Annual report pursuant to Section 13 and 15(d)

ABEONA THERAPEUTICS LLC ACQUISITION

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ABEONA THERAPEUTICS LLC ACQUISITION
 12 Months Ended
Dec. 31, 2015
ABEONA THERAPEUTICS LLC ACQUISITION [Abstract]  
ABEONA THERAPEUTICS LLC ACQUISITION

Note 11 - Abeona Therapeutics LLC Acquisition

 

On May 15, 2015, we agreed to issue an aggregate of 3,979,761 unregistered shares of our common stock to the members of Abeona Therapeutics LLC (Abeona Ohio). Abeona Ohio’s principal activities were focused on developing and delivering gene therapy products for severe and life-threatening rare diseases. Abeona Ohio's lead program is ABO-101 (AA NAGLU) and ABO-102 (AAV SGSH), adeno-associated virus (AAV)-based gene therapies for Sanfilippo syndrome (MPS IIIA and IIIB, respectively) in collaboration with patient advocate groups, researchers and clinicians, anticipated to commence clinical trials in 2016.

 

The initial consideration of $31,758,000 was calculated using the Company’s stock price on date of the closing, May 15, 2015 of $7.98 times the number of the Company shares (3,979,761) issued to Abeona Ohio members.

 

There is a contingent valuation on three milestones. Per the merger agreement with Abeona Ohio each milestone would consist of either cash, our stock or a combination of both, at the Company’s election, equivalent to a stated dollar amount. The fair value of the probability of achieving all three milestones was estimated at $6,489,000.

 

The following purchase price allocation is as follows:

 

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   $ 3,697,000  
Accounts receivable     1,000  
Prepaid expenses     28,000  
Property and equipment     51,000  
Other assets     1,000  
Accounts payable     (153,000 )
Total tangible assets     3,625,000  
         
Licensing agreement     2,156,000  
Goodwill     32,466,000  
         
Total net asset value   $ 38,247,000  

 

In connection with the acquisition $375,000 in merger costs were expensed.

 

The first milestone of receiving IND allowance from the FDA to initiate a Phase 1 clinical study from MPS IIIA or MPSIIIB by November 15, 2015 was not met after the measurement period ended. The Company recognized $3,898,000 in Miscellaneous Income for change in fair value of our contingent consideration liability.

 

Goodwill is not expected to be deductible for tax purposes.