Full Press Release Details
AuraSense Therapeutics, LLC)
INDEX TO FINANCIAL STATEMENTS
| PAGE | ||||
| Audited Financial Statements December 31, 2016 | ||||
| Independent Auditors Report | 2 | |||
| Balance Sheets as of December 31, 2016 and 2015 | 3 | |||
| Statements of Operations for the years ended December 31, 2016 and 2015 | 5 | |||
| Statement of Changes in Members Equity and Stockholders Equity for the years ended December 31, 2016 and 2015 | 6 | |||
| Statements of Cash Flows for the years ended December 31, 2016 and 2015 | 8 | |||
| Notes to Financial Statements | 9 |
Independent Auditors Report
The Board of Directors and Stockholders
We have audited the accompanying balance sheets of Exicure, Inc. (formerly AuraSense Therapeutics, LLC) as of December 31, 2016 and 2015, and the related
statements of operations, changes in members equity and stockholders equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with the auditing standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Exicure, Inc. as of December 31, 2016 and 2015, and the results of its operations and its cash flows for the years then ended in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the financial
statements, the Company has suffered recurring losses from operations and will be required to raise additional capital or alternative means of financial support to fund operations. These factors raise substantial doubt about its ability to continue
as a going concern. Management s plans in regard to these matters are also described in note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
March 17, 2017, except for Note 12, as to which the date is October 2, 2017
(formerly AuraSense Therapeutics, LLC)
thousands, except unit, share, and per share data)
| December 31, 2016 | December 31, 2015 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 19,623 | $ | 18,731 | ||||
| Accounts receivable | 71 | |||||||
| Unbilled revenue receivable | 166 | |||||||
| Receivable from related party | 15 | 57 | ||||||
| Prepaid expenses and other assets | 403 | 179 | ||||||
| Total current assets | 20,041 | 19,204 | ||||||
| Property and equipment, net | 503 | 385 | ||||||
| Deposit on leased facility | 32 | 32 | ||||||
| Total assets | $ | 20,576 | $ | 19,621 | ||||
| LIABILITIES AND STOCKHOLDERS EQUITY | ||||||||
| Current liabilities: | ||||||||
| Current portion of long-term debt | $ | 1,213 | $ | |||||
| Accounts payable | 509 | 635 | ||||||
| Accrued Northwestern University License Agreements fee | 1,500 | |||||||
| Accrued legal expenses | 123 | 78 | ||||||
| Accrued payroll-related expenses | 423 | 499 | ||||||
| Current portion of deferred revenue | 8,276 | |||||||
| Other accrued expenses | 114 | 131 | ||||||
| Total current liabilities | 12,158 | 1,343 | ||||||
| Long-term debt, net | 4,454 | |||||||
| Preferred stock warrant liability | 201 | |||||||
| Deferred revenue, net of current portion | 1,034 | |||||||
| Other noncurrent liabilities | 281 | 48 | ||||||
| Total liabilities | $ | 18,128 | $ | 1,391 |
See Accompanying Notes to Financial Statements.
(formerly AuraSense Therapeutics, LLC)
thousands, except unit, share, and per share data)
| December 31, 2016 | December 31, 2015 | |||||||
| Stockholders equity: | ||||||||
| Non-redeemable preferred stock | ||||||||
| Series C: $0.00001 par value per share; 21,000,000 shares authorized; 14,660,096 issued and outstanding, December 31, 2016; liquidation value of $50,577 at December 31, 2016; 14,464,445 shares issued and outstanding, December 31, 2015 | 33,483 | 33,039 | ||||||
| Series B-2: $0.00001 par value per share; 2,827,844 shares authorized, issued and outstanding, December 31, 2016 and 2015 | 3,641 | 3,641 | ||||||
| Series B-1: $0.00001 par value per share; 4,937,813 shares authorized, issued and outstanding, December 31, 2016 and 2015 | 5,371 | 5,371 | ||||||
| Series A: $0.00001 par value per share; 22,924,209 shares authorized, issued and outstanding, December 31, 2016 and 2015 | 135 | 135 | ||||||
| Common stock, $0.00001 par value per share; 62,000,000 shares authorized; 265,158 issued and outstanding December 31, 2016; 166,875 issued and outstanding, December 31, 2015 | ||||||||
| Additional paid-in capital | (17,578 | ) | (18,293 | ) | ||||
| Accumulated deficit | (22,604 | ) | (5,663 | ) | ||||
| Total stockholders equity | 2,448 | 18,230 | ||||||
| Total liabilities and stockholders equity | $ | 20,576 | $ | 19,621 |
See Accompanying Notes to Financial Statements.
(formerly AuraSense Therapeutics, LLC)
STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
| Year ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| Revenue: | ||||||||
| Grant income | $ | 346 | $ | 2,388 | ||||
| Collaboration revenue | 690 | |||||||
| Total revenue | 1,036 | 2,388 | ||||||
| Operating expenses: | ||||||||
| Research and development expense | 13,659 | 10,124 | ||||||
| General and administrative expense | 3,539 | 5,408 | ||||||
| Total operating expenses | 17,198 | 15,532 | ||||||
| Operating loss | (16,162 | ) | (13,144 | ) | ||||
| Other income (expense), net: | ||||||||
| Interest expense | (724 | ) | ||||||
| Other income (loss), net | (55 | ) | (7 | ) | ||||
| Total other income (loss), net | (779 | ) | (7 | ) | ||||
| Net loss attributable to members of AuraSense Therapeutics, LLC | (7,488 | ) | ||||||
| Net loss attributable to stockholders of Exicure, Inc. | (16,941 | ) | (5,663 | ) | ||||
| Net loss attributable to members of AuraSense Therapeutics, LLC/stockholders of Exicure, Inc. | $ | (16,941 | ) | $ | (13,151 | ) | ||
| Basic and diluted loss per common share | $ | (74.16 | ) | $ | (121.63 | ) | ||
| Basic and diluted weighted-average common shares outstanding | 228,447 | 108,123 |
See Accompanying Notes to Financial Statements.
(formerly AuraSense Therapeutics, LLC)
STATEMENT OF CHANGES IN MEMBERS EQUITY AND STOCKHOLDERS EQUITY
(in thousands, except units and shares)
| Non-Redeemable Preferred Units | Additional | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Class C | Class B (Series B-2) | Class B (Series B-1) | Class A | Common Units | Paid-in- | Accumulated | Members | |||||||||||||||||||||||||||||||||||||||||||||
| Units | $ | Units | $ | Units | $ | Units | $ | Units | $ | Capital | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2014 | 5,911,450 | $ | 13,479 | 2,827,848 | $ | 3,641 | 4,937,818 | $ | 5,371 | 22,924,210 | $ | 135 | $ | $ | 120 | $ | (11,349 | ) | $ | 11,397 | ||||||||||||||||||||||||||||||||
| Issuance of membership units, net | 2,010,219 | 4,581 | 4,581 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Exercise of options | 153,750 | 61 | (12 | ) | 49 | |||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | 138 | 138 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to members of AuraSense Therapeutics, LLC | (7,488 | ) | (7,488 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Limited Liability Company to Corporation | (7,921,669 | ) | (18,060 | ) | (2,827,848 | ) | (3,641 | ) | (4,937,818 | ) | (5,371 | ) | (22,924,210 | ) | (135 | ) | (153,750 | ) | (61 | ) | (246 | ) | 18,837 | (8,677 | ) | |||||||||||||||||||||||||||
| Issuance of preferred stock, net | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to stockholders of Exicure, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2015 | $ | $ | $ | $ | $ | $ | $ | $ |
See Accompanying Notes to Financial Statements.
(formerly AuraSense Therapeutics, LLC)
STATEMENT OF CHANGES IN MEMBERS EQUITY AND STOCKHOLDERS EQUITY
(in thousands, except units and shares)
| Non-Redeemable Preferred Stock | Additional | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Series C | Series B-2 | Series B-1 | Series A | Common Stock | Paid-in- | Accumulated | Total Stockholders | |||||||||||||||||||||||||||||||||||||||||||||
| Shares | $ | Shares | $ | Shares | $ | Shares | $ | Shares | $ | Capital | Deficit | Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2014 | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||||
| Exercise of options | 13,125 | 4 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | 233 | 233 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Conversion of Limited Liability Company to Corporation | 7,921,662 | 18,060 | 2,827,844 | 3,641 | 4,937,813 | 5,371 | 22,924,209 | 135 | 153,750 | (18,530 | ) | 8,677 | ||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock, net | 6,542,783 | 14,979 | 14,979 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to stockholders of Exicure, Inc. | (5,663 | ) | (5,663 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2015 | 14,464,445 | $ | 33,039 | 2,827,844 | $ | 3,641 | 4,937,813 | $ | 5,371 | 22,924,209 | $ | 135 | 166,875 | $ | $ | (18,293 | ) | $ | (5,663 | ) | $ | 18,230 | ||||||||||||||||||||||||||||||
| Exercise of options | 98,283 | 33 | 33 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Equity-based compensation | 682 | 682 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of preferred stock, net | 195,651 | 444 | 444 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to stockholders of Exicure, Inc. | (16,941 | ) | (16,941 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2016 | 14,660,096 | $ | 33,483 | 2,827,844 | $ | 3,641 | 4,937,813 | $ | 5,371 | 22,924,209 | $ | 135 | 265,158 | $ | $ | (17,578 | ) | $ | (22,604 | ) | $ | 2,448 |
See Accompanying Notes to Financial Statements.
(formerly AuraSense Therapeutics, LLC)
STATEMENTS OF CASH FLOWS
| Year Ended December 31, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (16,941 | ) | $ | (13,151 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
| Depreciation and amortization | 180 | 133 | ||||||
| Equity-based compensation | 682 | 370 | ||||||
| Amortization of long-term debt issuance costs and fees | 193 | |||||||
| Change in fair value of preferred stock warrant liability | 67 | |||||||
| Changes in operating assets and liabilities: | ||||||||
| Unbilled revenue receivable and accounts receivable | 237 | 316 | ||||||
| Receivable from related party | 42 | 38 | ||||||
| Prepaid expenses and other current assets | (244 | ) | (128 | ) | ||||
| Accounts payable | (126 | ) | (18 | ) | ||||
| Accrued Northwestern University License Agreements fee | 1,500 | |||||||
| Accrued legal expenses | 45 | 29 | ||||||
| Accrued payroll-related expenses | (76 | ) | 268 | |||||
| Other accrued expenses | 79 | (63 | ) | |||||
| Deferred revenue | 9,310 | |||||||
| Other noncurrent liabilities | 2 | 4 | ||||||
| Net cash used in operating activities | (5,050 | ) | (12,202 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Capital expenditures | (394 | ) | (12 | ) | ||||
| Net cash used in investing activities | (394 | ) | (12 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from long-term borrowing | 6,000 | |||||||
| Proceeds from preferred unit/stock offerings | 450 | 19,672 | ||||||
| Proceeds from exercise of common unit/stock options | 33 | 53 | ||||||
| Payment of long-term debt fees and issuance costs | (141 | ) | ||||||
| Payment of preferred unit/stock financing costs | (6 | ) | (112 | ) | ||||
| Net cash provided by financing activities | 6,336 | 19,613 | ||||||
| Net increase in cash and cash equivalents | 892 | 7,399 | ||||||
| Cash and cash equivalents beginning of period | 18,731 | 11,332 | ||||||
| Cash and cash equivalents end of period | $ | 19,623 | $ | 18,731 | ||||
| Supplemental disclosure of cash flow information | ||||||||
| Non-cash financing activities: | ||||||||
| Debt issuance costs-preferred stock warrants | $ | 134 | $ | |||||
| Debt issuance costs-accrued and payable loan fees and issuance costs | 231 | |||||||
| Non-cash investing activities (capital expenditure) included in other accrued expenses | (11 | ) | (107 | ) |
See Accompanying Notes to Financial Statements.
(formerly AuraSense Therapeutics, LLC)
NOTES TO FINANCIAL STATEMENTS
(in thousands, except unit, share, per unit, and per share data)
1. Description of Business and Basis of Presentation
Description of Business
Exicure, Inc. (formerly AuraSense Therapeutics, LLC) (the Company) is a clinical-stage biotechnology company developing gene regulatory and
immuno-oncology therapeutics based on the Company s proprietary Spherical Nucleic Acid, or SNA, technology. The Company believes the design of the Company s SNAs gives rise to chemical and biological properties that may provide advantages
over other nucleic acid therapeutics and enable therapeutic activity outside of the liver. The Company intends to build a leading nucleic acid therapeutics company focused on the discovery and development of therapeutics based on the Company s
proprietary SNA technology, either on its own or in collaboration with pharmaceutical partners.
On July 9, 2015, AuraSense
Therapeutics, LLC was converted into AuraSense Therapeutics, Inc., a Delaware corporation, and on the same date changed its name to Exicure, Inc., which actions together are referred to in these Notes to Financial Statements as the corporate
conversion. In connection with the corporate conversion, each common unit, Class A unit, Class B-I unit, Class B-II unit and Class C unit of
AuraSense Therapeutics, LLC issued and outstanding immediately prior to the effectiveness of the corporate conversion was converted into one share of common stock, Series A preferred stock, Series B-1
preferred stock, Series B-2 preferred stock and Series C preferred stock of Exicure, Inc., respectively. No preferred stock was provided in consideration for fractional membership units. Each outstanding
option to purchase one common unit of AuraSense Therapeutics, LLC was converted into an option to purchase one share of common stock of Exicure, Inc.
AuraSense Therapeutics, LLC was formed on June 13, 2011 as a wholly owned subsidiary of AuraSense, LLC, but did not conduct substantive
business until December 12, 2011, which is considered the inception date. On December 12, 2011, AuraSense, LLC contributed the assets and liabilities comprising the business of the Company to the Company through a Bill of Sale and
Assumption Agreement. Pursuant to this agreement AuraSense, LLC received 22,924,210 Class A Units of the Company.
liabilities contributed by AuraSense, LLC were transferred at their historical cost and consisted of an unbilled revenue receivable of $143, scientific equipment of $309 and a liability of $317 for accrued legal expenses related to patent
protection. The net book value of Parent s contribution at inception was $135.
Also on December 12, 2011, the Company and
AuraSense, LLC entered into a Partial Assignment of License agreement whereby certain license rights held by AuraSense, LLC pursuant to a License Agreement with Northwestern University were assigned to the Company. Under the terms of the License
Agreement and the Partial Assignment of License, Northwestern University received 1% of the Class A units received by AuraSense, LLC in the formation transaction, which amounted to 229,242 units. Also on December 12, 2011, the Company sold
4,937,818 of its Class B (Series B-1) units with net proceeds of $5,371.
Company sold 2,827,848 of its Class B (Series B-2) units for net proceeds of $3,641.
2014, the Company sold 5,911,450 of its Class C units for net proceeds of $13,479.
In February 2015, the Company sold 2,010,219 of
its Class C units for net proceeds of $4,581.
In October 2015, the Company sold 6,542,783 shares of its Series C preferred stock for
net proceeds of $14,979.
In January 2016, the Company sold 195,651 shares of its Series C preferred stock at a price of $2.30 per share
for net proceeds of $444.
These transactions are described in more detail below in Note 5, Stockholders Equity.
(formerly AuraSense Therapeutics, LLC)
NOTES TO FINANCIAL STATEMENTS
(in thousands, except unit, share, per unit, and per share data)
Basis of presentation
The accompanying financial statements as of, and for the years ended, December 31, 2016 and 2015, have been presented in conformity with
accounting principles generally accepted in the United States of America (GAAP).
As of December 31, 2016, the Company has generated an accumulated deficit of $41,441 since inception and expects to incur significant
expenses and negative cash flows for the foreseeable future. Based on the Company s current operating plans, existing working capital at December 31, 2016 is not sufficient to sustain operations beyond September 30, 2017. As discussed
in Note 12, Subsequent Events, on September 26, 2017 the Company completed the Merger with Max-1 Acquisition Corporation. and the Private Placement for the sale of approximately $20,302 of Exicure
shares of Common Stock, or 6,767,360 shares, at a price of $3.00 per share (see Note 12, Subsequent Events). The combined company is expected to have approximately $17,394 in additional capital after the Private Placement. Management believes
cash as of December 31, 2016, when combined with the cash raised in connection with the Private Placement, is sufficient to fund the Company through September 30, 2018. Management believes that it will be able to obtain additional working
capital through equity financings, partnerships and licensing, or other arrangements, to fund operations. However, there can be no assurance that such additional financing, if available, can be obtained on terms acceptable to the Company. If the
Company is unable to obtain such additional financing, the Company will need to reevaluate future operating plans. Accordingly, there is substantial doubt regarding the Company s ability to continue as a going concern.
The accompanying financial statements have been prepared as though the Company will continue as a going concern, which contemplates the
realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
On September 26, 2017, the Company completed the Merger with Max-1 Acquisition
Corporation. (see Note 12, Subsequent Events). Pursuant to the terms of the Merger, each outstanding share of Exicure capital stock (other than shares of Series C Preferred Stock of Exicure) was converted into 0.49649 shares of Max-1 Acquisition Corporation s Common Stock and each outstanding share of Series C Preferred Stock of Exicure was converted into 0.7666652 shares of Max-1 Acquisition
Corporation s Common Stock.
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases its estimates on
certain assumptions which it believes are reasonable in the circumstance and while actual results could differ from those estimates, management does not believe that any change in those assumptions in the near term would have a significant effect on