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Business Acquisition (Tables)

12 Months Ended

Dec. 31, 2021

Summary of Fair Value of Purchase Price Consideration

The following table summarizes the fair value of the purchase price consideration to acquire Anelixis (in thousands):

Description	Amount
Fair value of purchase consideration:
Common shares issued (1)	$	1,194
Preferred shares issued (2)		69,723
Options assumed (3)		2,950
Warrants assumed (3)		12,944
Total purchase consideration	$	86,811

(1)

The fair value of common shares issued in the merger is based on 175,488 shares issued on the September 14, 2020, acquisition date at the closing price of the Company's common stock of $6.80 per share.

(2)

The fair value of preferred shares issued in the merger is based on the amount per share of Series X¹ preferred stock in the September 2020 Purchase Agreement.

(3)

The fair value of the options and warrants assumed and replaced in the merger is based on applying the Black-Scholes valuation method using appropriate inputs of volatility rates ranging from 82% to 83%, expected terms of 5.0 to 5.9 years and risk-free rates of 0.27% to 0.45%.

Summary of Preliminary Estimate of Fair Value of Assets Acquired and Liabilities Assumed

The following is an allocation of the purchase price as of the September 14, 2020 acquisition closing date based upon the estimated fair value of the assets acquired and the liabilities assumed by the Company in the acquisition (in thousands):

Description	Amount
Cash and cash equivalents	$	11,035
Prepaid expenses and other current assets		26
Other non-current assets		12
Accounts payable		(580	)
Accrued expenses and other liabilities		(206	)
Deferred tax liability		(4,510	)
Net identifiable assets acquired		5,777

Goodwill		48,648
Identifiable intangible assets		32,386
Net assets acquired	$	86,811

Schedule of Unaudited Pro Forma Combined Financial Information

The following unaudited pro forma combined financial information is presented to illustrate the estimated effects of the Merger based on the historical financial statements and accounting records of Eledon and Anelixis after giving effect to the Merger and the Merger-related pro forma adjustments.

The unaudited pro forma combined statement of operations for the years ended December 31, 2020 combine the historical statements of operations of Eledon and Anelixis, giving effect to the Merger as if it had occurred on January 1, 2020, the first day of the fiscal year ended December 31, 2020.

The unaudited pro forma combined financial information has been presented for informational purposes only. The unaudited pro forma combined financial information does not purport to represent the actual results of operations that Eledon and Anelixis would have achieved had the companies been combined during the periods presented in the unaudited pro forma combined financial statements and is not intended to project the future results of operations that the combined company may achieve after the Merger. The unaudited pro forma combined financial information does not reflect any potential cost savings that may be realized as a result of the Merger and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

Additionally, the unaudited pro forma combined financial information does not reflect any merger-related expenses incurred by the Company or pre-merger Anelixis, which totaled approximately $3.4 million and were removed from general and administrative expenses in the pro forma calculations below. The unaudited pro forma combined financial information also excludes certain other income and other expense items as part of the acquisition of Anelixis. For the year ended December 31, 2020, a gain of approximately $0.7 million due to the forgiveness of Anelixis debt was removed from pro

forma other income. Approximately $0.5 million excluded from pro forma other expenses for the years ended December 31, 2020, for interest expense related to notes that were converted into equity interest in the Company.

	Year Ended December 31,
	2020
Revenue	$	120

Operating expenses
Research and development		9,489
General and administrative		8,317
Restructuring expense		2,282
Total operating expenses		20,088
Loss from operations		(19,968	)
Other income (expense), net		79
Warrant inducement expense		(4,829	)
Loss before provision for income taxes		(24,718	)
Income tax benefit		404
Net loss and other comprehensive loss	$	(24,314	)
Net loss per share, basic and diluted	$	(15.44	)
Weighted-average shares outstanding, basic and diluted		1,574,657