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Reverse Merger | 9 Months Ended
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Sep. 30, 2018
Business Combinations [Abstract] |
Reverse Merger | 2. REVERSE MERGER The consolidated financial statements account for the Arrangement between us and OncoGenex, whereby OncoGenex acquired all of our outstanding common shares, as a reverse merger wherein we are deemed to be the acquiring entity from an accounting perspective. The consolidated results of operations include the results of operations of the combined company for the three and nine months period ended September 30, 2018. The consolidated results of operations for the three and nine month periods ended September 30, 2017 include only our consolidated results of operations and the results of OncoGenex following the completion of the Arrangement on August 1, 2017. On August 1, 2017, our stockholders approved the Arrangement described above and on the same date, OncoGenex stockholders approved the Arrangement and a one-for-eleven reverse stock split of its common stock. The reverse stock split occurred immediately prior to the closing of the Arrangement. Resulting fractional shares were eliminated. Under the purchase method of accounting, OncoGenex’s outstanding shares of common stock were valued using the closing price on The Nasdaq Capital Market of $46.20 as at August 1, 2017. There were 273,670 shares of common stock outstanding on August 1, 2017, immediately prior to closing. The fair value of the OncoGenex outstanding stock options was determined using the Black-Scholes pricing model with the following assumptions: stock price of $46.20, volatility of 97.23% to 106.63%, risk-free interest rate of 1.31% to 1.54%, and expected lives ranging from 1.82 to 3.31 years. The fair value of the OncoGenex outstanding warrants was determined using the Black-Scholes pricing model with the following assumptions: stock price of $46.20, volatility of 90.33% to 106.08%, risk-free interest rate of 1.32% to 1.53%, and expected lives ranging from 1.91 to 3.24 years. The final purchase price is summarized as follows (dollars in thousands, except per share amounts):
Shares of the combined company to be owned by OncoGenex equity holders |  |  | 273,671 |
Multiplied by the price per share of OncoGenex stock |  | $ | 46.20 |
Value of shares of the combined company owned by OncoGenex equity holders |  | $ | 12,643 |
Fair value of options and warrants assumed |  | $ | 207 |
Fair value of contingent value rights assumed |  | $ | 200 |
Total purchase price |  | $ | 13,050 |
Under the purchase method of accounting, the total purchase price as shown in the table above is allocated to the OncoGenex net tangible and identifiable intangible assets acquired and liabilities assumed based on their fair values as of the date of the completion of the Arrangement. The final purchase price allocation is as follows (in thousands):
Cash, cash equivalents and marketable securities |  |  | 12,376 |
Prepaid expenses and other assets |  |  | 518 |
Intangible assets license agreements |  |  | 8,610 |
Accounts payable, accrued expenses and other liabilities |  |  | (4,054 | )
Deferred tax liability |  |  | (2,928 | )
Contingent value rights |  |  | (200 | )
Excess negative goodwill |  |  | (1,272 | )
Total purchase price |  |  | 13,050 |
In accordance with ASC 805, “Business Combinations,” any excess of fair value of acquired net assets over purchase price (negative goodwill) has been recognized as a gain in the period the Arrangement was completed. We have reassessed whether all acquired assets and assumed liabilities have been identified and recognized and performed remeasurements to verify that the consideration paid, assets acquired, and liabilities assumed have been properly valued. The remaining excess has been recognized as a gain. There was no other impact to other comprehensive income. OncoGenex issued contingent value rights, or each, a CVR and collectively, the CVRs, on July 31, 2017 to their existing stockholders as of July 27, 2017. One CVR was a non-transferable right to potentially receive certain cash, equity or other consideration received by us in the event that we received any such consideration during the five-year period after consummation of the Arrangement as a result of the achievement of certain clinical milestones, regulatory milestones, sales-based milestones and/or up-front payment milestones relating to apatorsen, or the Milestones, upon the terms and subject to the conditions set forth in a contingent value rights agreement to be entered into between us and an as of yet unidentified third party, as rights agent, or the CVR Agreement. The aggregate consideration to be distributed to the holders of the CVRs would have been equal to 80% of the consideration received by us as a result of the achievement of the Milestones less certain agreed to offsets, as determined pursuant to the CVR Agreement. The contingent value rights expired on August 17, 2017, as we did not enter into any term sheets or agreement with third parties for the development or commercialization of apatorsen. A recovery of $0.2 million was recognized on our Consolidated Statements of Loss and Comprehensive Loss in 2017. Pro Forma Results of Operations The results of operations of OncoGenex are included in our consolidated financial statements from the date of the completion of the transaction on August 1, 2017. The following table presents pro forma results of operations and gives effect to the business combination transaction as if the transaction was consummated at the beginning of the period presented. The unaudited pro forma results of operations are not necessarily indicative of what would have occurred had the business combination been completed at the beginning of the retrospective periods or of the results that may occur in the future.
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
Net loss applicable to common shareholders |  | $ | (3,240 | ) |  | $ | (9,730 | ) |  | $ | (9,050 | ) |  | $ | (10,100 | )
Net loss per share-basic and diluted |  | $ | (0.71 | ) |  | $ | (13.47 | ) |  | $ | (3.70 | ) |  | $ | (41.48 | )
Weighted average shares |  |  | 4,533,943 |  |  |  | 722,583 |  |  |  | 2,448,962 |  |  |  | 243,510 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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