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8-K/A - FORM 8-K/A - SELLAS Life Sciences Group, Inc. | b86288e8vkza.htm |
Exhibit 99.1
Unaudited Pro Forma Condensed Combined Financial Information
The following unaudited pro forma condensed combined financial information combines (i) the
historical balance sheets of RXi Pharmaceuticals Corporation (RXi) and Apthera, Inc. (Apthera)
as of December 31, 2010, giving pro forma effect to the merger as if it had occurred on December
31, 2010, and (ii) the historical statement of expenses of RXi and the historical statement of
operations of Apthera for the year ended December 31, 2010, giving pro forma effect to the merger
as if it had occurred on January 1, 2010.
The historical financial information has been adjusted to give effect to pro forma events are
directly attributable to the merger, are factually supportable and, in the case of the pro forma
statements of expenses, have a recurring impact. The pro forma adjustments are preliminary, and the
unaudited pro forma condensed combined financial information is not necessarily indicative of the
financial position or results of operations that may have actually occurred had the acquisition
taken place on the dates noted, or the future financial position or operating results of the
combined company. The pro forma adjustments are based upon available information and assumptions
that we believe are reasonable.
The acquisition of Apthera will be accounted for using the purchase method of accounting. The
total purchase price will be allocated to the assets acquired and liabilities assumed based upon
their respective fair values. The purchase price allocation has not been finalized and is subject
to change based upon finalization of the valuations of the tangible and intangible assets and
liabilities.
The allocations included in the pro forma condensed combined financial information are
estimates based upon the best available information at the current time. RXi will record on the
closing date the fair value of the assets and liabilities assumed utilizing all available
information including appraisal and valuation information with respect to the tangible and
intangible assets acquired and liabilities assumed.
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Unaudited Pro Forma Condensed Combined Balance Sheet
December 31, 2010
(Amounts in thousands, except share data)
December 31, 2010
(Amounts in thousands, except share data)
Pro Forma | Pro Forma | |||||||||||||||
RXi | Apthera | Adjustments | Combined | |||||||||||||
ASSETS |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 6,891 | $ | 217 | $ | | $ | 7,108 | ||||||||
Prepaid expenses and other current assets |
150 | 7 | | 157 | ||||||||||||
Total current assets |
7,041 | 224 | | 7,265 | ||||||||||||
Equipment and furnishings, net |
419 | 12 | | 431 | ||||||||||||
Goodwill |
| | 2,306 | (A) | 2,306 | |||||||||||
Intangible assets |
| 15 | 9,622 | (A) | 9,637 | |||||||||||
Deposits |
16 | | | 16 | ||||||||||||
Total assets |
$ | 7,476 | $ | 251 | $ | 11,928 | $ | 19,655 | ||||||||
LIABILITIES AND STOCKHOLDERS EQUITY |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Accounts payable |
$ | 724 | $ | 1,346 | $ | | $ | 2,070 | ||||||||
Accrued expenses and other current liabilities |
1,113 | 900 | | 2,013 | ||||||||||||
Notes payable, net of discount |
| 422 | | 422 | ||||||||||||
Current maturities of capital lease obligations |
51 | | | 51 | ||||||||||||
Fair value of common stock warrants potentially
settleable in cash |
3,138 | | | 3,138 | ||||||||||||
Total current liabilities |
5,026 | 2,668 | | 7,694 | ||||||||||||
Purchase consideration potentially settleable in cash |
| | 3,194 | (A) | 3,194 | |||||||||||
Capital lease obligations, net of current maturities |
20 | | | 20 | ||||||||||||
Total liabilities |
5,046 | 2,668 | 3,194 | 10,908 | ||||||||||||
Commitments and contingencies |
||||||||||||||||
Stockholders equity: |
||||||||||||||||
Preferred stock |
| | | | ||||||||||||
Common stock |
2 | 1 | (1 | )(A) | 2 | |||||||||||
Additional paid-in capital |
62,020 | 5,025 | 1,292 | (A) | 68,337 | |||||||||||
Deficit accumulated during the developmental stage |
(55,743 | ) | (7,443 | ) | 7,443 | (A) | (55,743 | ) | ||||||||
Less treasury shares at cost |
(3,849 | ) | | | (3,849 | ) | ||||||||||
Total stockholders equity |
2,430 | (2,417 | ) | 8,734 | 8,747 | |||||||||||
Total liabilities and stockholders equity |
$ | 7,476 | $ | 251 | $ | 11,928 | $ | 19,655 | ||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information
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Unaudited Pro Forma Condensed Combined Statement of
Expenses
Year Ended December 31, 2010
(Amounts in thousands, except share and per share data)
Expenses
Year Ended December 31, 2010
(Amounts in thousands, except share and per share data)
Pro Forma | Pro Forma | |||||||||||||||
RXi | Apthera | Adjustments | Combined | |||||||||||||
Expenses: |
||||||||||||||||
Research and development expenses |
$ | 7,873 | $ | 673 | $ | | $ | 8,546 | ||||||||
General and administrative expenses |
8,752 | 766 | | 9,518 | ||||||||||||
Total operating expenses |
(16,625 | ) | (1,439 | ) | | (18,064 | ) | |||||||||
Interest income (expense) |
5 | (106 | ) | (643 | )(C) | (744 | ) | |||||||||
Other income (expense) |
4,627 | (1 | ) | | 4,626 | |||||||||||
Loss before provision for income taxes |
(11,993 | ) | (1,546 | ) | (643 | ) | (14,182 | ) | ||||||||
Provision for income taxes |
| | | | ||||||||||||
Net loss |
$ | (11,993 | ) | $ | (1,546 | ) | $ | (643 | ) | $ | (14,182 | ) | ||||
Net loss per common share: Basic and diluted |
$ | (0.67 | ) | $ | (0.62 | ) | ||||||||||
Weighted average common shares outstanding: basic
and diluted |
17,883,381 | 4,974,090 | (B) | 22,857,471 | ||||||||||||
See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information
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Notes to Unaudited Pro Forma Condensed Combined Financial
Information
(Amounts in thousands, except share and per share data)
Information
(Amounts in thousands, except share and per share data)
Note 1 Description of Transaction and Basis of Presentation
On March 31, 2011, RXi Pharmaceuticals Corporation (the Company), Diamondback Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of the Company (Merger Sub), Apthera,
Inc., a Delaware corporation (Apthera), and Robert E. Kennedy, in his capacity as representative
of Aptheras stockholders (the Stockholder Representative), entered into an Agreement and Plan of
Merger (the Merger Agreement). Pursuant to the Merger Agreement, on April 13, 2011, Merger Sub
merged with and into Apthera, with Apthera surviving as a wholly-owned subsidiary of the Company
(the Merger). The aggregate merger consideration payable to Aptheras stockholders consists of
(i) 19.9% of the number of shares of the Companys common stock issued and outstanding as of the
date of the Merger Agreement, or approximately 5.0 million shares of common stock (the Aggregate
Stock Consideration); and (ii) contingent payments of up to $32 million (the Contingent
Consideration) based on the achievement of certain development and commercial milestones relating
to Aptheras NeuVax product candidate. The payment of the Contingent Consideration will be subject
to and in accordance with the terms of a Contingent Value Rights Agreement to be entered into
between the Company and the Stockholder Representative in connection with the Merger (the CVR
Agreement). Under the CVR Agreement, a form of which is attached to the Merger Agreement as
Exhibit A, the Contingent Consideration is payable in either cash
or additional shares of common stock, at the election of the Company; provided, however, that the
Company may not issue any shares in satisfaction of any Contingent Consideration unless it has
first obtained approval of its stockholders in accordance with Rule 5635(a) of the NASDAQ Listing
Rules.
In connection with the Merger, the Company and the Stockholder Representative entered into an
escrow agreement (the Escrow Agreement), pursuant to which the Company deposited with a
third-party escrow agent certificates representing 10% of the Aggregate Stock Consideration (the
Escrow Shares). Pursuant to the terms of the Escrow Agreement, the Escrow Shares will be
available to compensate the Company and related parties for certain indemnifiable losses as
described in the Merger Agreement.
Note 2 Basis of Presentation and Pro Forma Adjustments
The unaudited pro forma condensed combined financial information has been prepared based on
the Companys historical financial information and the historical financial information of Apthera
giving effect to the acquisition and related adjustments described in these notes. Certain note
disclosures normally included in the financial statements prepared in accordance with generally
accepted accounting principles in the United States have been condensed or omitted as permitted by
the SEC rules and regulations.
This unaudited pro forma condensed combined financial information is not necessarily
indicative of the results of operations that would have been achieved had the acquisition actually
taken place at the dates indicated and do not purport to be indicative of future position or
operating results. The unaudited pro forma combined condensed financial information has been
prepared on the basis of assumptions relating to the allocation of consideration paid for the
acquired assets and liabilities of Apthera based on managements best preliminary estimates. The
actual allocation of the amount of the consideration may differ from that reflected in this
unaudited pro forma condensed combined financial information after a third party valuation and
other procedures have been finalized.
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(A) To record purchase price consideration and allocation of purchase price
Calculation of allocable purchase price(i): |
(in 000s) | |||
Fair value of shares issued at closing including escrowed shares expected to be released |
$6,317(ii) | |||
Estimated value of earn-out |
3,194 | |||
Total allocable purchase price |
$ | 9,511 | ||
Estimated allocation of purchase price(i): |
||||
Cash |
$ | 217 | ||
Prepaid expenses and other current assets |
7 | |||
Equipment and furnishings |
12 | |||
Goodwill |
2,306 | |||
In-process research and development |
9,637 | |||
Accounts payable |
(1,346 | ) | ||
Accrued expenses and other current liabilities |
(900 | ) | ||
Notes payable |
(422 | ) | ||
$ | 9,511 | |||
(i) | The purchase price has not been finalized and is subject to change upon completion of the valuation of intangible assets. | |
(ii) | The value of the Companys common stock was based upon a per share value of $1.27, the closing price of the Companys common stock as of the close of business on April 13, 2011. |
(B) Reflects the increase in weighted average basic and diluted shares outstanding for the Companys common stock issued in connection with the Merger. Pro
forma basic and diluted loss per share was calculated assuming that the 4,974,090 shares of the Companys common stock issued in connection with the Merger were
issued at the beginning of the period presented.
(C) To record accretion of discount on purchase consideration.
Year-ended December 31, 2010 |
$ | 643,000 |
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