Note 3 - Stock Purchase Agreement

12 Months Ended

Jun. 30, 2016

Notes to Financial Statements

Business Combination Disclosure [Text Block]

(3) Stock Purchase Agreement

On June 3, 2015, the Company completed the acquisition of Anaconda Pharma pursuant to a stock purchase agreement, dated February 25, 2015, the (“agreement”). Under the terms of the agreement, at closing all of Anaconda Pharma's outstanding shares were acquired for 3.5 million shares of the Company’s common stock and $8.0 million in cash, subject to certain closing and post-closing adjustments. The transaction also includes additional contingent financial consideration of up to $30.0 million, which is based on the successful achievement of certain future clinical and regulatory milestones, plus a royalty. If and when these contingent considerations are probable the effect of a change in estimate will be accounted in the period of change by recording a cumulative catch-up adjustment to retroactively apply the new estimate in accordance with U.S. GAAP.

The fair value of the issuance of 3.5 million of Aviragen’s common stock in the acquisition of Anaconda Pharma's was $7.5 million or $2.14 per share, based on the volume weighted average price on June 3, 2015. The purchase price paid at closing was calculated as follows:

(in millions)
Fair value of Aviragen common stock issued	$	7.5
Estimated transaction and exit costs		1.0
Cash consideration issued		8.0
Total purchase price	$	16.5

The Company had also incurred $1.0 million of transaction costs directly related to the Anaconda Pharma acquisition, which includes expenditures for advisory, legal, fairness opinion, accounting and other similar services.

The IPR&D project is BTA074, a patented, direct-acting antiviral in development for the treatment of genital warts, as well as the orphan disease recurrent respiratory papillomatosis, both of which are caused by HPV types 6 and 11. The accounting fair value of BTA074 IPR&D was $17.6 million.

The total estimated purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed in connection with the transaction, based on their estimated fair values. Anaconda Pharma was a development stage enterprise, therefore the acquisition was not considered to be a business combination as it did not meet the definition of a business. The Company determined that the acquired assets can only be used for a specific and intended purpose and have no alternative future use after taking into consideration further research and development, regulatory and marketing approval efforts required in order to reach technological feasibility. Accordingly, the acquisition was accounted for as a purchase of IPR&D assets with no alternative future use and the entire amount was charged to IPR&D expense as of the acquisition date. Further, the contingent financial consideration will be recognized if and when the contingency is resolved and becomes payable.

The allocation of the total purchase price, as shown above, to the acquired tangible and intangible assets and assumed liabilities of Anaconda Pharma based on their fair values as of the acquisition date are as follows:

(in millions)
Cash and cash equivalents	$	0.3
Prepaid expenses and other current assets		0.2
Notes payable		(1.0	)
Accounts payable		(0.4	)
Accrued expenses		(0.2	)
Sub-total net fair value of acquired assets and liabilities		(1.1	)
In-process research and development		17.6
Total purchase price	$	16.5

Further, the Company assumed an interest-free loan of $1.0 million with a French local development authority for previous research and development activities related to BTA074. As of June 30, 2016 and June 30, 2015, $0.7 million and $1.0 million was outstanding under this note payable, respectively.

Future minimum payments due under notes payable as of June 30, 2016 are as follows:

(in millions)
2017	$	0.4
2018		0.2
2019		0.1
2020		-
2021		-
Total future payments	$	0.7