Acquisition

On December 29, 2017, the Company completed the Merger with Private SELLAS as discussed in Note 1. The Merger was accounted for as a reverse merger under the acquisition method of accounting, whereby Private SELLAS was considered to have acquired the Company for financial reporting purposes because, immediately upon completion of the Merger, Private SELLAS stockholders held a majority of the voting interest of the combined company.

The purchase consideration in a reverse acquisition is determined with reference to the value of equity that the accounting acquirer, in this case, Private SELLAS, would have had to issue to the owners of the accounting acquiree, the Company, to give the pre-acquisition equity holders of the Company the same percentage interest in Private SELLAS that such pre-acquisition equity holders held in the Company immediately following the Merger. The purchase price was calculated as follows (in thousands):



Fair value of the Company's pre-Merger shares outstanding	$	12,487
Estimated fair value of the Company's pre-Merger stock options outstanding	32
Total purchase price	$	12,519

The Merger transaction has been accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date.

The following table summarizes the allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date (in thousands):




Assets acquired:
Cash	$	1,812
Restricted cash	10,346
Prepaid expenses and other assets	3,103
Intangible assets	17,600
Goodwill	1,914
Total assets acquired	$	34,775
Liabilities assumed:
Accounts payable and accrued expenses	$	5,692
Litigation settlement	1,300
Long-term debt	10,988
Contingent purchase price consideration of Apthera, Inc.	1,294
Warrant liability	1,309
Deferred tax liability	1,673
Total liabilities assumed	$	22,256
Net assets acquired	$	12,519

Qualitative factors supporting the recognition of goodwill due to the Merger include the Company’s anticipated enhanced ability to secure additional capital and gain access to capital market opportunities as a public company. The goodwill is not deductible for income tax purposes.

The following summary pro forma consolidated financial information reflects the Merger with Galena as if it had occurred on January 1, 2017 for purposes of the statements of operations. This summary pro forma information is not necessarily representative of what the Company’s results of operations would have been had the Merger in fact occurred on January 1, 2017, and is not intended to project the Company’s results of operations for any future period.



	Year Ended December 31, 2017
Net loss (in thousands)	$	(24,089	)
Basic and diluted net loss per share	$	5.15

Non-recurring pro forma transaction costs directly attributable to the Merger were $5.7 million for the year ended December 31, 2017 and have been deducted from the net loss presented above. The costs deducted from the year ended December 31, 2017 period included a success fee and other transaction costs of $4.8 million and issued 119,672 shares of common stock with a fair value of $0.9 million as a fee to Equilibria Capital Management Limited (“Equilibria”). Additionally, the Company incurred approximately $1.9 million in severance costs as a result of resignations of executive officers immediately prior to the Merger. These costs are excluded from the pro forma financial information for the year ended December 31, 2017. The Company excluded a $5.2 million impairment charge incurred by the Company as well as combined transaction costs from Galena and the Company in the amount of $8.7 million from the pro forma financial information for the year ended December 31, 2017.