Full Press Release Details
UPDATED UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
On January 6, 2019, Vital Therapies, Inc.,
or Vital Therapies, a Delaware corporation, and Immunic AG, or Immunic, a stock corporation formed under the laws of Germany
focused on developing novel oral therapies for chronic inflammatory and autoimmune diseases, entered into a definitive
agreement, or the Exchange Agreement, pursuant to which and subject to, among other things, the satisfaction or waiver of the
conditions set forth in the Exchange Agreement, Vital Therapies acquired all of the outstanding shares of Immunic in exchange
for newly-issued shares of Vital Therapies in an all-stock transaction, or the Transaction. The exchange, or the Merger,
constituted a transaction qualifying for federal income tax purposes as a tax-free exchange under the provisions of Section
351(a) of the Internal Revenue Code of 1986, as amended. The Merger closed on April 12, 2019.
Subject to the terms and conditions of the Exchange
Agreement, at the effective time of the exchange, or the Effective Time, (a) each holder of Immunic's outstanding shares
contributed and transferred by assignment all of the Immunic shares held by such holder in exchange for Vital Therapies'
common stock based on the exchange ratio described below. Immediately following the exchange, Immunic AG is a wholly-owned subsidiary
of Vital Therapies and the name of Vital Therapies changed from "Vital Therapies, Inc." to "Immunic, Inc."
Under the exchange ratio provided in the Exchange
Agreement, as of and immediately after the Merger, the Immunic security holders own 88.25% of the aggregate number of shares of
Immunic Inc.'s common stock issued and outstanding plus any common stock equivalent outstanding on the Effective Date, or the Post-Closing
Shares, and the stockholders of Vital Therapies own 11.75% of the aggregate number of Post-Closing Shares, as of the Effective
Date. The aggregate consideration issuable in the Transaction, after giving effect to the reverse stock split, was 8,927,130 shares
of Vital Therapies common stock.
Concurrent with Immunic's entry into the
Exchange Agreement, certain of Immunic's existing security holders entered into an Investment and Subscription Agreement
to purchase shares of Immunic's common stock in a private financing prior to consummation of the Transaction for an aggregate
purchase price of $30.0 million, referred to as the Pre-Closing Financing.
The following unaudited pro forma condensed combined
financial information gives effect to the exchange of all of the outstanding shares of Immunic AG for newly-issued shares of Vital
Therapies in the Transaction, pursuant to the Exchange Agreement between the companies, and were prepared in accordance with the
regulations of the Securities and Exchange Commission, or the SEC. Immunic was determined to be the accounting acquirer based upon
the terms of the Transaction and other factors including:
(i) Immunic's security holders own over
80% of the company, (ii) Immunic directors hold a majority of the board seats in the company, and (iii) Immunic management hold
all key positions in the management of the combined company, immediately following the closing of the Transaction.
In the unaudited pro forma condensed combined
financial statements, the Transaction is recorded as a business combination using the acquisition method of accounting under accounting
principles generally accepted in the United States, or "U.S. GAAP". The Transaction is accounted for as a reverse acquisition
under the accounting guidance and Immunic, as the accounting acquirer, recorded the assets acquired and liabilities assumed of
Vital Therapies in the Transaction at their fair values as of the acquisition date. Vital Therapies and Immunic have determined
a purchase price calculated as described in Note 3 to the unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined balance
sheet as of March 31, 2019 gives effect to the Transaction as if it took place on March 31, 2019 and combines the historical balance
sheets of Vital Therapies and Immunic as of such date. The unaudited pro forma condensed combined statements of operations for
the three months ended March 31, 2019 and for the year ended December 31, 2018 gives effect to the Transaction as if it took place
on January 1, 2019, and 2018, respectively, and combines the historical results of Vital Therapies and Immunic for each period.
The historical financial statements of Vital Therapies and Immunic have been adjusted to give pro forma effect to events that are
(i) directly attributable to the Transaction, (ii) factually supportable, and (iii) with respect to the unaudited pro forma condensed
combined statements of operations, at the date hereof are expected to have a continuing impact on the combined companies'
Immunic has not completed the detailed
valuations necessary to estimate the fair value of the assets acquired and the liabilities assumed from Vital Therapies and
the related allocations of purchase price. Additionally, a final determination of the fair value of assets acquired and
liabilities assumed from Vital Therapies will be based on the actual net tangible and intangible assets and liabilities of
Vital Therapies that existed as of the closing date. Accordingly, the pro forma purchase price adjustments presented herein
are preliminary. Immunic estimated the fair value of Vital Therapies' assets and liabilities based on discussions with Vital
Therapies' management, due diligence and preliminary work performed by third-party valuation specialists. As the final
valuations are being performed, increases or decreases in the fair value of relevant balance sheet amounts will result in
adjustments, which may result in material differences from the information presented herein.
The unaudited pro forma condensed combined financial
information does not give effect to the potential impact of current financial conditions, regulatory matters, operating efficiencies
or other savings or expenses that may be associated with the integration of the two companies, if any. The unaudited pro forma
condensed combined financial information is preliminary and has been prepared for informational purposes only and is not necessarily
indicative of the financial position or results of operations in future periods or the results that actually would have been realized
had Vital Therapies and Immunic been a combined company during the specified periods.
This Updated Unaudited Pro Forma Condensed Combined Financial
Information should be read in conjunction with our audited consolidated financial statements as of and for the years ended December
31, 2018 and 2017 and our unaudited condensed consolidated financial statements as of and for the three months ended March 31,
2019 and 2018 filed in our Current Report on Form 8-K filed on June 21, 2019.
Unaudited Pro Forma Condensed
Combined Balance Sheet March 31, 2019
| Vital Therapies | Immunic U.S. GAAP Adjusted | Pro Forma Adjustments | Note | Pro Forma Combined | ||||||||||||||||
| Assets | ||||||||||||||||||||
| Current assets | ||||||||||||||||||||
| Cash and cash equivalents | $ | 9,595 | $ | 7,593 | $ | 30,026 | A | $ | 47,214 | |||||||||||
| Restricted cash | - | 20,426 | (20,426 | ) | A | - | ||||||||||||||
| Prepaid expenses and other current assets | 393 | 502 | 914 | B | 1,809 | |||||||||||||||
| Total current assets | 9,988 | 28,521 | 10,514 | 49,023 | ||||||||||||||||
| Property and equipment, net | 482 | 41 | (146 | ) | I | 377 | ||||||||||||||
| Other assets | 12 | 74 | (12 | ) | H | 74 | ||||||||||||||
| Intangible assets, net | - | - | - | - | ||||||||||||||||
| In process research and development | - | - | 764 | C | 764 | |||||||||||||||
| Goodwill | - | - | 33,103 | D | 33,103 | |||||||||||||||
| Total assets | $ | 10,482 | 28,636 | $ | 44,223 | 83,341 | ||||||||||||||
| Liabilities, Preferred Stock and Stockholders' Equity (Deficit) | ||||||||||||||||||||
| Current liabilities: | ||||||||||||||||||||
| Accounts payable | $ | 184 | 511 | $ | - | $ | 695 | |||||||||||||
| Accrued expenses and other current liabilities | 1,249 | 655 | 5,812 | E | 7,716 | |||||||||||||||
| Total current liabilities | 1,433 | 1,166 | 5,812 | 8,411 | ||||||||||||||||
| Long term liabilities | - | 48 | - | 48 | ||||||||||||||||
| Series A-2 Convertible preferred stock, 1.00 par value, 299,456 shares authorized, issued and outstanding at March 31, 2019 and December 31, 2018, Liquidation Preference 47,465 ($53,237) as of March 31, 2019 | - | 34,313 | (34,313 | ) | A | - | ||||||||||||||
| Series A-1 Convertible preferred stock, 1.00 par value,13,541 authorized, issued and outstanding at March 31, 2019 and December 31, 2018, Liquidation Preference 4,438 ($4,978) at March 31, 2019 | - | 2,879 | (2,879 | ) | A | - | ||||||||||||||
| Stockholders' equity (deficit): | ||||||||||||||||||||
| Common Stock | 4 | 56 | (56 | ) | G | - | ||||||||||||||
| (4 | ) | G | - | |||||||||||||||||
| Additional paid-in capital | 355,874 | - | 30,026 | A | 115,527 | |||||||||||||||
| 34,313 | A | |||||||||||||||||||
| 2,879 | A | |||||||||||||||||||
| 8,853 | F | |||||||||||||||||||
| (316,418 | ) | G | ||||||||||||||||||
| Stock subscription not yet issued | - | 20,531 | (20,531 | ) | A | - | ||||||||||||||
| Accumulated other comprehensive income | 80 | (1,066 | ) | (80 | ) | G | (961 | ) | ||||||||||||
| 105 | A | |||||||||||||||||||
| Accumulated deficit | (346,909 | ) | (29,291 | ) | (1,540 | ) | E | (39,684 | ) | |||||||||||
| (8,853 | ) | F | ||||||||||||||||||
| 346,909 | G | |||||||||||||||||||
| Total stockholders' equity (deficit) | 9,049 | (9,770 | ) | 75,603 | 74,882 | |||||||||||||||
| Total liabilities, preferred stock and stockholders' equity (deficit) | $ | 10,482 | $ | 28,636 | $ | 44,223 | $ | 83,341 |
See accompanying notes to the unaudited pro forma
condensed combined financial statements.
Condensed Combined Statement of Operations For the Three Months Ended March 31, 2019
(in thousands, except
share and per share amounts)
| Vital Therapies | Immunic U.S. GAAP Adjusted | Pro Forma Adjustments | Note | Pro Forma Combined | Note | |||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||
| Research and development | $ | 494 | $ | 3,355 | $ | - | $ | 3,849 | ||||||||||||||
| General and administrative | 2,690 | 1,307 | - | 3,997 | ||||||||||||||||||
| Severance costs | 6,369 | - | - | 6,369 | ||||||||||||||||||
| Total operating expenses | 9,553 | 4,662 | - | 14,215 | ||||||||||||||||||
| Loss from operations | (9,553 | ) | (4,662 | ) | - | (14,215 | ) | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Interest income (expense), net | 62 | - | - | 62 | ||||||||||||||||||
| Other income (expense), net | (2 | ) | 349 | - | 347 | |||||||||||||||||
| Total other income (expense) | 60 | 349 | - | 409 | ||||||||||||||||||
| Net loss | $ | (9,493 | ) | $ | (4,313 | ) | $ | - | $ | (13,806 | ) | |||||||||||
| Net loss per share, basic and diluted | $ | (0.22 | ) | $ | (86.26 | ) | $ | - | $ | (1.38 | ) | |||||||||||
| Weighted-average common shares outstanding, basic and diluted | 43,714,626 | 50,000 | (390,772,012 | ) | 10,019,795 | J |
See accompanying notes to the unaudited pro forma
condensed combined financial statements.
Condensed Combined Statement of Operations For the Year Ended December 31, 2018
(in thousands, except
share and per share amounts)
| Vital Therapies | Immunic U.S. GAAP Adjusted | Pro Forma Adjustments | Note | Pro Forma Combined | Note | |||||||||||||||||
| Operating Expenses: | ||||||||||||||||||||||
| Research and development | $ | 24,825 | $ | 9,595 | $ | (1,000 | ) | B | $ | 33,420 | ||||||||||||
| General and administrative | 13,585 | 2,402 | - | 15,987 | ||||||||||||||||||
| Severance costs | 2,395 | - | - | 2,395 | ||||||||||||||||||
| Impairment loss | 1,219 | - | - | 1,219 | ||||||||||||||||||
| Total operating expenses | 42,024 | 11,997 | (1,000 | ) | 53,021 | |||||||||||||||||
| Loss from operations | (42,024 | ) | (11,997 | ) | 1,000 | (53,021 | ) | |||||||||||||||
| Other income (expense): | ||||||||||||||||||||||
| Interest income (expense), net | 521 | (1 | ) | - | 520 | |||||||||||||||||
| Other income (expense), net | 28 | 456 | - | 484 | ||||||||||||||||||
| Total other income (expense) | 549 | 455 | - | 1,004 | ||||||||||||||||||
| Net loss | $ | (41,475 | ) | $ | (11,542 | ) | $ | 1,000 | $ | (52,017 | ) | |||||||||||
| Net loss per share, basic and diluted | $ | (0.98 | ) | $ | (230.84 | ) | $ | - | $ | (5.21 | ) | |||||||||||
| Weighted-average common shares | ||||||||||||||||||||||
| outstanding, basic and diluted | 42,369,245 | 50,000 | (389,460,265 | ) | 9,986,161 |
See accompanying notes to the unaudited pro forma
condensed combined financial statements.
Notes to the Unaudited Pro Forma Condensed Combined
Financial Information
On January 6, 2019, Vital Therapies, Inc., a
Delaware corporation, and Immunic AG, a stock corporation formed under the laws of Germany focused on developing novel oral therapies
for chronic inflammatory and autoimmune diseases, entered into a definitive agreement, or the Exchange Agreement, pursuant to which
and subject to, among other things, the satisfaction or waiver of the conditions set forth in the Exchange Agreement, Vital Therapies
acquired all of the outstanding shares of Immunic in exchange for newly-issued shares of Vital Therapies in an all-stock transaction,
or the Transaction. The exchange constituted a transaction qualifying for federal income tax purposes as a tax-free exchange under
the provisions of Section 351(a) of the Internal Revenue Code of 1986, as amended. The Merger closed on April 12, 2019.
Subject to the terms and conditions of the Exchange
Agreement, at the effective time of the exchange, or the Effective Time, (a) each holder of Immunic's outstanding shares
contributed and transferred by assignment all of the Immunic shares held by such holder in exchange for Vital Therapies'
common stock based on the exchange ratio described below. Immediately following the exchange, Immunic AG is a wholly-owned subsidiary
of Vital Therapies and the name of Vital Therapies changed from "Vital Therapies, Inc." to "Immunic, Inc."
Under the exchange ratio provided in the Exchange
Agreement, as of and immediately after the merger, the Immunic security holders own 88.25% of the aggregate number of shares of
the company's common stock issued and outstanding plus any common stock equivalent outstanding on the Effective Date, or