The end of the year marks an important time for individual investors. Perhaps you're sitting back and enjoying an overall great year for the stock market. Or perhaps you're reevaluating each position in your portfolio, and selling companies that have proven your original investing thesis right or wrong. Sometimes, it simply makes sense to move on. Whatever your plan, you'll likely be infusing more cash into your portfolio in 2014. If you're looking for a fresh position with steady growth, then you may want to consider bioprocessing product company Repligen (RGEN 0.94%), which had an amazing 2013.
Shares handily beat the broader market on their way to a two-bagger. Three catalysts, in particular -- a new deal with Pfizer (PFE 1.39%), a steady royalty from Bristol-Myers Squibb (BMY 3.91%), and an expansion of manufacturing capacity -- drove progress in the past 12 months for this commercially focused company. Let's reflect in more detail.
Catalyst #1: Licensing agreement
Repligen sells bioprocessing products that are necessary for producing monoclonal antibodies, but that hasn't always been the focus. The company was attempting to develop novel therapeutics in clinical trials -- like so many other developmental stage biotech companies -- before acquiring Novozymes Biopharma Sweeden in 2011, and pivoting to its current business. However, it retained its clinical assets for future licensing opportunities.
That decision paid off for Repligen and investors in 2013. The company collected a cool $5 million upfront payment in January, and another $1 million milestone in September, from a licensing agreement with Pfizer. Only about 20% was attributed to this year's revenue, but clinical progress at Pfizer that occurred in the past 12 months is certainly an encouraging sign. The deal gives the pharma giant worldwide rights to Repligen's former spinal muscular atrophy program in return for $64 million in potential future milestone payments (on top of the aforementioned payments), and potential royalties on future sales.
Catalyst #2: Orencia royalties
Royalty payments for rheumatoid arthritis drug Orencia from Bristol-Myers Squibb will generate about one-quarter of Repligen's total revenue this year. Unlike the licensing deal with Pfizer, Orencia royalties are the result of a legal settlement and, unfortunately, they'll end at the end of 2013. While that will result in lower total revenue in 2014, investors should know that the royalty stream was instrumental in building the company's $70 million cash pile. The war chest, which equates to about 17% of Repligen's market cap, will help fund growth for years to come.
Catalyst #3: Manufacturing expansion
In early November, Repligen announced that it had completed a 9,000 square foot expansion of its manufacturing capacity in Massachusetts. The upgrade more than doubled capacity for producing OPUS Series chromatography columns, tripled warehouse space for inventory, and included dedicated research and development laboratories -- all of which will help meet the growing needs of its most important customers. The scary part is that an additional 17,000 square feet is reserved for future expansion.
Foolish bottom line
With so many headlines touting the potential of pharmaceutical compounds in development across the industry's pipeline, it can be easy to overlook companies such as Repligen that operate behind the scenes. However, I believe it remains one of the best and safest ways to capitalize on the growth of the biotech industry -- as evidenced by its tremendous 2013. You may not realize an overnight multibagger, but you won't wake up to a giant loss from a failed clinical trial, either. Check back soon for what to expect from the bioprocessing product leader in 2014.
