Exhibit 99.2
ORE PHARMACEUTICALS INC.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed financial statements as of and for the nine months ended September 30, 2007 and for the three years ended December 31, 2006 have been derived from the historical consolidated financial statements of Ore Pharmaceuticals Inc (previously named Gene Logic Inc. (the “Company”)) to give effect to the sale of the assets related to the Company’s Genomics Business associated with the business of developing, operating and licensing databases of genomics and toxicogenomcs data and related software and providing genomic and genetic data generation and analysis services and other related services (the “Genomics Assets”) to and the assumption of certain liabilities and ongoing contractual obligations by Ocimum Biosolutions Inc. (“Ocimum”) that occurred at closing as if it occurred as of the earlier dates described below. The following unaudited pro forma consolidated condensed financial statements reflect the Company’s continued ownership of its molecular diagnostics and drug repositioning assets.
The unaudited pro forma consolidated condensed balance sheet as of September 30, 2007 reflects the financial position of the Company after giving effect to the disposition of the Genomics Assets, the assumption of certain liabilities and ongoing contractual obligations and the receipt of net proceeds as if the disposition occurred on September 30, 2007.
The unaudited pro forma consolidated condensed statement of operations for the nine months ended September 30, 2007 assumes the disposition of the Genomics Assets and the assumption of certain liabilities and ongoing contractual obligations occurred on January 1, 2007. The unaudited pro forma consolidated condensed statement of operations for the three years ended December 31, 2006 assumes the disposition of the Genomics Assets and the assumption of certain liabilities and ongoing contractual obligations occurred on January 1st of each year.
The sale price included in the unaudited pro forma consolidated condensed financial statements is $10,000,000 (including $7,000,000 in cash and a $3,000,000 promissory note due 18 months from the date of closing), subject to adjustment based on revisions to the carrying value of a certain liability assumed by Ocimum at closing. The net proceeds of the sale of the Genomics Assets (net of costs associated with the sale) are estimated to be $8,600,000, of which, $981,000 of costs associated with the sale have already been recorded in the Company’s historical consolidated financial statements.
The pro forma adjustments are described in the accompanying notes and are based upon available information and various assumptions that management believes are reasonable. These adjustments give effect to events directly attributable to the transaction.
The accompanying unaudited pro forma financial information should be read in conjunction with the historical consolidated financial statements and the related notes thereto of the Company. The unaudited pro forma financial information is not necessarily indicative of the operating results or financial position that would have occurred if the transaction had been consummated at the times indicated, nor is it necessarily indicative of the future financial position and the results of operations of the Company.
ORE PHARMACEUTICALS INC. |
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET |
(in thousands) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | September 30, 2007 |
| | | Ore Pharma | | | Pro Forma | | | | | Total |
| | | Historical | | | Adjustments | | | | | Pro Forma |
ASSETS | | | | | | | | | | |
| Current assets: | | | | | | | | | | |
| Cash and cash equivalents | | $ | 22,640 | | | $ | 6,581 | | (1 | ) | | $ | 29,221 |
| Marketable securities available-for-sale | | | 8,917 | | | | - | | | | | | 8,917 |
| Accounts receivable, net | | | 615 | | | | 973 | | (1 | ) | | | 1,588 |
| Unbilled services | | | 602 | | | | (474 | ) | (1 | ) | | | 128 |
| Inventory, net | | | 1,156 | | | | (1,156 | ) | (1 | ) | | | - |
| Prepaid expenses | | | 1,592 | | | | (834 | ) | (1 | ) | | | 758 |
| Other current assets | | | 2,610 | | | | (232 | ) | (1 | ) | | | 2,378 |
| Total current assets | | | 38,132 | | | | 4,858 | | | | | | 42,990 |
| Property and equipment, net | | | 10,415 | | | | (7,974 | ) | (1 | ) | | | 2,441 |
| Long-term investments | | | 2,964 | | | | - | | | | | | 2,964 |
| Goodwill | | | 2,677 | | | | (2,039 | ) | (2 | ) | | | 638 |
| Other intangibles, net | | | 7,122 | | | | (6,229 | ) | (1 | ) | | | 893 |
| Other assets | | | 483 | | | | 3,000 | | (1 | ) | | | 3,483 |
| Total assets | | $ | 61,793 | | | $ | (8,384 | ) | | | | $ | 53,409 |
| | | | | | | | | | | | | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | | | | | | | |
| Current liabilities: | | | | | | | | | | | | | |
| Accounts payable | | $ | 2,383 | | | $ | - | | | | | $ | 2,383 |
| Payable to Bridge Pharmaceuticals | | | 119 | | | | - | | | | | | 119 |
| Accrued compensation and employee benefits | | | 4,169 | | | | (739 | ) | (1 | ) | | | 3,430 |
| Other accrued expenses | | | 2,406 | | | | - | | | | | | 2,406 |
| Accrued restructuring costs | | | 309 | | | | - | | | | | | 309 |
| Current portion of long-term debt | | | 501 | | | | - | | | | | | 501 |
| Deferred revenue | | | 5,018 | | | | (2,572 | ) | (1 | ) | | | 2,446 |
| Total current liabilities | | | 14,905 | | | | (3,311 | ) | | | | | 11,594 |
| Deferred revenue | | | 137 | | | | (137 | ) | (1 | ) | | | - |
| Long-term debt, net of current portion | | | 40 | | | | - | | | | | | 40 |
| Deferred rent | | | 882 | | | | (838 | ) | (3 | ) | | | 44 |
| Stockholders' equity | | | 45,829 | | | | (4,098 | ) | (1 | ) | | | 41,731 |
| Total liabilities and stockholders' equity | | $ | 61,793 | | | $ | (8,384 | ) | | | | $ | 53,409 |
| | | | | | | | | | | | | | |
| See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements. |
ORE PHARMACEUTICALS INC. | |
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS |
(in thousands, except per share data) | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Nine Months Ended September 30, 2007 |
| | | Ore Pharma | | | | | | | | Total | |
| | | Historical | | | Genomics (4) | | | | | Pro Forma | |
| Revenue | | $ | 13,235 | | | $ | 12,356 | | | | $ | 879 | |
| Expenses: | | | | | | | | | | | | | |
| Database production | | | 15,765 | | | | 15,765 | | (5 | ) | | | - | |
| Research and development | | | 7,859 | | | | (705 | ) | (5 | ) | | | 8,564 | |
| Selling, general and administrative | | | 17,044 | | | | 8,393 | | | | | | 8,651 | |
| Total expenses | | | 40,668 | | | | 23,453 | | | | | | 17,215 | |
| Loss from operations | | | (27,433 | ) | | | (11,097 | ) | | | | | (16,336 | ) |
| Interest (income), net | | | (1,594 | ) | | | - | | | | | | (1,594 | ) |
| Other (income) expense | | | 46 | | | | 46 | | | | | | - | |
| Loss from continuing operations | | $ | (25,885 | ) | | $ | (11,143 | ) | | | | $ | (14,742 | ) |
| Basic and diluted net loss per share from continuing operations | | $ | (0.81 | ) | | | | | | | | $ | (0.46 | ) |
| Basic and diluted weighted average shares outstanding | | | 31,865 | | | | | | | | | | 31,865 | |
| | | | | | | | | | | | | | | | |
| See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements. | | |
ORE PHARMACEUTICALS INC. |
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS |
(in thousands, except per share data) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | Year Ended December 31, 2006 |
| | | Ore Pharma | | | | | | | | Total |
| | | Historical | | | Genomics (4) | | | | | Pro Forma |
| Revenue | | $ | 24,346 | | | $ | 24,310 | | | | $ | 36 | |
| Expenses: | | | | | | | | | | | | | |
| Database production | | | 27,408 | | | | 27,408 | | (5 | ) | | | - | |
| Research and development | | | 9,876 | | | | (656 | ) | (5 | ) | | | 10,532 | |
| Selling, general and administrative | | | 22,422 | | | | 10,000 | | | | | | 12,422 | |
| Genomics Division restructuring | | | 5,258 | | | | 2,831 | | (6 | ) | | | 2,427 | |
| Total expenses | | | 64,964 | | | | 39,583 | | | | | | 25,381 | |
| Loss from operations | | | (40,618 | ) | | | (15,273 | ) | | | | | (25,345 | ) |
| Interest (income), net | | | (2,694 | ) | | | - | | | | | | (2,694 | ) |
| Other (income) expense | | | 55 | | | | 55 | | | | | | - | |
| Write-down of long-term equity investment | | | 275 | | | | - | | | | | | 275 | |
| Loss from continuing operations | | $ | (38,254 | ) | | $ | (15,328 | ) | | | | $ | (22,926 | ) |
| Basic and diluted loss per share from continuing operations | | $ | (1.20 | ) | | | | | | | | $ | (0.72 | ) |
| Basic and diluted weighted average shares outstanding | | | 31,807 | | | | | | | | | | 31,807 | |
| | | | | | | | | | | | | | |
| See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements. |
ORE PHARMACEUTICALS INC. |
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS |
(in thousands, except per share data) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | Year Ended December 31, 2005 |
| | | Ore Pharma | | | | | | | | Total |
| | | Historical | | | Genomics (4) | | | | | Pro Forma |
| Revenue | | $ | 57,190 | | | $ | 56,602 | | | | $ | 588 | |
| Expenses: | | | | | | | | | | | | | |
| Database production | | | 31,689 | | | | 31,689 | | (5 | ) | | | - | |
| Research and development | | | 6,812 | | | | (1,504 | ) | (5 | ) | | | 8,316 | |
| Selling, general and administrative | | | 26,788 | | | | 13,567 | | | | | | 13,221 | |
| Total expenses | | | 65,289 | | | | 43,752 | | | | | | 21,537 | |
| Loss from operations | | | (8,099 | ) | | | 12,850 | | | | | | (20,949 | ) |
| Interest (income), net | | | (2,625 | ) | | | - | | | | | | (2,625 | ) |
| Other (income) expense | | | (813 | ) | | | (813 | ) | | | | | - | |
| Write-down of other-than-temporary decline in the value of marketable securities available-for-sale | | | 719 | | | | - | | | | | | 719 | |
| Loss from continuing operations | | $ | (5,380 | ) | | $ | 13,663 | | | | | $ | (19,043 | ) |
| Basic and diluted loss per share from continuing operations | | $ | (0.17 | ) | | | | | | | | $ | (0.60 | ) |
| Basic and diluted weighted average shares outstanding | | | 31,744 | | | | | | | | | | 31,744 | |
| | | | | | | | | | | | | | | |
| See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements. |
ORE PHARMACEUTICALS INC. |
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS |
(in thousands, except per share data) |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | Year Ended December 31, 2004 |
| | | Ore Pharma | | | | | | | | Total |
| | | Historical | | | Genomics (4) | | | | | Pro Forma |
| Revenue | | $ | 52,171 | | | $ | 52,171 | | | | $ | - | |
| Expenses: | | | | | | | | | | | | | |
| Database production | | | 41,870 | | | | 41,870 | | (5 | ) | | | - | |
| Research and development | | | 2,449 | | | | (1,777 | ) | (5 | ) | | | 4,226 | |
| Selling, general and administrative | | | 19,224 | | | | 10,435 | | | | | | 8,789 | |
| Purchased research and development | | | 8,817 | | | | - | | | | | | 8,817 | |
| Total expenses | | | 72,360 | | | | 50,528 | | | | | | 21,832 | |
| Loss from operations | | | (20,189 | ) | | | 1,643 | | | | | | (21,832 | ) |
| Interest (income), net | | | (1,395 | ) | | | - | | | | | | (1,395 | ) |
| Other (income) expense | | | - | | | | - | | | | | | - | |
| Income tax expense | | | 287 | | | | 287 | | | | | | - | |
| Loss from continuing operations | | $ | (19,081 | ) | | $ | 1,356 | | | | | $ | (20,437 | ) |
| Basic and diluted net loss per share from continuing operations | | $ | (0.61 | ) | | | | | | | | $ | (0.65 | ) |
| Basic and diluted weighted average shares outstanding | | | 31,493 | | | | | | | | | | 31,493 | |
| | | | | | | | | | | | | | | |
See accompanying Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements. |
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(in thousands)
The pro forma adjustments footnoted in the unaudited pro forma consolidated condensed financial statements are explained below:
| (1) | These amounts reflect the disposition of the Genomics Assets, the assumption, by Ocimum of certain liabilities and ongoing contractual obligations and the sale price that includes the receipt of cash proceeds of $7,000 and a $3,000 promissory note, which will be due 18 months from the date of closing. Estimated costs at closing associated with the sale ($419) have been reflected in the net proceeds on the Unaudited Pro Forma Consolidated Condensed Balance Sheet at September 30, 2007. The Company will also retain accounts receivable, whether earned or unearned as of closing. |
| (2) | Amount represents the elimination of the historical goodwill amount from the Company’s Genomics Business due to the disposition of the Genomics Assets. |
| (3) | Amount represents the elimination of the historical deferred rent amount due to the assumption by Ocimum of a related ongoing contractual lease obligation. |
| (4) | This column represents the operating results of the Company’s Genomics Assets (“Genomics”) for the respective period. These operating results were consolidated in the historical consolidated condensed financial statements of Ore Pharmaceuticals Inc. and are subtracted to reflect the disposition. |
| (5) | Expenses classified as Database Production that were not eliminated as a result of the disposition of the Genomics Assets have been reclassified to Research and Development. |
| (6) | Amount not eliminated consists of facility expenses related to ongoing contractual lease obligations that would not have been assumed by Ocimum. |
