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    Biopharm Stock on the Move; Repligen recovers on Positive Phase III Results

    Repligen Corporation (NASDAQ: RGEN) shares are on the move toward the green shortly after the company reported positive top-line results from a phase III study to evaluate the safety and efficacy of its pancreatic imaging agent RG1068. RGEN trading was halted in the morning of March 14 and resumed at 10.20 a.m. at $3.38, down 7.4% from March 13 closing price of $3.65.  During regular trading, the stock hit $3.85 on positive news and closed the session at $3.64. Approximately 1.1 million shares changed hands, a 793% increase over its 90-day average volume.

    Repligen is a biopharmaceutical company focused on building an integrated company by developing and marketing innovative drugs that deliver the benefits of protein therapies in the fields of neurology and gastroenterology.  The company is currently conducting a number of drug development programs for diseases such as pancreatitis, bipolar disorder, Friedreich’s ataxia and spinal muscular atrophy. In addition, RGEN has out-licensed certain biologics intellectual property from which it receives royalties from Bristol-Myers Squibb (NYSE: BMY) on the U.S. sales of Orencia.

    The company took a severe beating in the market on March 7, after it reported that a phase II clinical trial showed that its drug candidate RG2417 (uridine) was not significantly better than a placebo in treating bipolar depression. After the final evaluation, the company would decide if there is a continuation with RG2417. The shares tumbled 27.9% to $3.54.

    However, it is poised to recover since the recent results from the phase III trials demonstrated that RG1068 improves the identification of patients with pancreatic disease and allows the radiologist to render a more highly confident diagnosis to the gastroenterologist. RG1068, a synthetic version of human secretin, stimulates the secretion of pancreatic fluid into the pancreatic ducts, thereby filling the ducts with water and improving the ability to visualize pancreatic abnormalities during magnetic resonance imaging (MRI). As a result, the imaging agent could enhance the planning for indicated endoscopy and pancreatic surgery.

    There are approximately 300,000 MRI procedures conducted in the U.S. and Europe each year that could directly benefit from the addition of RG1068. According to management, procedures enhanced with RG1068 could cost up to $350 each. This translates into annual revenue for the company in the range of $105 million.

    Besides RG1068, the company remains committed on advancing its other compounds for Friedreich’s ataxia and for spinal muscular atrophy into the clinical research phase. In addition, the company will continue receiving royalties from Bristol-Myers on the sales of Orencia through December 31, 2013.

    For the nine-month period ended December 31, 2010, RGEN’s revenue was $21.4 million compared to $16.1 million for the same period in fiscal year 2010. The sales of bioprocessing products, based on recombinant protein A, for the first nine months of fiscal 2011 and 2010 were approximately $11.8 million and $8.1 million, respectively. The company recognized royalty revenue on the sales of Orencia of approximately $7.7 million and $6.7 million for the first nine months of fiscal 2011 and 2010. In addition, RGEN recognized $2.2 million of revenue from different sponsored research and development projects.

    Net income for the nine-month period ended December 31, 2010, was $2.0 million or $0.06 per diluted share compared to a net loss of $2.4 million or $0.08 per diluted share for the same period in fiscal year 2010. Total cash and marketable securities at December 31, 2010, were approximately $60.3 million.

    RGEN has reiterated its revenue forecast of $27 million to $28 million for fiscal 2011.  The company reported revenue of $21 million in fiscal 2010.

    Going forward, RGEN intends to leverage the Orphan Drug status of RG1068 and meet with the U.S. Food and Drug Administration to review the phase III results as well as discuss the plans to file a New Drug Application. According to management, RG1068 could enter the commercialization phase in early 2012. The company’s current capitalization of nearly $115 million leaves significant room for growth and appreciation, given the market potential of RG1068.

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