Assembly Pharmaceuticals, Inc. Transaction

12 Months Ended

Dec. 31, 2014

Business Combinations [Abstract]

Assembly Pharmaceuticals, Inc. Transaction

Note 3 - Assembly Pharmaceuticals, Inc. Transaction

On July 11, 2014, the Company completed the Assembly Merger, whereby Assembly Pharmaceuticals became the Company’s wholly-owned subsidiary. Pursuant to the terms of the Assembly Merger, the shares of Assembly Pharmaceuticals were converted into an aggregate of 4,008,848 shares of the Company’s common stock. Also pursuant to the terms of the Assembly Merger, the options to purchase shares of Assembly Pharmaceuticals were assumed by the Company and became exercisable for an aggregate of 621,651 shares of the Company’s common stock.

The allocation of the purchase price to the Assembly balance sheet is shown below:

Cash and cash equivalents	$	509,363
Other current assets		23,540
Equipment, net		10,350
IPR&D		29,000,000
Goodwill		12,737,350
Security deposits		16,606
Total assets		42,297,209
Accrued expenses		874,113
Deferred tax liability		11,600,000
Total liabilities		12,474,113
Net assets acquired	$	29,823,096

The transaction was accounted for using the acquisition method. Accordingly, goodwill has been measured as the excess of the total consideration over the amounts assigned to the identifiable assets acquired and liabilities assumed including the related deferred tax liability.

On the acquisition date, the fair value of net assets acquired was $29,823,096. The fair value of stock issued to the Assembly Pharmaceuticals shareholders as part of the consideration of $29,064,148 was based on reference to quoted market values of the Company’s common stock as of the date of acquisition. The options assumed in the Assembly Merger were valued at approximately $758,948.

The fair value of the net assets acquired in the Assembly Merger is preliminary and is subject to change over the upcoming periods. The following table presents the unaudited pro forma financial results, as if the Assembly Merger had been completed as of January 1, 2013 and 2014. 

Pro Forma          

	For the Years Ended December 31,
	2014		2013
Revenues	$	-	$	-
Net loss		(26,352,751)		(20,347,860)
Loss per share - basic and diluted	$	(2.90)	$	(2.58)