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Kolltan Acquisition | 12 Months Ended
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Dec. 31, 2017
Kolltan Acquisition |
Kolltan Acquisition | (17) Kolltan Acquisition On November 29, 2016, the Company acquired all of the share and debt interests of Kolltan Pharmaceuticals, Inc. ("Kolltan"), a clinical-stage biopharmaceutical company, in exchange for 18,257,996 shares of the Company's common stock plus contingent consideration in the form of development and approval milestones up to a maximum of $172.5 million. The Company completed this acquisition in order to gain access to Kolltan's antibody-based drug development programs targeting receptor tyrosine kinases (RTKs) for the treatment of cancer and other diseases with significant unmet needs. Purchase Price The purchase price for Kolltan was calculated based on the closing price of the Company's common stock of $4.02 per share on November 29, 2016. The Company also recorded a liability of $44.2 million which represented the initial fair value of the contingent consideration. This fair value measurement used significant unobservable inputs representing a Level 3 measurement more fully described in Note 4, Fair Value Measurements to these consolidated financial statements. Subsequent changes to the fair value of the contingent consideration will be recognized as adjustments to operating earnings. The acquisition was accounted for using the acquisition method of accounting which requires all assets acquired and liabilities assumed recognized at their acquisition-date fair values. The total consideration transferred consisted of the following (in thousands):
Fair value of common stock issued for upfront payment |  | $ | 73,397 |
Fair value of contingent consideration |  |  | 44,200 |
Kolltan transaction expenses paid in cash by the Company |  |  | 3,768 |
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Total consideration transferred |  | $ | 121,365 |
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Allocations of Assets and Liabilities The purchase price allocation was finalized in the fourth quarter of 2017 with no adjustments made to the initial purchase price allocation. The following table summarizes the fair values of the assets acquired and liabilities assumed as of November 29, 2016 (in thousands):
Cash and cash equivalents |  | $ | 8,160 |
Other current and long-term assets |  |  | 799 |
Property and equipment, net |  |  | 2,072 |
In-process research and development (IPR&D) |  |  | 61,690 |
Goodwill |  |  | 82,011 |
Deferred tax liabilities, net |  |  | (23,393 | )
Other assumed liabilities |  |  | (9,974 | )
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Total |  | $ | 121,365 |
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IPR&D primarily represents the initial estimated fair value of $40.0 million, $3.5 million and $18.0 million for the anti-KIT program, CDX-3379 and TAM programs, respectively, using probability adjusted discounted cash flow analyses. The expected future net cash flows for the anti-KIT program, CDX-3379 and TAM programs were based on the expectation that a Biologics License Application ("BLA") would be filed with the FDA no earlier than the end of 2023, 2024 and 2028, respectively, with an expected commercial launch as promptly as practicable after necessary regulatory approvals are received. The estimated development costs included in the expected future net cash flows were approximately $132 million combined. The deferred tax liability, net of $23.4 million primarily relates to the temporary differences associated with the IPR&D intangible assets, which are not deductible for tax purposes. The excess of purchase price over the fair value amounts assigned to the identifiable assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. The value of the goodwill can be attributable to the synergies related to the combined antibody-based platform and a deferred tax liability related to acquired IPR&D intangible assets. None of the goodwill is expected to be deductible for income tax purposes. Acquisition-Related Expenses, Including Severance The Company incurred $0.7 million in acquisition-related expenses in the consolidated statements of operations for the year ended December 31, 2016. From the acquisition date through December 31, 2016, the consolidated statements of operations also include $2.4 and $0.7 million in Kolltan related severance expense within general and administrative and research and development expenses, respectively. Pro Forma Financial Information The operating results of Kolltan and pro forma adjustments including severance expense and transaction expenses of $3.1 million and $0.7 million, respectively, have been included in the accompanying consolidated financial statements from November 29, 2016 to December 31, 2016. Kolltan had no revenues from November 29, 2016 through December 31, 2016. The following unaudited pro forma financial summary is presented as if the operations of the Company and Kolltan were combined as of January 1, 2015. The unaudited pro forma combined results are not necessarily indicative of the actual results that would have occurred had the acquisition been consummated at that date or of the future operations of the combined entities.
|  | Unaudited Years Ended December 31, |
|  | 2016 |  | 2015 |
|  | (In thousands) |
Revenue |  | $ | 6,786 |  | $ | 5,480 |
Net loss |  | $ | (146,905 | ) | $ | (157,690 | )
Basic and diluted net loss per common share |  | $ | (1.24 | ) | $ | (1.37 | )

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