XML 27 R11.htm IDEA: XBRL DOCUMENT
v3.19.1

Merger Accounting | 3 Months Ended
--- | ---
Mar. 31, 2019
Business Combinations [Abstract] |
Merger Accounting |
3. | Merger Accounting
Based on the Exchange Ratio of 0.5702, immediately following the Merger, former Arsanis stockholders, Arsanis option holders and other persons holding securities or other rights directly or indirectly convertible, exercisable or exchangeable for Arsanis common stock owned approximately 31.3% of the outstanding capital stock of the combined organization on a fully diluted basis, and former X4 stockholders, holders of options or warrants to acquire X4 capital stock and other persons holding securities and other rights directly or indirectly convertible, exercisable or exchangeable for X4 capital stock owned approximately 68.7% of the outstanding capital stock of the combined organization on a fully diluted basis. At the closing of the Merger, all shares of X4 common stock and X4 preferred stock then outstanding were exchanged for Arsanis common stock. In addition, pursuant to the terms of the Merger Agreement, the Company, for accounting purposes, assumed all outstanding stock options to purchase shares of Arsanis common stock at the closing of the Merger. At the closing of the Merger, such stock options became options to purchase an aggregate of 271,230 shares of the Company’s common stock after giving effect to the Reverse Stock Split. The total purchase price paid in the Merger has been allocated to the tangible and intangible assets acquired and liabilities assumed of Arsanis based on their fair values as of the completion of the Merger, with the excess allocated to goodwill. The following summarizes the preliminary estimate of the purchase price paid in the Merger:
Number of shares of the combined organization owned by Arsanis stockholders (1) |  |  | 2,440,582 |
Multiplied by the fair value per share of Arsanis common stock (2) |  | $ | 18.66 |
Fair value of consideration issued it effect the Merger |  | $ | 45,541 |
Fair value of replacement awards held by former employees, board of directors and consultants of Arsanis that were vested as of the Merger. |  | $ | 817 |
Purchase price: |  | $ | 46,358 |
(1) | The number of shares of 2,440,582 represents the historical 14,643,737 shares of Arsanis common stock outstanding immediately prior to the closing of the Merger, adjusted for the Reverse Stock Split.
(2) | Based on the last reported sale price of Arsanis common stock on the Nasdaq Global Market on March 13, 2019, the closing date of the Merger, and gives effect to the Reverse Stock Split.
The following summarizes the allocation of the purchase price to the net tangible and intangible assets acquired:
Cash and cash equivalents and restricted cash |  | $ | 26,406 |
Other current assets |  |  | 2,147 |
Property and equipment, net |  |  | 68 |
IPR&D indefinite-lived intangible assets |  |  | 4,900 |
Other assets, non-current |  |  | 879 |
Current liabilities |  |  | (5,221 | )
Loans payable |  |  | (8,713 | )
Other liabilities, non-current |  |  | (1,515 | )
Goodwill |  |  | 27,407 |
Purchase price |  | $ | 46,358 |
The goodwill of $27,407 is not tax deductible and represents the excess of the consideration paid over the fair value of assets acquired and liabilities assumed. Goodwill is mainly attributable to the enhanced value of the combined company, as reflected in the increase in market value of the Arsanis common shares following the announcement of the Merger with X4. The Company incurred costs directly related to the Merger of approximately $1 million for the three months ended March 31, 2019. The preliminary allocation of the purchase price for the Merger was based on estimates of the fair value of the net assets acquired and is subject to adjustment upon finalization of the valuation of the acquired intangible assets, property, plant and equipment, right-of-use assets, lease obligations, fair value of debt and any related deferred taxes. Measurements of these items inherently require significant estimates and assumptions. The following supplemental unaudited pro forma information presents the Company’s financial results as if the acquisition of Arsanis had occurred on January 1, 2018:
|  | Three Months Ended March 31, |
|  | 2019 |  |  | 2018 |
|  | (unaudited) |
Revenue |  | $ | 0 |  |  | $ | 0 |
Net loss |  | $ | (16,258 | ) |  | $ | (20,235 | )
The above unaudited pro forma information was determined based on the historical GAAP results of the Company and Arsanis. The unaudited pro forma consolidated results are not necessarily indicative of what the Company’s consolidated results of operations would have been if the acquisition was completed on January 1, 2018. The unaudited pro forma consolidated net loss includes pro forma adjustments primarily relating to the reclassification of transaction costs and severance payments directly related to the closing of the Merger of $2.7 million from the three months ended March 31, 2019 to the three months ended March 31, 2018.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: 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
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration