GNI USA Contributions under the Business Combination Agreement

12 Months Ended

Dec. 31, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

GNI USA Contributions under the Business Combination Agreement


7.	GNI USA Contributions under the Business Combination Agreement

The GNI USA Contributions under the Business Combination Agreement (see Note 1) was treated as a reverse asset acquisition, with CPI as the accounting acquirer and Catalyst as the legal acquirer. Under U.S. GAAP, a company must evaluate if an integrated set of assets and activities qualifies as a business acquisition or an asset acquisition by assessing if the gross assets’ fair value is primarily concentrated in a single asset or a group of similar assets. If this criterion is met, the acquired operations are not considered a business. Catalyst did not meet the business definition as its fair value was concentrated in one IPR&D asset, it lacked an organized workforce contributing significantly to output creation, and no substantive processes were acquired. As such, the GNI USA Contributions was treated as an asset acquisition. In an asset acquisition, goodwill is not recognized, and the cost allocated to the acquired IPR&D with no alternative future use is expensed.

The following summarizes the purchase price paid in the GNI USA Contributions (in thousands, except per share amounts):


Catalyst Common Stock outstanding		2,532
Multiplied by the fair value per share of Catalyst stock (1)	$	7.67
Fair value of common shares to be owned by Catalyst’s stockholders	$	19,420
Fair value of preferred shares to be owned by Catalyst’s stockholders (2)	$	63,099
Fair value of Catalyst	$	82,519
Pre-GNI USA Contributions Catalyst stock options assumed by CPI (3)	$	1,829
Fair value of consideration issued	$	84,348
Acquisition costs	$	659
Purchase price	$	85,007

(1)

The purchase price was based on the closing price of Catalyst Common Stock on October 30, 2023.

(2)

This amount is calculated based on 12,340 shares of Convertible Preferred Stock outstanding as of October 30, 2023. Each share of preferred stock converts into approximately 666.67 shares of common stock. The fair value was calculated using the closing price of Catalyst Common Stock on October 30, 2023 and the number of underlying common shares.

(3)

Any option to purchase Catalyst Common Stock that was issued and outstanding at the Effective Time remains issued and outstanding and unaffected by the GNI USA Contributions. In a reverse acquisition, however, from an accounting perspective, the Catalyst employee stock option awards have been exchanged for share-based payment awards of the accounting acquirer. Accordingly, this balance represents the pre-Contributions service portion of the estimated fair value of the employee stock option awards issued to Catalyst option holders. In calculating the estimated fair value of the option awards based on the Black-Scholes model, management used the following weighted-average assumptions:


Expected term (in years)		5.00
Volatility		84.30	%
Risk free interest rate		3.65	%
Dividend yield	—%

The total purchase price paid in the GNI USA Contributions has been allocated to the net assets acquired and liabilities assumed based on their fair values at the Effective Time. The allocation of the purchase price, as shown above, is as follows (in thousands):


Cash and cash equivalents	$	5,587
Other receivables from GNI		423
Prepaid assets		1,097
Other current assets		41
Long-term receivable from GCBP		4,683
Other assets, noncurrent		168
IPR&D		83,104
Accounts payable		(44	)
Advance payment received from GNI		(2,500	)
Accrued expenses and other current liabilities		(1,784	)
CVR excess closing cash payable		(1,085	)
CVR derivative liability, noncurrent		(4,683	)
Net assets acquired	$	85,007

The Minority Holder Contributions were treated as an equity transaction, where the Company obtained additional indirect interest and maintained its control in Gyre Pharmaceuticals.