Attached files
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EX-99.1 - SYMPHONY FINANCIAL STATEMENTS - LEXICON PHARMACEUTICALS, INC. | exhibit991.htm |
8-K/A - FORM 8-K/A - LEXICON PHARMACEUTICALS, INC. | form8kasymphonyicon.htm |
Exhibit 99.2
Lexicon Pharmaceuticals, Inc.
Unaudited Pro Forma Combined Financial Statements
On July 30, 2010, Lexicon Pharmaceuticals, Inc. (“Lexicon”) entered into an amended and restated purchase option agreement (the “Amended and Restated Purchase Option Agreement”) with Symphony Icon Holdings LLC (“Holdings”) and Symphony Icon, Inc. (“Symphony Icon”), amending and restating its purchase option agreement with Holdings and Symphony Icon dated June 15, 2007.
Concurrently with the execution of the Amended and Restated Purchase Option Agreement on July 30, 2010, Lexicon exercised its exclusive purchase option (the “Purchase Option”) thereunder to acquire all of the equity of Symphony Icon, thereby reacquiring all rights to the drug candidates for which Lexicon had previously granted Symphony Icon an exclusive license under its intellectual property rights. Pursuant to its exercise of the Purchase Option, Lexicon paid Holdings $10 million and agreed to make up to $80 million in additional deferred and contingent payments.
Prior to January 1, 2010, Lexicon's financial statements included the accounts of Symphony Icon, for which Lexicon was the primary beneficiary and therefore had consolidated the financial condition and results of operations of Symphony Icon under variable interest entity accounting. Upon the adoption of a new accounting pronouncement regarding variable interest entities on January 1, 2010, Lexicon determined that it was no longer the primary beneficiary of Symphony Icon, and therefore did not include the financial condition and results of operations of Symphony Icon in its consolidated financial statements from the period from January 1, 2010 through the exercise of the Purchase Option on July 30, 2010.
The accompanying unaudited pro forma financial information reflects the impact of the purchase of Symphony Icon on Lexicon's financial position and operating results. The unaudited pro forma combined statements of operations for the year ended December 31, 2009, for the six months ended June 30, 2010 and for the nine months ended September 30, 2010 are based on the historical statements of operations of Lexicon for such periods after giving effect to the Symphony Icon acquisition as if it had occurred on January 1, 2009. The unaudited pro forma combined balance sheet as of June 30, 2010 is based on the historical balance sheets of Lexicon as of June 30, 2010, adjusted to reflect the impact of the acquisition of Symphony Icon as if it had occurred on June 30, 2010. The unaudited pro forma combined balance sheet as of September 30, 2010 has not been included as Lexicon's reported balance sheet as of September 30, 2010 already gives effect to the acquisition of Symphony Icon. The unaudited pro forma financial information should be read in conjunction with Lexicon's consolidated financial statements and thereto contained in Lexicon's 2009 Annual Report on Form 10-K filed on March 8, 2010, and Lexicon's Quarterly Report on Form 10-Q for the nine months ended September 30, 2010, filed on November 8, 2010.
The unaudited pro forma combined financial statements have been prepared by management. They are provided for illustrative purposes only and are not necessarily indicative of the results of operations that might have occurred had the transaction been completed on the respective dates presented, nor are they necessarily indicative of Lexicon's future operating results.
Lexicon (a) | Pro Forma Adjustments | Pro Forma Lexicon | |||||||||||
Revenues: | |||||||||||||
Collaborative research | $ | 9,334 | $ | — | $ | 9,334 | |||||||
Subscription and license fees | 1,366 | — | 1,366 | ||||||||||
Total revenues | 10,700 | — | 10,700 | ||||||||||
Operating expenses: | — | ||||||||||||
Research and development | 81,238 | — | 81,238 | ||||||||||
General and administrative | 19,418 | — | 19,418 | ||||||||||
Total operating expenses | 100,656 | — | 100,656 | ||||||||||
Loss from operations | (89,956 | ) | — | (89,956 | ) | ||||||||
Gain on investments, net | 1,173 | — | 1,173 | ||||||||||
Interest income | 880 | — | 880 | ||||||||||
Interest expense | (2,966 | ) | — | (2,966 | ) | ||||||||
Other income (expense), net | (2,550 | ) | 2,141 | (b) | (409 | ) | |||||||
Consolidated net loss before taxes | (93,419 | ) | 2,141 | (91,278 | ) | ||||||||
Income tax benefit | 102 | — | 102 | ||||||||||
Consolidated net loss | (93,317 | ) | 2,141 | (91,176 | ) | ||||||||
Less: net loss attributable to Symphony Icon, Inc. | 10,537 | (10,537 | ) | (c) | — | ||||||||
Net loss attributable to Lexicon Pharmaceuticals, Inc. | $ | (82,780 | ) | $ | (8,396 | ) | $ | (91,176 | ) | ||||
Net loss attributable to Lexicon Pharmaceuticals, Inc. per common share, basic and diluted | $ | (0.57 | ) | $ | (0.63 | ) | |||||||
Shares used in computing net loss attributable to Lexicon Pharmaceuticals, Inc. per common share, basic and diluted | 145,465 | 145,465 |
(a) | Lexicon consolidated the results of Symphony Icon through January 1, 2010 in accordance with ASC 810. Therefore, Symphony Icon's results are not separately presented. |
(b) | Adjustment to remove the amortization of the Purchase Option asset for Lexicon's right to purchase Symphony Icon of $2.1 million during the year ended December 31, 2009. |
(c) | Adjustment to remove the net loss attributable to the equity holders of Symphony Icon. |
Lexicon | Icon | Pro Forma Adjustments | Pro Forma Lexicon | ||||||||||||||
Revenues: | |||||||||||||||||
Collaborative research | $ | 2,805 | $ | 5,631 | $ | (5,631 | ) | (a) | $ | 2,805 | |||||||
Subscription and license fees | 69 | — | — | 69 | |||||||||||||
Total revenues | 2,874 | 5,631 | (5,631 | ) | 2,874 | ||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 41,327 | 5,271 | (5,271 | ) | (a) | 41,327 | |||||||||||
General and administrative | 10,587 | 362 | (362 | ) | (a) | 10,587 | |||||||||||
Total operating expenses | 51,914 | 5,633 | (5,633 | ) | 51,914 | ||||||||||||
Loss from operations | (49,040 | ) | (2 | ) | 2 | (49,040 | ) | ||||||||||
Gain on investments, net | 141 | — | — | 141 | |||||||||||||
Interest income | 417 | 2 | (2 | ) | (a) | 417 | |||||||||||
Interest expense | (1,456 | ) | — | — | (1,456 | ) | |||||||||||
Other income (expense), net | (1,325 | ) | — | 1,357 | (b) | 32 | |||||||||||
Net loss attributable to Lexicon Pharmaceuticals, Inc. | $ | (51,263 | ) | $ | — | $ | 1,357 | $ | (49,906 | ) | |||||||
Net loss attributable to Lexicon Pharmaceuticals, Inc. per common share, basic and diluted | $ | (0.19 | ) | $ | (0.19 | ) | |||||||||||
Shares used in computing net loss attributable to Lexicon Pharmaceuticals, Inc. per common share, basic and diluted | 267,709 | 267,709 |
(a) | Adjustments to remove the operations of Symphony Icon for the six months ended June 30, 2010, as Lexicon funded all operations during this period. As Symphony Icon used the funding provided by Lexicon, Symphony Icon recorded revenue and expense, and Lexicon recorded expense. |
(b) | Adjustment to remove Lexicon's amortization of the Purchase Option asset for Lexicon's right to purchase Symphony Icon of $1.4 million during the six months ended June 30, 2010. |
Lexicon | Icon | Pro Forma Adjustments | Pro Forma Lexicon | ||||||||||||||
Revenues: | |||||||||||||||||
Collaborative research | $ | 3,437 | $ | 6,752 | $ | (6,752 | ) | (a) | $ | 3,437 | |||||||
Subscription and license fees | 218 | — | — | 218 | |||||||||||||
Total revenues | 3,655 | 6,752 | (6,752 | ) | 3,655 | ||||||||||||
Operating expenses: | |||||||||||||||||
Research and development | 61,413 | 6,305 | (6,305 | ) | (a) | 61,413 | |||||||||||
General and administrative | 15,535 | 450 | (450 | ) | (a) | 15,535 | |||||||||||
Total operating expenses | 76,948 | 6,755 | (6,755 | ) | 76,948 | ||||||||||||
Loss from operations | (73,293 | ) | (3 | ) | 3 | (73,293 | ) | ||||||||||
Gain on investments, net | 141 | — | — | 141 | |||||||||||||
Interest income | 468 | 3 | (3 | ) | (a) | 468 | |||||||||||
Interest expense | (2,093 | ) | — | — | (2,093 | ) | |||||||||||
Other expense, net | (4,025 | ) | — | 3,957 | (b) | (68 | ) | ||||||||||
Net loss before taxes | (78,802 | ) | — | 3,957 | (74,845 | ) | |||||||||||
Income tax benefit | 26 | — | — | 26 | |||||||||||||
Net loss attributable to Lexicon Pharmaceuticals, Inc. | $ | (78,776 | ) | $ | — | $ | 3,957 | $ | (74,819 | ) | |||||||
Net loss attributable to Lexicon Pharmaceuticals, Inc. per common share, basic and diluted | $ | (0.27 | ) | $ | (0.26 | ) | |||||||||||
Shares used in computing net loss attributable to Lexicon Pharmaceuticals, Inc. per common share, basic and diluted | 291,196 | 291,196 |
(a) | Adjustments to remove the operations of Symphony Icon for the period from January 1, 2010 to July 30, 2010, as Lexicon funded all operations during 2010 through the acquisition date of July 30, 2010. As Symphony Icon used the funding provided by Lexicon, Symphony Icon recorded revenue and expense, and Lexicon recorded expense. |
(b) | Adjustment to remove Lexicon's amortization of the Purchase Option asset for Lexicon's right to purchase Symphony Icon of $4.0 million during the nine months ended September 30, 2010. |
Lexicon | Icon | Pro Forma Adjustments | Pro Forma Lexicon | ||||||||||||||
Assets | |||||||||||||||||
Current assets: | |||||||||||||||||
Cash and cash equivalents | $ | 247,698 | $ | 5,406 | $ | (10,000 | ) | (a) | $ | 243,104 | |||||||
Short-term investments | 24,083 | — | — | 24,083 | |||||||||||||
Accounts receivable, net | 2,083 | — | (736 | ) | (e) | 1,347 | |||||||||||
Prepaid expenses and other current assets | 8,589 | 501 | (5,390 | ) | (b) | 3,700 | |||||||||||
Total current assets | 282,453 | 5,907 | (16,126 | ) | 272,234 | ||||||||||||
Property and equipment, net | 56,552 | — | — | 56,552 | |||||||||||||
Goodwill | 25,798 | — | 18,745 | (a) | 44,543 | ||||||||||||
Other intangible assets | — | — | 53,557 | (a) | 53,557 | ||||||||||||
Other assets | 352 | — | — | 352 | |||||||||||||
Total assets | $ | 365,155 | $ | 5,907 | $ | 56,176 | $ | 427,238 | |||||||||
Liabilities and Equity | |||||||||||||||||
Current liabilities: | |||||||||||||||||
Accounts payable | $ | 3,547 | $ | 779 | $ | (736 | ) | (e) | $ | 3,590 | |||||||
Accrued liabilities | 6,285 | 338 | — | 6,623 | |||||||||||||
Current portion of deferred revenue | 514 | 2,790 | (2,790 | ) | (c) | 514 | |||||||||||
Current portion of long-term debt | 17,100 | — | — | 17,100 | |||||||||||||
Total current liabilities | 27,446 | 3,907 | (3,526 | ) | 27,827 | ||||||||||||
Deferred revenue, net of current portion | 14,212 | — | — | 14,212 | |||||||||||||
Long-term debt | 27,922 | — | — | 27,922 | |||||||||||||
Deferred tax liability | — | — | 18,745 | (a) | 18,745 | ||||||||||||
Other long-term liabilities | 540 | — | 45,557 | (a) | 46,097 | ||||||||||||
Total liabilities | 70,120 | 3,907 | 60,776 | 134,803 | |||||||||||||
Equity: | |||||||||||||||||
Common stock | 338 | — | — | 338 | |||||||||||||
Additional paid-in capital | 917,828 | 45,000 | (45,000 | ) | (d) | 917,828 | |||||||||||
Accumulated deficit | (622,894 | ) | (43,000 | ) | 40,400 | (d) | (625,494 | ) | |||||||||
Treasury stock | (237 | ) | — | — | (237 | ) | |||||||||||
Total equity | 295,035 | 2,000 | (4,600 | ) | 292,435 | ||||||||||||
Total liabilities and equity | $ | 365,155 | $ | 5,907 | $ | 56,176 | $ | 427,238 |
(a) | Adjustments to reflect the purchase price paid for the acquisition of Symphony Icon ($10.0 million in cash and $45.6 million in long-term liabilities) and assets and liabilities acquired ($18.7 million in goodwill, $53.6 million in other intangible assets, and $18.7 million in deferred tax liability). |
(b) | Adjustments to remove prepaid expenses of $2.8 million that had been recorded by Lexicon related to Lexicon's funding of Symphony Icon's operations and remove the Purchase Option asset as of June 30, 2010 of $2.6 million. Lexicon provided funding to Symphony Icon, and prior to using that funding, Lexicon recorded this as a prepaid expense and Symphony Icon recorded this as deferred revenue. |
(c) | Adjustment to remove deferred revenue of $2.8 million that had been recorded by Symphony Icon related to Lexicon's funding of Symphony Icon's operations. |
(d) | Adjustments to remove the net equity of Symphony Icon of $2.0 million as of June 30, 2010 and the net balance of the Purchase Option asset as of June 30, 2010 of $2.6 million. |
(e) | Adjustments to remove amounts due to Lexicon from Symphony Icon. |