Assembly Pharmaceuticals, Inc. Transaction

6 Months Ended

Jun. 30, 2015

Business Combinations [Abstract]

Assembly Pharmaceuticals, Inc. Transaction

Note 3 - Assembly Pharmaceuticals, Inc. Transaction

As described in Note 1, on July 11, 2014, the Company completed the Merger, whereby Assembly Pharmaceuticals, Inc. became the Company’s wholly-owned subsidiary. Pursuant to the terms of the 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 Merger, the outstanding options to purchase shares of Assembly Pharmaceuticals were assumed by the Company and an aggregate of 621,651 shares of the Company’s common stock were reserved for issuance thereunder.

The allocation of the purchase price is shown below:

Cash and cash equivalents	$	509,363
Other current assets		23,540
Property, plant and equipment, net		10,350
In-process research and development		29,000,000
Goodwill		12,638,136
Security deposits		16,606
Total assets		42,197,995
Accrued expenses		774,899
Deferred tax liabilities		11,600,000
Total liabilities		12,374,899
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. Goodwill is not deductible for tax purposes. 

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 Merger were valued at $758,948. As of June 30, 2015, the Company finalized its purchase price allocation. The Company adjusted certain accrued expenses, resulting in a decrease of goodwill and accrued expenses of approximately $99,000 in the second quarter of 2015.