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Acquisitions
 9 Months Ended
Sep. 30, 2025
Acquisitions  
Acquisitions

3.

Acquisitions

ACELYRIN Merger

The Company completed the ACELYRIN Merger on May 21, 2025 (the “Closing Date”). ACELYRIN was a late-stage biopharma company focused on identifying, acquiring, and accelerating the development and commercialization of transformative medicines. ACELYRIN’s portfolio consisted of lonigutamab, a subcutaneously delivered, monoclonal antibody targeting IGF-1R for the potential treatment of Thyroid Eye Disease (“TED”). The ACELYRIN Merger strengthened the Company’s balance sheet and its cash position and added the lonigutamab product candidate to the Company’s development portfolio as of the Closing Date. Immediately following the ACELYRIN Merger, the Company’s pre-merger stockholders collectively owned approximately 52% of the combined company’s common stock and the pre-merger stockholders of ACELYRIN owned approximately 48% of the combined company’s common stock, in each case, calculated on a fully diluted basis as of January 31, 2025.

As of the Closing Date, the Company (i) issued 48,653,549 shares of its common stock in exchange for ACELYRIN issued and outstanding common stock shares and paid cash for fractional shares, (ii) assumed ACELYRIN’s stock options with an exercise price of $18.00 or less outstanding and unexercised immediately prior to the Closing Date, which are exercisable into 4,712,186 shares of the Company’s common stock, (iii) assumed ACELYRIN’s RSUs outstanding and unvested immediately prior to the Closing Date, which were converted into 1,323,905 of the Company’s RSUs, and (iv) assumed ACELYRIN’s performance RSUs outstanding and unvested immediately prior to the Closing Date, which were converted into 146,963 of the Company’s RSUs subject only to a service vesting condition.

Outstanding shares, stock options, RSUs and performance RSUs were exchanged at the exchange ratio of 0.4814 shares of the Company’s common stock for each share of ACELYRIN common stock (the “Exchange Ratio”). ACELYRIN’s outstanding and unexercised options with exercise prices more than $18.00 were cancelled. Exercise prices for the assumed options were determined as the product of the original exercise prices multiplied by the reciprocal of the Exchange Ratio. Converted ACELYRIN stock options and RSUs continue to vest in accordance with their original terms. Performance RSUs were deemed to have 100% satisfied their performance conditions and will vest in two equal installments on May 15 of calendar years 2026 and 2027, subject to the holder of the converted performance RSUs remaining in service with the Company or any of its subsidiaries on such date.

The preliminary purchase price consideration consists of the Company’s shares of common stock issued as of the Closing Date and the additional stock-based compensation related to the fair value of replacement awards attributable to pre-combination services, and is calculated as follows (in thousands, except share and per share data):

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​

​

​

Implied shares of common stock issued to holders of ACELYRIN common stock

​

​

48,653,549

Closing price per share of common stock as of Closing Date

​

$

4.78

Consideration transferred for share exchange

​

$

232,564

Fair value of replacement awards attributable to pre-combination services

​

$

5,513

Total preliminary purchase price consideration

​

$

238,077

​

The ACELYRIN Merger was accounted for as a business combination with the Company being treated as the accounting acquirer. Net assets acquired were recognized at their fair value as of the Closing Date of the ACELYRIN Merger. The Company recognized ACELYRIN Merger transaction costs of $(0.1) and $14.7 million in general and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2025, respectively.

The following table presents the preliminary purchase price allocation of the fair value of the net assets acquired and liabilities assumed as of the Closing Date (in thousands):

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​

​

​

Assets Acquired

 

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Cash and cash equivalents

​

$

49,155

Restricted cash

​

 

367

Marketable securities

​

 

333,436

Research and development prepaid expenses

​

 

958

Prepaid credit voucher for clinical manufacturing

​

​

11,376

Other prepaid expenses and current assets

​

 

8,081

Restricted cash, non-current

​

 

220

Property and equipment, net

​

 

420

Intangible assets

​

​

50,959

Operating lease right-of-use assets, net

​

 

4,349

Other assets, non-current

​

 

744

Total assets

​

$

460,065

Liabilities Assumed

​

 

  

Accounts payable

​

$

(6,518)

Research and development accrued expenses

​

 

(3,546)

Other accrued expenses and current liabilities

​

 

(5,688)

Operating lease liabilities, current

​

 

(1,390)

Operating lease liabilities, non-current

​

 

(6,238)

Deferred income tax liability

​

 

(10,701)

Total liabilities

​

 

(34,081)

Fair value of net assets

​

$

425,984

Purchase consideration

​

​

238,077

Gain on bargain purchase

​

$

187,907

​

Valuing certain components of the ACELYRIN Merger, primarily the acquired IPR&D intangible asset and a deferred income tax liability required the Company to make significant estimates that may be adjusted in the future; consequently, the purchase price allocation is considered preliminary. The preliminary fair value estimates of the net assets acquired are based upon preliminary calculations and valuations and are subject to change as the Company obtains additional information during the measurement period (up to one year from the Closing Date).

Intangible assets represent the IPR&D intangible asset related to the acquired lonigutamab product candidate in development as of the Closing Date. The preliminary fair value of the acquired IPR&D intangible asset was estimated at $51.0 million using the multi-period excess earnings method which is equal to the present value of the incremental after-tax cash flows attributable to that intangible asset, using a discount rate of 23.0% based on the best estimate of a market participant's after-tax weighted average cost of capital. Projected future cash flows were based on significant estimates, including estimated revenues, costs and probabilities of technical and regulatory milestones, among other factors. The acquired IPR&D intangible asset is an indefinite-life asset and will be tested for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may not be recoverable as ASC 350 Intangibles - Goodwill and Other also requires testing more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

The Company acquired a prepaid credit voucher for clinical manufacturing issued by one of ACELYRIN’s contract manufacturers that will be applied towards payments of clinical product manufacturing invoices issued by the vendor. The remaining balance of $11.4 million as of the Closing Date was not adjusted from its carrying amount as its fair value approximated its carrying value as of this date.

The Company acquired two operating leases and a sublease. Refer to Note 9 for additional details. The Company estimated the fair value of lease liabilities as the present value of the remaining lease payments, as if the acquired leases were new leases of the acquirer as of the Closing Date. The Company measured the right-of-use asset at the same amount as the lease liability as adjusted to reflect favorable or unfavorable terms of the lease when compared with market terms. As ACELYRIN entered into a sublease in February 2025, these sublease terms were considered at market terms. As of the Closing Date, the fair value of operating lease liabilities, current, increased by $0.2 million and the fair value of operating lease liabilities, non-current, increased by $0.5 million. As of the Closing Date, the fair value of operating lease right-of-use assets, net, decreased by $0.1 million.

Because the fair value of the identifiable assets acquired and liabilities assumed exceeded the fair value of the purchase consideration transferred, the Company recorded a gain on bargain purchase of $187.9 million as of the Closing Date. Consequently, the Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed in accordance with ASC 805-30-25-4 and concluded that all acquired assets and assumed liabilities were recognized and that the valuation procedures and resulting measures were appropriate. Gain on bargain purchase primarily relates to the market value of ACELYRIN’s common stock trading below the carrying value of net assets and the Exchange Ratio being fixed at the time when the Merger Agreement was signed and not adjusted for subsequent changes in the market price of the Company’s common stock. Gain on bargain purchase is recognized as other income in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company recognized a deferred tax liability of $10.7 million related to the acquired IPR&D intangible asset as of the Closing Date.

The Company also has additional severance related obligations under the Merger Agreement that are separate from the assets and liabilities acquired. In accordance with the ACELYRIN severance plan, ACELYRIN employees terminated without cause within 12 months of the Closing Date are entitled to receive severance benefits, including acceleration of their outstanding equity awards and extension of their outstanding options exercise periods of up to 12 months post-termination. The Company estimated total cash severance obligations, including related taxes, of $13.5 million, which it expects to pay within 12 months from the Closing Date based on agreed termination dates with employees. Severance obligation is recorded to expense over the remaining employment period for notified employees. The Company recognized $1.9 million as general and administrative expenses and $2.4 million as research and development expenses related to severance expenses for the three months ended September 30, 2025. The Company recognized $7.1 million as general and administrative expenses and $6.1 million as research and development expenses related to severance expenses for the nine months ended September 30, 2025. As of September 30, 2025, the severance liability of $1.4 million is classified as other accrued expenses and current liabilities in the unaudited condensed consolidated balance sheet. The Company estimated stock-based compensation expense of $13.1 million related to the accelerated vesting and exercise term modification for severed employees, which will be recognized during the year ending December 31, 2025. The Company recognized stock-based compensation expense of $1.0 million as general and administrative expenses and $1.1 million as research and

development expenses for the three months ended September 30, 2025. The Company recognized stock-based compensation expense of $8.8 million as general and administrative expenses and $4.1 million as research and development expenses for the nine months ended September 30, 2025.

Following the Closing Date, the operating results of ACELYRIN have been included in the unaudited condensed consolidated financial statements. For the period from May 22, 2025 through September 30, 2025, there was no revenue attributable to ACELYRIN, and operating losses attributable to ACELYRIN for such period were $14.2 million.

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The ACELYRIN Merger is intended to be a reorganization under Internal Revenue Code (“IRC”) Section 368(a). The Merger Agreement outlines the “plan of reorganization” within the meaning of the regulations issued under IRC Section 368(a) and the ACELYRIN Merger is intended to qualify as a tax-free reorganization for U.S. federal and state income tax purposes.

Unaudited Pro Forma Summary of Operations

The following table shows the unaudited pro forma summary of operations for the three and nine months ended September 30, 2025, and 2024, as if the ACELYRIN Merger had closed on January 1, 2024. The pro forma financial information is provided for comparative purposes only and is not necessarily indicative of what actual results would have been had the acquisition occurred as of January 1, 2024, nor does it give effect to synergies or any cost savings, and it is not indicative of what such results would be for any future period:

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​

​

​

​

​

​

​

​

​

​

​

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Three Months Ended September 30, 

​

Nine Months Ended September 30, 

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2025

​

2024

​

2025

    

2024

Total revenue

​

$

2,066

​

$

—

​

$

22,121

​

$

—

Net income (loss)

​

​

(104,452)

​

​

(141,667)

​

​

(380,973)

​

​

(222,102)

​

The summary pro forma financial information includes the following adjustments:

●actual acquisition-related transaction costs of $(0.1) million and $14.7 million were excluded from the three and nine months ended September 30, 2025 pro forma results, respectively, and zero and $14.7 million were included in the three and nine months ended September 30, 2024 pro forma results, respectively, as if these costs were incurred during the 2024 period;
●incremental stock-based compensation expense related to the accelerated vesting and exercise term modification of $2.1 million and $12.9 million were excluded from the three and nine months ended September 30, 2025 pro forma results, respectively, and less than $0.1 million and $13.1 million were included in the three and nine months ended September 30, 2024 pro forma results, respectively, as if these costs were incurred during the 2024 period;
●severance cash obligations for terminated ACELYRIN employees of $4.3 million and $13.2 million were excluded from the three and nine months ended September 30, 2025 pro forma results, respectively, and zero and $13.5 million were included in the three and nine months ended September 30, 2024 pro forma results, respectively, as if these costs were incurred during the 2024 period; and
●Gain on bargain purchase of zero and $187.9 million were excluded from the three and nine months ended September 30, 2025 pro forma results, respectively, and zero and $187.9 million were included in the three and nine months ended September 30, 2024 pro forma results, respectively, as if such gains were recognized during the 2024 period.