of the capitalized debt issuance costs.
We recorded a net decrease to the fair value of the contingent consideration obligations for the twelve months ended December 31, 2023 of ($30.6) million primarily related to the change in estimated contingent consideration obligations from the acquisition of Avitide, Inc. (“Avitide”) in September 2021.
The fair value of contingent consideration obligations for the year ended December 31, 2024 had a net change of $3.2 million primarily related to the change in the contingent consideration obligations from the acquisition of Avitide, Inc. (“Avitide”) in September 2021.
Stock-based compensation We use the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date. The expected term of options granted represents the period of time for which the options are expected to be outstanding and is derived from our historical stock option exercise experience and option expiration data.
The expected term of options granted represents the period of time for which the options are expected to be outstanding and is derived from our historical stock option exercise experience and option expiration data.
Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue. At December 31, 2023, we had cash and cash equivalents of $751.3 million compared to cash and cash equivalents of $523.5 million at December 31, 2022. There were no restrictions on cash as of December 31, 2023.
Most recently, the 2023 Notes issued in in December 2023. Our revenue for the foreseeable future will primarily be limited to our bioprocessing product revenue. At December 31, 2024, we had cash and cash equivalents of $757.4 million compared to cash and cash equivalents of $751.3 million at December 31, 2023.
Revenues Total revenues for years ended December 31, 2023 and 2022 were comprised of the following: For the Years Ended December 31, 2023 vs 2022 2023 2022 $ Change % Change (Amounts in thousands, except for percentage data) Revenue: Product $ 638,381 $ 801,183 $ (162,802 ) (20.3 %) Royalty and other income 383 353 30 8.5 % Total revenue $ 638,764 $ 801,536 $ (162,772 ) (20.3 %) Product revenues Since 2016, we have been increasingly focused on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers.
Revenues Total revenues for years ended December 31, 2024 and 2023 were comprised of the following: For the Years Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change (Amounts in thousands, except for percentage data) Revenue: Product $ 634,178 $ 631,979 $ 2,199 0.3 % Royalty and other income 261 383 (122 ) (31.9 %) Total revenue $ 634,439 $ 632,362 $ 2,077 0.3 % Product revenues Since 2016, we have been increasingly focused on selling our products directly to customers in the pharmaceutical industry and to our contract manufacturers.
As of December 31, 2023, the Company had fixed lease payment obligations of $132.2 million, with $5.6 million payable within 12 months. See Note 6, “Leases,” for additional information. In 2023, we had other purchase obligations primarily consisting of purchase commitments with certain vendors and open purchase orders for the procurement of raw materials for manufacturing.
See Note 7, “Leases,” for additional information. In 2024, we had other purchase obligations primarily consisting of purchase commitments with certain vendors and open purchase orders for the procurement of raw materials for manufacturing.
As a result, the remaining $69.7 million aggregate principal amount of 2019 Notes are convertible at the option of the holders of the 2019 Notes during the first quarter of 2024, the quarter immediately following the quarter when conditions are met, as stated in the terms of the 2019 Notes.
As a result, the remaining $69.7 million aggregate principal amount of 2019 Notes were convertible at the option of the holders of the 2019 Notes during the first quarter of 2024. During 2024, $0.2 million aggregate principal amount of the 2019 Notes converted, bringing the remaining outstanding 2019 Notes to $69.5 million in aggregate principal amount.
As a result, the 2019 Notes are convertible at the option of the holders of the 2019 Notes during the first quarter of 2024, 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, the 2023 Notes are not convertible at the option of the holders of the 2023 Notes during the fourth quarter of 2024, the quarter immediately following the quarter when the conditions are met, as stated in the indenture governing the 2023 Notes.
We have historically tested for impairment on our goodwill annually as of our measurement date of December 31st pursuant to Company policy.
Prior to fiscal year 2024, testing of impairment on our goodwill occurred annually as of our measurement date of December 31st, pursuant to Company policy.
The state net operating loss carryforwards will expire at various dates through 2043, while the federal and foreign net operating loss carryforwards have unlimited carryforward periods and do not expire. We had federal and state business tax credits carryforwards of $5.0 million available to reduce future federal and state income taxes.
We had federal and state business tax credit carryforwards of $6.6 million available to reduce future federal and state income taxes. The business tax credit carryforwards will expire at various dates through 2044.
Cash flows For the Years Ended December 31, 2023 vs 2022 2023 2022 $ Change (Amounts in thousands) Cash provided by (used in): Operating activities $ 113,918 $ 172,083 $ (58,165 ) Investing activities (123,275 ) (233,236 ) 109,961 Financing activities 248,961 (13,337 ) 262,298 Effect of exchange rate changes on cash, cash equivalents and restricted cash (11,739 ) (5,866 ) (5,873 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ 227,865 $ (80,356 ) $ 308,221 Operating activities For 2023, our operating activities provided cash of $113.9 million reflecting net income of $41.6 million and non-cash charges totaling $81.0 million primarily related to amortization of inventory step-up charges, depreciation, intangible amortization, amortization of debt discount and issuance costs, contingent consideration fair value adjustments, deferred income taxes, stock-based compensation charges and loss on extinguishment of debt.
As of December 31, 2024, the Company had other purchase obligations of $31.0 million, payable within 12 months. 48 Cash flows For the Years Ended December 31, 2024 vs 2023 2024 2023 $ Change (Amounts in thousands) Cash provided by (used in): Operating activities $ 175,394 $ 113,918 $ 61,476 Investing activities (86,383 ) (123,275 ) 36,892 Financing activities (82,902 ) 248,961 (331,863 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash (77 ) (11,739 ) 11,662 Net increase (decrease) in cash, cash equivalents and restricted cash $ 6,032 $ 227,865 $ (221,833 ) Operating activities For 2024, our operating activities provided cash of $175.4 million reflecting net loss of $25.5 million and non-cash charges totaling $140.0 million primarily related to depreciation, intangible amortization, amortization of debt discount and issuance costs, contingent consideration fair value adjustments, deferred income taxes, stock-based compensation charges, loss on disposal of fixed assets, and right of use asset amortization.
For 2022, our operating activities provided cash of $172.1 million reflecting net income of $186.0 million and non-cash charges totaling $49.9 million primarily related to depreciation, amortization, contingent consideration adjustments, amortization of debt issuance costs, deferred income taxes and stock-based compensation charges.
For 2023, our operating activities provided cash of $113.9 million reflecting net income of $35.6 million and non-cash charges totaling $98.4 million primarily related to amortization of inventory step-up charges, depreciation expense, intangible amortization expense, amortization of debt discount and issuance costs, contingent consideration fair value adjustments, deferred income taxes, stock-based compensation charges, loss on extinguishment of debt and operating lease right of use asset amortization.
In 2023, we acquired two companies for an aggregate of $186.6 million in cash, net of cash acquired. In connection with the acquisitions, the Company has an obligation to pay up to $52.0 million (undiscounted) in contingent consideration earnout payments in cash over a two-year earnout period beginning January 1, 2023 and ending December 31, 2024).
In connection with the acquisitions, the Company has an obligation to pay up to $54.5 million (undiscounted) in contingent consideration earnout payments in cash over a three-year earnout period beginning January 1, 2025 and ending December 31, 2027. See Note 3, “ Fair Value Measurements,” and Note 5, “ Acquisitions,” for additional information.
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 2023, as compared to 2022. Gross margin was 44.6% in 2023, compared to 56.9% in 2022.
The increase in restructuring changes was partially offset by a decrease in employee-related costs unrelated to the restructuring activities in 2024, as compared to 2023. Gross margin was 43.3% in 2024, compared to 44.0% in 2023.
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 adjustments include reserved values which may be recoverable in future periods, if salvageable.
Where the value of finished goods and raw materials exceeded 45 the projected requirements to be used before reaching their expiration date, or in a reasonable time horizon, they were written down to their realizable value.
R&D expense also includes payments made to expand our proteins product offering through our development agreement with Navigo Proteins GmbH (“Navigo”). Such expenses were $3.8 million in 2023, $2.6 million in 2022 and $2.3 million in 2021 in the form of milestone payments to Navigo.
Such expenses were $3.1 million in 2024, $3.8 million in 2023, and $2.6 million in 2022 in the form of milestone payments to Navigo.
Our investment income increased by $17.2 million in 2023, as compared to 2022 due to an increase in interest rates on higher average invested cash balances since December 31, 2022, as well as interest earned on U.S. treasury bills purchased at the end of 2022.
Our investment income increased by $11.7 million in 2024, as compared to 2023 due to having higher average invested cash balances since December 31, 2023. We expect investment income to vary based on changes in the amount of funds invested and fluctuation of interest rates.
Costs and operating expenses Total costs and operating expenses for the years ended December 31, 2023 and 2022 were comprised of the following: For the Years Ended December 31, 2023 vs 2022 2023 2022 $ Change % Change (Amounts in thousands, except for percentage data) Cost of product revenue $ 353,922 $ 345,830 $ 8,092 2.3 % Research and development 42,722 43,936 (1,214 ) (2.8 )% Selling, general and administrative 218,113 215,829 2,284 1.1 % Contingent consideration (30,569 ) (28,729 ) (1,840 ) 6.4 % Total costs and operating expenses $ 584,188 $ 576,866 $ 7,322 1.3 % Cost of product revenue In 2023, cost of product revenue increased $8.1 million, or 2.3%, compared to 2022, primarily due to restructuring charges, including $23.6 million in inventory adjustments to reflect inventory at net realizable value, a $3.8 million charge for accelerated depreciation on equipment related to manufacturing facilities closed and $3.0 million in severance and other charges during 2023 as a result of our restructuring activities, which commenced in July 2023.
Costs and operating expenses Total costs and operating expenses for the years ended December 31, 2024 and 2023 were comprised of the following: For the Years Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change (Amounts in thousands, except for percentage data) Cost of goods sold $ 359,794 $ 353,922 $ 5,872 1.7 % Research and development 43,200 42,722 478 1.1 % Selling, general and administrative 263,368 218,584 44,784 20.5 % Contingent consideration 3,191 (30,569 ) 33,760 (110.4 )% Total costs and operating expenses $ 669,553 $ 584,659 $ 84,894 14.5 % Cost of goods sold In 2024, cost of goods sold increased $5.9 million, or 1.7%, compared to 2023, including an incremental $12.5 million of inventory adjustments compared to the prior year to reflect inventory at net realizable value, and an incremental $6.1 million charge compared to the prior year related to manufacturing facilities closed and equipment abandoned.
Net Operating Loss Carryforwards At December 31, 2023, we had federal net operating loss carryforwards of $31.1 million, state net operating loss carryforwards of $1.5 million, and foreign net operating loss carryforwards of $4.9 million.
Net Operating Loss Carryforwards At December 31, 2024, we had federal net operating loss carryforwards of $19.3 million, state net operating loss carryforwards of $11.9 million, and foreign net operating loss carryforwards of $26.0 million. The federal net operating loss carryforwards have unlimited carryforward periods and do not expire.
Our restructuring activities include consolidating a portion of our manufacturing facilities between certain U.S. locations, discontinuing the sale of certain product SKUs, and evaluating the fair value of finished goods and raw materials secured during the COVID-19 Period to meet increasing demand during a challenging supply chain environment in the industry.
Our restructuring and other inventory-related activities include consolidating a portion of our manufacturing facilities between certain U.S. locations, writing-off abandoned equipment with the rationalization of excess production line capacity, discontinuing the sale of certain product SKUs, and evaluating the net realizable value of finished goods and raw materials.
Other income (expenses), net The changes in other expenses, net in 2023, as compared to 2022, is primarily attributable to realized and unrealized foreign currency gains and losses related to transactions with customers and vendors, as well as the revaluation impact of intercompany loans with subsidiaries.
Other income (expenses), net The changes in other expenses, net in 2024, as compared to 2023, is primarily attributable to realized and unrealized foreign currency gains and losses related to transactions with customers and vendors, as well as the revaluation impact of intercompany loans with subsidiaries. 47 Income tax (benefit) provision Income tax (benefit) provision for the years ended December 31, 2024 and 2023 was as follows: For the Years Ended December 31, 2024 vs 2023 2024 2023 $ Change % Change (Amounts in thousands, except for percentage data) Income tax (benefit) provision $ (1,521 ) $ 21,111 $ (22,632 ) (107.2 )% Effective tax rate 5.6 % 37.2 % For year ended December 31, 2024, we recorded an income tax benefit of $1.5 million.
Liquidity and Capital Resources We have financed our operations primarily through revenues derived from product sales, the issuance of the 2016 Notes in May 2016, our 2019 Notes in July 2019, the 2023 Notes in December 2023 and the issuance of common stock in our December 2020, July 2019 and May 2019 public offerings.
The difference in effective tax rates between 2024 and 2023 was primarily due to a loss before income taxes and nonrecurring nondeductible loss on extinguishment of debt and debt discount that occurred in 2023. Liquidity and Capital Resources We have financed our operations primarily through revenues derived from product sales, and the issuance of the Notes and public offerings.
We also experienced an increase in manufacturing costs from an increase in occupancy costs due to added capacity and an increase in depreciation expense. Research and development expenses R&D expenses are related to bioprocessing products, which include personnel, supplies and other research expenses.
Partially offsetting this increase in costs, margins increased as a result of a change in product mix. Research and development expenses R&D expenses are related to bioprocessing products, which include personnel, supplies and other research expenses.
Our financing activities consumed $13.3 million of cash in 2022, which included cash disbursed in relation to shares withheld to cover employee income tax due upon the vesting and release of restricted stock units of $17.0 million. This was partially offset by proceeds received from stock option exercises during the period of $3.7 million.
Financing activities In 2024, cash consumed by financing activities was $82.9 million, driven primarily by the repayment of the 2019 Notes of $69.9 million, $9.9 million in cash disbursed for shares withheld to cover employee income tax due upon the vesting and release of restricted stock units, and $7.3 million paid to settle the cash portion of the contingent earnout obligation related to our acquisition of Avitide in September 2021.
See Note 3, “ Fair Value Measurements,” and Note 4, “ Acquisitions,” for additional information. On December 14, 2023, we issued $600.0 million aggregate principal amount of our 2023 Notes in Exchange and Subscription Agreements with a limited number of holders of our outstanding 2019 Notes and certain other investors.
On December 14, 2023, the Company issued $600.0 million aggregate principal amount of its 2023 Notes in a private placement pursuant to separate, privately negotiated exchange and subscription agreements (the “Exchange and Subscription Agreements”) with a limited number of holders of its outstanding 2019 Notes and certain other qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (“Securities Act”).
See Note 14, “Convertible Senior Notes,” to our consolidated financial statements included in this report for more information on our adoption of ASU 2020-06. 43 During the fourth 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.
The 2023 Notes will mature on December 15, 2028, unless earlier redeemed, repurchased or converted. During the fourth quarter of 2024, the closing price of the Company's common stock did not exceed 130% of the conversion price of the 2023 Notes for more than 20 trading days of the last 30 consecutive trading days of the quarter.
Our investing activities consumed $233.2 million of cash during 2022, mainly due to $88.3 million of capital expenditures in 2022 as we continued to increase our manufacturing capacity worldwide. Of these expenditures, $3.5 million represented capitalized costs related to our internal-use software for 2022.
Investing activities Our investing activities consumed $86.4 million of cash in 2024, primarily due to $54.8 million in cash (net of cash received) used for the 2024 acquisition of Tantti Laboratory Inc. Capital expenditures consumed $29.9 million in 2024, including $4.2 million of capitalized costs related to our internal-use software for 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeForeign Exchange Risk 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.
Biggest changeTo achieve this objective, we maintain our portfolio of cash equivalents in high-quality securities, including money market funds. 51 Foreign Exchange Risk 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.
As a result, a hypothetical 100 basis point increase in interest rates would have no effect on our cash position as of December 31, 2023. We manage our investment portfolio in accordance with our investment policy or approval by the Board of Directors.
As a result, a hypothetical 100 basis point increase in interest rates would have no effect on our cash position as of December 31, 2024. We manage our investment portfolio in accordance with our investment policy or approval by the Board of Directors.
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. We do not have any such investments as of December 31, 2023.
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. We do not have any such investments as of December 31, 2024.
Our investment portfolio consists of cash and cash equivalents (cash and money market funds) that total $751.3 million on the consolidated balance sheets as of December 31, 2023. Our cash equivalent investments (money market funds) have short-term maturity periods that dampen the impact of market or interest rate risk.
Our investment portfolio consists of cash and cash equivalents (cash and money market funds) that total $757.4 million on the consolidated balance sheets as of December 31, 2024. Our cash equivalent investments (money market funds) have short-term maturity periods that dampen the impact of market or interest rate risk.
The primary objectives of our investment policy 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 in high-quality securities, including money market funds.
The primary objectives of our investment policy 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.
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. Although a majority of our contracts are denominated in U.S. dollars, 38.5% and 38.2% of total revenues were denominated in foreign currencies during 2023 and 2022, respectively.
Fluctuations in exchange rates may adversely affect our results of operations, financial position and cash flows. Although a majority of our contracts are denominated in U.S. dollars, 37.0% and 37.9% of total revenues were denominated in foreign currencies during 2024 and 2023, respectively.
Added
We use foreign exchange forward contracts to hedge a portion of our exposures to changes in currency exchange rates which result from an intercompany loan with a subsidiary. We do not use derivative financial instruments for trading or speculative purposes. A hypothetical 10% change in currency exchange rates would not have a material impact on our consolidated financial statements.

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