TARRYTOWN, N.Y. and HERZLIYA-PITUACH, Israel, Nov. 20, 2013 /PRNewswire/ -- Immune Pharmaceuticals Inc. (OTCQX and NASDAQ OMX Stockholm Exchange: IMNP) ("Immune" or the "Company") announced today its financial results for the three and nine month periods ended September 30, 2013. During the third quarter of 2013, Immune recorded net income attributable to common stockholders of $1.2 million, or $0.11 per diluted share compared with a net loss attributable to common stockholders of $3.1 million, or $1.11 per share, during the third quarter of 2012. The Company recorded net income during the 2013 period as a result of the recent merger between Immune Pharmaceuticals Ltd. ("Immune Ltd.") and the Company from which the Company recorded other income of $6.4 million representing the excess of fair value of the assets acquired over the purchase price. Total stockholders' equity increased from $14,000 at December 31, 2012 to $7.8 million at September 30, 2013 primarily as a result of this gain.
For the nine months ended September 30, 2013, the Company recorded a net loss attributable to common stockholders of $3.2 million, or $0.65 per share, compared with a loss $9.9 million, or $1.81 a share, for the nine month period ended September 30, 2012.
Dr. Daniel G. Teper, Chairman and CEO of Immune, commented, "Immune Pharmaceuticals' improved balance sheet as a result of the merger supports our plans to raise sufficient capital to realize the value of our innovative drug portfolio including the funding in 2014 of two Phase II clinical trials in ulcerative colitis and bullous pemphigoid – a dermatological orphan auto-immune indication- with our lead monoclonal antibody bertilimumab."
Details of Merger TransactionOn August 25, 2013, the planned merger between the Company and Immune Ltd. closed. After giving effect to the acquisition and the issuance of the Company's common stock to the former shareholders of Immune Ltd., the Company had approximately 13.3 million shares of its common stock issued and outstanding, of which approximately 81% was held by the former shareholders of Immune Ltd. and 19% retained by the Company's pre-merger stockholders. The Company's assets and liabilities were recorded as of the acquisition date at their estimated fair values. As the merger is treated as a reverse merger with Immune Ltd. being the acquiring company, the Company's reported consolidated financial condition and results of operations after completion of the merger will reflect these values. The transaction is expected to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.
In addition to the share exchange, all of the outstanding Immune Ltd. options and warrants were exchanged for warrants and options to purchase the Company's common stock. The exchange ratio, and consequently, the proportionate ownership of the Company, was subject to adjustment and did not include (i) the exercise or conversion of certain of our out-of-the-money options and warrants, (ii) ordinary shares and common stock (including common stock issued upon the conversion of certain securities) issued in connection with a proposed private placement of securities conducted by either Immune Ltd, us or both, (iii) loans made between the parties or (iv) the purchase of our common stock by Immune Ltd. prior to the closing of the Merger with the use of a portion of the proceeds from such private placement of securities and in lieu of a certain loan to the Company, each as contemplated and more fully described in the Merger Agreement.
The estimated acquisition consideration and the preliminary allocation of the estimated acquisition consideration are in part based upon a preliminary management valuation, as more fully described in the Company's Report on Form 10-Q for the Period Ended September 30, 2013. The Company's estimates and assumptions are subject to change.
The final determination of the acquisition consideration allocation will be based on the fair values of the assets acquired and liabilities assumed as of the date the merger was consummated. The Company expects that the allocation will be finalized within twelve months after the merger. Based on the purchase price allocation, the following table summarizes the estimated provisional fair value amounts of the assets acquired and liabilities assumed at the date of acquisition: (in thousands):AmountPreliminary pro forma acquisition consideration allocation:Cash and cash equivalents$
292Restricted cash252Other current assets96Property and equipment29In-process research and development27,500Accounts payable(3,078)Accrued liabilities(1,737)Loan payable(4,442)Deferred tax liability(10,870)Gain on bargain purchase(6,444)Total acquisition consideration$
1,598The total acquisition consideration consisted of Immune Ltd.'s equity investment in pre-merger Immune Inc. and loans between the parties that were forgiven in the merger.
The Company estimates that approximately $27.5 million of the acquisition consideration represents the fair value of purchased in-process research and development related to projects associated with the AmiKet license agreement. In accordance with U.S. generally accepted account principles, any excess of fair value of acquired net assets over the acquisition consideration results in a gain on bargain purchase, which was recognized in the quarter ended September 30, 2013.
Product PipelineFollowing the completion of the merger, Immune's product portfolio includes the following major products:
Financial and Operating Highlights Third Quarter and Nine Months 2013 vs. Third Quarter and Nine Months 2012RevenueDuring the three and nine month period ended September 30, 2013, the Company recognized revenue of $19,000 from royalties received with respect to technology acquired in the merger. We recorded no revenue during the three and nine month periods ended September 30, 2012.
General and Administrative (G&A) ExpenseGeneral and administrative expense decreased by approximately $0.7 million to $1.0 million for the three month period ended September 30, 2013 from $1.7 million for the three month period ended September 30, 2012. The decrease was primarily attributable to lower stock-based compensation expense recorded in the three month period ended September 30, 2013 compared with the third quarter of 2012. For the nine month period ended September 30, 2013, General and administrative expense was $3.2 million compared with $3.3 million for the comparable period ended September 30, 2012. Stock-based compensation expense was $2.1 million and $2.6 million in the nine month periods ended September 30, 2013 and September 30, 2012, respectively.
Research and Development (R&D) Expense Research and development expense decreased by 23%, or approximately $0.3 million during the quarter ended September 2013 to approximately $1.0 million, compared with $1.3 million during the quarter ended September 30, 2012. The decrease in research and development expense was primarily attributable to manufacturing expenses related to bertilimumab that were incurred in the three month period ended September 30, 2012 and were not continued in 2013. During the nine month period ended September 30, 2013, Research and development expense decreased by 19%, or approximately $0.6 million to approximately $2.5 million, compared with $3.1 million during the nine month period ended September 30, 2012.
The decrease in research and development expense was primarily attributable to manufacturing expenses related to bertilimumab incurred during the nine month period ended September 30, 2012. Our research and development effort has been focused on the development of bertilimumab, anti-Ferritin mAb and NanomAbs.
Other Income (Expense)Other income (expense), net amounted to $3.6 million income during the quarter ended September 30, 2013 compared with a net expense of $0.1 million during the quarter ended September 30, 2012. Other income of $6.4 million was recognized during the quarter ended September 30, 2013 as a gain on bargain purchase recorded as a result of the merger. The Company recorded an additional $2.0 million liquidation preference attributable to a grant of additional founder shares to the Company's Chief Executive Officer during the quarter ended September 30, 2013, and a $0.7 million charge for warrant amendment expense incurred as a result of extending the maturity of certain Immune Ltd. warrants beyond the merger closing date, which partially offset the gain on bargain purchase.
Other components of other income (expense) primarily relate to interest and other expense and, during the quarter ended September 30, 2012, a charge of $26,000 for the derivative liability recorded for the anti-dilution shares issuable to iCo upon a deemed liquidation event.
For the nine months ended September 30, 2013, other income (expense) net amounted to $3.4 million net income compared with a net expense of $3.5 million for the nine month period ended September 30, 2013. Other income of $6.4 million was recognized during the nine months ended September 30, 2013 as a gain on bargain purchase recorded as a result of the merger. The Company recorded an additional $2.0 million liquidation preference attributable to a grant of additional founder shares to the Company's Chief Executive Officer during the nine months ended September 30, 2013, and a $0.7 million charge for warrant amendment expense incurred as a result of extending the maturity of certain Immune Ltd. warrants beyond the merger closing date, partially offsetting the gain on bargain purchase.
Other components of other income (expense) primarily relate to interest and other expense.
Deemed DividendsDeemed dividends amounted to $0.4 million for the three months ended September 30, 2013 as a result of anti-dilution provisions in the securities purchase agreements for certain investors, which was triggered when Immune Ltd. closed the merger with the Company at a price that was less than 80% of the price per share of Immune Ltd.'s common stock at the time of the merger. Deemed dividends amounted to $0.9 million for the nine months ended September 30, 2013.Financial ConditionImmune had approximately $0.4 million in cash and cash equivalents as of September 30, 2013, plus an additional $0.2 million in restricted cash held by its senior secured lender. The Company raised $4.4 million since the beginning of 2013 primarily in the form of equity issuances through Immune Ltd. in order to fund the associated merger costs and the on-going operations of the Company through the merger closing. The Company's current level of liquidity is low. The Company has significantly reduced its cash burn as much as possible but must raise additional capital, in the form of equity, debt or non-dilutive funding in order to continue operations, pay vendors, and meet debt service obligations. The Company is negotiating transactions with select groups of investors that it believes will raise a sufficient amount of capital to continue operations while the Company completes its longer term fundraising efforts in association with its bankers and advisors.
The Company's obligations under its outstanding loan with MidCap Financial LLC were restructured at the time of the merger closing. MidCap consented to the merger, and entered into the Third Amendment to the Loan and Security Agreement with the Company that fixed the principal balance of the loan at approximately $4.4 million. Principal repayments on the loan will commence on December 1, 2013. Principal repayments will be due in approximately equal monthly installments commencing on the first repayment date. The scheduled maturity date of the loan is August 1, 2016. Interest on the loan is accruing at the rate of 11.5% per annum.
The Amendment also provided for additional availability of $1 million for drawing by the Company through August 2014 upon meeting certain conditions, most importantly the raising of net cash proceeds of at least $17.5 million through one or more qualifying transactions, as defined in the Amendment. Repayment of this amount, if borrowed, will be in approximately equal monthly payments, ending on the maturity date of the loan.
About Immune Pharmaceuticals Inc.Immune Pharmaceuticals Inc. (OTCQX and NASDAQ OMX Stockholm Exchange: IMNP) applies a personalized approach to treatment, developing novel, highly targeted antibody therapeutics to improve the lives of patients with inflammatory diseases and cancer. The Company's lead product candidate, bertilimumab, is entering Phase II clinical studies for moderate to severe ulcerative colitis and bullous pemphigoid, with additional studies planned for Crohn's disease and severe asthma. The Company is evaluating the use of its NanomAb® platform, a second generation antibody drug conjugate technology, with chemotherapeutics in order to enhance their safety and efficacy profiles by delivering the medicines directly to cancer cells. The Company's growing oncology pipeline also includes proprietary antibodies and, clinical-stage small molecules that have been shown activity in a variety of solid tumors.
Immune is headquartered in Tarrytown, New York, with its primary research and development facilities in Herzliya-Pituach, Israel.
For more information, visit Immune's website at www.immunepharmaceuticals.com, the content of which is not a part of this press release.
Forward-Looking Statements This news release and any oral statements made with respect to the information contained in this news release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. You are urged to consider statements that include the words "may," "will," "would," "could," "should," "believes," "estimates," "projects," "potential," "expects," "plans," "anticipates," "intends," "continues," "forecast," "designed," "goal" or the negative of those words or other comparable words to be uncertain and forward-looking. Such forward-looking statements include statements that express plans, anticipation, intent, contingency, goals, targets, future development and are otherwise not statements of historical fact. These statements are based on our current expectations and are subject to risks and uncertainties that could cause actual results or developments to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Factors that may cause actual results or developments to differ materially include: the risks associated with the adequacy of our existing cash resources and our ability to continue as a going concern; the risks associated with our ability to continue to meet our obligations under our existing debt agreements; the risk that clinical trials for bertilimumab, crolibulin or AmiKet™ will not be successful; the risk that bertilimumab, crolibulin, AmiKet™ or compounds arising from our NanomAb® program will not receive regulatory approval or achieve significant commercial success; the risk that we will not be able to find a partner to help conduct the Phase III trials for AmiKet™ on attractive terms, a timely basis or at all; the risk that our other product candidates that appeared promising in early research and clinical trials do not demonstrate safety and/or efficacy in larger-scale or later-stage clinical trials; the risk that we will not obtain approval to market any of our product candidates; the risks associated with dependence upon key personnel; the risks associated with reliance on collaborative partners and others for further clinical trials, development, manufacturing and commercialization of our product candidates; the cost, delays and uncertainties associated with our scientific research, product development, clinical trials and regulatory approval process; our history of operating losses since our inception; the highly competitive nature of our business; risks associated with litigation; and risks associated with our ability to protect our intellectual property. These factors and other material risks are more fully discussed in our periodic reports, including our reports on Forms 8-K, 10-Q and 10-K and other filings with the U.S. Securities and Exchange Commission. You are urged to carefully review and consider the disclosures found in our filings which are available at www.sec.gov or at www.immunepharmaceuticals.com. You are cautioned not to place undue reliance on any forward-looking statements, any of which could turn out to be wrong due to inaccurate assumptions, unknown risks or uncertainties or other risk factors.
Selected financial information follows:Immune Pharmaceuticals, Inc.(Unaudited)Selected Consolidated Balance Sheet Data(in $000s)September 30,December 31,20132012Cash and cash equivalents$
95Property and equipment, net5435In-process research and development27,500—Identifiable intangible assets, net3,6803,896Total assets$
4,131Accounts payable and other accrued liabilities$
2,423Notes and loans payable4,868375Deferred tax liability10,870—Total stockholders' equity7,82514Total liabilities and stockholders' equity$
4,131 Immune Pharmaceuticals, Inc.(Unaudited)Selected Consolidated Statement of Operations Data(in $000s except share and per share data)Three Months EndedNine Months EndedSeptember 30, September 30, 2013201220132012Revenue:Licensing and other revenue$
8212;Costs and expenses:General and administrative1,008
3,324Research and development1,007
3,113Total costs and expenses2,015
6,437Loss from operations(1,996)
(6,437)Other income (expense):Interest expense (44)
(32)Derivative liability expense —
(51)Warrant amendment expense (734)
—Liquidation preference granted to founder (2,037)
(2,804)Loss on extinguishment of debt —
(549)Gain on bargain purchase 6,444
(27)Other income (expense), net3,597
(3,463)Net income (loss) before income taxes1,601(3,114)(2,313)(9,900)Income tax expense(3)
—Net income (loss) $
(9,900)Deemed dividends (443)
—Income (loss) attributable to common stockholders$
(9,900)Basic income (loss) per common share$0.14
(1.81)Diluted income (loss) per common share$0.11
(1.81)Weighted average common shares - Basic8,055,360
5,461,288Weighted average common shares - Diluted10,308,296
5,461,288 Immune Pharmaceuticals, Inc.(Unaudited)Selected Consolidated Statement of Cash Flows Data(in $000s)Nine Months Ended September 30,20132012Net cash used in operating activities$
(2,906)Net cash used in investing activities(1,270)(85)Net cash provided by financing activities 4,4181,317Net increase (decrease) in cash and cash equivalents 322(1,674)Cash and cash equivalents at beginning of period951,792Cash and cash equivalents at end of period$
118 Immune Pharmaceuticals, Inc.(Unaudited)Selected Consolidated Statement of Stockholders' Deficit Data(in $000s)Nine Months Ended September 30,20132012Stockholders' equity at beginning of period$
3,196Net loss for the period(2,316)(9,900)Stock-based compensation expense2,2032,985Share and warrant issuance7,1901,411Conversion of Ordinary shares to Founder's shares2,804Warrant amendment expense734—Stockholders' equity at end of period$
496As of November 19, 2013, Immune had 13,276,037 common shares outstanding.
Immune expects to report results for the year ending December 31, 2013 on or about February 28, 2014.
|SOURCE Immune Pharmaceuticals Inc.|
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