Galecto Inc.
Galecto Inc.
10/07/2024 | Press release | Distributed by Public on 10/07/2024 07:16
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Form 8 K
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On October 7, 2024, the Company completed the Closing of the Asset Purchase as further described under Item 1.01 of this Current Report on Form 8-K.
The following unaudited pro forma condensed consolidated financial information is based upon the historical financial statements of the Company, adjusted to reflect the Closing of the Asset Purchase. The following unaudited pro forma condensed consolidated financial information of the Company should be read in conjunction with the related notes herein and with the historical consolidated financial statements of the Company and the related notes thereto included in previous filings with the U.S. Securities and Exchange Commission ("SEC").
To provide a better understanding of the impact of the Asset Purchase, the following unaudited pro forma condensed consolidated financial information is presented to reflect how the Asset Purchase might have affected the historical financial statements had the transactions been consummated at an earlier date. The unaudited pro forma condensed consolidated statements of operations and comprehensive loss that follow are presented as if the Closing of the Asset Purchase had occurred on January 1, 2023, the beginning of the earliest period presented. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2024 is presented as if the Closing of the Asset Purchase had occurred on that date.
On August 29, 2024, the Company executed a reverse stock split of the Company's common stock at a ratio of 1-for-25 (the "Reverse Stock Split"). The historical financial information included in the pro forma information has been adjusted to reflect the impact of the Reverse Stock Split.
The unaudited pro forma condensed consolidated financial information presented in accordance with Article 11 of the SEC Regulation S-X ("Article 11 of Regulation S-X"), are for informational purposes only and do not purport to show the results that would have occurred had such transaction been completed as of the date and for the periods presented or which may occur in the future. The unaudited pro forma condensed consolidated financial information constitutes forward-looking information and is subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity. For example, the financial information does not reflect any potential ongoing earnings or costs associated with the Asset Purchase, nor the conversion of the Preferred Stock into shares of Common Stock which is subject to, and contingent upon, Stockholder Approval.
1
GALECTO, INC.
Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 2024
(in thousands, except share and per share amounts)
(Unaudited)
|
Galecto, Inc. |
Asset |
Pro Forma |
||||||
|
Assets |
||||||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ |
22,862 |
$ |
(2,680 |
) |
(a) |
$ |
20,182 |
|
Marketable securities |
- |
- |
- |
|||||
|
Prepaid expenses and other current assets |
2,306 |
- |
2,306 |
|||||
|
Total current assets |
25,168 |
(2,680 |
) |
22,488 |
||||
|
Operating lease right-of-use asset |
76 |
- |
76 |
|||||
|
Equipment, net |
67 |
- |
67 |
|||||
|
Other assets, non-current |
1,986 |
- |
1,986 |
|||||
|
Total assets |
$ |
27,297 |
$ |
(2,680 |
) |
$ |
24,617 |
|
|
Liabilities and stockholders' equity |
||||||||
|
Current liabilities |
||||||||
|
Accounts payable |
$ |
724 |
$ |
- |
$ |
724 |
||
|
Accrued expenses and other current liabilities |
2,985 |
- |
2,985 |
|||||
|
Total current liabilities |
3,709 |
- |
3,709 |
|||||
|
Operating lease liabilities, non-current |
- |
- |
- |
|||||
|
Total liabilities |
3,709 |
- |
3,709 |
|||||
|
Mezzanine equity |
||||||||
|
Preferred stock, par value of $0.00001per share; 10,000,000 |
- |
1,876 |
(b) |
1,876 |
||||
|
Stockholders' equity |
||||||||
|
Common stock, par value of $0.00001per share; 300,000,000 |
- |
- |
(c) |
- |
||||
|
Additional paid-in capital |
290,291 |
732 |
(c) |
291,023 |
||||
|
Accumulated deficit |
(266,900 |
) |
(5,288 |
) |
(d) |
(272,188 |
) |
|
|
Accumulated other comprehensive gain |
197 |
- |
197 |
|||||
|
Total stockholders' equity |
23,588 |
(2,680 |
) |
20,908 |
||||
|
Total liabilities and stockholders' equity |
$ |
27,297 |
$ |
(2,680 |
) |
$ |
24,617 |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
2
GALECTO, INC.
Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss
Year Ended December 31, 2023
(in thousands, except share and per share amounts)
(Unaudited)
|
Galecto, Inc. |
Asset |
Pro Forma |
|||||||
|
Operating expenses |
|||||||||
|
Research and development |
$ |
23,770 |
$ |
5,288 |
(e) |
$ |
29,058 |
||
|
General and administrative |
12,687 |
- |
12,687 |
||||||
|
Restructuring costs |
3,448 |
- |
3,448 |
||||||
|
Total operating expenses |
39,905 |
5,288 |
45,193 |
||||||
|
Loss from operations |
(39,905 |
) |
(5,288 |
) |
(45,193 |
) |
|||
|
Other income, net |
|||||||||
|
Interest income, net |
1,689 |
- |
1,689 |
||||||
|
Gain on sale of equipment |
64 |
- |
64 |
||||||
|
Foreign exchange transaction loss, net |
(197 |
) |
- |
(197 |
) |
||||
|
Total other income, net |
1,556 |
- |
1,556 |
||||||
|
Net loss |
$ |
(38,349 |
) |
$ |
(5,288 |
) |
$ |
(43,637 |
) |
|
Net loss attributable to common shares |
$ |
(38,349 |
) |
$ |
160 |
(f) |
$ |
(38,189 |
) |
|
Net loss per common share, basic and diluted |
$ |
(36.08 |
) |
$ |
- |
$ |
(33.93 |
) |
|
|
Weighted-average number of shares used in computing net loss per common share, basic and diluted |
1,062,872 |
62,594 |
(g) |
1,125,466 |
|||||
|
Net loss attributable to preferred shares |
$ |
- |
$ |
(5,448 |
) |
(f) |
$ |
(5,448 |
) |
|
Net loss per preferred share, basic and diluted |
$ |
- |
$ |
- |
$ |
(33,932 |
) |
||
|
Weighted-average number of shares used in computing net loss per preferred share, basic and diluted |
- |
161 |
(g) |
161 |
|||||
|
Other comprehensive loss, net of tax |
|||||||||
|
Currency translation gain |
393 |
- |
393 |
||||||
|
Unrealized gain on marketable securities |
231 |
- |
231 |
||||||
|
Other comprehensive gain (loss), net of tax |
624 |
- |
624 |
||||||
|
Total comprehensive loss |
$ |
(37,725 |
) |
$ |
(5,288 |
) |
$ |
(43,013 |
) |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
3
GALECTO, INC.
Pro Forma Condensed Consolidated Statement of Operations and Comprehensive Loss
Six Months Ended June 30, 2024
(in thousands, except share and per share amounts)
(Unaudited)
|
Galecto, Inc. |
Asset |
Pro Forma |
|||||||
|
Operating expenses |
|||||||||
|
Research and development |
$ |
4,297 |
$ |
- |
$ |
4,297 |
|||
|
General and administrative |
6,053 |
- |
6,053 |
||||||
|
Restructuring costs |
968 |
- |
968 |
||||||
|
Total operating expenses |
11,318 |
- |
11,318 |
||||||
|
Loss from operations |
(11,318 |
) |
- |
(11,318 |
) |
||||
|
Other income, net |
|||||||||
|
Interest income, net |
470 |
- |
470 |
||||||
|
Foreign exchange transaction gain, net |
75 |
- |
75 |
||||||
|
Total other income, net |
545 |
- |
545 |
||||||
|
Loss before income tax expense |
(10,773 |
) |
- |
(10,773 |
) |
||||
|
Income tax expense |
42 |
- |
42 |
||||||
|
Net loss |
$ |
(10,815 |
) |
$ |
- |
$ |
(10,815 |
) |
|
|
Net loss attributable to common shares |
$ |
(10,815 |
) |
$ |
1,328 |
(f) |
$ |
(9,487 |
) |
|
Net loss per common share, basic and diluted |
$ |
(9.97 |
) |
$ |
- |
$ |
(8.27 |
) |
|
|
Weighted-average number of shares used in computing net loss per common share, basic and diluted |
1,084,565 |
62,594 |
(g) |
1,147,159 |
|||||
|
Net loss attributable to preferred shares |
$ |
- |
$ |
(1,328 |
) |
(f) |
$ |
(1,328 |
) |
|
Net loss per preferred share, basic and diluted |
$ |
- |
$ |
- |
$ |
(8,270 |
) |
||
|
Weighted-average number of shares used in computing net loss per preferred share, basic and diluted |
- |
161 |
(g) |
161 |
|||||
|
Other comprehensive loss, net of tax |
|||||||||
|
Currency translation loss |
(217 |
) |
- |
(217 |
) |
||||
|
Unrealized gain on marketable securities |
34 |
- |
34 |
||||||
|
Other comprehensive gain (loss), net of tax |
(183 |
) |
- |
(183 |
) |
||||
|
Total comprehensive loss |
$ |
(10,998 |
) |
$ |
- |
$ |
(10,998 |
) |
See accompanying notes to the unaudited pro forma condensed consolidated financial statements.
4
GALECTO, INC.
Notes to the Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The unaudited pro forma condensed consolidated financial information was prepared with the Asset Purchase being accounted for as an asset acquisition by the Company under Accounting Standards Codification ("ASC") Topic 805-50. The Company further concluded that the set of assets acquired in the transaction does not represent a business under Securities and Exchange Commission Regulation S-X Rule 11-01.
Upon completion of the Asset Purchase, the Company obtained control of assets consisting primarily of in-process research and development (IPR&D) related to Bridge Medicine's BRM-1420 program. In accordance with U.S. GAAP, the Company must first assess whether an integrated set of assets and activities should be accounted for as an acquisition of a business or an asset acquisition. An initial screen test is completed to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single asset or group of similar assets. If that screen is met, the set is not considered a business and is accounted for as an asset acquisition. The Company will account for the Asset Purchase as an asset acquisition as substantially all of the fair value of the gross assets being acquired is concentrated within Bridge Medicine's programs and development candidates which are considered a group of similar assets.
2. Transaction Adjustments
The unaudited pro forma condensed consolidated financial statements reflect the following notes and adjustments:
|
(a)
Represents the cash paid to Bridge Medicines to reimburse transaction costs as well as the estimated transaction costs associated with the Asset Purchase incurred by the Company.
(b)
Represents the fair value of the Preferred Stock Payment Shares issued to Bridge Medicines in consideration of the assets acquired in the Asset Purchase.
(c)
Represents the fair value of the Common Stock Payment Shares issued to Bridge Medicines in consideration of the assets acquired in the Asset Purchase.
(d)
Represents the earnings adjustments associated with pro forma adjustment (e).
(e)
Represents the expense to be recorded associated with the Asset Purchase. The assets acquired do not have an alternative future use to the Company as defined in Accounting Standards Codification ("ASC") 730, Research and development. Accordingly, the Company recorded the fair value of the consideration transferred for the assets acquired, which is comprised of the cash paid for transaction costs under pro forma adjustment (a), and the fair value of the Payment Shares under pro forma adjustments (b) and (c), as Research and development expense as opposed to capitalizing the costs as an asset.
(f)
Represents the allocation of pro forma net loss between the pro forma common shares and pro forma preferred shares of the Company. The preferred shares participate in earnings and losses of the Company with the Common Stock and are therefore treated as a separate class of common stock for purposes of calculating net loss per share. Net loss per share is provided separately for each class of stock. Subject to receipt of Stockholder Approval, the preferred stock is convertible into common stock at a conversion ratio of 1-to-1,000and participate in losses on an as-converted basis. Accordingly, the net loss per preferred share is 1,000 times the net loss per common share.
(g)
Represents the issuance of shares of Common Stock Payment Shares and Preferred Stock Payment Shares to Bridge Medicines in consideration of the assets acquired in the Asset Purchase.
|
5