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Delaware
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2846
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| |
85-1710962
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(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification Number) |
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|
Large accelerated filer
☐
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| |
Accelerated filer
☒
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Non-accelerated filer
☐
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Smaller reporting company
☒
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Emerging growth company
☒
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| | | | | F-1 | | | |
| | | | | F-16 | | | |
| | | | | II-1 | | |
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WHO CAN VOTE?
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| | Each share of our common stock that you owned as of the close of business on September 14, 2020, the record date for the special meeting, which we refer to herein as the Record Date, entitles you to one vote on at least one matter to be voted upon at the special meeting. On the Record Date, there were shares of our common stock issued and outstanding, of which shares were entitled to vote on each matter. Accordingly, there are an aggregate of votes entitled to be cast on all proposals at the special meeting. | |
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HOW CAN I ATTEND THE MEETING?
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| | The special meeting will be a completely virtual meeting of stockholders, which will be conducted exclusively by webcast. You are entitled to participate in the special meeting only if you were a stockholder of Liquidia Technologies as of the close of business on the Record Date, or if you hold a valid proxy for the special meeting. No physical meeting will be held. | |
| | | | You will be able to attend the special meeting online and submit your questions during the meeting by visiting www.meetingcenter.io/287587626. You also will be able to vote your shares online by attending the special meeting by webcast. | |
| | | | To participate in the special meeting, you will need to review the information included on your proxy card or on the instructions that accompanied your proxy materials. The password for the meeting is LQDARGN2020. | |
| | | | If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below. | |
| | | | The online meeting will begin promptly at 4:30 p.m. Eastern Time. We encourage you to access the special meeting 15 minutes prior to the start time leaving ample time for the check in. Please follow the registration instructions as outlined in this proxy statement/prospectus. | |
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HOW DO I REGISTER TO ATTEND THE SPECIAL MEETING VIRTUALLY ON THE INTERNET?
|
| | If you are a registered stockholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the special meeting virtually on the Internet. Please follow the instructions on the proxy card that you received. | |
| | | | If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the special meeting virtually on the Internet. | |
| | | | To register to attend the special meeting online by webcast you must submit proof of your proxy power (legal proxy) reflecting your Liquidia Technologies holdings along with your name and email address to Computershare. Requests for registration must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on October 14, 2020. | |
| | | | You will receive a confirmation of your registration by email after Liquidia Technologies receives your registration materials. | |
| | | | Requests for registration should be directed to us at the following: | |
| | | | By email: | |
| | | | Forward the email from your broker, or attach an image of your legal proxy, to legalproxy@computershare.com; | |
| | | | By mail: | |
| | | |
Computershare
COMPANY Legal Proxy P.O. Box 43001 Providence, RI 02940-3001 |
|
| HOW DO I VOTE? | | | If your shares are registered directly in your name, you may vote: | |
| | | |
•
Over the Internet or by Telephone. If you are a registered stockholder (that is, if you hold your stock directly and not in street name), you may vote by telephone or over the Internet by following the instructions included in the proxy card by accessing the Internet at www.envisionreports.com/LQDA and following the instructions contained on that website. Stockholders with shares registered directly with us may vote (i) by telephone by dialing 1-800-652-8683 toll-free from the United States, U.S. territories and Canada or (ii) by Internet at www.envisionreports.com/LQDA and following the instructions contained on that website. Internet and telephone voting are available 24 hours a day. You must specify how you want your shares voted or your Internet or telephone vote cannot be completed and you will receive an error message. Your shares will be voted according to your instructions.
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|
| | | |
•
By Mail. You may vote by mail by signing, detaching and returning the bottom portion of the proxy card with the postage prepaid envelope addressed to Computershare, Inc. provided with the proxy materials. Your proxy will be voted according to your instructions. If you do not specify how you want your shares voted, they will be voted as recommended by our board of directors.
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|
| | | |
•
Virtually at the Special Meeting. If you virtually attend the special meeting, you may vote online during the special meeting. To vote at the special meeting, you must access www.meetingcenter.io/287587626 and will need the control number located on your proxy card or to follow the instructions that accompanied your proxy materials. We recommend that you log-in at least 15 minutes before the special meeting starts to ensure that you are logged in when the virtual meeting begins. Only our stockholders and persons holding proxies from our stockholders may
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|
| | | |
attend the special meeting. Please see “How Can I Attend the Meeting?” and “How Do I Register to Attend the Special Meeting Virtually on the Internet” above for more information.
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|
| | | | If your shares are held in “street name” (held for your account by a broker or other nominee) you may vote: | |
| | | |
•
Over the Internet or by Telephone. You will receive instructions from your broker or other nominee if you are permitted to vote over the Internet or by telephone.
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|
| | | |
•
By Mail. You will receive instructions from your broker or other nominee explaining how to cast your vote.
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|
| | | |
•
Virtually at the Special Meeting. Contact the broker or other nominee who holds your shares to obtain a broker’s proxy card. You will not be able to vote at the special meeting unless you have a proxy from your broker issued in your name giving you the right to vote the shares. Please see “How Can I Attend the Meeting?” and “How Do I Register to Attend the Special Meeting Virtually on the Internet” above for more information.
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|
| HOW CAN I CHANGE MY VOTE? | | | You may revoke your proxy and change your vote at any time before the special meeting. To do this, you must do one of the following: | |
| | | |
•
Vote over the Internet or by Telephone as instructed above. Only your latest Internet vote is counted.
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|
| | | |
•
Sign and date a new proxy and submit it as instructed above. Only your latest proxy vote is counted.
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|
| | | |
•
Virtually attend the special meeting and vote online by accessing www.meetingcenter.io/287587626. Virtually attending the special meeting will not revoke your proxy unless you specifically request it. Please see “How Can I Attend the Meeting?” and “How Do I Register to Attend the Special Meeting Virtually on the Internet” above for more information.
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|
WILL MY SHARES BE VOTED IF I DO NOT RETURN MY PROXY?
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| |
If your shares are registered directly in your name, your shares will not be voted if you do not vote over the Internet, by telephone or return your proxy, or virtually attend and vote at the special meeting. If you have misplaced your proxy, you may obtain another by accessing the Internet website at www.envisionreports.com/LQDA and following the instructions contained on that website.
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|
| | | | If your shares are held in “street name,” your brokerage firm, under certain circumstances, may vote your shares for you if you do not return your proxy. Brokerage firms have authority to vote customers’ unvoted shares on matters that the New York Stock Exchange, or NYSE, determines to be “routine.” If you do not give a proxy to your brokerage firm to vote your shares, your brokerage firm may either: vote your shares on routine matters, or leave your shares unvoted. Each of the proposals which you are being asked to vote on are not considered routine matters except for Proposal 4, the | |
| | | | effect as a vote “AGAINST” this proposal. If no vote is specified on the proxy and in the absence of directions to the contrary, the shares will be voted “FOR” the Merger Agreement and the Liquidia Merger. | |
| | | | Proposal 2 — Approval of the HoldCo 2020 Incentive Plan | |
| | | | To approve Proposal 2, if a quorum is present or represented by proxy at the special meeting, stockholders holding a majority of our common stock present or represented by proxy at the special meeting and entitled to vote on the matter must vote “FOR” the proposal, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal. If a stockholder votes to “ABSTAIN,” it has the same effect as a vote “AGAINST.” Broker non-votes will not be considered as votes cast “FOR” or “AGAINST” this proposal and will therefore have no effect on the outcome of the vote. If no vote is specified on the proxy and in the absence of directions to the contrary, the shares will be voted “FOR” the HoldCo 2020 Incentive Plan. | |
| | | | Proposal 3 — Approval of the HoldCo 2020 ESPP | |
| | | |
To approve Proposal 3, if a quorum is present or represented by proxy at the special meeting, stockholders holding a majority of our common stock present or represented by proxy at the special meeting and entitled to vote on the matter must vote “FOR” the proposal, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal. If a stockholder votes to “ABSTAIN,” it has the same effect as a vote “AGAINST.” Broker non-votes will not be considered as votes cast “FOR” or “AGAINST” this proposal and will therefore have no effect on the outcome of the vote. If no vote is specified on the proxy and in the absence of directions to the contrary, the shares will be voted “FOR” the HoldCo 2020 ESPP.
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|
| | | | Proposal 4 — Ratify the Appointment of PricewaterhouseCoopers LLP as HoldCo’s Independent Registered Public Accounting Firm for the Year Ending December 31, 2020 | |
| | | |
To approve Proposal 4, if a quorum is present or represented by proxy at the meeting, stockholders holding a majority of our common stock present or represented by proxy at the special meeting and entitled to vote on the matter must vote “FOR” the proposal, meaning that the votes cast by the stockholders “FOR” the approval of the proposal must exceed the number of votes cast “AGAINST” the approval of the proposal. If a stockholder votes to “ABSTAIN,” it has the same effect as a vote “AGAINST.” As Proposal 4 is a routine matter, broker non-votes will not occur with respect to this proposal. If no vote is specified on the proxy and in the absence of directions to the contrary, the shares will be voted “FOR” the ratification of the appointment of HoldCo’s independent auditor.
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| |
|
|
Date
|
| |
Liquidia Technologies
Common Stock |
| |
RareGen
Units |
| ||||||
June 29, 2020
|
| | | $ | 10.67 | | | | | | N/A | | |
September 3, 2020
|
| | | $ | 4.39 | | | | | | N/A | | |
| | |
Six Months Ended
June 30, |
| |
Increase
(Decrease) |
| ||||||||||||
| | |
2020
|
| |
2019
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | |
Net service revenue
|
| | | $ | 4,579 | | | | | $ | 3,392 | | | | | $ | 1,187 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | |
Litigation expense
|
| | | | 1,845 | | | | | | 1,773 | | | | | | 72 | | |
Payroll expense
|
| | | | 1,152 | | | | | | 1,615 | | | | | | (463) | | |
Contract support, general and administrative
|
| | | | 638 | | | | | | 681 | | | | | | (43) | | |
Management fee
|
| | | | 120 | | | | | | 180 | | | | | | (60) | | |
Research and development
|
| | | | 84 | | | | | | 9 | | | | | | 75 | | |
Total operating expenses
|
| | | | 3,839 | | | | | | 4,258 | | | | | | (419) | | |
Other income
|
| | | | 17 | | | | | | 3 | | | | | | 14 | | |
Net income (loss)
|
| | | $ | 757 | | | | | $ | (863) | | | | | $ | 1,620 | | |
| | |
Period Ended
December 31, |
| |
Increase
(Decrease) |
| ||||||||||||
| | |
2019
|
| |
2018
|
| ||||||||||||
| | |
(in thousands)
|
| |||||||||||||||
Statement of Operations Data: | | | | | | | | | | | | | | | | | | | |
Net service revenue
|
| | | $ | 10,088 | | | | | $ | — | | | | | $ | 10,088 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | |
Litigation expense
|
| | | | 5,312 | | | | | | — | | | | | | 5,312 | | |
Payroll expense
|
| | | | 2,945 | | | | | | 495 | | | | | | 2,450 | | |
Contract support, general and administrative
|
| | | | 1,114 | | | | | | 428 | | | | | | 686 | | |
Management fee
|
| | | | 300 | | | | | | 192 | | | | | | 108 | | |
Research and development
|
| | | | 30 | | | | | | — | | | | | | 30 | | |
Total operating expenses
|
| | | | 9,701 | | | | | | 1,115 | | | | | | 8,586 | | |
Other income
|
| | | | 23 | | | | | | — | | | | | | 23 | | |
Net income (loss)
|
| | | $ | 410 | | | | | $ | (1,115) | | | | | $ | 1,525 | | |
| | |
Six Months Ended
June 30, |
| |||||||||
| | |
2020
|
| |
2019
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Cash and cash equivalents, beginning of period
|
| | | $ | 3,563 | | | | | $ | 1,081 | | |
Net cash provided by operating activities
|
| | | | 5,161 | | | | | | 1,794 | | |
Net cash used in investing activities
|
| | | | (16) | | | | | | (25) | | |
Net cash provided by financing activities
|
| | | | — | | | | | | 2,200 | | |
Net increase in cash and cash equivalents
|
| | | $ | 5,145 | | | | | $ | 3,969 | | |
| | |
Period Ended
December 31, |
| |||||||||
| | |
2019
|
| |
2018
|
| ||||||
| | |
(in thousands)
|
| |||||||||
Cash and cash equivalents, beginning of period
|
| | | $ | 1,081 | | | | | $ | — | | |
Net cash provided by (used in) operating activities
|
| | | | 333 | | | | | | (894) | | |
Net cash used in investing activities
|
| | | | (50) | | | | | | (20,025) | | |
Net cash provided by financing activities
|
| | | | 2,200 | | | | | | 22,000 | | |
Net increase in cash and cash equivalents
|
| | | $ | 2,483 | | | | | $ | 1,081 | | |
| | |
Liquidia
Technologies |
| |
RareGen
|
| |
Transaction
Accounting Adjustments |
| |
Notes
|
| |
Pro Forma
Combined |
| ||||||||||||
Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 23,586,442 | | | | | $ | 8,708,522 | | | | | $ | (7,708,522) | | | |
A
|
| | | $ | 24,586,442 | | |
Accounts receivable, net
|
| | | | — | | | | | | 2,731,205 | | | | | | (2,731,205) | | | |
B
|
| | | | — | | |
Prepaid expenses and other current
assets |
| | | | 750,023 | | | | | | 46,325 | | | | | | — | | | | | | | | | 796,348 | | |
Total current assets
|
| | | | 24,336,465 | | | | | | 11,486,052 | | | | | | (10,439,727) | | | | | | | | | 25,382,790 | | |
Property and equipment, net
|
| | | | 7,976,411 | | | | | | 83,138 | | | | | | — | | | | | | | | | 8,059,549 | | |
Operating lease right-of-use assets
|
| | | | 2,743,600 | | | | | | — | | | | | | — | | | | | | | | | 2,743,600 | | |
Intangible assets, net
|
| | | | — | | | | | | — | | | | | | 14,185,000 | | | |
C
|
| | | | 14,185,000 | | |
Goodwill | | | | | — | | | | | | — | | | | | | 11,708,436 | | | |
C
|
| | | | 11,708,436 | | |
Other assets
|
| | | | 378,043 | | | | | | 14,669,131 | | | | | | (1,618,667) | | | |
C
|
| | | | 13,428,507 | | |
Total assets
|
| | | $ | 35,434,519 | | | | | $ | 26,238,321 | | | | | $ | 13,835,042 | | | | | | | | $ | 75,507,882 | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued expenses
|
| | | $ | 5,794,876 | | | | | $ | 1,904,838 | | | | | $ | 4,082,195 | | | |
D, F
|
| | | $ | 11,781,909 | | |
Lease liabilities, current portion
|
| | | | 1,950,916 | | | | | | — | | | | | | — | | | | | | | | | 1,950,916 | | |
Due to related party
|
| | | | — | | | | | | 82,195 | | | | | | (82,195) | | | |
D
|
| | | | — | | |
Contingent consideration liability
|
| | | | — | | | | | | — | | | | | | 4,265,000 | | | |
H
|
| | | | 4,265,000 | | |
Deferred income tax liability
|
| | | | — | | | | | | — | | | | | | 2,248,000 | | | |
G
|
| | | | 2,248,000 | | |
Current portion of long-term debt
|
| | | | 5,585,636 | | | | | | — | | | | | | — | | | | | | | | | 5,585,636 | | |
Total current liabilities
|
| | | | 13,331,428 | | | | | | 1,987,033 | | | | | | 10,513,000 | | | | | | | | | 25,831,461 | | |
Lease liabilities, noncurrent
|
| | | | 5,728,745 | | | | | | — | | | | | | — | | | | | | | | | 5,728,745 | | |
Long-term debt
|
| | | | 7,504,757 | | | | | | — | | | | | | — | | | | | | | | | 7,504,757 | | |
Total liabilities
|
| | | | 26,564,930 | | | | | | 1,987,033 | | | | | | 10,513,000 | | | | | | | | | 39,064,963 | | |
Stockholders’ Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Members’ equity
|
| | | | — | | | | | | 24,251,288 | | | | | | (24,251,288) | | | |
E
|
| | | | — | | |
Common stock
|
| | | | 28,374 | | | | | | — | | | | | | 6,167 | | | |
E
|
| | | | 34,541 | | |
Additional paid-in capital
|
| | | | 252,788,245 | | | | | | — | | | | | | 31,567,163 | | | |
E
|
| | | | 284,355,408 | | |
Accumulated deficit
|
| | | | (243,947,030) | | | | | | — | | | | | | (4,000,000) | | | |
F
|
| | | | (247,947,030) | | |
Total stockholders’ equity
|
| | | | 8,869,589 | | | | | | 24,251,288 | | | | | | 3,322,042 | | | | | | | | | 36,442,919 | | |
Total liabilities and stockholders’ equity
|
| | | $ | 35,434,519 | | | | | $ | 26,238,321 | | | | | $ | 13,835,042 | | | | | | | | $ | 75,507,882 | | |
| | |
Liquidia
Technologies |
| |
RareGen
|
| |
Transaction
Accounting Adjustments |
| |
Notes
|
| |
Pro Forma
Combined |
| ||||||||||||
Net service revenue
|
| | | $ | — | | | | | $ | 4,578,896 | | | | | $ | — | | | | | | | | $ | 4,578,896 | | |
Collaboration revenue
|
| | | | — | | | | | | — | | | | | | — | | | | | | | | | — | | |
Net service revenue
|
| | | | — | | | | | | 4,578,896 | | | | | | — | | | | | | | | | 4,578,896 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cost of service revenue
|
| | | | — | | | | | | 800,662 | | | | | | 1,552,000 | | | |
I
|
| | | | 2,352,662 | | |
Research and development
|
| | | | 19,313,342 | | | | | | 84,444 | | | | | | — | | | | | | | | | 19,397,786 | | |
General and administrative
|
| | | | 9,049,460 | | | | | | 2,953,818 | | | | | | (500,000) | | | |
F
|
| | | | 11,503,278 | | |
Total operating expenses
|
| | | | 28,362,802 | | | | | | 3,838,924 | | | | | | 1,052,000 | | | | | | | | | 33,253,726 | | |
(Loss) Income from operations
|
| | | | (28,362,802) | | | | | | 739,972 | | | | | | (1,052,000) | | | | | | | | | (28,674,830) | | |
Interest income
|
| | | | 121,220 | | | | | | 17,378 | | | | | | — | | | | | | | | | 138,598 | | |
Interest expense
|
| | | | (465,998) | | | | | | — | | | | | | — | | | | | | | | | (465,998) | | |
Net (loss) income
|
| | | $ | (28,707,580) | | | | | $ | 757,350 | | | | | $ | (1,052,000) | | | | | | | | $ | (29,002,230) | | |
Net loss per share, basic
|
| | | $ | (1.01) | | | | | | | | | | | | | | | | | | | | $ | (0.84) | | |
Net loss per share, diluted
|
| | | $ | (1.01) | | | | | | | | | | | | | | | | | | | | $ | (0.84) | | |
Weighted average common shares outstanding, basic
|
| | |
|
28,453,812
|
| | | | | | | | | |
|
6,166,666
|
| | |
E
|
| | |
|
34,620,478
|
| |
Weighted average common shares outstanding, diluted
|
| | |
|
28,453,812
|
| | | | | | | | | |
|
6,166,666
|
| | |
E
|
| | |
|
34,620,478
|
| |
| | |
Liquidia
Technologies |
| |
RareGen
|
| |
Transaction
Accounting Adjustments |
| |
Notes
|
| |
Pro Forma
Combined |
| ||||||||||||
Net service revenue
|
| | | $ | — | | | | | $ | 10,088,356 | | | | | $ | — | | | | | | | | $ | 10,088,356 | | |
Collaboration revenue
|
| | | | 8,072,120 | | | | | | — | | | | | | — | | | | | | | | | 8,072,120 | | |
Total revenue
|
| | | | 8,072,120 | | | | | | 10,088,356 | | | | | | — | | | | | | | | | 18,160,476 | | |
Operating expenses:
|
| | | | | | ||||||||||||||||||||||
Cost of revenue
|
| | | | 807,192 | | | | | | 2,211,124 | | | | | | 3,156,000 | | | |
I
|
| | | | 6,174,316 | | |
Research and development
|
| | | | 40,491,358 | | | | | | 30,627 | | | | | | — | | | | | | | | | 40,521,985 | | |
General and administrative
|
| | | | 13,597,119 | | | | | | 7,459,577 | | | | | | 4,500,000 | | | |
F
|
| | | | 25,556,696 | | |
Total operating expenses
|
| | | | 54,895,669 | | | | | | 9,701,328 | | | | | | 7,656,000 | | | | | | | | | 72,252,997 | | |
(Loss) Income from operations
|
| | | | (46,823,549) | | | | | | 387,028 | | | | | | (7,656,000) | | | | | | | | | (54,092,521) | | |
Interest income
|
| | | | 613,716 | | | | | | 22,799 | | | | | | — | | | | | | | | | 636,515 | | |
Interest expense
|
| | | | (1,373,622) | | | | | | (53) | | | | | | — | | | | | | | | | (1,373,675) | | |
Net (loss) income
|
| | | $ | (47,583,455) | | | | | $ | 409,774 | | | | | $ | (7,656,000) | | | | | | | | $ | (54,829,681) | | |
Net loss per share, basic
|
| | | $ | (2.57) | | | | | | | | | | | | | | | | | | | | $ | (2.22) | | |
Net loss per share, diluted
|
| | | $ | (2.57) | | | | | | | | | | | | | | | | | | | | $ | (2.22) | | |
Weighted average common shares outstanding, basic
|
| | | | 18,482,455 | | | | | | | | | | | | 6,166,666 | | | |
E
|
| | | | 24,649,121 | | |
Weighted average common shares outstanding, diluted
|
| | | | 18,482,455 | | | | | | | | | | | | 6,166,666 | | | |
E
|
| | | | 24,649,121 | | |
|
Number of shares of the combined company to be owned by RareGen’s members
|
| | | | 6,166,666 | | |
|
Multiplied by the fair value per share of Liquidia Technologies common stock
|
| | | $ | 5.12 | | |
|
Total estimated stock value
|
| | | $ | 31,573,330 | | |
|
Contingent consideration liability
|
| | | | 4,265,000 | | |
|
Total estimated purchase price
|
| | | $ | 35,838,330 | | |
| Cash | | | | $ | 1,000,000 | | |
|
Property and equipment
|
| | | | 83,138 | | |
|
Prepaid and other current assets
|
| | | | 48,789 | | |
|
Intangible asset
|
| | | | 14,185,000 | | |
|
Other assets
|
| | | | 13,048,000 | | |
| Goodwill | | | | | 11,708,436 | | |
|
Less current liabilities
|
| | | | (1,987,033) | | |
|
Less deferred tax liability
|
| | | | (2,248,000) | | |
|
Total estimated purchase price
|
| | | $ | 35,838,330 | | |
| | |
Before
Reclassification |
| |
Reclassification
Adjustments |
| |
Notes
|
| |
After
Reclassification |
| |||||||||
Net service revenue
|
| | | $ | 4,578,896 | | | | | $ | — | | | | | | | | $ | 4,578,896 | | |
Operating expenses: | | | | | | | | | | | | | | | | | | | | | | |
Cost of revenue
|
| | | | — | | | | | | 800,662 | | | |
(i)
|
| | | | 800,662 | | |
Litigation expense
|
| | | | 1,845,186 | | | | | | (1,845,186) | | | |
(ii)
|
| | | | — | | |
Payroll expense
|
| | | | 1,151,758 | | | | | | (1,151,758) | | | |
(i), (iii)
|
| | | | — | | |
Management fee
|
| | | | 120,000 | | | | | | (120,000) | | | |
(iv)
|
| | | | — | | |
Research and development
|
| | | | 84,444 | | | | | | — | | | | | | | | | 84,444 | | |
General and administrative
|
| | | | 637,536 | | | | | | 2,316,282 | | | |
(ii), (iii), (iv)
|
| | | | 2,953,818 | | |
Total operating expenses
|
| | | | 3,838,924 | | | | | | — | | | | | | | | | 3,838,924 | | |
(Loss) Income from operations
|
| | | | 739,972 | | | | | | — | | | | | | | | | 739,972 | | |
Interest income
|
| | | | 17,378 | | | | | | — | | | | | | | | | 17,378 | | |
Interest expense
|
| | | | — | | | | | | — | | | | | | | | | — | | |
Net (loss) income
|
| | | $ | 757,350 | | | | | $ | — | | | | | | | | $ | 757,350 | | |
| | |
Before
Reclassification |
| |
Reclassification
Adjustments |
| |
Notes
|
| |
After
Reclassification |
| |||||||||
Net service revenue
|
| | | $ | 10,088,356 | | | | | $ | — | | | | | | | | $ | 10,088,356 | | |
Operating expenses: | | | | | | |||||||||||||||||
Cost of revenue
|
| | | | — | | | | | | 2,211,124 | | | |
(i)
|
| | | | 2,211,124 | | |
Litigation expense
|
| | | | 5,312,357 | | | | | | (5,312,357) | | | |
(ii)
|
| | | | — | | |
Payroll expense
|
| | | | 2,944,705 | | | | | | (2,944,705) | | | |
(i), (iii)
|
| | | | — | | |
Management fee
|
| | | | 300,000 | | | | | | (300,000) | | | |
(iv)
|
| | | | — | | |
Research and development
|
| | | | 30,627 | | | | | | — | | | | | | | | | 30,627 | | |
General and administrative
|
| | | | 1,113,639 | | | | | | 6,345,938 | | | |
(ii), (iii), (iv)
|
| | | | 7,459,577 | | |
Total operating expenses
|
| | | | 9,701,328 | | | | | | — | | | | | | | | | 9,701,328 | | |
(Loss) Income from operations
|
| | | | 387,028 | | | | | | — | | | | | | | | | 387,028 | | |
Interest income
|
| | | | 22,799 | | | | | | — | | | | | | | | | 22,799 | | |
Interest expense
|
| | | | (53) | | | | | | — | | | | | | | | | (53) | | |
Net (loss) income
|
| | | $ | 409,774 | | | | | $ | — | | | | | | | | $ | 409,774 | | |
| | |
Year Ended
December 31, 2019 |
| |||||||||
| | |
As Previously
Presented |
| |
As Revised
|
| ||||||
Net loss per common share: Diluted
|
| | | $ | (2.59) | | | | | $ | (2.57) | | |
Diluted weighted average shares outstanding
|
| | | | 18,371,083 | | | | | | 18,482,455 | | |
Pro forma combined diluted weighted average shares outstanding
|
| | | | 24,537,749 | | | | | | 24,649,121 | | |
|
Date
Announced |
| |
Acquirer
|
| |
Target
|
| |
Transaction
Value ($ million) |
| |
TV/LTM
Revenue |
|
|
01/09/20
|
| | ANI Pharmaceuticals, Inc. | | | Amerigen Pharmaceuticals, Ltd. (US portfolio of 23 generic products) | | |
53
|
| |
1.4x
|
|
|
03/07/19
|
| | Shore Suven Pharma, Inc. | | | Aceto Corporation (generic business) | | |
15
|
| |
NA
|
|
|
01/29/19
|
| | Strides Pharma Science Limited | | | Vensun Pharmaceuticals, Inc. | | |
18
|
| |
1.1x
|
|
|
09/06/18
|
| | Aurobindo Pharma Limited | | | Sandoz Inc. (dermatology and oral solids portfolio) | | |
900
|
| |
0.8x
|
|
|
07/23/18
|
| | Mayne Pharma Group Limited | | | Spear Pharmaceuticals, Inc. (generic Efudex) | | |
20
|
| |
1.7x
|
|
|
Date
Announced |
| |
Acquirer
|
| |
Target
|
| |
Transaction
Value ($ million) |
| |
TV/LTM
Revenue |
|
|
05/07/18
|
| | Lannett Company, Inc. | | | Endo International plc (23 generic drugs) | | |
12
|
| |
0.1x
|
|
|
02/24/17
|
| | ANI Pharmaceuticals, Inc. | | | Cranford Pharmaceuticals, LLC (Inderal XL)/ Holmdel Pharmaceuticals LP (InnoPran XL) | | |
51
|
| |
2.2x
|
|
|
11/02/16
|
| | Aceto Corporation | | | Citron Pharma LLC/ Lucid Pharma, LLC (generic assets) | | |
429
|
| |
2.2x
|
|
|
10/05/16
|
| | Accord Healthcare Ltd. | | | Actavis Generics (UK and Ireland assets) | | |
769
|
| |
2.4x
|
|
|
06/28/16
|
| | Mayne Pharma Group Limited | | | Teva Pharmaceutical Industries Ltd. (US generic product portfolio) | | |
652
|
| |
2.8x
|
|
|
06/21/16
|
| | Impax Laboratories | | | Teva Pharmaceutical Industries Ltd. (portfolio) | | |
586
|
| |
3.9x
|
|
|
05/13/16
|
| | Mylan N.V. | | | Renaissance Pharma Inc. (non-sterile, topicals business) | | |
1,000
|
| |
2.7x
|
|
|
03/11/16
|
| | ANI Pharmaceuticals, Inc. | | | Cranford Pharmaceuticals, LLC (Inderal LA) | | |
60
|
| |
2.0x
|
|
|
12/17/15
|
| | Perrigo Company plc | | | Matawan Pharmaceuticals, LLC (generic Retin-A) | | |
415
|
| |
6.7x
|
|
|
5/21/15
|
| | Strides Pharma Science Limited | | | Aspen Pharmacare Holdings Limited (Australian generic assets) | | |
300
|
| |
3.2x
|
|
|
09/10/14
|
| | Mylan N.V. | | | Aspen Pharmacare Holdings Limited (Aritxtra injection US rights) | | |
300
|
| |
2.6x
|
|
|
07/14/14
|
| | Mylan N.V. | | | Abbott Laboratories (non-US developed markets generics) | | |
5,271
|
| |
2.8x
|
|
Financial Metrics
|
| |
Implied RareGen
Equity Value |
|
LTM (3/30/20) RareGen/Sandoz Net Sales
|
| |
$27.0 – $69.0 million
|
|
LTM (3/20/20) Adjusted Net Sales
|
| |
$22.0 – $55.0 million
|
|
| | |
Implied RareGen
Equity Value |
|
Liquidia Technologies case (no synergies)
|
| |
$26.0 – $56.0 million
|
|
Liquidia Technologies case (with synergies)
|
| |
$36.0 – $66.0 million
|
|
(in millions, except for percentages)
|
| |
Implied Equity
Value – Liquidia Technologies |
| |
Implied Equity
Value – RareGen |
| |
Implied Relative
Value Range – Liquidia Technologies |
| |
Implied Relative
Value Range – RareGen |
|
Precedent Transaction Analysis – RareGen LTM 3/31/20 Revenue Multiple | | |
$238.2 – $268.1
|
| |
$27.5 – $68.7
|
| |
77.6% – 90.7%
|
| |
9.3% – 22.4%
|
|
Precedent Transaction Analysis – RareGen LTM 3/31/20 Adjusted Revenue Multiple | | |
$238.2 – $268.1
|
| |
$22.0 – $55.0
|
| |
81.2% – 92.4%
|
| |
7.6% – 18.8%
|
|
Discounted Cash Flow Analysis – No Synergies | | |
$238.2 – $268.1
|
| |
$25.9 – $56.1
|
| |
80.9% – 91.2%
|
| |
8.8% – 19.1%
|
|
Discounted Cash Flow Analysis – With Synergies | | |
$238.2 – $268.1
|
| |
$35.7 – $66.3
|
| |
78.2% – 88.2%
|
| |
11.8% – 21.8%
|
|
| | |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| |
2031
|
| |
2032
|
| |
2033
|
| |
2034
|
| |
2035
|
| |
2036
|
| |
2037
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue
|
| | | | — | | | | | | 1.3 | | | | | | 37.0 | | | | | | 97.2 | | | | | | 163.4 | | | | | | 228.8 | | | | | | 282.7 | | | | | | 318.2 | | | | | | 339.8 | | | | | | 357.2 | | | | | | 375.2 | | | | | | 360.8 | | | | | | 317.2 | | | | | | 271.6 | | | | | | 224.1 | | | | | | 174.7 | | | | | | 123.1 | | | | | | 69.4 | | |
EBIT
|
| | | | (45.4) | | | | | | (80.5) | | | | | | (71.5) | | | | | | (19.3) | | | | | | 54.3 | | | | | | 109.9 | | | | | | 157.3 | | | | | | 190.0 | | | | | | 211.4 | | | | | | 224.5 | | | | | | 238.1 | | | | | | 236.1 | | | | | | 203.7 | | | | | | 164.6 | | | | | | 120.6 | | | | | | 73.0 | | | | | | 22.2 | | | | | | (31.6) | | |
Net Operating Profit (after tax)
|
| | | | (45.4) | | | | | | (80.5) | | | | | | (71.5) | | | | | | (19.3) | | | | | | 40.8 | | | | | | 82.4 | | | | | | 118.0 | | | | | | 142.5 | | | | | | 158.5 | | | | | | 168.4 | | | | | | 178.6 | | | | | | 177.0 | | | | | | 152.8 | | | | | | 123.4 | | | | | | 90.4 | | | | | | 54.8 | | | | | | 16.7 | | | | | | (31.6) | | |
| | |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| |
2031
|
| |
2032
|
| |
2033
|
| |
2034
|
| |
2035
|
| |
2036
|
| |
2037
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue
|
| | | | — | | | | | | — | | | | | | 1.3 | | | | | | 25.1 | | | | | | 66.1 | | | | | | 111.0 | | | | | | 155.1 | | | | | | 191.6 | | | | | | 215.6 | | | | | | 230.3 | | | | | | 242.1 | | | | | | 254.3 | | | | | | 244.5 | | | | | | 214.9 | | | | | | 184.1 | | | | | | 151.9 | | | | | | 118.4 | | | | | | 83.4 | | |
EBIT
|
| | | | (40.0) | | | | | | (46.1) | | | | | | (54.8) | | | | | | (47.8) | | | | | | (4.2) | | | | | | 31.8 | | | | | | 67.9 | | | | | | 101.7 | | | | | | 123.4 | | | | | | 134.4 | | | | | | 143.1 | | | | | | 159.8 | | | | | | 154.8 | | | | | | 130.8 | | | | | | 104.2 | | | | | | 75.4 | | | | | | 44.4 | | | | | | 11.1 | | |
Net Operating Profit (after tax)
|
| | | | (40.0) | | | | | | (46.1) | | | | | | (54.8) | | | | | | (47.8) | | | | | | (4.2) | | | | | | 23.9 | | | | | | 51.0 | | | | | | 76.2 | | | | | | 92.6 | | | | | | 100.8 | | | | | | 107.3 | | | | | | 119.9 | | | | | | 116.1 | | | | | | 98.1 | | | | | | 78.2 | | | | | | 56.5 | | | | | | 33.3 | | | | | | 8.3 | | |
| | |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| |
2031
|
| |
2032
|
| |
2033
|
| |
2034
|
| |
2035
|
| |
2036
|
| |
2037
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unlevered FCF
|
| | | | (47.1) | | | | | | (82.1) | | | | | | (76.1) | | | | | | (27.0) | | | | | | 32.4 | | | | | | 73.6 | | | | | | 109.7 | | | | | | 135.8 | | | | | | 153.0 | | | | | | 163.1 | | | | | | 173.0 | | | | | | 174.9 | | | | | | 154.0 | | | | | | 125.3 | | | | | | 92.9 | | | | | | 58.0 | | | | | | 20.1 | | | | | | — | | |
| | |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |
2025
|
| |
2026
|
| |
2027
|
| |
2028
|
| |
2029
|
| |
2030
|
| |
2031
|
| |
2032
|
| |
2033
|
| |
2034
|
| |
2035
|
| |
2036
|
| |
2037
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Unlevered FCF
|
| | | | (41.6) | | | | | | (47.6) | | | | | | (56.0) | | | | | | (51.9) | | | | | | (10.0) | | | | | | 17.7 | | | | | | 44.8 | | | | | | 70.7 | | | | | | 88.0 | | | | | | 97.1 | | | | | | 103.7 | | | | | | 116.1 | | | | | | 114.6 | | | | | | 98.9 | | | | | | 79.4 | | | | | | 58.1 | | | | | | 35.0 | | | | | | 10.1 | | |
| | |
Fiscal Year Ending December 31,
|
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |||||||||||||||
RareGen/Sandoz Net Sales(1)
|
| | | $ | 35.0 | | | | | $ | 47.3 | | | | | $ | 48.1 | | | | | $ | 45.5 | | | | | $ | 36.8 | | |
Adjusted Net Sales(2)
|
| | | | 26.2 | | | | | | 23.6 | | | | | | 24.1 | | | | | | 22.8 | | | | | | 18.4 | | |
EBIT
|
| | | | 16.4 | | | | | | 15.1 | | | | | | 15.2 | | | | | | 17.0 | | | | | | 12.3 | | |
Net Operating Profit (after tax)(3)
|
| | | $ | 12.3 | | | | | $ | 11.3 | | | | | $ | 11.4 | | | | | $ | 12.7 | | | | | $ | 9.2 | | |
| | |
Fiscal Year Ending December 31,
|
| |||||||||||||||||||||||||||
| | |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |||||||||||||||
RareGen/Sandoz Net Sales(1)
|
| | | $ | 16.2 | | | | | $ | 18.4 | | | | | $ | 19.6 | | | | | $ | 23.1 | | | | | $ | 26.4 | | |
Adjusted Net Sales(2)
|
| | | | 13.0 | | | | | | 13.2 | | | | | | 9.8 | | | | | | 11.5 | | | | | | 13.2 | | |
EBIT | | | | | 5.8 | | | | | | 6.4 | | | | | | 3.7 | | | | | | 8.3 | | | | | | 8.6 | | |
Net Operating Profit (after tax)(3)
|
| | | $ | 4.3 | | | | | $ | 4.8 | | | | | $ | 2.8 | | | | | $ | 6.2 | | | | | $ | 6.5 | | |
Unlevered Free Cash Flows ($ in millions)
|
| |
2020
|
| |
2021
|
| |
2022
|
| |
2023
|
| |
2024
|
| |||||||||||||||
RareGen Management Forecasts
|
| | | $ | 10.5 | | | | | $ | 9.7 | | | | | $ | 10.9 | | | | | $ | 12.6 | | | | | $ | 9.7 | | |
Our RareGen Forecasts
|
| | | $ | 4.4 | | | | | $ | 4.2 | | | | | $ | 2.2 | | | | | $ | 5.4 | | | | | $ | 5.7 | | |
Plan Category
|
| |
Number of securities
to be issued upon exercise of outstanding options, warrants and rights |
| |
Weighted-average
exercise price of outstanding options, warrants and rights(1) |
| |
Number of securities
remaining available for future issuance under equity compensation plans |
| |||||||||
Equity compensation plans approved by security holders
|
| | | | 2,772,784(2) | | | | | $ | 8.18 | | | | | | 1,621,415 | | |
Equity compensation plans not approved by security holders
|
| | | | — | | | | | $ | — | | | | | | — | | |
Total
|
| | | | 2,772,784(2) | | | | | $ | 8.18 | | | | | | 1,621,415 | | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
Neal F. Fowler | | |
58
|
| | Mr. Fowler has been our Chief Executive Officer and a member of our board of directors since March 2008 and HoldCo’s Chief Executive Officer and a member of HoldCo’s board of directors since its formation in June 2020. Mr. Fowler also served as chief executive officer of Envisia Therapeutics, Inc., a biotechnology company and former subsidiary of our company, or Envisia, from November 2013 until March 2015, and as a director of Envisia from November 2013 until November 2017. | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
| | | | | | Mr. Fowler served as a director of Aralez Pharmaceuticals, Inc. (Nasdaq: ARLZ) from June 2010 until August 2018. From June 2006 to March 2008, Mr. Fowler served as president of Centocor, Inc., a subsidiary of Johnson & Johnson, which focused on the development and commercialization of industry leading biomedicines used to treat chronic inflammatory diseases. From July 2004 to June 2006, Mr. Fowler was the president of Ortho McNeil Neurologics, Inc., a company focused exclusively on providing solutions that improve neurological health, and from October 2001 to July 2004, he was the vice president of the central nervous system business of Ortho McNeil Janssen Pharmaceuticals, Inc. From June 1988 to October 2001, Mr. Fowler held a variety of sales, marketing and business development roles at Eli Lilly and Company in the pharmaceutical and medical device divisions. Mr. Fowler graduated from the University of North Carolina — Chapel Hill, or UNC, with a Bachelor of Science in Pharmacy and holds a Master of Business Administration from UNC. We believe Mr. Fowler is qualified to serve on the HoldCo board of directors due to his extensive and broad range of experience in business and healthcare product development, including previous experience growing companies in the pharmaceutical industry. | |
Arthur Kirsch | | |
68
|
| | Mr. Kirsch has been a member of our board of directors since September 2016, the Chairperson of our Audit Committee since its formation in August 2016 and a member of our Compensation Committee since May 2019. Additionally, Mr. Kirsch has been a member of the HoldCo board of directors, the Chairperson of HoldCo’s Audit Committee and a member of HoldCo’s Compensation Committee since HoldCo’s formation in June 2020. From May 2004 until February 2016, Mr. Kirsch served as a director of POZEN Inc. (Nasdaq: POZN). Mr. Kirsch served as a director of Aralez Pharmaceuticals, Inc. (Nasdaq: ARLZ) from February 2016 until May 2019. Mr. Kirsch is currently a director of Kadmon Corporation (NYSE: KDMN), a position he has served in since May 2019. From August 2015 until October 2016, Mr. Kirsch served as a director of Immunomedics, Inc. (Nasdaq: IMMU). From June 2005 until April 2020, Mr. Kirsch served as the managing director and senior advisor, as well as global head of medical devices and diagnostics, of GCA Global, LLC, a global investment banking firm. From May 1994 to May 2004, he served as executive vice president, head of research at Vector Securities, LLC, a brokerage firm. From February 1990 to May 1993, Mr. Kirsch served as president of Natwest Securities Limited, a brokerage firm. From June 1979 to February 1990, Mr. Kirsch worked at Drexel Burnham Lambert, Inc., an investment banking firm, where he held the position of executive vice president, head of equity division. Mr. Kirsch graduated from the University of Rhode Island with a Bachelor of Science and also holds a Master of Business Administration from Baruch College. We believe Mr. Kirsch is qualified to serve on the HoldCo board of directors due to his business and financial expertise and his experience serving on the boards of directors of several public pharmaceutical and life sciences companies. | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
Paul B. Manning | | |
64
|
| | As a condition to closing the Merger Transaction, pursuant to the Merger Agreement and PBM/PD Cooperation Agreement, Mr. Manning will be appointed as a member of the HoldCo board of directors and the HoldCo Nominating and Corporate Governance Committee effective upon closing of the Merger Transaction. Since 2010, Mr. Manning has served as the Chairman and Chief Executive Officer of PBM Capital Group, a private equity investment firm in the business of investing in healthcare and life-science related companies, which he founded. Prior to that, Mr. Manning founded PBM Products in 1997, a producer of infant formula and baby food, which was sold to Perrigo Corporation in 2010. Mr. Manning has served as a director of Verrica Pharmaceuticals, Inc. (Nasdaq: VRCA) since December 2015. Within the past five years, Mr. Manning previously served on the board of directors of Dova Pharmaceuticals, Inc. and AveXis, Inc. Mr. Manning has also served as a director of RareGen since August 2018 and also serves as a director of other private companies. Mr. Manning received a B.S. in microbiology from the University of Massachusetts. We believe that Mr. Manning is qualified to serve on the HoldCo board of directors based upon his over 30 years of managerial and operational experience in the healthcare industry and as an investor in healthcare related companies. | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
Dr. Stephen Bloch | | |
58
|
| | Dr. Bloch has been the Chairperson of our board of directors since October 2018 and has been a member of our board of directors since July 2009, a member of our Audit Committee since its formation in August 2016 and the Chairperson of our Compensation Committee since its formation in August 2016. Additionally, Dr. Bloch has been a member and Chairperson of the HoldCo board of directors, a member of HoldCo’s Audit Committee and the Chairperson of HoldCo’s Compensation Committee since HoldCo’s formation in June 2020. Dr. Bloch is currently a director of a number of private life sciences companies and served as a director of Marinus Pharmaceuticals, Inc. (Nasdaq: MRNS) from September 2005 until April 2016. Dr. Bloch has been a general partner at Canaan Partners, a global venture capital firm, since November 2007. From August 2003 to November 2007, Dr. Bloch was a principal at Canaan Partners. From January 1995 to June 2002, Dr. Bloch was the founder and chief executive officer of Radiology Management Sciences, LLC, a specialty medical management company. Dr. Bloch graduated from Dartmouth College with a Bachelor of Arts. Dr. Bloch also holds a Doctor of Medicine from the University of Rochester and a Master of Arts in the History of Science and Public Policy from Harvard University. We believe Dr. Bloch is qualified to serve on the HoldCo board of directors due to his financial expertise, experience as a venture capitalist and his experience of serving on the board of directors for several public and private pharmaceutical and life sciences companies. | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
Dr. Joanna Horobin | | |
65
|
| | Dr. Horobin has been a member of our board of directors since September 2019, a member of our Compensation Committee since October 2019 and a member of our Research and Development Committee since September 2019. Additionally, Dr. Horobin has been a member of HoldCo’s board of directors, a member of HoldCo’s Compensation Committee and a member of HoldCo’s Research and Development Committee since HoldCo’s formation in June 2020. Dr. Horobin served as the Senior Vice President and Chief Medical Officer of Idera Pharmaceuticals, Inc., a clinical-stage biopharmaceutical company focused on the clinical development, and ultimately the commercialization, of drug candidates for both oncology and rare disease indications (“Idera”) (Nasdaq: IDRA), from November 2015 until July 2019. Prior to joining Idera, Dr. Horobin served as the Chief Medical Officer of Verastem, Inc., or Verastem, (Nasdaq: VSTM), a biopharmaceutical company focused on developing and commercializing medicines to improve the survival and quality of life of cancer patients, from September 2012 to July 2015. Prior to joining Verastem, she served as President of Syndax Pharmaceuticals, Inc. (Nasdaq: SNDX), a clinical-stage biopharmaceutical company developing an innovative pipeline of cancer therapies, from September 2006 to September 2012 and as Chief Executive Officer from September 2006 until April 2012. Prior to that, Dr. Horobin held several roles of increasing responsibility at global pharmaceutical corporations such as Rhône-Poulenc Rorer (now Sanofi) and Chugai-Rhône-Poulenc. Dr. Horobin received her medical degree from the University of Manchester, England. Dr. Horobin currently serves on the boards of Kymera Therapeutics and Nordic Nanovector ASA. We believe Dr. Horobin is qualified to serve on the HoldCo board of directors due to her extensive industry experience and knowledge in drug development and commercialization. | |
Roger A. Jeffs, Ph.D. | | |
58
|
| | As a condition to closing the Merger Transaction, pursuant to the Merger Agreement and the Serendipity Cooperation Agreement, Dr. Jeffs will be appointed as a member of the HoldCo board of directors and the HoldCo Compensation Committee effective upon closing of the Merger Transaction. Dr. Jeffs is currently the Co-Founder and Vice Chairman of Kriya Therapeutics, a gene therapy company, where he has served since October 2019. Dr. Jeffs was previously at United Therapeutics Corporation, a biotechnology company, where he worked for 18 years until 2016. Dr. Jeffs joined United Therapeutics Corporation during its inception phase in 1998 as Director of Research, Development, and Medical and served as its President and Chief Operating Officer from 2001 to 2014, and President and co-CEO from 2015-2016, and was a member of the board of directors from 2001 through 2016. While at United Therapeutics, Dr. Jeffs helped lead the initial public offering, oversaw the clinical development and regulatory approval of six products for rare diseases, and managed the commercial effort that led to a consistent >20% CAGR and $1.5 billion revenue run rate. United Therapeutics was consistently recognized as one of the fastest growing companies and best places to work during his tenure. Dr. Jeffs previously held positions at Amgen, Inc., a biopharmaceutical company, and Burroughs Wellcome Co., a pharmaceutical company, where he held roles in clinical development. Dr. Jeffs currently serves on the board of directors of Axsome Therapeutics, Inc. (Nasdaq: AXSM) and Albireo Pharma, Inc. (Nasdaq: ALBO) and previously served, within the last | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
| | | | | | five years, on the board of directors of Axovant Gene Therapies (Nasdaq: AXGT), Dova Pharmaceuticals, Sangamo Therapeutics (Nasdaq: SGMO) and United Therapeutics (Nasdaq: UTHR). Dr. Jeffs has also served as a director of RareGen since August 2018 and also serves as a director of other private companies. Dr. Jeffs holds an undergraduate degree in chemistry from Duke University and a Ph.D. in pharmacology from the University of North Carolina School of Medicine. We believe Dr. Jeffs’ scientific background and business experience, coupled with his experience as a chief executive officer of a publicly-traded biotechnology company, provide him with the qualifications and skills to serve on the HoldCo board of directors. | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
Katherine Rielly-Gauvin | | |
57
|
| | Ms. Rielly-Gauvin has been a member of our board of directors since October 2019 and a member of our Nominating and Corporate Governance Committee and Research and Development Committee since October 2019. Additionally, Ms. Rielly-Gauvin has been a member of the HoldCo board of directors and a member of HoldCo’s Nominating and Corporate Governance Committee and Research and Development Committee since HoldCo’s formation in June 2020. Ms. Rielly-Gauvin has served as the Vice President of Global Commercial Development of AbbVie Inc. (NYSE: ABBV), or AbbVie, a pharmaceutical research and development company, since January 2013. At AbbVie, Ms. Rielly-Gauvin is responsible for developing the strategic commercial direction of key compounds in AbbVie’s pipeline across core therapeutic areas in Immunology, Oncology, Neuroscience and Specialty. Prior to joining AbbVie, Ms. Rielly-Gauvin worked in the Johnson & Johnson family of companies across a variety of roles in commercial, medical affairs and research capacities, including Vice President and General Manager for the Janssen Commercial CNS organization. Ms. Rielly-Gauvin holds a Bachelor of Science degree in Chemistry from Simmons College and an MBA in Economics from Rutgers University. We believe Ms. Rielly-Gauvin is qualified to serve on the HoldCo board of directors due to her extensive industry experience and knowledge in drug development and commercialization. | |
Dr. Seth Rudnick | | |
71
|
| | Dr. Rudnick has been a member of our board of directors since March 2008, a member of our Compensation Committee since its formation in August 2016, a member of our Nominating and Corporate Governance Committee since its formation in July 2018 and the Vice Chairperson of our Research and Development Committee since its formation in May 2017. Additionally, Dr. Rudnick has been a member of the HoldCo board of directors, Compensation Committee and Nominating and Corporate Governance Committee and Vice Chairperson of HoldCo’s Research and Development Committee since HoldCo’s formation in June 2020. Dr. Rudnick served as the Chairperson | |
Name
|
| |
Age
|
| |
Principal Occupation and Business Experience
|
|
| | | | | | of our board of directors from March 2008 until October 2018. Dr. Rudnick is currently a director of G1 Therapeutics, Inc. (Nasdaq: GTHX) and served as a director of Aralez Pharmaceuticals, Inc. (Nasdaq: ARLZ) from June 2011 until August 2018. Dr. Rudnick previously served as a partner at Canaan Partners, a global venture capital firm, from January 1998 to December 2013. From January 1991 to January 1998, Dr. Rudnick was the chief executive officer and chairman of CytoTherapeutics, Inc., a biotechnology company focused on the discovery, development and commercialization of stem cell-based therapies. From July 1986 to January 1991, Dr. Rudnick worked at Ortho Biotech, Inc., a subsidiary of Johnson & Johnson, where he served as vice president, head of research and development. Dr. Rudnick also previously held directorships at Square 1 Bank, LQ3 Pharmaceuticals, Inc. and Spine Wave, Inc. Dr. Rudnick graduated from the University of Pennsylvania with a Bachelor of Arts in History. He also holds a Doctor of Medicine from the University of Virginia and a Diplomate in the Specialty of Internal Medicine from the American Board of Internal Medicine. We believe Dr. Rudnick is qualified to serve on the HoldCo board of directors due to his industry experience, experience as a venture capitalist and senior executive and his experience of serving on the board of directors for several public and private pharmaceutical and life sciences companies. | |
Raman Singh | | |
49
|
| | Mr. Singh has been a member of our board of directors since February 2018, a member of our Audit Committee since July 2018 and a member of our Nominating and Corporate Governance Committee since its formation in July 2018. Additionally, Mr. Singh has been a member of the HoldCo board of directors, Audit Committee and Nominating and Corporate Governance Committee since HoldCo’s formation in June 2020. Since October 2011, Mr. Singh has served as the chief executive officer of Mundipharma Pte Limited, which is part of a network of independent associated companies active in the fields of analgesia, oncology, ophthalmology, respiratory, specialty care and consumer health. Mr. Singh graduated from Osmania University with a Bachelors in Mechanical Engineering in 1992. He also holds Masters in International Management from Thunderbird School of Global Management and in Business Administration from Assumption University. We believe Mr. Singh is qualified to serve on the HoldCo board of directors due to his vast industry experience and knowledge as well as his business experience. | |
| | |
Member
Annual Fee ($) |
| |
Chairperson
Additional Annual Fee ($) |
| ||||||
Board of Directors
|
| | | | 35,000 | | | | | | 25,000 | | |
Audit Committee
|
| | | | 7,500 | | | | | | 15,000 | | |
Compensation Committee
|
| | | | 5,000 | | | | | | 10,000 | | |
Nominating and Corporate Governance Committee
|
| | | | 3,750 | | | | | | 7,500 | | |
Name
|
| |
Age
|
| |
Position
|
| |||
Neal F. Fowler | | | | | 58 | | | | Chief Executive Officer and Director | |
Steven Bariahtaris | | | | | 56 | | | | Interim Chief Financial Officer | |
Robert A. Lippe | | | | | 55 | | | | Chief Operations Officer | |
Tushar Shah, M.D. | | | | | 60 | | | | Chief Medical Officer and Head of Research and Development | |
Dr. Benjamin Maynor | | | | | 46 | | | |
Senior Vice President, Research and Development
|
|
Jeri Thomas | | | | | 59 | | | | Senior Vice President, Commercial | |
Scott Moomaw | | | | | 50 | | | | Senior Vice President, Commercial | |
Florina Krawchick | | | | | 38 | | | | Senior Vice President, Human Resources | |
| | |
Number of Shares
Beneficially Owned |
| |
Percentage of Shares
Beneficially Owned |
| ||||||
5% Stockholders: | | | | | | | | | | | | | |
Eshelman Ventures, LLC(1)
|
| | | | 7,210,317 | | | | | | 19.1% | | |
Canaan VIII L.P.(2)
|
| | | | 2,917,169 | | | | | | 7.7% | | |
New Enterprise Associates 12, Limited Partnership(3)
|
| | | | 2,526,764 | | | | | | 6.7% | | |
Named Executive Officers and Directors: | | | | | | | | | | | | | |
Neal F. Fowler(4)
|
| | | | 561,814 | | | | | | 1.5% | | |
Richard D. Katz, M.D.(5)
|
| | | | 49,722 | | | | | | * | | |
Robert A. Lippe(6)
|
| | | | 112,572 | | | | | | * | | |
Dr. Stephen Bloch(7)
|
| | | | 26,004 | | | | | | * | | |
Katherine Rielly-Gauvin(8)
|
| | | | 7,222 | | | | | | * | | |
Dr. Joanna Horobin(9)
|
| | | | 7,639 | | | | | | * | | |
Arthur Kirsch(10)
|
| | | | 30,453 | | | | | | * | | |
Dr. Seth Rudnick(11)
|
| | | | 122,676 | | | | | | * | | |
Dr. Ralph Snyderman(12)
|
| | | | 78,367 | | | | | | * | | |
Raman Singh(13)
|
| | | | 27,886 | | | | | | * | | |
All executive officers and directors as a group (14 persons)(14)
|
| | | | 1,224,411 | | | | | | 3.2% | | |
| | |
Number of Units
Beneficially Owned |
| |
Percentage of Units
Beneficially Owned |
| ||||||
5% Unitholders: | | | | | | | | | | | | | |
PBM Capital Finance, LLC(1)
|
| | | | 7,065 | | | | | | 70.65% | | |
Serendipity BioPharma LLC(2)
|
| | | | 2,500 | | | | | | 25.00% | | |
Named Executive Officers and Directors: | | | | | | | | | | | | | |
Damian deGoa
|
| | | | 75 | | | | | | * | | |
Scott Moomaw
|
| | | | | | | | | | | | |
Roger A. Jeffs, Ph.D.
|
| | | | 2,500 | | | | | | 25.00% | | |
Paul B. Manning(1)
|
| | | | 7,065 | | | | | | 70.65% | | |
All executive officers and directors as a group (4 persons)
|
| | | | 9,640 | | | | | | 96.40% | | |
| | |
Number of Shares
Beneficially Owned |
| |
Percentage of Shares
Beneficially Owned |
| ||||||
5% Stockholders: | | | | | | | | | | | | | |
Eshelman Ventures, LLC(1)
|
| | | | 7,210,317 | | | | | | 16.7% | | |
PD Joint Holdings, LLC Series 2016-A(2)
|
| | | | 4,460,308 | | | | | | 10.3% | | |
Canaan VIII L.P.(3)
|
| | | | 2,917,169 | | | | | | 6.7% | | |
New Enterprise Associates 12, Limited Partnership(4)
|
| | | | 2,526,764 | | | | | | 5.8% | | |
Named Executive Officers and Directors: | | | | | | | | | | | | | |
Neal F. Fowler(5)
|
| | | | 561,814 | | | | | | 1.3% | | |
Richard D. Katz, M.D.(6)
|
| | | | 49,722 | | | | | | * | | |
Robert A. Lippe(7)
|
| | | | 112,572 | | | | | | * | | |
Dr. Stephen Bloch(8)
|
| | | | 26,004 | | | | | | * | | |
Katherine Rielly-Gauvin(9)
|
| | | | 7,222 | | | | | | * | | |
Dr. Joanna Horobin(10)
|
| | | | 7,639 | | | | | | * | | |
Roger Jeffs, Ph.D.(11)
|
| | | | 1,406,095 | | | | | | 3.2% | | |
Arthur Kirsch(12)
|
| | | | 30,453 | | | | | | * | | |
Paul B. Manning(13)
|
| | | | 4,939,541 | | | | | | 11.4% | | |
Dr. Seth Rudnick(14)
|
| | | | 122,676 | | | | | | * | | |
Raman Singh(15)
|
| | | | 27,886 | | | | | | * | | |
All executive officers and directors as a group (16 persons)(16)
|
| | | | 7,491,680 | | | | | | 16.9% | | |
Name
|
| |
Age
|
| |
Position
|
| |||
Damian deGoa | | | | | 42 | | | | Chief Executive Officer and Director | |
Scott Moomaw | | | | | 50 | | | | Chief Operating Officer | |
Roger A. Jeffs, Ph.D. | | | | | 58 | | | | Director | |
Paul B. Manning | | | | | 64 | | | | Director | |
Name and principal position
|
| |
Year
|
| |
Salary
($) |
| |
Bonus
($) |
| |
All other
compensation ($)(5) |
| |
Total
($) |
| |||||||||||||||
Damian deGoa
|
| | | | 2019 | | | | | | 300,000 | | | | | | 30,000(2) | | | | | | 5,737 | | | | | | 335,737 | | |
Chief Executive Officer(6)
|
| | | | 2018 | | | | | | 81,923(1) | | | | | | 30,000(3) | | | | | | — | | | | | | 111,923 | | |
Scott Moomaw.
|
| | | | 2019 | | | | | | 300,000 | | | | | | 40,000(4) | | | | | | 5,600 | | | | | | 345,600 | | |
Chief Operating Officer(7)
|
| | | | 2018 | | | | | | 111,538(1) | | | | | | — | | | | | | 500 | | | | | | 112,038 | | |
| | |
2018
|
| |
2019
|
| ||||||
Audit Fees(1)
|
| | | $ | 1,128,332 | | | | | $ | 648,008 | | |
Audit-Related Fees(2)
|
| | | $ | 37,840 | | | | | $ | — | | |
Tax Fees(3)
|
| | | | — | | | | | $ | — | | |
All Other Fees(4)
|
| | | $ | 2,768 | | | | | $ | 2,768 | | |
TOTAL
|
| | | $ | 1,168,940 | | | | | $ | 650,776 | | |
| | |
PAGE
|
| |||
| | | | F-2 | | | |
Financial Statements: | | | | | | | |
| | | | F-3 | | | |
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | |
December 31,
|
| |
2019
|
| |
2018
|
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | |
$
|
3,563,490
|
| | | | $ | 1,080,784 | | |
Accounts receivable
|
| | |
|
3,697,731
|
| | | | | 320 | | |
Prepaid expenses
|
| | |
|
43,844
|
| | | | | 53,906 | | |
Total current assets
|
| | |
|
7,305,065
|
| | | | | 1,135,010 | | |
Non-current assets | | | | | | | | | | | | | |
Property, plant and equipment, net
|
| | |
|
69,952
|
| | | | | 24,921 | | |
Intangibles, net
|
| | |
|
16,666,667
|
| | | | | 20,000,000 | | |
Deposits
|
| | |
|
2,464
|
| | | | | 2,464 | | |
Total assets
|
| | |
$
|
24,044,148
|
| | | | $ | 21,162,395 | | |
Liabilities and Members’ Equity | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | |
$
|
16,028
|
| | | | $ | 80,991 | | |
Accrued compensation
|
| | |
|
206,015
|
| | | | | 90,292 | | |
Due to related party
|
| | |
|
49,784
|
| | | | | 63,735 | | |
Accrued litigation costs
|
| | |
|
226,704
|
| | | | | — | | |
Other accrued expenses
|
| | |
|
51,679
|
| | | | | 43,213 | | |
Total current liabilities
|
| | |
|
550,210
|
| | | | | 278,231 | | |
Total liabilities
|
| | |
|
550,210
|
| | | | | 278,231 | | |
Commitment and contingencies (Note 7) | | | | | | | | | | | | | |
Members’ equity
|
| | |
|
23,493,938
|
| | | | | 20,884,164 | | |
Total liabilities and members’ equity
|
| | |
$
|
24,044,148
|
| | | | $ | 21,162,395 | | |
Periods ended December 31,
|
| |
2019
|
| |
2018
|
| ||||||
Net service revenue
|
| | |
$
|
10,088,356
|
| | | | $ | — | | |
Litigation expense
|
| | |
|
5,312,357
|
| | | | | — | | |
Payroll expense
|
| | |
|
2,944,705
|
| | | | | 495,405 | | |
Contract support, general and administrative
|
| | |
|
1,113,639
|
| | | | | 428,173 | | |
Management fee
|
| | |
|
300,000
|
| | | | | 192,258 | | |
Research and development
|
| | |
|
30,627
|
| | | | | — | | |
Total operating expenses
|
| | |
|
9,701,328
|
| | | | | 1,115,836 | | |
Income (loss) from operations
|
| | |
|
387,028
|
| | | | | (1,115,836) | | |
Other income (expense) | | | | | | | | | | | | | |
Interest income
|
| | |
|
22,799
|
| | | | | — | | |
Other expense
|
| | |
|
(53)
|
| | | | | — | | |
Total other income, net
|
| | |
|
22,746
|
| | | | | — | | |
Net income (loss)
|
| | | $ | 409,774 | | | | |
$
|
(1,115,836)
|
| |
| | |
Common Units
|
| |
Contributed
Capital |
| |
Members’
Deficit |
| |
Total
|
| ||||||||||||
Inception, July 16, 2018
|
| | | | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Issuance of units
|
| | | | 10,000 | | | | | | — | | | | | | — | | | | | | | | |
Capital contributions
|
| | | | — | | | | | | 22,000,000 | | | | | | — | | | | | | 22,000,000 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | (1,115,836) | | | | | | (1,115,836) | | |
Balance, December 31, 2018
|
| | | | 10,000 | | | | | $ | 22,000,000 | | | | | $ | (1,115,836) | | | | | $ | 20,884,164 | | |
Capital contributions
|
| | | | — | | | | | | 2,200,000 | | | | | | — | | | | | | 2,200,000 | | |
Net income
|
| | | | — | | | | | | — | | | | | | 409,774 | | | | | | 409,774 | | |
Balance, December 31, 2019
|
| | | | 10,000 | | | | | $ | 24,200,000 | | | | | $ | (706,062) | | | | | $ | 23,493,938 | | |
Periods ended December 31,
|
| |
2019
|
| |
2018
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income (loss)
|
| | |
$
|
409,774
|
| | | | $ | (1,115,836) | | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | |
|
3,338,402
|
| | | | | 422 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | |
|
(3,697,411)
|
| | | | | (320) | | |
Prepaid expenses
|
| | |
|
10,062
|
| | | | | (53,906) | | |
Deposits
|
| | |
|
—
|
| | | | | (2,464) | | |
Accounts payable
|
| | |
|
(64,963)
|
| | | | | 80,991 | | |
Accrued compensation
|
| | |
|
115,723
|
| | | | | 90,292 | | |
Due to related party
|
| | |
|
(13,951)
|
| | | | | 63,735 | | |
Accrued expenses
|
| | |
|
235,170
|
| | | | | 42,213 | | |
Net cash provided by (used in) operating activities
|
| | |
|
332,806
|
| | | | | (893,873) | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | |
|
(50,100)
|
| | | | | (25,343) | | |
Purchase of intangible assets
|
| | |
|
—
|
| | | | | (20,000,000) | | |
Net cash used in investing activities
|
| | |
|
(50,100)
|
| | | | | (20,025,343) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Capital contributions
|
| | |
|
2,200,000
|
| | | | | 22,000,000 | | |
Net cash provided by financing activities
|
| | |
|
2,200,000
|
| | | | | 22,000,000 | | |
Increase in cash and cash equivalents
|
| | |
|
2,482,706
|
| | | | | 1,080,784 | | |
Cash and cash equivalents, beginning of period
|
| | |
|
1,080,784
|
| | | | | — | | |
Cash and cash equivalents, end of period
|
| | |
$
|
3,563,490
|
| | | | $ | 1,080,784 | | |
December 31,
|
| |
2019
|
| |
2018
|
| ||||||
Cash
|
| | |
$
|
111,079
|
| | | | $ | 1,080,784 | | |
Cash equivalents
|
| | |
|
3,452,411
|
| | | |
|
―
|
| |
Totals:
|
| | |
$
|
3,563,490
|
| | | | $ | 1,080,784 | | |
| | |
Up-front Payment
to Sandoz, Inc. (the Customer) |
| |
Total Intangibles
|
| ||||||
Balance at December 31, 2018
|
| | | | 20,000,000 | | | | | | 20,000,000 | | |
Amortization
|
| | | | 3,333,333 | | | | | | 3,333,333 | | |
Balance at December 31, 2019
|
| | | $ | 16,666,667 | | | | | $ | 16,666,667 | | |
Amortization Period (in years)
|
| | | | 5 | | | | | | | | |
December 31,
|
| |
2019
|
| |
2018
|
| ||||||
Computer hardware
|
| | |
$
|
17,375
|
| | | | $ | 17,375 | | |
Office equipment
|
| | |
|
7,968
|
| | | | | 7,968 | | |
Construction in progress
|
| | |
|
50,100
|
| | | | | — | | |
| | | |
|
75,443
|
| | | | | 25,343 | | |
Less accumulated depreciation
|
| | |
|
(5,491)
|
| | | | | (422) | | |
| | | |
$
|
69,952
|
| | | | $ | 24,921 | | |
|
| | |
PAGE
|
| |||
Financial Statements: | | | | | | | |
| | | | F-17 | | | |
| | | | F-18 | | | |
| | | | F-19 | | | |
| | | | F-20 | | | |
| | | | F-21 | | |
| | |
June 30, 2020
(Unaudited) |
| |
December 31,
2019 |
| ||||||
Assets | | | | | | | | | | | | | |
Current assets: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | |
$
|
8,708,522
|
| | | | $ | 3,563,490 | | |
Accounts receivable
|
| | |
|
2,731,205
|
| | | | | 3,697,731 | | |
Prepaid expenses
|
| | |
|
46,325
|
| | | | | 43,844 | | |
Total current assets
|
| | |
|
11,486,052
|
| | | | | 7,305,065 | | |
Non-current assets | | | | | | | | | | | | | |
Property, plant and equipment, net
|
| | |
|
83,138
|
| | | | | 69,952 | | |
Intangibles, net
|
| | |
|
14,666,667
|
| | | | | 16,666,667 | | |
Deposits
|
| | |
|
2,464
|
| | | | | 2,464 | | |
Total assets
|
| | |
$
|
26,238,321
|
| | | | $ | 24,044,148 | | |
Liabilities and Members’ Equity | | | | | | | | | | | | | |
Current liabilities: | | | | | | | | | | | | | |
Accounts payable
|
| | |
$
|
64,872
|
| | | | $ | 16,028 | | |
Accrued compensation
|
| | |
|
193,048
|
| | | | | 206,015 | | |
Due to related party
|
| | |
|
82,195
|
| | | | | 49,784 | | |
Accrued litigation costs
|
| | |
|
1,432,596
|
| | | | | 226,704 | | |
Other accrued expenses
|
| | |
|
214,322
|
| | | | | 51,679 | | |
Total current liabilities
|
| | |
|
1,987,033
|
| | | | | 550,210 | | |
Total liabilities
|
| | |
|
1,987,033
|
| | | | | 550,210 | | |
Members’ equity
|
| | |
|
24,251,288
|
| | | | | 23,493,938 | | |
Total liabilities and members’ equity
|
| | |
$
|
26,238,321
|
| | | | $ | 24,044,148 | | |
Six months ended June 30,
|
| |
2020
|
| |
2019
|
| ||||||
Net service revenue
|
| | |
$
|
4,578,896
|
| | | | $ | 3,392,454 | | |
Litigation expense
|
| | |
|
1,845,186
|
| | | | | 1,773,225 | | |
Payroll expense
|
| | |
|
1,151,758
|
| | | | | 1,615,191 | | |
Contract support, general and administrative
|
| | |
|
637,536
|
| | | | | 681,279 | | |
Management fee
|
| | |
|
120,000
|
| | | | | 180,000 | | |
Research and development
|
| | |
|
84,444
|
| | | | | 9,415 | | |
Total operating expenses
|
| | | | 3,838,924 | | | | |
|
4,259,110
|
| |
Income (loss) from operations
|
| | |
|
739,972
|
| | | | | (866,656) | | |
Interest income
|
| | |
|
17,378
|
| | | | | 2,980 | | |
Other income (expense)
|
| | |
|
—
|
| | | | | (53) | | |
Total other income, net
|
| | |
|
17,378
|
| | | | | 2,927 | | |
Net income (loss)
|
| | | $ | 757,350 | | | | |
$
|
(863,729)
|
| |
| | |
Common
Units |
| |
Contributed
Capital |
| |
Members’
(Deficit) Equity |
| |
Total
|
| ||||||||||||
Balance, December 31, 2019
|
| | | | 10,000 | | | | | $ | 24,200,000 | | | | | $ | (706,062) | | | | | $ | 23,493,938 | | |
Net income
|
| | | | ― | | | | | | ― | | | | | | 757,350 | | | | | | 757,350 | | |
Balance, June 30, 2020
|
| | | | 10,000 | | | | | $ | 24,200,000 | | | | | $ | 51,288 | | | | | $ | 24,251,288 | | |
Balance, December 31, 2018
|
| | | | 10,000 | | | | | $ | 22,000,000 | | | | | $ | (1,115,836) | | | | | $ | 20,884,164 | | |
Net loss
|
| | | | ― | | | | | | ― | | | | | | (863,729) | | | | | | (863,729) | | |
Capital contribution
|
| | | | ― | | | | | | 2,200,000 | | | | | | ― | | | | | | 2,200,000 | | |
Balance, June 30, 2019
|
| | | | 10,000 | | | | | $ | 24,200,000 | | | | | $ | (1,979,566) | | | | | $ | 22,220,435 | | |
Six months ended June 30,
|
| |
2020
|
| |
2019
|
| ||||||
Cash flows from operating activities: | | | | | | | | | | | | | |
Net income (loss)
|
| | |
$
|
757,350
|
| | | | $ | (863,729) | | |
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
| | | | | | | | | | | | |
Depreciation and amortization
|
| | |
|
2,002,534
|
| | | | | 1,335,867 | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Accounts receivable
|
| | |
|
966,526
|
| | | | | 320 | | |
Prepaid expenses
|
| | |
|
(2,481)
|
| | | | | (7,216) | | |
Accounts payable
|
| | |
|
48,844
|
| | | | | (57,626) | | |
Accrued compensation
|
| | | | (12,967) | | | | |
|
159,414
|
| |
Due to related party
|
| | |
|
32,411
|
| | | | | (34,812) | | |
Accrued litigation costs
|
| | |
|
1,205,892
|
| | | | | 1,227,736 | | |
Accrued expenses
|
| | |
|
162,643
|
| | | | | 34,393 | | |
Net cash provided by operating activities
|
| | |
|
5,160,752
|
| | | | | 1,794,347 | | |
Cash flows from investing activities: | | | | | | | | | | | | | |
Purchase of property and equipment
|
| | |
|
(15,720)
|
| | | | | (25,050) | | |
Net cash used in investing activities
|
| | |
|
(15,720)
|
| | | | | (25,050) | | |
Cash flows from financing activities: | | | | | | | | | | | | | |
Proceeds from capital contributions
|
| | |
|
—
|
| | | | | 2,200,000 | | |
Net cash provided by financing activities
|
| | |
|
—
|
| | | | | 2,200,000 | | |
Increase in cash and cash equivalents
|
| | |
|
5,145,032
|
| | | | | 3,969,297 | | |
Cash and cash equivalents, beginning of period
|
| | |
|
3,563,490
|
| | | | | 1,080,784 | | |
Cash and cash equivalents, end of period
|
| | |
$
|
8,708,522
|
| | | | $ | 5,050,081 | | |
| | |
June 30,
2020 |
| |
December 31,
2019 |
| ||||||
Cash
|
| | |
$
|
834,032
|
| | | | $ | 111,079 | | |
Cash equivalents
|
| | |
|
7,874,490
|
| | | | | 3,452,411 | | |
Total
|
| | |
$
|
8,708,522
|
| | | | $ | 3,563,490 | | |
| | |
June 30, 2020
|
| |||||||||||||||
| | |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Intangibles,
Net |
| |||||||||
Up-front payments to Sandoz, Inc. (the Customer)
|
| | |
$
|
20,000,000
|
| | | |
$
|
5,333,333
|
| | | |
$
|
14,666,667
|
| |
|
| | |
December 31, 2019
|
| |||||||||||||||
| | |
Gross
Carrying Amount |
| |
Accumulated
Amortization |
| |
Intangibles,
Net |
| |||||||||
Up-front payments to Sandoz, Inc. (the Customer)
|
| | | $ | 20,000,000 | | | | | $ | 3,333,333 | | | | | $ | 16,666,667 | | |
| | |
June 30,
2020 |
| |
December 31,
2019 |
| ||||||
Computer hardware
|
| | |
$
|
17,375
|
| | | | $ | 17,375 | | |
Office equipment
|
| | |
|
7,968
|
| | | | | 7,968 | | |
Construction in progress
|
| | |
|
65,820
|
| | | | | 50,100 | | |
| | | |
|
91,163
|
| | | | | 75,443 | | |
Less accumulated depreciation
|
| | |
|
(8,025)
|
| | | | | (5,491) | | |
| | | |
$
|
83,138
|
| | | | $ | 69,952 | | |
| | |
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| EXHIBITS | | | | |
| EXHIBIT A | | | Support Agreement | |
| EXHIBIT B | | | Form of Irrevocable Written Consent | |
| EXHIBIT C-1 | | | Form of PBM Cooperation Agreement | |
| EXHIBIT C-2 | | | Form of Serendipity Cooperation Agreement | |
| EXHIBIT D | | | Certificate of Incorporation of Liquidia Surviving Corporation | |
| EXHIBIT E | | | Bylaws of Liquidia Surviving Corporation | |
| EXHIBIT F | | | Certificate of Formation of RareGen Surviving LLC | |
| EXHIBIT G | | | RareGen Surviving LLC Operating Agreement | |
| EXHIBIT H | | | Litigation Funding and Indemnification Agreement | |
| EXHIBIT I | | | Form of Lock-Up Agreement | |
| SCHEDULES | | |||
| | | | RareGen Disclosure Schedule | |
| | | | Liquidia Disclosure Schedule | |
| “Agreement” | | | Preamble | |
| “Basket” | | | Section 7.2.2(b) | |
| “Benefit Plan” | | | Section 3.10.1 | |
| “Certificates of Merger” | | | Section 1.4 | |
| “Change in Recommendation” | | | Section 5.4 | |
| “Closing” | | | Section 1.5 | |
| “Closing Date” | | | Section 1.5 | |
| “COBRA” | | | Section 3.10.7 | |
| “Code” | | | Recitals | |
| “Confidentiality Agreement” | | | Section 5.5.2 | |
| “Cooperation Agreements” | | | Recitals | |
| “D&O Insurance” | | | Section 5.12.2 | |
| “deGoa Employment Agreement” | | | Section 6.2.8 | |
| “DGCL” | | | Recitals | |
| “Direct Claims” | | | Section 7.3.3 | |
| “DLLCA” | | | Recitals | |
| “Draft Net Sales Report” | | | Section 2.5.3(a) | |
| “Effective Time” | | | Section 1.4 | |
| “Exchange Agent” | | | Section 2.2.1 | |
| “Exchange Fund” | | | Section 2.2.1 | |
| “Final Net Sales Report” | | | Section 2.5.3(e) | |
| “Fundamental Representations” | | | Section 7.1.1 | |
| “Health Care Laws” | | | Section 3.6.4 | |
| “HIPAA” | | | Section 3.6.4 | |
| “HSR Filing Determination” | | | Section 5.7.1 | |
| “HSS-OIG” | | | Section 3.6.2 | |
| “HoldCo” | | | Preamble | |
| “HoldCo Common Stock” | | | Section 2.1.1.1 | |
| “HoldCo Fundamental Representations” | | | Section 7.1.2 | |
| “Indemnified Party” | | | Section 7.4 | |
| “Indemnifying Party” | | | Section 7.4 | |
| “Liabilities” | | | Section 3.8 | |
| “Liquidia” | | | Preamble | |
| “Liquidia Board” | | | Recitals | |
| “Liquidia Board Recommendation” | | | Section 5.4 | |
| “Liquidia Bylaws” | | | Section 4.2 | |
| “Liquidia Certificate” | | | Section 4.2 | |
| “Liquidia Common Stock” | | | Section 2.1.1.1 | |
| “Liquidia Disclosure Schedule” | | | Article 4 | |
| “Liquidia Employees” | | | Section 5.11 | |
| “Liquidia Financial Statements” | | | Section 4.6.2 | |
| “Liquidia Form 10-K” | | | Section 4.2 | |
| “Liquidia Form 10-Q” | | | Section 4.6.3 | |
| “Liquidia Incentive Plans” | | | Section 2.4.1 | |
| “Liquidia Indemnitees” | | | Section 7.2.1 | |
| “Liquidia Merger” | | | Section 1.2 | |
| “Liquidia Merger Sub” | | | Preamble | |
| “Liquidia Options” | | | Section 2.4.1 | |
| “Liquidia Permits” | | | Section 4.5 | |
| “Liquidia Representatives” | | | Section 5.5.1 | |
| “Liquidia RSUs” | | | Section 2.4.2 | |
| “Liquidia SEC Filings” | | | Section 4.6.2 | |
| “Liquidia Stockholders’ Meeting” | | | Section 5.4 | |
| “Liquidia Surviving Corporation” | | | Section 1.6 | |
| “Liquidia Warrants” | | | Section 2.1.1.2 | |
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“Litigation Funding and Indemnification Agreement”
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| | Section 6.1.7 | |
| “Members’ Representative” | | | Preamble | |
| “Members’ Representative’s Net Sales Response” | | | Section 2.5.3(b) | |
| “Mergers” | | | Section 1.3 | |
| “Multiemployer Plan” | | | Section 3.10.3 | |
| “NASDAQ” | | | Section 4.4.2 | |
| “Net Sales” | | | Section 2.5.2 | |
| “Net Sales Earnout” | | | Section 2.5.1 | |
| “Net Sales Earnout Amount” | | | Section 2.5.2 | |
| “Net Sales Earnout Issuance” | | | Section 2.5.1 | |
| “Net Sales Earnout Period” | | | Section 2.5.2 | |
| “Net Sales Earnout Shares” | | | Section 2.5.2 | |
| “Net Sales Target” | | | Section 2.5.2 | |
| “Outside Date” | | | Section 8.1.2 | |
| “Permitted Disposition” | | | Section 2.5.6 | |
| “Proxy Statement” | | | Section 5.3 | |
| “Registration Statement” | | | Section 5.3 | |
| “RareGen” | | | Preamble | |
| “RareGen Audit” | | | Section 3.7.1 | |
| “RareGen Board” | | | Recitals | |
| “RareGen Certificate” | | | Section 3.2 | |
| “RareGen Common Units” | | | Section 2.1.1.3 | |
| “RareGen Disclosure Schedule” | | | Article 3 | |
| “RareGen Employees” | | | Section 5.11 | |
| “RareGen Financial Statements” | | | Section 3.7.1 | |
| “RareGen Interim Balance Sheet” | | | Section 3.7.1 | |
| “RareGen Interim Financial Statements” | | | Section 3.7.1 | |
| “RareGen Material Contract” | | | Section 3.13 | |
| “RareGen Members” | | | Recitals | |
| “RareGen Member Consent” | | | Recitals | |
| “RareGen Member Indemnitees” | | | Section 7.3.1 | |
| “RareGen Merger” | | | Section 1.3 | |
| “RareGen Merger Sub” | | | Preamble | |
| “RareGen Operating Agreement” | | | Section 3.2 | |
| “RareGen Permits” | | | Section 3.6.1 | |
| “RareGen Representatives” | | | Section 5.5.1 | |
| “RareGen Surviving LLC” | | | Section 1.6 | |
| “RareGen Year-End Balance Sheet” | | | Section 3.7.1 | |
| “RareGen Year-End Financial Statements” | | | Section 3.7.1 | |
| “Requisite Liquidia Vote” | | | Section 6.1.2 | |
| “Sandoz” | | | Section 3.20 | |
| “Sandoz Agreement” | | | Section 3.20 | |
| “Sandoz Consent” | | | Section 3.20 | |
| “Second Request” | | | Section 8.5 | |
| “Sunshine Act” | | | Section 3.6.4 | |
| “Surviving Entities” | | | Section 1.6 | |
| “Tax Counsel” | | | Section 5.3 | |
| “Tax Opinion” | | | Section 6.1.8 | |
| “Tax Representations” | | | Section 7.1.1 | |
| “Termination Fee” | | | Section 8.2.2 | |
| “Third Party Claim” | | | Section 7.4.1 | |
| “Support Agreement” | | | Recitals | |
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| Liquidia Corporation | | | Date | |
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Enclosures:
Incentive Stock Option Agreement
Prospectus for the 2020 Long-Term Incentive Plan Exercise Form
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| | OPTIONEE | |
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Date:
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Signature
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Title
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Date
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/s/ Neal F. Fowler
Neal F. Fowler
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| | Chief Executive Officer and Director(Principal Executive Officer) | | |
September 4, 2020
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/s/ Steven Bariahtaris
Steven Bariahtaris
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| | Interim Chief Financial Officer(Principal Financial Officer and Principal Accounting Officer) | | |
September 4, 2020
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*
Dr. Stephen Bloch
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| | Chairman of the Board of Directors | | |
September 4, 2020
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*
Katherine Rielly-Gauvin
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| | Director | | |
September 4, 2020
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*
Dr. Joanna Horobin
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| | Director | | |
September 4, 2020
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Arthur Kirsch
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| | Director | | |
September 4, 2020
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Dr. Seth Rudnick
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| | Director | | |
September 4, 2020
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Raman Singh
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| | Director | | |
September 4, 2020
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Dr. Ralph Snyderman
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| | Director | | |
September 4, 2020
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Exhibit 10.38
SECOND AMENDMENT TO
PROMOTION AGREEMENT
This Second Amendment to Promotion Agreement (this “Amendment”), is entered into as of September 4, 2020 (the “Second Amendment Effective Date”) by and between Sandoz Inc. (“Sandoz”) and RareGen, LLC (“RareGen”).
BACKGROUND
WHEREAS, Sandoz and RareGen are parties to that certain Promotion Agreement, dated as of August 1, 2018 (the “Original Agreement”), as amended by that certain First Amendment to Promotion Agreement, dated as of May 8, 2020 (the “First Amendment” and, collectively with the Original Agreement, as they may be amended from time to time, the “Agreement”); and
WHEREAS, Sandoz and RareGen desire to amend the terms of the First Amendment to extend the expiration date for the Limited Waiver (as defined in the First Amendment);
NOW, THEREFORE, in consideration of the mutual promises and obligations, and for other good and valuable consideration the adequacy and sufficiency of which are hereby acknowledged, Sandoz and RareGen agree as follows:
AGREEMENT
1. Definitions. All capitalized terms used in this Amendment and not otherwise defined herein shall have the meanings assigned to them in the Agreement.
2. Extension of Limited Waiver. Section 9 of the First Amendment is hereby amended to replace “September 30, 2020” with “December 31, 2020” in each place where it appears in such Section such that the Limited Waiver shall continue in effect so long as the Transaction closes on or prior to December 31, 2020.
3. Effect of Amendment. Except as otherwise provided herein, all of the provisions of the Agreement are hereby ratified and confirmed and all the terms, conditions and provisions thereof remain in full force and effect.
4. Governing Law. This Amendment and any and all matters arising directly or indirectly here from shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, U.S.A. applicable to agreements made and to be performed entirely in such state, without giving effect to the conflict of law principles thereof. The Parties expressly agree that the United Nations Convention on Contracts for the International Sale of Goods shall not apply to this Amendment or any Party’s performance hereunder.
5. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. This Amendment may be executed by the exchange of faxed executed copies, certified electronic signatures or executed copies delivered by electronic mail in Adobe Portable Document Format or similar format, and such signature shall be deemed an original signature for purposes of this Amendment. The Parties agree that the electronic signatures appearing on this Amendment are the same as handwritten signatures for the purposes of validity, enforceability and admissibility pursuant to the Electronic Signatures in Global and National Commerce (ESIGN) Act of 2000 and Uniform Electronic Transactions Act (UETA) model law or similar applicable laws.
[Signature page follows.]
2
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the Second Amendment Effective Date.
SANDOZ: | SANDOZ INC. | |
By: | /s/ Karen McDonnell | |
Name: Karen McDonnell | ||
Title: VP, General Counsel, NA | ||
RAREGEN: | RAREGEN, LLC | |
By: | /s/ Damian deGoa | |
Name: Damian deGoa | ||
Title: CEO |
3
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in this Registration Statement on Form S-4 of Liquidia Corporation of our report dated March 16, 2020 relating to the financial statements, which appears in Liquidia Technologies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2019. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/
PricewaterhouseCoopers LLP
Raleigh, North Carolina
September 4, 2020
Exhibit 23.2
Consent of Independent Auditors
We hereby consent to the use in the proxy statement/prospectus constituting a part of this Registration Statement on Form S-4 of our report dated July 17, 2020, relating to the financial statements of RareGen, LLC, which is contained in this proxy statement/prospectus.
We also consent to the reference to us under the caption “Experts” in this proxy statement/prospectus.
/s/ BDO USA, LLP
Richmond, Virginia
September 4, 2020
Exhibit 99.5
MMMMMMMMMMMM MMMMMMMMMMMMMMM C123456789 000004 ENDORSEMENT_LINE______________ SACKPACK_____________ 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext MR A SAMPLE DESIGNATION (IF ANY) ADD 1 ADD 2 ADD 3 ADD 4 ADD 5 ADD 6 Your vote matters – here’s how to vote! If no electronic voting, delete QR code and control # Δ≈ Online Go to www.envisionreports.com/LQDA or scan the QR code — login details are located in the shaded bar below. Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Phone Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada Save paper, time and money! Sign up for electronic delivery at www.envisionreports.com/LQDA Liquidia Technologies, Inc. 2020 Special Meeting Proxy Card 1234 5678 9012 345 q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q A Proposals — The Board of Directors recommend a vote FOR Proposals 1, 2, 3, 4 and 5. ForAgainst Abstain + ForAgainst Abstain 1. To approve the Agreement and Plan of Merger, dated as of June 29, 2020, among Liquidia Technologies, Inc., RareGen, LLC, Liquidia Corporation, Gemini Merger Sub I, Inc., Gemini Merger Sub II, LLC and PBM RG Holdings, LLC, pursuant to which Liquidia Technologies, Inc. and RareGen, LLC will each become a subsidiary of Liquidia Corporation, and each share of Liquidia Technologies, Inc. common stock will be automatically converted into one share of Liquidia Corporation common stock, and to approve the merger of Gemini Merger Sub I, Inc. with and into Liquidia Technologies, Inc. 2. To approve the Liquidia Corporation 2020 Long-Term Incentive Plan effective upon completion of the merger transaction. 3. To approve the Liquidia Corporation 2020 Employee Stock Purchase Plan effective upon completion of the merger transaction. 4. To ratify the appointment of PricewaterhouseCoopers LLP as Liquidia Corporation’s independent registered public accounting firm for the year ending December 31, 2020. 5. To approve the grant of discretionary authority to the board of directors of Liquidia Technologies, Inc. to adjourn or postpone the special meeting to a later date, if necessary, to solicit additional proxies if there are insufficient votes in favor of Proposals 1, 2, 3 or 4. B Authorized Signatures — This section must be completed for your vote to count. Please date and sign below. Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title. Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box. MMMMMMM C 1234567890J N T MR A SAMPLE (THIS AREA IS SET UP TO ACCOMMODATE 140 CHARACTERS) MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND MMMMMMMMM 4 7 5 6 4 3 MR A SAMPLE AND MR A SAMPLE AND MR A SAMPLE AND+ |
The 2020 Special Meeting of Stockholders of Liquidia Technologies, Inc. will be held on Wednesday, October 21, 2020, 4:30 P.M. local time, virtually via the internet at www.meetingcenter.io/287587626. To access the virtual meeting, you must have the information that is printed in the shaded bar located on the reverse side of this form. The password for this meeting is — LQDA2020 Important notice regarding the Internet availability of proxy materials for the Liquidia Technologies, Inc. 2020 Special Meeting of Stockholders. The material is available at: www.envisionreports.com/LQDA Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/LQDA q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q Liquidia Technologies, Inc. + Notice of 2020 Special Meeting of Stockholders Proxy Solicited by Board of Directors for Special Meeting — October 21, 2020 Neal F. Fowler and Steven Bariahtaris, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Special Meeting of Stockholders of Liquidia Technologies, Inc. to be held on October 21, 2020 at 4:30 P.M. local time or at any postponement or adjournment thereof. Shares represented by this proxy will be voted by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR items 1, 2, 3, 4 and 5. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. + |