Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - ASSEMBLY BIOSCIENCES, INC. | v389290_8ka.htm |
| EX-99.3 - EXHIBIT 99.3 - ASSEMBLY BIOSCIENCES, INC. | v389290_ex99-3.htm |
Exhibit 99.4
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The accompanying unaudited pro forma condensed combined financial statements reflect the combined financial position of Assembly Biosciences, Inc. (“ASMB”) and Assembly Pharmaceuticals, Inc. (“Assembly”) as of June 30, 2014, and the results of their unaudited condensed combined operations for the six-months ended June 30, 2014 and the year ended December 31, 2013 after giving effect to the acquisition of Assembly, as more fully described below. The unaudited pro forma condensed combined balance sheet is based on the historical unaudited balance sheet of ASMB and gives effect to the acquisition of Assembly as if it had occurred on June 30, 2014. The unaudited pro forma condensed combined statement of operations for the six months ended June 30, 2014 and for the year ended December 31, 2013 gives effect to the acquisition as if it had occurred on January 1, 2014 and January 1, 2013, respectively.
The pro forma adjustments reflecting the consummation of the acquisition are based upon the purchase method of accounting and upon the assumptions set forth in the disclosures hereto. The acquisition closed on July 11, 2014, and 12,897,418 issued and outstanding shares of Assembly’s common stock were exchanged for 4,008,833 shares of ASMB’s Common Stock and issued and outstanding options to purchase 2,000,000 shares of Assembly’s common stock were assumed and became options to purchase 621,650 shares of ASMB’s Common Stock (the “Share Exchange”), after adjustment for a 1-for-5 reverse stock split that was effected immediately after the Share Exchange.
ASMB is the acquirer and the transaction is accounted for in the financial statements of ASMB under the accounting rules for business combinations. Accordingly, the accompanying unaudited pro forma condensed combined financial statements reflect Assembly’s assets and liabilities at their estimated fair values.
The unaudited pro forma condensed combined financial statements were prepared in accordance with the regulations of the SEC. The pro forma adjustments reflecting the completion of the Share Exchange are based upon the acquisition method of accounting in accordance with GAAP and upon the assumptions set forth in the notes to the unaudited pro forma condensed combined financial statements.
The historical financial data has been adjusted to give pro forma effect to events that are (i) directly attributable to the Share Exchange; (ii) factually supportable, and (iii) with respect to the statements of operations, expected to have a continuing impact on the combined results. The pro forma adjustments are preliminary and based on management’s estimates of the fair value and useful lives of the assets acquired and liabilities assumed and have been prepared to illustrate the estimated effect of the Share Exchange and certain other adjustments.
The pro forma adjustments do not reflect any operating efficiencies and cost savings that may be achievable with respect to the combined companies.
The following information has been prepared for illustrative purposes only and is not necessarily indicative of the financial position or operating results that would have occurred had the Share Exchange been consummated on the dates, or at the beginning of the periods for which the consummation of the transaction is being given effect. For purposes of these pro forma financial statements, the value of ASMB’s common shares was calculated based on the closing price of ASMB’s common stock on June 30, 2014 and adjusted for the 1-for-5 reverse stock split. A final determination of the required purchase accounting adjustments, including the allocation of the purchase price to the assets acquired and liabilities assumed based on their respective fair values, has not yet been made. Accordingly, the purchase accounting adjustments made in the pro forma condensed combined financial information have been made solely for purposes of developing such pro forma condensed combined financial information. ASMB will undertake a study to determine the fair value of certain of Assembly's assets and will make appropriate purchase accounting adjustments upon completion of that study. The actual financial position and results of operations will differ, perhaps significantly, from the pro forma amounts reflected herein because of a variety of factors, including access to additional information and changes in the financial conditions and in operating results between the dates of the pro forma financial information data and the July 11, 2014 closing date.
The Share Exchange is intended to qualify as a tax free exchange under Section 368(a)(1)(B) of the U.S. Internal Revenue Code of 1986, as amended.
The unaudited pro forma condensed combined financial statements including notes hereto, are qualified in their entirety by reference to and should be read in conjunction with the historical financial statements of ASMB included in its Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, the Annual Report on Form 10-K for the year ended December 31, 2013 and the interim financial statements of Assembly for the quarter ended June 30, 2014 included in this Form 8-K/A and the audited financial statements for the year ended December 31, 2013 included in ASMB’s definitive proxy statement on Schedule 14A filed on June 9, 2014.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
June 30, 2014
| A | B | |||||||||||||||||||
| ASMB June 30, 2014 | Assembly June 30, 2014 | Elimination of Assembly | Pro Forma Adjustments | Pro Forma Combined June 30, 2014 | ||||||||||||||||
| ASSETS | ||||||||||||||||||||
| Current assets: | ||||||||||||||||||||
| Cash and cash equivalents | 21,316,328 | 509,363 | $ | (509,363 | ) | 509,363 | C | $ | 21,825,691 | |||||||||||
| Other current assets | 431,475 | 24,290 | (24,290 | ) | (235,631 | )C | 195,844 | |||||||||||||
| Total current assets | 21,747,803 | 533,653 | (533,653 | ) | 273,732 | 22,021,535 | ||||||||||||||
| Intangible assets | - | - | - | 37,359,691 | C | 37,359,691 | ||||||||||||||
| Equipment, net | 7,399 | 10,350 | (10,350 | ) | 10,350 | C | 17,749 | |||||||||||||
| Security deposit | 16,606 | (16,606 | ) | 16,606 | C | 16,606 | ||||||||||||||
| Total assets | 21,755,202 | 560,609 | (560,609 | ) | 37,660,379 | 59,415,581 | ||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY) | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable and accrued expenses | 1,469,788 | 889,033 | $ | (889,033 | ) | 629,112 | C | $ | 2,098,900 | |||||||||||
| Total current liabilities | 1,469,788 | 889,033 | (889,033 | ) | 629,112 | 2,098,900 | ||||||||||||||
| Convertible notes payable | - | 1,950,000 | (1,950,000 | ) | - | - | ||||||||||||||
| Deferred tax liability | - | - | - | 10,674,197 | C | 10,674,197 | ||||||||||||||
| Contingent license fee | - | 99,214 | (99,214 | ) | 99,214 | C | 99,214 | |||||||||||||
| Total non-current liabilities | - | 2,049,214 | (2,049,214 | ) | 10,773,411 | 10,773,411 | ||||||||||||||
| Total liabilities | 1,469,788 | 2,938,247 | (2,938,247 | ) | 11,402,523 | 12,872,311 | ||||||||||||||
| Commitments | ||||||||||||||||||||
| Stockholders’ equity: | ||||||||||||||||||||
| Common Stock, $.001 par value | 4,679 | 105 | (105 | ) | 566 | D | ||||||||||||||
| 3,442 | D | 8,687 | ||||||||||||||||||
| Additional paid-in capital | 138,174,448 | 1,842,007 | (1,842,007 | ) | 3,709,112 | D | ||||||||||||||
| 22,544,736 | D | 164,428,296 | ||||||||||||||||||
| Common stock issuable, 25,000 shares at June 30, 2014 | 368,750 | 368,750 | ||||||||||||||||||
| Deficit accumulated during the development stage | (118,262,463 | ) | (4,219,750 | ) | 4,219,750 | - | (118,262,463 | ) | ||||||||||||
| Total stockholders’ equity (deficiency) | 20,285,414 | (2,377,638 | ) | 2,377,638 | 26,257,856 | 46,543,270 | ||||||||||||||
| Total liabilities and stockholders’ equity (deficiency) | 21,755,202 | 560,609 | (560,609 | ) | 37,660,379 | 59,415,581 | ||||||||||||||
| A | Derived from the unaudited balance sheet of Assembly Biosciences, Inc. as of June 30, 2014. - |
| B | Derived from the unaudited balance sheet of Assembly as of June 30, 2014. |
| C | The preliminary allocation of the purchase price to the Assembly balance sheet is shown below: |
| Cash and cash equivalents | $ | 509,363 | ||
| Other current assets (to exclude intercompany receivables of $259,921) | (235,631 | ) | ||
| Equipment, net | 10,350 | |||
| Security deposit | 16,606 | |||
| Intangible assets | 37,359,691 | |||
| Total assets | 37,660,379 | |||
| Accounts payable and accrued expenses (to exclude intercompany payables of $259,921) | 629,112 | |||
| Convertible notes payable | - | |||
| Contingent license fee | 99,214 | |||
| Deferred tax liability | 10,674,197 | (4) | ||
| Net assets acquired | $ | 26,257,856 | (2) |
| (2) | Consideration issued |
| Issuance of ASMB common stock - to Assembly convertible note holders (5) | $ | 3,709,678 | (3) | |
| Issuance of ASMB common stock - to Assembly shareholders | 22,548,178 | (3) | ||
| Total Consideration issued | 26,257,856 |
| (3) | The fair value of the common stock issued was based upon the following: |
| D | D | |||||||||||||||||||
| Common Stock
Issued | Share Price
on June 30, 2014 | Fair value | Common stock at Par ($0.001) | Additional
Paid in Capital | ||||||||||||||||
| Issuance of ASMB common stock - to Assembly convertible note holders (5) | 566,363 | $ | 6.55 | $ | 3,709,678 | 566 | 3,709,112 | |||||||||||||
| Issuance of ASMB common stock - to Assembly shareholders | 3,442,470 | $ | 6.55 | 22,548,178 | 3,442 | 22,544,736 | ||||||||||||||
| Total | 4,008,833 | $ | 26,257,856 | $ | 4,008 | $ | 26,253,848 | |||||||||||||
| (4) | The deferred tax liability resulting from the increase in basis of Assembly's intangible assets, excluding goodwill, for book purposes but not for tax purposes was calculated using a 40% effective tax rate. Under the acquisition method of accounting, the impact on the acquiring company's deferred tax assets is recorded outside of acquisition accounting. Accordingly, the valuation allowance on the Company’s deferred tax assets will be released to offset the increase in deferred tax liability and result in an estimated financial statement income tax benefit of approximately $12.0 million which will be recorded in the statement of operations for the three and nine month period ending September 30, 2014. |
| (5) | Assembly's convertible notes payable were converted in Assembly's common stock prior to the closing. |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2014
| E | F | |||||||||||||||
| ASMB
Six Months Ended June 30, 2014 | Assembly
Six Months Ended June 30, 2014 | Pro Forma Adjustments | Pro
Forma Combined Six Months Ended June 30, 2014 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 4,069,334 | $ | 1,529,173 | - | $ | 5,598,507 | |||||||||
| General and administrative | 2,546,961 | 1,034,779 | - | 3,581,740 | ||||||||||||
| Loss from operations | (6,616,295 | ) | (2,563,952 | ) | - | (9,180,247 | ) | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 77,105 | - | - | 77,105 | ||||||||||||
| Interest expense | - | (666,461 | ) | 666,461 | G | - | ||||||||||
| Total other (expense) | 77,105 | (666,461 | ) | 666,461 | 77,105 | |||||||||||
| Net loss | $ | (6,539,190 | ) | $ | (3,230,413 | ) | $ | 666,461 | $ | (9,103,142 | ) | |||||
| Basic and diluted net loss per common share | $ | (1.43 | ) | $ | (1.06 | ) | ||||||||||
| Weighted average common shares outstanding - basic and diluted | 4,562,384 | 8,571,217 | H | |||||||||||||
| E | Derived from the unaudited condensed consolidated statements of operations of ASMB for the six months ended June 30, 2014. |
| F | Derived from the unaudited condensed consolidated statements of operations of Assembly for the six months ended June 30, 2014. |
| G | Elimination of interest expense assuming the Merger took place on January 1, 2014 |
| H | Weighted Average Shares - Basic and Diluted |
| Outstanding as of June 30, 2014 | 4,562,384 | |||
| Issuance of ASMB common stock - to Assembly convertible note holders | 566,363 | |||
| Issuance of ASMB common stock - to Assembly shareholders | 3,442,470 | |||
| Total | 8,571,217 |
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2013
| I | J | |||||||||||||||
| ASMB
Year Ended December 31, 2013 | Assembly
Year Ended December 31, 2013 | Pro
Forma Adjustments | Pro
Forma Combined Year Ended December 31, 2013 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | 15,029,078 | $ | 822,409 | - | $ | 15,851,487 | |||||||||
| Amortization of intangible assets | - | - | - | $ | - | |||||||||||
| General and administrative | 4,575,701 | 121,692 | - | 4,697,393 | ||||||||||||
| Loss from operations | (19,604,779 | ) | (944,101 | ) | - | (20,548,880 | ) | |||||||||
| Other income (expense) | ||||||||||||||||
| Interest income | 201,020 | - | - | 201,020 | ||||||||||||
| Interest expense | - | (33,902 | ) | 33,902 | K | - | ||||||||||
| Total other income (expense) | 201,020 | (33,902 | ) | 33,902 | 201,020 | |||||||||||
| Net loss | $ | (19,403,759 | ) | $ | (978,003 | ) | $ | 33,902 | $ | (20,347,860 | ) | |||||
| Basic and diluted net loss per common share | $ | (5.00 | ) | $ | (2.58 | ) | ||||||||||
| Weighted average common shares outstanding - basic and diluted | 3,878,697 | 7,887,530 | L | |||||||||||||
| I | Derived from the audited consolidated statements of operations of ASMB for the year ended December 31, 2013. |
| J | Derived from the audited consolidated statements of operations of Assembly for the year ended December 31, 2013. |
| K | Elimination of interest expense assuming the Merger took place on January 1, 2013 |
| L | Weighted Average Shares - Basic and Diluted |
| Outstanding as of December 31, 2013 | 3,878,697 | |||
| Issuance of ASMB common stock - to Assembly convertible note holders | 566,363 | |||
| Issuance of ASMB common stock - to Assembly shareholders | 3,442,470 | |||
| Total | 7,887,530 |