EXHIBIT 99.3
PLASMATECH BIOPHARMACEUTICALS, INC,
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements apply to the merger between Abeona Therapeutics LLC (“Abeona”) and PlasmaTech Biopharmaceuticals, Inc. (“PlasmaTech”), by which Abeona became a wholly owned subsidiary of PlasmaTech, and are based upon the historical condensed consolidated financial statements and notes thereto (as applicable) of PlasmaTech and Abeona.
The unaudited pro forma condensed combined balance sheet at March 31, 2015 gives pro forma effect to the merger as if the merger had been completed on March 31, 2015 and combines PlasmaTech’s unaudited combined balance sheet and Abeona’s unaudited balance sheet as of March 31, 2015.
The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2015 gives pro forma effect to the merger as if it had been completed on January 1, 2014 and combines PlasmaTech’s unaudited consolidated statements and Abeona’s unaudited statements of operations for the three months ended March 31, 2015.
The unaudited pro forma condensed combined statement of operations for the twelve months ended December 31, 2014 gives pro forma effect to the merger as if it had been completed on January 1, 2014 and combines PlasmaTech’s audited consolidated statements of operations and Abeona’s audited statements of operations for the year ended December 31, 2014.
As previously disclosed, on May 15, 2015, we closed our acquisition of Abeona and will issue an aggregate of 3,979,761 shares of PlasmaTech’s common stock to the members of Abeona. In addition, there may be up to an additional $9 million in performance milestones payable to members of Abeona, in common stock or cash, at PlasmaTech’s option.
The pro forma adjustments are based upon available information and certain assumptions that PlasmaTech believes are reasonable under the circumstances and are based upon our preliminary purchase price allocation.
These unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and related notes contained in the annual, quarterly and other reports filed by PlasmaTech with the SEC and the audited consolidated financial statements of Abeona included in this Form 8-K/A.
Basis of Presentation
The unaudited pro forma condensed combined financial information has been derived from the historical financial information of the PlasmaTech and Abeona and was prepared using the acquisition method of accounting in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification (“ASC”) 805, Business Combinations, and uses the fair value concepts defined in ASC 820, Fair Value Measurements and Disclosures. ASC 805 requires, among other things, that all assets acquired and liabilities assumed be recognized at their fair values as of the purchase date. In addition ASC 805 establishes that the consideration transferred be measured at the closing date of the purchase at the then-current market price. Under ASC 805, acquisition-related transaction costs (e.g., advisory, legal, valuation, other professional fees) and certain acquisition-related restructuring charges impacting the target company are not included as a component of consideration transferred but are accounted for as expenses in the periods in which the costs are incurred.
The pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. The Company anticipates that the values assigned to the assets acquired and liabilities assumed will be finalized during the measurement period following the May 15, 2015 closing date.
Pro Forma Condensed Combined Balance Sheet
As of March 31, 2015
(Unaudited)
Historical
PlasmaTech | Abeona | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
ASSETS | ||||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 7,948,000 | $ | 4,026,000 | $ | 11,974,000 | ||||||||||
Receivables | 144,000 | - | 144,000 | |||||||||||||
Prepaid expenses and other current expenses | 98,000 | 24,000 | 122,000 | |||||||||||||
Total current assets | 8,190,000 | 4,050,000 | 12,240,000 | |||||||||||||
Property and equipment, net | 11,000 | 53,000 | 64,000 | |||||||||||||
Licensed technology, net | 4,875,000 | 261,000 | 2,156,000 | (a) | 7,031,000 | |||||||||||
(261,000 | )(a) | |||||||||||||||
Goodwill | - | - | 32,172,000 | (a) | 32,173,000 | |||||||||||
Other assets | 41,000 | 1,000 | 42,000 | |||||||||||||
Total assets | $ | 13,117,000 | $ | 4,365,000 | $ | 51,550,000 | ||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable and accrued expenses | $ | 638,000 | $ | 184,000 | 375,000 | (c) | $ | 1,197,000 | ||||||||
Short-term milestone payment liabilities | - | - | 5,694,000 | (d) | 5,694,000 | |||||||||||
Current portion of deferred revenue | 602,000 | 1,000 | 603,000 | |||||||||||||
Total current liabilities | 1,240,000 | 185,000 | 7,494,000 | |||||||||||||
Long-term milestone payment liability | - | - | 795,000 | (d) | 795,000 | |||||||||||
Payable due Licensor | 4,000,000 | - | 4,000,000 | |||||||||||||
Long-term debt deferred revenue | 4,718,000 | - | 4,718,000 | |||||||||||||
Total liabilities | 9,958,000 | 185,000 | 17,007,000 | |||||||||||||
Stockholders’ equity | ||||||||||||||||
Common stock | 200,000 | - | 40,000 | (a) | 240,000 | |||||||||||
Additional paid-in capital | 301,033,000 | - | 38,207,000 | (a) | 332,752,000 | |||||||||||
(3,919,000 | )(a) | |||||||||||||||
(261,000 | )(a) | |||||||||||||||
4,180,000 | (b) | |||||||||||||||
(6,489,000 | )(d) | |||||||||||||||
Member’s equity | - | 4,180,000 | (4,180,000 | )(b) | - | |||||||||||
Accumulated deficit | (298,074,000 | ) | (375,000 | )(c) | (298,449,000 | ) | ||||||||||
Total stockholders’ equity | 3,159,000 | 4,180,000 | 34,543,000 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 13,117,000 | $ | 4,365,000 | $ | 51,550,000 |
See accompanying Notes to Pro Forma Condensed Combined Balance Sheet
Notes to Pro Forma Condensed Combined Balance Sheet
Note 1: The above statement gives effect to the following pro forma adjustments necessary to reflect the merger of PlasmaTech and Abeona, as if the transaction had occurred March 31, 2015.
a) | To record the exchange, for accounting purposes, by Abeona members of their units for 3,979,761 shares of PlasmaTech. The initial consideration of $31,758,000 was calculated using the PlasmaTech stock price on date of the close, May 15, 2015 of $7.98 times the number of PlasmaTech shares (3,979,761) issued to Abeona members. |
There is a contingent valuation on three milestones. Per the merger agreement with Abeona each milestone would consist of either cash, our stock or a combination of both, at PlasmaTech’s election, equivalent to a stated dollar amount. The fair value of the probability of achieving all three milestones is estimated at $6,489,000.
The following preliminary purchase price allocation is based on information we have to date and is unaudited. We expect to finalize our purchase price allocation once all information has been obtained.
Total purchase price | ||||
Initial consideration | $ | 31,758,000 | ||
Contingent consideration | 6,489,000 | |||
Total purchase price | $ | 38,247,000 | ||
Allocation of the purchase price | ||||
Cash | $ | 4,026,000 | ||
Prepaid expenses | 24,000 | |||
Property and equipment | 53,000 | |||
Other assets | 1,000 | |||
Accounts payable | (184,000 | ) | ||
Unearned revenue | (1,000 | ) | ||
Total tangible assets | 3,919,000 | |||
Licensing agreement | 2,156,000 | |||
Goodwill | 32,172,000 | |||
Total intangible assets | 34,329,000 | |||
Total net asset value | $ | 38,247,000 |
b) | To eliminate the Members’ Equity of Abeona. |
c) | To record $375,000 in merger costs. |
d) | To record milestone liabilities. The present value of probability of the short-term milestone liabilities for milestone #1 and #2 are $5,694,000 and long-term liability for milestone #3 is $795,000. |
After the consummation of the transactions described herein, PlasmaTech had 200,000,000 common shares authorized, and approximately 23,978,562 common shares were issued and outstanding at March 31, 2015.
Pro Forma Condensed Combined Statement of Operations
For the Three Months Ended March 31, 2015
(Unaudited)
Historical
PlasmaTech | Abeona | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
Revenues | $ | 258,000 | $ | - | $ | 258,000 | ||||||||||
Expenses | ||||||||||||||||
Research and development | 453,000 | 279,000 | 732,000 | |||||||||||||
General and administrative | 1,689,000 | 133,000 | (173,000 | )(b) | 1,649,000 | |||||||||||
Depreciation and amortization | 118,000 | 7,000 | 27,000 | (a) | 152,000 | |||||||||||
Total expenses | 2,260,000 | 419,000 | 2,533,000 | |||||||||||||
Loss from operations | (2,002,000 | ) | (419,000 | ) | (2,275,000 | ) | ||||||||||
Interest and miscellaneous income | 3,000 | 3,000 | 6,000 | |||||||||||||
Interest and other expenses | (1,000 | ) | - | (1,000 | ) | |||||||||||
2,000 | 3,000 | (5,000 | ) | |||||||||||||
Net loss allocable to common stockholders | $ | (2,000,000 | ) | $ | (416,000 | ) | $ | (2,280,000 | ) | |||||||
Basic and diluted loss per common share | ||||||||||||||||
Loss allocable to all common stockholders | $ | (0.10 | ) | $ | (0.10 | ) | ||||||||||
Weighted average basic and diluted common shares outstanding | 19,983,751 | 23,963,512 |
Notes to Pro Forma Condensed Combined Statement of Operations
Note 1: The above statement gives effect to the merger of PlasmaTech and Abeona, as if the merger had occurred on January 1, 2014.
a) To record $27,000, three months amortization of the licensing agreement for estimated change in fair value.
b) To reverse $173,000 in merger costs recorded in the first quarter of 2015.
Note 2: The pro forma combined-weighted average number of common outstanding shares is based on the weighted average number of shares of common stock of PlasmaTech during the period plus those shares to be issued in conjunction with the merger. A reconciliation between PlasmaTech's historical weighted average shares outstanding and pro forma weighted average shares outstanding and pro forma weighted average shares outstanding is as follows:
Historical | 19,983,751 | |||
Abeona equivalent shares giving effect to the merger | 3,979,761 | |||
Total | 23,963,512 |
Pro Forma Condensed Combined Statement of Operations
For the Twelve Months Ended December 31, 2014
(Unaudited)
Historical
PlasmaTech | Abeona | Pro Forma Adjustments | Pro Forma Combined | |||||||||||||
Revenues | $ | 925,000 | $ | - | $ | 925,000 | ||||||||||
Expenses | ||||||||||||||||
Research and development | 333,000 | 28,000 | 361,000 | |||||||||||||
General and administrative | 3,712,000 | 397,000 | 4,109,000 | |||||||||||||
Depreciation and amortization | 11,000 | 11,000 | 109,000 | (a) | 131,000 | |||||||||||
Total expenses | 4,056,000 | 436,000 | 4,601,000 | |||||||||||||
Loss from operations | (3,131,000 | ) | (436,000 | ) | (3,676,000 | ) | ||||||||||
Interest and miscellaneous income | 45,000 | 2,000 | 47,000 | |||||||||||||
Interest and other expenses | (582,000 | ) | - | (582,000 | ) | |||||||||||
Loss on change in fair value of derivative preferred stock | (23,110,000 | ) | - | (23,110,000 | ) | |||||||||||
(23,647,000 | ) | 2,000 | (23,645,000 | ) | ||||||||||||
Net loss | (26,778,000 | ) | (434,000 | ) | (27,321,000 | ) | ||||||||||
Less preferred stock dividends | (2,875,000 | ) | - | (2,875,000 | ) | |||||||||||
Net loss allocable to common stockholders | $ | (29,653,000 | ) | $ | (434,000 | ) | $ | (30,196,000 | ) | |||||||
Basic and diluted loss per common share | ||||||||||||||||
Loss allocable to all common stockholders | $ | (15.26 | ) | $ | (5.10 | ) | ||||||||||
Weighted average basic and diluted common shares outstanding | 1,942,905 | 5,922,666 |
Notes to Pro Forma Condensed Combined Statement of Operations
Note 1: The above statement gives effect to the merger of PlasmaTech and Abeona, as if the merger had occurred on January 1, 2014.
a) To record $109,000, twelve months amortization of the licensing agreement for estimated change in fair value.
Note 2: The pro forma combined-weighted average number of common outstanding shares is based on the weighted average number of shares of common stock of PlasmaTech during the period plus those shares to be issued in conjunction with the merger. A reconciliation between PlasmaTech's historical weighted average shares outstanding and pro forma weighted average shares outstanding and pro forma weighted average shares outstanding is as follows:
Historical | 1,942,905 | |||
Abeona equivalent shares giving effect to the merger | 3,979,761 | |||
Total | 5,922,666 |