Attached files
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| 8-K - 8-K - SELLAS Life Sciences Group, Inc. | d342770d8k.htm |
Exhibit 99.1
Unaudited Pro Forma Condensed Consolidated Financial Statements
On April 27, 2012, Galena Biopharma, Inc. (the “Company” or “Galena”) completed the spin-off of its wholly-owned subsidiary, RXi Pharmaceuticals Inc. (“RXi”) pursuant to the Securities Purchase Agreement with RXi and two institutional investors.
The following unaudited pro forma condensed consolidated financial statements of Galena Biopharma, Inc. are presented to comply with Article 11 of Regulation S-X and follow prescribed SEC regulations. The unaudited pro forma condensed consolidated financial statements do not purport to present what the Company’s results would have been had the disposition actually occurred on the dates indicated or to project the Company’s results from operations or financial position for any future period. The pro forma adjustments are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated balance sheet as of December 31, 2011, presents the pro forma effects of the transaction as if the spin-off of RXi had occurred on December 31, 2011. The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2011 and 2010 present the pro forma effects of the transaction as if the spin-off of RXi had occurred on January 1, 2010.
The unaudited pro forma condensed consolidated financial statements are presented for informational purposes. These unaudited pro forma condensed consolidated financial statements and accompanying notes should be read together with the Company’s audited consolidated financial statements and the accompanying notes, as of and for the year ended December 31, 2011.
Galena Biopharma, Inc.
Pro Forma Condensed Consolidated
Balance Sheet
As of December 31, 2011
(Unaudited)
| Historical | Pro Forma Adjustments(a) |
Pro Forma | ||||||||||
| ASSETS |
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| Current Assets |
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| Cash and cash equivalents |
$ | 11,433 | $ | (1,433 | ) | $ | 10,000 | |||||
| Restricted cash |
101 | — | 101 | |||||||||
| Prepaid expenses and other current assets |
276 | (176 | ) | 100 | ||||||||
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| Total current assets |
11,810 | (1,609 | ) | 10,201 | ||||||||
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| Property and equipment, net |
393 | (355 | ) | 38 | ||||||||
| In process research and development |
12,864 | — | 12,864 | |||||||||
| Goodwill |
5,898 | — | 5,898 | |||||||||
| Deposits |
3 | — | 3 | |||||||||
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| Total assets |
$ | 30,968 | $ | (1,964 | ) | $ | 29,004 | |||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY |
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| Current Liabilities |
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| Accounts payable |
$ | 2,155 | $ | (667 | ) | $ | 1,488 | |||||
| Accrued liabilities |
2,168 | (544 | ) | 1,624 | ||||||||
| Convertible notes payable |
500 | (500 | ) | — | ||||||||
| Deferred revenue |
816 | (816 | ) | — | ||||||||
| Current maturities of capital lease obligations |
35 | (29 | ) | 6 | ||||||||
| Warrants potentially settleable in cash |
3,746 | — | 3,746 | |||||||||
| Current contingent purchase price consideration |
1,782 | — | 1,782 | |||||||||
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| Total current liabilities |
11,202 | (2,556 | ) | 8,646 | ||||||||
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| Capital lease obligations, net of current maturities |
32 | (5 | ) | 27 | ||||||||
| Deferred tax liability |
5,053 | — | 5,053 | |||||||||
| Contingent purchase price consideration, net of current portion |
4,569 | — | 4,569 | |||||||||
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| Total liabilities |
20,856 | (2,561 | ) | 18,295 | ||||||||
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| Stockholders’ Equity |
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| Preferred stock, $0.0001 par value, 5,000,000 shares authorized; no shares issued and outstanding |
— | — | — | |||||||||
| Common stock, $0.0001 par value, 125,000,000 shares authorized; 47,811,453 shares issued and 47,136,453 outstanding |
5 | — | 5 | |||||||||
| Additional paid-in capital |
81,184 | — | 81,184 | |||||||||
| Less treasury shares at cost, 675,000 |
(3,849 | ) | — | (3,849 | ) | |||||||
| Deficit accumulated during the developmental stage |
(67,228 | ) | 597 | (66,631 | ) | |||||||
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| Total stockholders’ equity |
10,112 | 597 | 10,709 | |||||||||
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| Total liabilities and stockholders’ equity |
$ | 30,968 | $ | (1,964 | ) | $ | 29,004 | |||||
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Galena Biopharma, Inc.
Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2011
(Unaudited)
| Historical | Pro Forma Adjustments (b) |
Pro Forma | ||||||||||
| Expenses: |
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| Research and development expense |
$ | 10,742 | $ | (7,030 | ) | $ | 3,712 | |||||
| Research and development employee stock-based compensation expense |
866 | (657 | ) | 209 | ||||||||
| Research and development non-employee stock-based compensation expense |
(70 | ) | — | (70 | ) | |||||||
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| Total research and development expense |
11,538 | (7,687 | ) | 3,851 | ||||||||
| General and administrative expense |
6,863 | (614 | )(c) | 6,249 | ||||||||
| Fair value of common stock warrants issued for general and administrative expense |
108 | — | 108 | |||||||||
| Fair value of common stock issued for general and administrative expense |
73 | — | 73 | |||||||||
| General and administrative employee stock-based compensation expense |
2,205 | — | 2,205 | |||||||||
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| Total general and administrative expense |
9,249 | (614 | ) | 8,635 | ||||||||
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| Operating loss |
(20,787 | ) | 8,301 | (12,486 | ) | |||||||
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| Other income/(expense) |
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| Interest income, net |
30 | (37 | ) | (7 | ) | |||||||
| Loss on warrant exchange |
(900 | ) | — | (900 | ) | |||||||
| Other income, net |
10,172 | (186 | ) | 9,986 | ||||||||
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| Total other income, net |
9,302 | (223 | ) | 9,079 | ||||||||
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| Loss before provision for income taxes |
(11,485 | ) | 8,078 | (3,407 | ) | |||||||
| Provision for income taxes |
— | — | — | |||||||||
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| Income from continuing operations |
$ | (11,485 | ) | $ | 8,078 | $ | (3,407 | ) | ||||
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| Loss from continuing operations per common share: |
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| Basic and diluted loss per share |
$ | (0.32 | ) | $ | (0.09 | ) | ||||||
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| Weighted average number of shares outstanding: basic and dilutive |
36,334,413 | 36,334,413 | ||||||||||
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The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
Galena Biopharma, Inc.
Pro Forma Condensed Consolidated Statement of Operations
Year Ended December 31, 2010
(Unaudited)
| Historical | Pro Forma Adjustments (b) |
Pro Forma | ||||||||||
| Expenses: |
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| Research and development expense |
$ | 6,046 | $ | (5,629 | ) | $ | 417 | |||||
| Research and development employee stock-based |
1,084 | (1,084 | ) | — | ||||||||
| Research and development non-employee stock-based compensation expense |
743 | — | 743 | |||||||||
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| Total research and development expense |
7,873 | (6,713 | ) | 1,160 | ||||||||
| General and administrative expense |
5,493 | — | 5,493 | |||||||||
| Fair value of common stock warrants issued for general and administrative expense |
718 | — | 718 | |||||||||
| General and administrative employee stock-based |
2,541 | — | 2,541 | |||||||||
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| Total general and administrative expense |
8,752 | — | 8,752 | |||||||||
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| Operating loss |
(16,625 | ) | 6,713 | (9,912 | ) | |||||||
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| Other income/(expense) |
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| Interest income, net |
5 | — | 5 | |||||||||
| Other income, net |
4,627 | (792 | ) | 3,835 | ||||||||
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| Total other income, net |
4,632 | (792 | ) | 3,840 | ||||||||
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| Loss before provision for income taxes |
(11,993 | ) | 5,921 | (6,072 | ) | |||||||
| Provision for income taxes |
— | — | — | |||||||||
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| Income from continuing operations |
$ | (11,993 | ) | $ | 5,921 | $ | (6,072 | ) | ||||
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| Loss from continuing operations per common share: |
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| Basic and diluted loss per share |
$ | (0.67 | ) | $ | (0.34 | ) | ||||||
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| Weighted average number of shares outstanding: basic and dilutive |
17,883,381 | 17,883,381 | ||||||||||
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The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
Galena Biopharma, Inc
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
Description of Transaction and Basis of Presentation
On April 27, 2012, Galena Biopharma, Inc. (the “Company” or “Galena”) completed the spin-off its wholly-owned subsidiary, RXi Pharmaceuticals Inc. (“RXi”) pursuant to the Securities Purchase Agreement with RXi and two institutional investors (the “Investors”) whereby the Investors agreed to purchase a total of $9,500,000 of Series A Preferred Stock of RXi. The shares of the Preferred Stock purchased by the Investors are convertible into shares of RXi common stock representing approximately 83% of the shares of RXi common stock that would be outstanding, assuming the conversion in full of the Preferred Stock, which is referred to as the “as-converted common stock.” The Company owned approximately 12% of the as-converted common stock immediately prior to the spin-off of RXi, and Advirna, LLC, a key licensor of RXi, was issued the remaining 5% of the as-converted common stock pursuant to the agreement with Advirna, LLC. As agreed in the Securities Purchase Agreement and subject to the conditions of the dividend announced by the Company on April 16, 2012 upon the spin-off of RXi, the Company distributed on a share for share basis to its April 23, 2012 shareholders of record approximately 8% of the as-converted common stock of RXi with the Company initially retaining 4% of the as-converted common stock. The Company agreed, in the Securities Purchase Agreement, not to sell or dispose of its shares of RXi common stock for a one-year period following completion of the spin-off of RXi.
Following the spin-off, Galena’s financial statements will no longer reflect the consolidated financial condition and results of operations of RXi, and the Company will account for its partial ownership of RXi based on the cost method of accounting.
Pro Forma Adjustments
The unaudited pro forma condensed consolidated financial statements have been prepared based on the historical financial information of the Company giving effect to the spin-off. The unaudited pro forma condensed consolidated balance sheet as of December 31, 2011, presents pro forma effects of the transaction as if the spin-off of RXi had occurred on December 31, 2011. The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2011 and 2010 present the pro forma effects of the transaction as if the spin-off of RXi had occurred on January 1, 2010. The following pro forma adjustments are included in the accompanying pro forma condensed consolidated financial statements:
| (a) | To reflect the elimination of the assets and liabilities transferred to RXi in connection with the spin-off transaction as if the closing of the spin-off transaction had occurred on December 31, 2011. |
| (b) | To reflect the elimination of expenses directly attributable to RXi as if the spin-off occurred on January 1, 2010. |
| (c) | Included in the pro forma adjustment are transaction costs of $280,000 directly attributable to the spin-off. These costs are excluded from continuing operations. |