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Reverse Merger
6 Months Ended
Jun. 30, 2018
Business Combinations [Abstract]  
Reverse Merger
REVERSE MERGER

In February 2017, the Company, then known as Signal Genetics, Inc. (“Signal”), completed its merger with Miragen Therapeutics, Inc., a then privately-held Delaware corporation (“Private Miragen”). Pursuant to the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) by and among the Company, Private Miragen, and Signal Merger Sub, Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), Merger Sub merged with and into Private Miragen, with Private Miragen surviving as a wholly-owned subsidiary of the Company (the “Merger”). Immediately, following the Merger, Private Miragen merged with and into the Company, with the Company as the surviving corporation (the “Short-Form Merger” and, together with the Merger, the “Mergers”). In connection with the Short-Form Merger, the Company changed its corporate name to “Miragen Therapeutics, Inc.”

For accounting purposes, Private Miragen is considered to have acquired Signal in the Merger. Private Miragen was determined to be the accounting acquirer based upon the terms of the Merger and other factors including: (i) the Private Miragen security holders owned approximately 95.2% of the combined company’s outstanding common stock immediately following the closing of the Mergers; (ii) former Private Miragen directors held all of the board seats in the combined company immediately following the closing of the Mergers; and (iii) Private Miragen management held key management positions of the combined company. The Merger has been accounted for as an asset acquisition rather than business combination because the assets acquired and liabilities assumed by Private Miragen do not meet the definition of a business as defined by U.S. GAAP. The net assets acquired in connection with this transaction were recorded at their estimated acquisition date fair values in February 2017 as of the date the Mergers were completed.

Immediately prior to the effective date of the Merger, all shares of preferred stock of Private Miragen converted into shares of common stock of Private Miragen on a one-for-one basis.

At the effective date of the Merger, the Company issued shares of its Common Stock to Private Miragen stockholders, at an exchange rate of approximately 0.7031 shares of Common Stock in exchange for each share of Private Miragen common stock outstanding immediately prior to the Merger. The exchange rate was calculated by a formula that was determined through arms-length negotiations between the Company and Private Miragen. The combined company assumed all the outstanding options, whether or not vested, under the 2008 Plan with such options representing the right to purchase a number of shares of Common Stock equal to approximately 0.7031 multiplied by the number of shares of Private Miragen common stock previously represented by such options.

Immediately after the Merger, there were 21,309,440 shares of Common Stock outstanding. In addition, immediately after the Merger, Private Miragen stockholders, warrant holders, and option holders owned approximately 95.9% of the aggregate number of shares of Common Stock, and the stockholders of the Company immediately prior to the Merger owned approximately 4.1% of the aggregate number of shares of Common Stock (each on a fully diluted basis). The accompanying unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements give retroactive effect to the exchange ratio and change in par value for all periods presented.

On February 13, 2017, prior to the effectiveness of the Merger, Signal had 1,024,960 shares of Common Stock outstanding and a market capitalization of $12.6 million. The estimated fair value of the net assets of Signal on February 13, 2017, prior to the Merger, was $0.2 million. The fair value of Common Stock on the Merger closing date, prior to the Merger, was above the fair value of the Company’s net assets. As the Company’s net assets were predominantly comprised of cash offset by current liabilities, the fair value of the Company’s net assets as of February 13, 2017, prior to the Merger, is considered to be the best indicator of the fair value and, therefore, the purchase consideration.
 
The following table summarizes the net assets acquired based on their estimated fair values immediately prior to the Merger (in thousands):
Cash and cash equivalents
$
1,280

Prepaid and other assets
248

Accrued liabilities
(1,324
)
Net acquired tangible assets
$
204