Exhibit 99.1

 

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

The following unaudited pro forma combined balance sheet of Combined Entity (as defined below) as of December 31, 2020 and the unaudited pro forma combined statements of operations of Combined Entity for the years ended December 31, 2019 and 2020 present the combination of the financial information of FS Development Corp (“FS Development” or “FSDC”) and Gemini Therapeutics Sub, Inc. f/k/a Gemini Therapeutics, Inc. (“Old Gemini”) after giving effect to the Business Combination (as defined in the Current Report on Form 8-K filed on February 11, 2021), PIPE Financing (as defined below) and related adjustments described in the accompanying notes. FS Development and Old Gemini are collectively referred to herein as the “Companies”, and the Companies, subsequent to the Business Combination and PIPE Financing, are referred to herein as “Combined Entity” or “Gemini”.

 

The unaudited pro forma combined statements of operations for the years ended December 31, 2019 and 2020 give pro forma effect to the Business Combination and PIPE Financing as if they had occurred on January 1, 2019. The unaudited pro forma combined balance sheet as of December 31, 2020 gives pro forma effect to the Business Combination and PIPE Financing as if they were completed on December 31, 2020.

 

The unaudited pro forma combined financial information is based on and should be read in conjunction with the audited and unaudited historical financial statements of each of FS Development and Old Gemini and the notes thereto, as well as the disclosures contained in the sections titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of FS Development,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Gemini” contained herein with respect to Old Gemini and in the Form 10-K for FS Development for the year ended December 31, 2020, which has been filed with the SEC.

 

The unaudited pro forma combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what Combined Entity’s financial condition or results of operations would have been had the Business Combination and PIPE Financing occurred on the dates indicated. Further, the unaudited pro forma combined financial information also may not be useful in predicting the future financial condition and results of operations of Combined Entity. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma combined financial statements and are subject to change as additional information becomes available and analyses are performed.

 

On February 5, 2021, the Combined Entity consummated the previously announced Business Combination pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated October 15, 2020 among FS Development, FSG Merger Sub Inc. (“Merger Sub”), Old Gemini and the Shareholders Representative named therein, under the terms of which, FS Development acquired Old Gemini, through which FSG Merger Sub merged with and into Old Gemini, with Old Gemini becoming a wholly-owned subsidiary of FS Development referred to herein as Combined Entity, which became a publicly-listed entity. As a result of the Business Combination, the Combined Entity owns, directly or indirectly, all of the issued and outstanding equity interests of Old Gemini and the Old Gemini Equityholders hold a portion of the Combined Entity Common Stock.

 

The following pro forma combined financial statements presented herein reflect the redemption of 100 shares of Class A Common Stock by FS Development’s stockholders in conjunction with the stockholder vote on the Business Combination contemplated by the Merger Agreement at a special meeting held on February 3, 2021.

 

 

COMBINED ENTITY

 

UNAUDITED PRO FORMA

 

COMBINED BALANCE SHEET

 

December 31, 2020

 

(in thousands)

 

		FSDC (Historical)				Old Gemini (Historical)				Pro Forma Adjustments				Note 3		Pro Forma
Assets
Current assets:
Cash and cash equivalents		$	1,212			$	4,503			$	192,503			(a), (b), (c)		$	198,218
Prepaid expenses and other current assets			126				562				-						688
Total current assets			1,338				5,065				192,503						198,906
Property and equipment, net			-				294				-						294
Restricted cash			-				323				-						323
Cash held in Trust Account			120,755				-				(120,755	)		(c)			-
Deferred offering costs			-				2,637				(2,637	)		(d)			-
Other assets			-				-				-						-
Total assets		$	122,093			$	8,319			$	69,111					$	199,523
Liabilities and stockholders’ equity (deficit)
Current liabilities:
Accounts payable and accrued expenses		$	498			$	8,187			$	(1,619	)		(a), (d), (e)		$	7,066
Franchise tax payable			100				-				(100	)		(e)			-
Term loan, current portion			-				5,000				-						5,000
Convertible notes, net			-				11,689				(11,689	)		(f)			-
Total current liabilities			598				24,876				(13,408	)					12,066
Deferred underwriting commissions			4,226				-				(4,226	)		(b)			-
Warrant liability			-				76				-						76
Other liabilities			-				277				-						277
Term loan, net of current portion and discount			-				4,951				-						4,951
Total liabilities			4,824				30,180				(17,634	)					17,370
Series A convertible preferred stock			-				47,113				(47,113	)		(g)			-
Series B convertible preferred stock			-				33,336				(33,336	)		(g)			-
Total convertible preferred stock			-				80,449				(80,449	)					-
Class A common stock subject to redemption			112,269				-				(112,269	)		(g)			-
Stockholders’ equity (deficit)
Preferred stock			-				-				-						-
Class A common stock			-				-				-						-
Class B common stock			-				-				-						-
Common stock			-				7				(6	)		(g)			1
Additional paid-in capital			5,812				10,504				281,483			(g)			297,799
Accumulated deficit			(812	)			(112,821	)			(2,015	)		(g)			(115,648	)
Total stockholders’ equity (deficit)			5,000				(102,310	)			279,463						182,153
Total liabilities and stockholders’ equity (deficit)		$	122,093			$	8,319			$	69,111					$	199,523

 

 

COMBINED ENTITY

 

UNAUDITED PRO FORMA COMBINED

 

STATEMENT OF OPERATIONS FOR THE

 

YEAR ENDED DECEMBER 31, 2020

 

(in thousands, except share and per share amounts)

 

		FSDC (Historical)				Old Gemini (Historical)				Pro Forma Adjustments				Note 3		Pro Forma
Operating expenses:
Research and development		$	-			$	28,170			$	-					$	28,170
General and administrative			717				5,870				100			(h)			6,687
Franchise tax expense			100				-				(100	)		(h)			-
Total operating expenses			817				34,040				-						34,857
Loss from operations			(817	)			(34,040	)			-						(34,857	)
Other income (expense):
Interest expense			-				(6,826	)			(2,116	)		(i)			(8,942	)
Interest income			-				37				-						37
Interest earned on cash equivalents held in Trust Account			5				-				(5	)		(j)			-
Loss on extinguishment of debt			-				-				(711	)		(i)			(711	)
Change in fair value of warrant liability			-				(8	)			-						(8	)
Net loss		$	(812	)		$	(40,837	)		$	(2,832	)				$	(44,481	)
Weighted common shares outstanding - Class A			12,075,000				5,676,370							(k)			42,998,664
Basic and diluted net loss per share - Class A		$	-			$	(7.19	)						(k)		$	(1.03	)
Weighted common shares outstanding - Class B			3,257,081				-										-
Basic and diluted net loss per share - Class B		$	(0.25	)		$	-									$	-

 

 

COMBINED ENTITY

 

UNAUDITED PRO FORMA COMBINED

 

STATEMENT OF OPERATIONS FOR THE

 

YEAR ENDED DECEMBER 31, 2019

 

(in thousands, except share and per share amounts)

 

		FSDC (Historical)				Old Gemini (Historical)				Pro Forma Adjustments				Note 3		Pro Forma
Operating expenses:
Research and development		$	-			$	34,472			$	-					$	34,472
General and administrative			-				6,753				-						6,753
Total operating expenses			-				41,225				-						41,225
Loss from operations			-				(41,225	)			-						(41,225	)
Other income (expense):
Interest expense			-				(350	)			-						(350	)
Interest income			-				177				-						177
Change in fair value of warrant liability			-				(2	)			-						(2	)
Net loss		$	-			$	(41,400	)		$	-					$	(41,400	)
Weighted common shares outstanding - Class A							5,171,537							(k)			42,998,664
Basic and diluted net loss per share - Class A						$	(8.01	)						(k)		$	(0.96	)

 

 

Note 1 – Description of the Business Combination

 

On February 5, 2021, the Combined Entity consummated the previously announced Business Combination pursuant to the Agreement and Plan of Merger dated October 15, 2020 between FS Development, Merger Sub, Old Gemini and the Shareholders Representative named therein, under the terms of which, FS Development acquired Old Gemini, through which Merger Sub merged with and into Old Gemini, with Old Gemini becoming a wholly-owned subsidiary of FS Development, referred to herein as Combined Entity, which became a publicly-listed entity. As a result of the Business Combination, the Combined Entity owns, directly or indirectly, all of the issued and outstanding equity interests of Old Gemini and the Old Gemini Equityholders hold a portion of the Combined Entity Common Stock.

 

As a result of the Merger Agreement, Old Gemini Equityholders received an aggregate number of shares of Combined Entity Common Stock equal to (i) $215.0 million, divided by (ii) $10.00, or 21,500,000 shares. The final conversion ratio used to calculate the final Merger Consideration was .2180, resulting in 17,957,514 shares issued for all issued and outstanding Old Gemini common stock and preferred stock, 2,303,326 shares issued for Old Gemini’s underlying vested, unvested and unexercised options and 1,239,160 shares reserved for issuance under the 2021 Stock Option and Incentive Plan. In connection with the closing of the Business Combination, certain investors agreed to subscribe for and purchase an aggregate of $95.1 million of common stock of Combined Entity (the “PIPE Financing”).

 

The following summarizes the number of Combined Entity Common Stock outstanding following the consummation of the Business Combination and the PIPE Financing:

 

		Shares				%
FS Development public stockholders			12,074,900				28.1	%
FS Development Sponsor and Directors			3,460,250				8.0	%
Old Gemini Stockholders			17,957,514				41.8	%
PIPE - Old Gemini Stockholders			1,560,000				3.6	%
PIPE - FS Development Sponsor			1,500,000				3.5	%
PIPE - Other Investors		6,446,000				15.0		%
Total		42,998,664				100		%

 

Note 2 – Basis of Presentation

 

The historical financial information of FS Development and Old Gemini has been adjusted in the unaudited pro forma combined financial information to give effect to events that are (1) directly attributable to the Business Combination and the PIPE Financing, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the combined results. The pro forma adjustments are prepared to illustrate the estimated effect of the Business Combination and the PIPE Financing and certain other adjustments.

 

The Business Combination will be accounted for as a reverse recapitalization because Old Gemini has been determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations. The determination is primarily based on the evaluation of the following facts and circumstances:

 

●

The pre-combination equity holders of Old Gemini will hold the majority of voting rights in Combined Entity;

 

●

The pre-combination equity holders of Old Gemini will have the right to appoint the majority of the directors on the Combined Entity Board;

 

●

Senior management of Old Gemini will comprise the senior management of Combined Entity; and

 

●

Operations of Old Gemini will comprise the ongoing operations of Combined Entity.

 

 

Under the reverse recapitalization model, the Business Combination will be treated as Old Gemini issuing equity for the net assets of FS Development, with no goodwill or intangible assets recorded.

 

If the actual facts are different than these assumptions, then the amounts and shares outstanding in the unaudited pro forma combined financial information will be different.

 

The Combined Entity entered into new equity awards with its employees upon the consummation of the Business Combination. The terms of these new equity awards were not changed or amended from the original awards. Accordingly, no effect was given to the unaudited pro forma combined financial information for the new awards.

 

The unaudited pro forma combined financial information does not reflect the income tax effects of the pro forma adjustments as any change in the deferred tax balance would be offset by an increase in the valuation allowance given Old Gemini incurred significant losses during the historical periods presented.

 

Note 3 – Pro Forma Adjustments

 

Adjustments to the Unaudited Pro Forma Combined Balance Sheet as of December 31, 2020

 

The pro forma adjustments included in the unaudited pro forma combined balance sheet as of December 31, 2020 are as follows:

 

a)

Cash. Represents the impact of the Business Combination and PIPE Financing on the cash balance of Combined Entity.

 

The table below represents the sources and uses of funds as it relates to the Business Combination (in thousands):

 

		Note
FS Development cash held in Trust Account		(1)		$	120,755
PIPE - FS Development Sponsor		(2)			15,000
PIPE - Old Gemini Shareholders		(2)			15,600
Other PIPE Investors		(2)			64,460
Payment to redeeming FS Development Stockholders		(3)			(1	)
Payment of deferred underwriting commissions		(4)			(4,226	)
Payment of FS Development accrued transaction costs		(5)			(423	)
Payment of FS Development incremental transaction costs		(5)			(11,642	)
Payment of Old Gemini accrued transaction costs		(6)			(1,297	)
Payment of Old Gemini incremental transaction costs		(6)			(5,723	)
Excess cash to balance sheet from Business Combination				$	192,503

 

(1)	Represents the amount of the cash equivalents held in the Trust Account upon consummation of the Business Combination at Closing.
(2)	Represents the issuance, in the PIPE Financing, to certain investors of 9,506,000 shares of Combined Entity common stock at a price of $10.00 per share.
(3)	Represents the amount paid to FS Development stockholders who exercised their redemption rights.
(4)	Represents payment of deferred FS Development IPO underwriting commissions by FS Development (see Note 3(b)(1)).
(5)	Represents payment of FS Development accrued and incremental transaction costs related to the Business Combination (see Note 3(b)(2) and 3(b)(3)).
(6)	Represents payment of Old Gemini accrued and incremental transaction costs related to the Business Combination (see Note 3(b)(4) and 3(b)(5)).

 

 

b)

Business Combination costs.

 

	(1)	Payment of deferred FS Development IPO underwriting commissions incurred by FS Development in the amount of $4.2 million (see Note 3(a)(4)). The unaudited pro forma combined balance sheet reflects payment of these costs as a reduction of cash, with a corresponding decrease in deferred underwriting commission liability.
	(2)	Payment of FS Development accrued transaction costs related to the Business Combination and the PIPE Financing in the amount of $0.4 million (see Note 3(a)(5)). The unaudited pro forma combined balance sheet reflects these costs as a reduction of cash, with a corresponding decrease in accounts payable and accrued expenses.
	(3)	Payment of FS Development incremental expenses related to the Business Combination and the PIPE Financing in the amount of $11.6 million (see Note 3(a)(5)). The unaudited pro forma combined balance sheet reflects these costs as a reduction of cash, with a corresponding decrease in additional paid-in capital (see Note 3(g)).
	(4)	Payment of Old Gemini accrued transaction costs related to the Business Combination and the PIPE Financing in the amount of $1.3 million (see Note 3(a)(6)). The unaudited pro forma combined balance sheet reflects these costs as a reduction of cash, with a corresponding decrease in accounts payable and accrued expenses.
	(5)	Payment of Old Gemini incremental expenses related to the Business Combination and the PIPE Financing in the amount of $5.7 million (see Note 3(a)(6)). The unaudited pro forma combined balance sheet reflects these costs as a reduction of cash, with a corresponding decrease in additional paid-in capital (see Note 3(g)).

 

	c)	Trust Account. Represents release of the restricted investments and cash held in the FS Development Trust Account upon consummation of the Business Combination (See Note 3(a)(1)).
	d)	Capitalization of Old Gemini transaction costs. Reflects recognition of Old Gemini’s capitalized transaction expenses related to the Business Combination of $2.6 million as a reduction to equity proceeds. The unaudited pro forma combined balance sheet reflects this adjustment as a reduction to deferred offering costs, with a corresponding decrease in additional paid-in capital (see Note 3(g)).
	e)	Franchise tax payable. Reflects the reclassification of FS Development’s franchise tax payable to align with the balance sheet presentation of Old Gemini.
	f)	Convertible notes. On August 21, 2020, Old Gemini entered into a purchase agreement with various investors to issue $14.0 million in convertible promissory notes (the “Notes”). The Notes accrue simple interest at 8% per annum. Old Gemini determined that a beneficial conversion feature (“BCF”) exists and should be recognized on the issuance date. It recorded the Notes at the original issue price, net of the BCF discount. Principal and interest are convertible into Series B preferred stock at a per share conversion price of $1.3513 prior to the effective date of the Business Combination. The pro forma disclosures reflect the conversion of the Notes to Series B preferred stock on February 5, 2021, and a reacquisition price of $22.9 million representing the fair value of Series B preferred stock upon conversion. The adjustments reflect the conversion of the notes to Series B preferred stock, and the impact of conversion on additional paid-in capital and accumulated deficit.

 

 

	g)	Impact on equity. The following table represents the impact of the Business Combination and PIPE Financing on the number of shares of FS Development Class A Common Stock and represents the total equity:

(in thousands, except share amounts)		Common Stock
		Number of Shares								Par Value												Additional
		Class A Stock				Class B Stock				Class A Stock				Class B Stock				Old Gemini’s Stock				paid-in capital				Accumulated deficit
Pre Business Combination - FS Development stockholders			848,126				3,018,750			$	-			$	-			$	-			$	5,812			$	(812	)
Pre Business Combination - FS Development Holdings, LLC			441,500				-				-				-				-				-				-
Pre Business Combination - Old Gemini			-				-				7				-				80,449				10,504				(112,821	)
Pre Business Combination - Old Gemini conversion of promissory notes			-				-				-				-				23,413				(8,898	)			(2,827	)
Conversion of Class B common stock to Class A common stock			3,018,750				(3,018,750	)			-				-				-				-				-
Reclassification of redeemable stock to Class A common stock			11,226,874				-				1				-				-				112,268				-
Less: Redemption of redeemable shares			(100	)			-				-				-				-				(1	)			-
Old Gemini Stockholders			17,957,514				-				-				-				-				-				-
PIPE - Old Gemini Stockholders			1,560,000				`				-				-				-				15,600				-
PIPE - FS Development			1,500,000				-				-				-				-				15,000				-
PIPE - Other Investors			6,446,000				-				-				-				-				64,460				-
Balances after share transactions of Combined Entity			42,998,664				-				8				-				103,862				214,745				(116,460	)
FS Development incremental transaction costs			-				-				-				-				-				(11,642	)			-
Old Gemini incremental transaction costs			-				-				-				-				-				(5,723	)			-
Capitalized transaction costs of Old Gemini			-				-				-				-				-				(2,637	)			-
Elimination of historical accumulated deficit of FS Development			-				-				-				-				-				(812	)			812
Elimination of historical stock of Old Gemini			-				-				(7	)			-				(103,862	)			103,869				-
Post-Business Combination			42,998,664				-			$	1			$	-			$	-			$	297,799			$	(115,648	)

 

Adjustments to the Unaudited Pro Forma Combined Statements of Operations for the Years Ended December 31, 2019 and 2020

 

The pro forma adjustments included in the unaudited pro forma combined statement of operations for the years ended December 31, 2019 and 2020 are as follows:

 

	h)	Franchise tax expense. Reflects the reclassification of FS Development’s franchise tax expense to align with the statement of operations presentation of Old Gemini.
	i)	Interest expense and loss on extinguishment of debt. On August 21, 2020, Old Gemini entered into a purchase agreement with various investors to issue $14.0 million in convertible promissory notes (the “Notes”). The Notes accrue simple interest at 8% per annum. Old Gemini determined that a beneficial conversion feature (“BCF”) exists and should be recognized on the issuance date. It recorded the Notes at the original issue price, net of the BCF discount. The BCF discount is accreted to the face value of the Notes, offset against interest expense. Principal and interest are convertible into Series B preferred stock at a per share conversion price of $1.3513 prior to the effective date of the Business Combination. The pro forma disclosures reflect the conversion of the Notes to Series B preferred stock on February 5, 2021, and a reacquisition price of $22.9 million representing the fair value of Series B preferred stock upon conversion. The adjustments reflect the accretion of the BCF discount recognized as interest expense of $7.5 million, simple interest of $0.5 million and a loss on extinguishment of $0.7 million.
	j)	Exclusion of interest earned on cash equivalents held in Trust Account. Reflects the exclusion of interest earned on the cash equivalents held in Trust Account.
	k)	Net loss per share. Represents pro forma net loss per share based on pro forma net loss and 42,998,664 total shares outstanding upon consummation of the Business Combination and PIPE Financing. For each period presented, there is no difference between basic and diluted pro forma net loss as the inclusion of all potential shares of common stock of Combined Entity outstanding would have been anti-dilutive.