UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2020
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO
Commission File Number 001-39351
NUVATION BIO INC.
(Exact name of Registrant as specified in its Charter)
| Delaware | 85-0862255 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
1500 Broadway, Suite 1401 New York, New York | 10036 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (332) 208-6102
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A Common Stock, Par Value $0.0001 Per Share Warrants to Purchase Class A Common Stock | NUVB NUVB.WS | New York Stock Exchange New York Stock Exchange |
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YES ☐ NO ☒
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. YES ☐ NO ☒
Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒ NO ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YES ☒ NO ☐
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐ NO ☒
The registrant’s common stock was not publicly traded as of the last business day of the registrant’s most recently completed second fiscal quarter.
As of March 9, 2021, the registrant had 216,650,055 shares of Class A common stock and 1,000,000 shares of Class B common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
None.
| Page | ||||||
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 2 | ||||
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 5 | ||||
Item 8. | Consolidated Financial Statements and Supplementary Data | 5 | ||||
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 5 | ||||
Item 9A. | Controls and Procedures | 5 | ||||
Item 9B. | Other Information | 6 | ||||
Item 14. | Principal Accounting Fees and Services | 7 | ||||
Item 15. | Exhibits, Financial Statement Schedules | 7 | ||||
Item 16. | Form 10-K Summary | 9 | ||||
| Signatures | 10 | |||||
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EXPLANATORY NOTE
On February 10, 2021, (the “Closing Date”), Nuvation Bio Inc., a Delaware corporation (“Legacy Nuvation Bio”), Panacea Acquisition Corp., a Delaware corporation, (“Panacea”) and Panacea Merger Subsidiary Corp, a Delaware corporation and a direct, wholly owned subsidiary of Panacea (“Merger Sub”) consummated the transactions contemplated by an Agreement and Plan of Merger among them dated October 20, 2020 (the “Merger Agreement”).
Pursuant to the terms of the Merger Agreement, a combination of Panacea and Legacy Nuvation Bio was effected through the merger of Merger Sub with and into Legacy Nuvation Bio, with Legacy Nuvation Bio surviving as a wholly owned subsidiary of Panacea (the “Merger”). On the Closing Date, Legacy Nuvation Bio changed its name to Nuvation Bio Operating Company Inc. and Panacea changed its name to Nuvation Bio Inc. (the “Company,” “Nuvation Bio,” “we” or “us”).
We are filing this Amendment No. 1 to Annual Report on Form 10-K/A (this “Amendment”) to amend our Annual Report on Form 10-K for the period ended December 31, 2020, originally filed with the Securities and Exchange Commission (the “SEC”), on March 11, 2021 (the “Original Filing”), to restate Panacea’s financial statements as of and for the period ended December 31, 2020. This Form 10-K/A amends the Original Filing to reflect the correction of an error in Panacea’s unaudited interim financial statements as of and for the periods ended June 30, 2020 and September 30, 2020, and audited financial statements as of and for the period ended December 31, 2020. The correction involves only non-cash adjustments.
In this Amendment, unless the context otherwise requires, we use the term “Merger” to refer to the Merger collectively with the other transactions described in the Merger Agreement. In the portions of the Original Filing that are not amended hereby, these transactions are sometimes referred to collectively as the “Business Combination.”
The restatement results from the Panacea’s prior accounting for its outstanding warrants issued in connection with its initial public offering in July 2020 and forward purchase agreements (providing for the potential future issuance of securities, including additional warrants) entered into with certain anchor investors at that time (the “FPA”) as components of equity instead of as derivative liabilities. The warrant agreement governing the warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant.
Upon review of the “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” promulgated by the SEC on April 12, 2021 (the “SEC Staff Statement”), our management further evaluated the warrants under Financial Accounting Standard Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. Specifically, the exercise of the warrants may be settled in cash upon the occurrence of a tender offer or exchange that involves more than 50% of the outstanding shares of our Class A common stock. Because such a tender offer may not result in a change in control and trigger cash settlement and we do not control the occurrence of such event, we concluded that the warrants do not meet the conditions to be classified in equity.
As a result of the SEC Staff statement and in light of evolving views as to certain provisions commonly included in warrants issued by SPAC, we re-evaluated Panacea’s accounting for its public warrants and private placement warrants issued in connection with its initial public offering (the “Warrants”) as well as for the FPA entered into with certain anchor investors (the “FPA”), and concluded that the Warrants and FPA should be treated as derivative liabilities pursuant to ASC 815-40 rather than as components of equity as Panacea had previously treated the Warrants and FPA.
As a result, we are restating in this Amendment Panacea’s financial statements for the following periods: (i) as of and for the quarterly period ended June 30, 2020, (ii) as of and for the quarterly period ended September 30, 2020, and (iii) as of and for the period ended December 31, 2020, in each case to reflect the change in accounting treatment (the “Restatement”).
Panacea’s accounting for the Warrants and FPA as components of equity rather than as derivative liabilities did not have any effect on our previously reported operating expenses, cash flows or cash.
We are not amending Panacea’s previously filed Quarterly Reports on Form 10-Q for the periods affected by the Restatement. The financial information that has been previously filed or otherwise reported for these periods is superseded by the information in this Amendment, and the financial statements and related financial information contained in such previously filed reports should no longer be relied upon.
In connection with the Restatement, our management reevaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. As a result of that reassessment and in light of the SEC Staff Statement, our management determined that our disclosure controls and procedures as of December 31, 2020 were not effective due to a material weakness in internal control over financial reporting with respect to the accounting for complex accounting instruments, solely as a result of our classification of the warrants as components of equity instead of as derivative liabilities. For more information, see Item 9A included in this Amendment.
The Restatement is more fully described in Note 2 of the notes to the financial statements included herein.
In addition, as required by Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are filed as Exhibits 31.1 to 32.2) to this Amendment under Item 15 of Part IV hereof.
Except as described above, this Amendment does not amend, update or change any other items or disclosures contained in the Original Filing, and accordingly, this Amendment does not reflect or purport to reflect any information or events occurring after the original filing date or modify or update those disclosures affected by subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Filing and our other filings with the SEC. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Original Filing. Unless the context otherwise requires, references to "warrants" in this Amendment refers to both Panacea's public warrants, Panacea's private placement warrants and Panacea's forward purchase warrants.
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PART II
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included in Part II, Item 8 of this report.
Unless otherwise indicated, references in this section to the terms “Panacea,” the “Company,” “we,” “our” and “us” refer to Panacea Acquisition Corp. prior to the Merger. The term “Legacy Nuvation Bio” refers to privately-held Nuvation Bio Inc. prior to its merger with Panacea Merger Subsidiary Corp., a wholly owned subsidiary of Panacea Acquisition Corp. The term “Panacea” refers to Panacea Acquisition Corp. prior to the Merger.
The financial information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations is that of Panacea prior to the Merger because the Merger was consummated after the period covered by the financial statements included in this Annual Report on Form 10-K. Accordingly, the historical financial information included in this Annual Report on Form 10-K, unless otherwise indicated or as the context otherwise requires, is that of Panacea prior to the Merger.
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part I, Item 1A — “Risk Factors,” and elsewhere in this report. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. We caution investors that our business and financial performance are subject to substantial risks and uncertainties. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report on Form 10-K. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements.
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Introduction and Recent Developments
As of December 31, 2020, we were a blank check company formed under the laws of the State of Delaware on April 24, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses.
On October 20, 2020, we entered into the Agreement and Plan of Merger with Panacea Merger Subsidiary Corp. and Legacy Nuvation Bio, pursuant to which Merger Sub merged with and into Legacy Nuvation Bio, with Legacy Nuvation Bio surviving the merger and as our wholly owned subsidiary. On February 10, 2021, upon consummation of the Merger, we changed our name to Nuvation Bio Inc. The discussion below relates to Panacea prior to the Merger and, except as otherwise specifically stated, does not reflect the Merger.
Results of Operations
We have neither engaged in any operations (other than searching for a business combination after our Initial Public Offering) nor generated any revenues to date. Our only activities from April 24, 2020 (inception) through December 31, 2020 were organizational activities, those necessary to prepare for the Initial Public Offering, described below. We did not generate any operating revenues until after the completion of the Merger. We generated non-operating income in the form of interest earned on investments held after the Initial Public Offering. We incurred expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the period from April 24, 2020 (inception) through December 31, 2020, we had a net loss of $18,219,398, which consists of operating costs of $3,061,452, change in the fair value of the warrants of $8,018,459, change in the fair value of the FPA of $6,966,666 and transaction costs of $179,832 offset by interest income on investments held in the Trust Account of $7,011.
As a result of the restatement described in Note 2 of the notes to the financial statements included herein, we classify the warrants issued in connection with our Initial Public Offering and FPA as liabilities at their fair value and adjust the warrant instrument to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations.
Liquidity and Capital Resources
On July 6, 2020, we consummated the Initial Public Offering of 14,375,000 Units at a price of $10.00 per Unit, which included the full exercise by the underwriter of their over-allotment option in the amount of 1,875,000, generating gross proceeds of $143,750,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 487,500 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to certain stockholders, generating gross proceeds of $4,875,000.
Following the Initial Public Offering, the full exercise of the over-allotment option by the underwriters and the sale of the Private Placement Units, a total of $143,750,000 was placed in the Trust Account. We incurred $3,210,231 in transaction costs, including $2,875,000 of underwriting fees and $335,231 of other offering costs.
For the period from April 24, 2020 (inception) through December 31, 2020, cash used in operating activities was $880,658. Net loss of $18,219,398 was reduced by interest earned on investments held in the Trust Account of $7,011, offset by the change in the fair value of the warrants of $8,018,459, change in the fair value of the FPA of $6,966,666, transaction costs of $179,832 and net changes in operating assets and liabilities of $2,180,974.
As of December 31, 2020, we had investments held in the Trust Account of $143,757,011. We used substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete the Merger. During the period ended December 31, 2020, we did not withdraw any interest income from the Trust Account. The remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of December 31, 2020, we had $908,111 of cash held outside of the Trust Account. We used the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the Sponsors, PA Co-Investments LLC or an affiliate of the Sponsor or PA Co-Investments LLC, or certain of the Company’s officers and directors or their affiliates could, but were not obligated to, loan us funds as may have been required. The Working Capital Loans would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may have been convertible into units of the post business combination entity. The units would be identical to the Private Placement Units. Except for the foregoing, the terms of such Working Capital Loans, if any, were not determined and no written agreements exist with respect to such loans. As of December 31, 2020, there were no amounts outstanding under such Working Capital Loans.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2020. We did not participate in transactions that created relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
As of December 31, 2020, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, administrative and support services to us. We began incurring these fees on July 1, 2020.
We engaged the underwriters as an advisor in connection with a business combination to assist us in holding meetings with its stockholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities in connection with a business combination, assist us in obtaining stockholder approval for the business combination and assist us with its press releases and public filings in connection with the business combination. We paid the underwriters a cash fee for such services upon the consummation of the Merger in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering, or $5,031,250, which included any proceeds from the full or partial exercise of the over-allotment option.
In addition, on June 30, 2020, we entered into a forward purchase agreement with funds affiliated with EcoR1 Capital, LLC that will provide for the purchase by such funds of an aggregate of 2,500,000 shares of Class A common stock and 833,333 redeemable warrants, for an aggregate purchase price of $25,000,000, or $10.00 per one share of Class A common stock and one-third of one redeemable warrant, in a private placement to close substantially concurrently with the closing of a business Combination. The obligations under the forward purchase agreement did not depend on whether any shares of Class A common stock were redeemed by the Public Stockholders. The shares of Class A common stock and redeemable warrants issued pursuant to the forward purchase agreement were identical to the shares of Class A common stock and redeemable warrants included in the units being sold in the Initial Public Offering, respectively, except that the holders thereof have certain registration rights. On the closing date of the Merger, the forward purchase securities were purchased in full.
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liability
We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC Topic 815, Derivatives and Hedging (“ASC 815”), under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The fair value of the warrants was estimated using a Monte Carlo simulation approach.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in the ASC Topic 480, Distinguishing Liabilities from Equity. Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of our consolidated balance sheet.
4
Net Income (Loss) per Common Share
We apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Class A redeemable common stock outstanding for the period. Net loss per common share, basic and diluted for Class B non-redeemable common stock is calculated by dividing the net income, less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period presented.
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our consolidated financial statements.
| Item 7A. | Quantitative and Qualitative Disclosures about Market Risk |
As of December 31, 2020, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury obligations with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
| Item 8. | Financial Statements and Supplementary Data |
This information appears following Item 15 of this report and is included herein by reference.
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
As previously reported on Form 8-K, as filed with the SEC on February 12, 2021, the audit committee of our board of directors approved the engagement of KPMG LLP (“KPMG”) as our independent registered public accounting firm to audit our consolidated financial statements for the year ending December 31, 2021 on February 10, 2021. KPMG served as the independent registered public accounting firm of Legacy Nuvation Bio prior to the Merger. Accordingly, WithumSmith+Brown, PC, Panacea’s independent registered public accounting firm prior to the Merger, was informed on February 12, 2021 that it would be replaced by KPMG as our independent registered public accounting firm following (i) completion of our audit of the year ended December 31, 2020, which consists only of the accounts of the pre-Merger special purpose acquisition company, Panacea, and (ii) the filing of this Annual Report on Form 10-K for the fiscal year ended December 31, 2020.
| Item 9A. | Controls and Procedures. |
Restatement of Previously Issued Financial Statements
On May 17, 2021, we revised our prior position on accounting for warrants and restated our financial statements to reclassify certain warrants and forward purchase agreements as described in the Explanatory Note to this Amendment. However, the non-cash adjustments to the financial statements do not impact the amounts previously reported for our cash and cash equivalents, total assets, revenue or cash flows.
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2020, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2020, our disclosure controls and procedures were effective. In connection with the above-described restatement, our management, with the participation of our Certifying Officers, re-evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020. Our Certifying Officers concluded that our disclosure controls and procedures were not effective as of December 31, 2020 due to a material weakness in internal control over financial reporting with respect to the accounting for complex accounting instruments, solely as a result of our classification of the warrants as components of equity instead of as derivative liabilities. We believe that the identified material weakness was remediated following the Merger, as the disclosure controls and procedures and internal control over financial reporting of Legacy Nuvation Bio (as the deemed accounting acquirer) became the disclosure controls and procedures and internal control over financial reporting of the combined company, and the financial reporting and accounting personnel of Legacy Nuvation Bio assumed such roles and responsibilities with the combined company.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Management’s Report on Internal Controls Over Financial Reporting
This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
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Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| Item 9B. | Other |
None.
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| Item 14. | Principal Accountant Fees and Services. |
The firm of WithumSmith+Brown, PC, or Withum, acts as our independent registered public accounting firm. The following is a summary of fees paid to Withum for services rendered.
Audit Fees. For the period from April 24, 2020 (inception) through December 31, 2020, fees incurred for our independent registered public accounting firm were approximately $121,000, for the services Withum performed in connection with our Initial Public Offering, review of quarterly Form 10-Q’s, audit related consents and the audit of our December 31, 2020 financial statements included in the Original Filing and the audit of our restated financial statements included in this Amendment.
Audit-Related Fees. For the period from April 24, 2020 (inception) through December 31, 2020, our independent registered public accounting firm did not render assurance and related services related to the performance of the audit or review of consolidated financial statements.
Tax Fees. For the period from April 24, 2020 (inception) through December 31, 2020, our independent registered public accounting firm did not render services to us for tax compliance, tax advice and tax planning.
All Other Fees. For the period from April 24, 2020 (inception) through December 31, 2020, there were no fees billed for products and services provided by our independent registered public accounting firm other than those set forth above.
Pre-Approval Policy
Our audit committee was formed upon the consummation of our Initial Public Offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
| Item 15. | Exhibits, Financial Statement Schedules. |
(a) The following documents are filed as part of this Amendment:
1. Consolidated Financial Statements (as restated):
| Page | ||||
| F-2 | ||||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| F-6 | ||||
| F-7 | ||||
2. Consolidated Financial Statement Schedules
None.
3. Exhibits
We hereby file or incorporate by reference as part of this Amendment the exhibits listed in the attached Exhibit Index.
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8
| + | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601. The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
| # | Indicates a management contract or compensatory plan, contract or arrangement. |
| † | Portions of this exhibit, as marked by asterisks, have been omitted in accordance with Regulation S-K Item 601. |
| * | Filed herewith. |
| Item 16. | Form 10K Summary |
None.
9
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NUVATION BIO INC. | ||||||
| Date: May 21, 2021 | By: | /s/ David Hung, M.D. | ||||
| David Hung, M.D. | ||||||
| President and Chief Executive Officer | ||||||
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| F-2 | ||||
Consolidated Financial Statements (as restated): | ||||
| F-3 | ||||
| F-4 | ||||
| F-5 | ||||
| F-6 | ||||
| F-7 to F-22 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of
Panacea Acquisition Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Panacea Acquisition Corp. (the “Company”) as of December 31, 2020, the related consolidated statements of operations, changes in stockholders’ equity and cash flows for the period from April 24, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for the period from April 24, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Restatement of Consolidated Financial Statements
As discussed in Note 2 to the consolidated financial statements, the Securities and Exchange Commission issued a public statement entitled Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”) (the “Public Statement”) on April 12, 2021, which discusses the accounting for certain warrants as liabilities. The Company previously accounted for its warrants as equity instruments. Management evaluated its warrants against the Public Statement, and determined that the warrants should be accounted for as liabilities. Accordingly, the 2020 consolidated financial statements have been restated to correct the accounting and related disclosure for the warrants.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
/s/ WithumSmith+Brown, PC
We have served as the Company’s auditor since 2020.
New York, New York
May 21, 2021
F-2
PANACEA ACQUISITION CORP.
DECEMBER 31, 2020
(Restated)
ASSETS | ||||
Current assets | ||||
Cash | $ | 908,111 | ||
Prepaid expenses | 339,089 | |||
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| |||
Total Current Assets | 1,247,200 | |||
Investments held in trust account | 143,757,011 | |||
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Total Assets | $ | 145,004,211 | ||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Current liabilities | ||||
Accounts payable and accrued expenses | $ | 2,699,715 | ||
Accrued offering costs | 99,000 | |||
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Total Current Liabilities | 2,798,715 | |||
Warrant liability | 15,942,709 | |||
FPA liability | 6,966,666 | |||
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Total Liabilities | 25,708,090 | |||
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Commitments and contingencies | ||||
Class A common stock subject to possible redemption, 11,429,612 shares at $10.00 per share redemption value | 114,296,115 | |||
Stockholders’ Equity | ||||
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued or outstanding | — | |||
Class A common stock, $0.0001 par value; 500,000,000 shares authorized; 3,432,888 shares issued and outstanding (excluding 11,429,612 shares subject to possible redemption) | 343 | |||
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 3,593,750 shares issued and outstanding | 359 | |||
Additional paid-in capital | 23,218,702 | |||
Accumulated deficit | (18,219,398 | ) | ||
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Total Stockholders’ Equity | 5,000,006 | |||
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Total Liabilities and Stockholders’ Equity | $ | 145,004,211 | ||
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The accompanying notes are an integral part of the consolidated financial statements.
F-3
PANACEA ACQUISITION CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD FROM APRIL 24, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(Restated)
General and administrative expenses | $ | 3,061,452 | ||
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| |||
Loss from operations | (3,061,452 | ) | ||
Other (expense) income: | ||||
Transaction costs | (179,832 | ) | ||
Change in fair value of warrants liability | (8,018,459 | ) | ||
Change in fair value of FPA liability | (6,966,666 | ) | ||
Interest earned on investments held in Trust Account | 7,011 | |||
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| |||
Total other (expense) income, net | (15,157,946 | ) | ||
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Net loss | $ | (18,219,398 | ) | |
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Weighted average shares outstanding of Class A redeemable common stock | 14,375,000 | |||
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Basic and diluted income per share, Class A redeemable common stock | $ | — | ||
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| |||
Weighted average shares outstanding of Class A and Class B non-redeemable common stock | 3,840,179 | |||
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Basic and diluted net loss per share, Class A and Class B non-redeemable common stock | $ | (4.75 | ) | |
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The accompanying notes are an integral part of the consolidated financial statements.
F-4
PANACEA ACQUISITION CORP.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
(Restated)
| Class A Common Stock | Class B Common Stock | Additional Paid-in | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||||||||
Balance – April 24, 2020 (Inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Issuance of Class B common stock to initial stockholders | — | — | 3,593,750 | 359 | 24,641 | — | 25,000 | |||||||||||||||||||||
Sale of 14,375,000 Units, net of offering costs and allocation of public warrants fair value | 14,375,000 | 1,438 | — | — | 132,919,580 | — | 132,921,018 | |||||||||||||||||||||
Sale of 487,500 Private Placement Units, net of private placement warrants fair value allocation | 487,500 | 49 | — | — | 4,569,451 | — | 4,569,500 | |||||||||||||||||||||
Common stock subject to possible redemption | (12,141,530 | ) | (1,215 | ) | — | — | (121,414,079 | ) | — | (121,415,294 | ) | |||||||||||||||||
Change in value of common stock subject to redemption | 711,918 | 71 | — | — | 7,119,109 | — | 7,119,180 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (18,219,398 | ) | (18,219,398 | ) | |||||||||||||||||||
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Balance – December 31, 2020 | 3,432,888 | $ | 343 | 3,593,750 | $ | 359 | $ | 23,218,702 | $ | (18,219,398 | ) | $ | 5,000,006 | |||||||||||||||
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The accompanying notes are an integral part of the consolidated financial statements.
F-5
PANACEA ACQUISITION CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM APRIL 24, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
(Restated)
Cash Flows from Operating Activities: | ||||
Net loss | $ | (18,219,398 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Change in fair value of warrant liability | 8,018,459 | |||
Change in fair value of FPA liability | 6,966,666 | |||
Transaction costs | 179,832 | |||
Interest earned on investments held in Trust Account | (7,011 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (339,089 | ) | ||
Accounts payable and accrued expenses | 2,519,883 | |||
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| |||
Net cash used in operating activities | (880,658 | ) | ||
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| |||
Cash Flows from Investing Activities: | ||||
Investment of cash into Trust Account | (143,750,000 | ) | ||
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| |||
Net cash used in investing activities | (143,750,000 | ) | ||
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Cash Flows from Financing Activities: | ||||
Proceeds from sale of Units, net of underwriting discounts paid | 141,054,832 | |||
Proceeds from sale of Private Placement Units | 4,875,000 | |||
Proceeds from promissory note – related party | 80,000 | |||
Repayment of promissory note – related party | (80,000 | ) | ||
Payment of offering costs | (391,063 | ) | ||
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| |||
Net cash provided by financing activities | 145,538,769 | |||
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| |||
Net Change in Cash | 908,111 | |||
Cash – Beginning of period | — | |||
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Cash – End of period | $ | 908,111 | ||
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Non-Cash financing activities: | ||||
Initial classification of Class A common stock subject to possible redemption | $ | 121,415,295 | ||
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Change in value of Class A common stock subject to possible redemption | $ | (7,119,180 | ) | |
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Offering costs paid directly by Sponsor in consideration for the issuance of Class B common stock | $ | 25,000 | ||
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| |||
Offering costs included in accrued offering costs | $ | 99,000 | ||
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The accompanying notes are an integral part of the consolidated financial statements.
F-6
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Panacea Acquisition Corp. (the “Company”) was incorporated in Delaware on April 24, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. The Company is not limited to a particular industry or sector for purposes of consummating a business combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
The Company has one subsidiary, Panacea Merger Subsidiary Corp., a wholly owned subsidiary of the Company incorporated in Delaware on October 16, 2020 (“Merger Sub”).
As of December 31, 2020, the Company had not commenced any operations. All activity for the period from April 24, 2020 (inception) through December 31, 2020 relates to the Company’s formation, the initial public offering (“Initial Public Offering”), which is described below, and activities in connection with the proposed acquisition of Nuvation Bio Inc., a Delaware corporation (“Nuvation Bio”). The Company will not generate any operating revenues until after the completion of its initial business combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public Offering was declared effective on June 30, 2020. On July 6, 2020, the Company consummated the Initial Public Offering of 14,375,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of the over-allotment option to purchase an additional 1,875,000 Units, at $10.00 per Unit, generating gross proceeds of $143,750,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 487,500 units (each, a “Private Placement Unit” and collectively, the “Private Placement Units”) at a price of $10.00 per Private Placement Unit in a private placement to EcoR1 Panacea Holdings, LLC, a Delaware limited liability company (the “Sponsor”), and PA Co-Investments LLC, an affiliate of one of the underwriters (“PA Co-Investments LLC”), generating gross proceeds of $4,875,000, which is described in Note 4.
Transaction costs amounted to $3,210,231, consisting of $2,875,000 of underwriting fees and $335,231 of other offering costs.
Following the closing of the Initial Public Offering on July 6, 2020, an amount of $143,750,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Units was placed in a trust account (the “Trust Account”) located in the United States and that will invest only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a business combination and (ii) the distribution of the funds held in the Trust Account, as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a business combination. There is no assurance that the Company will be able to complete a business combination successfully. The Company must complete one or more initial business combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting discount). The Company will only complete a business combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a business combination either (i) in connection with a stockholder meeting called to approve the business combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a business combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share, plus any pro rata interest then in the Trust Account, net of taxes payable). There will be no redemption rights upon the completion of a business combination with respect to the Company’s warrants.
F-7
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
The Company will only proceed with a business combination if the Company has net tangible assets of at least $5,000,001 following any related redemptions and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the business combination. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a business combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a business combination, the Company’s Sponsor, PA Co-Investments LLC and any other holders of the Company’s common stock prior to the Initial Public Offering (the “initial stockholders”) have agreed to vote their Founder Shares (as defined in Note 5), Private Placement Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a business combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction.
If the Company seeks stockholder approval of a business combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation will provide that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company.
The initial stockholders have agreed (a) to waive their redemption rights with respect to their Founder Shares, Private Placement Shares and Public Shares held by them in connection with the completion of a business combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a business combination or to redeem 100% of its Public Shares if the Company does not complete a business combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The initial stockholders have agreed to waive their liquidation rights with respect to the Founder Shares and Private Placement Shares if the Company fails to complete a business combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a business combination within the Combination Period.
If the Company has not completed a business combination by July 6, 2022 (as it may be extended, the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable, and less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a business combination within the Combination Period.
F-8
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered public accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company previously accounted for its outstanding warrants as components of equity instead of as derivative liabilities. The warrant agreement governing the warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant.
Upon review of the “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (SPACs)” promulgated by the SEC on April 12, 2021, the Company’s management further evaluated the warrants under Accounting Standards Codification (“ASC”) Subtopic 815-40, Contracts in Entity’s Own Equity. Specifically, the exercise of the Public Warrants and Private Placement Warrants (“Warrants”) (as defined in Note 4 and Note 5) and Forward Purchase Agreement (“FPA) (as defined in Note 7) may be settled in cash upon the occurrence of a tender offer or exchange that involves 50% or more of our Class A stockholders. Because such a tender offer may not result in a change in control and trigger cash settlement and the Company does not control the occurrence of such event, the Company concluded that the Warrants and FPA do not meet the conditions to be classified in equity.
As a result of the above, the Company is reclassifying the Warrants and FPA as derivative liabilities in its previously issued consolidated financial statements. Under this accounting treatment, the Company is required to measure the fair value of the Warrants and FPA at the end of each reporting period and recognize changes in the fair value from the prior period in the Company’s operating results for the current period.
The Company’s accounting for the warrants as components of equity instead of as derivative liabilities did not have any effect on the Company’s previously reported operating expenses, cash flows or cash.
The following summarizes the effect of the restatement on each financial statement line item for each period presented herein and each prior interim period of the current fiscal year.
| As Previously | As | |||||||||||
| Reported | Adjustments | Restated | ||||||||||
Balance sheet as of December 31, 2020, (audited) | ||||||||||||
Warrant liability | $ | — | $ | 15,942,709 | $ | 15,942,709 | ||||||
FPA liability | 6,966,666 | 6,966,666 | ||||||||||
Class A common stock subject to possible redemption | 137,205,490 | (22,909,375 | ) | 114,296,115 | ||||||||
Class A common stock | 114 | 229 | 343 | |||||||||
Class B common stock | 359 | — | 359 | |||||||||
Additional paid-in capital | 8,053,974 | 15,164,728 | 23,218,702 | |||||||||
Accumulated deficit | (3,054,441 | ) | (15,164,957 | ) | (18,219,398 | ) | ||||||
Stockholders’ equity | 5,000,006 | — | 5,000,006 | |||||||||
Period from April 24, 2020 (inception) to December 31, 2020 (audited) | ||||||||||||
General and administrative expenses | 3,061,452 | — | 3,061,452 | |||||||||
Transaction costs | — | 179,832 | 179,832 | |||||||||
Change in fair value of warrant liability | — | 8,018,459 | 8,018,459 | |||||||||
Change in fair value of FPA liability | — | 6,966,666 | 6,966,666 | |||||||||
Net loss | (3,054,441 | ) | (15,164,957 | ) | (18,219,398 | ) | ||||||
Basic and diluted net loss per share, Non-redeemable Class A and Class B | (0.80 | ) | (3.95 | ) | (4.75 | ) | ||||||
F-9
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
| As Previously Reported | Adjustments | As Restated | ||||||||||
Balance sheet as of September 30, 2020 (unaudited) | ||||||||||||
Warrant liability | $ | — | $ | 11,659,376 | $ | 11,659,376 | ||||||
FPA liability | — | 6,449,999 | 6,449,999 | |||||||||
Class A common stock subject to possible redemption | 139,524,670 | (18,109,375 | ) | 121,415,295 | ||||||||
Class A common stock | 91 | 181 | 272 | |||||||||
Class B common stock | 359 | — | 359 | |||||||||
Additional paid-in capital | 5,734,817 | 10,184,943 | 15,919,760 | |||||||||
Accumulated deficit | (735,266 | ) | (10,185,124 | ) | (10,920,390 | ) | ||||||
Stockholders’ equity | 5,000,001 | — | 5,000,001 | |||||||||
| Three Months Ended September 30, 2020 | For the Period from April 24, 2020 Through September 30, 2020 | |||||||||||||||||||||||
| As Previously Reported | Adjustments | As Restated | As Previously Reported | Adjustments | As Restated | |||||||||||||||||||
Change in fair value of warrant liability | $ | — | $ | 3,735,125 | 3,735,125 | $ | — | $ | 3,735,125 | 3,735,125 | ||||||||||||||
Change in fair value of FPA liability | — | 2,275,000 | 2,275,000 | — | 6,449,999 | 6,449,999 | ||||||||||||||||||
Net loss | (734,266 | ) | (6,010,125 | ) | (6,744,391 | ) | (735,266 | ) | (10,185,124 | ) | (10,920,390 | ) | ||||||||||||
Basic and diluted net loss per share, Non-redeemable Class A and Class B | (0.20 | ) | (1.68 | ) | (1.88 | ) | (0.20 | ) | (2.84 | ) | (3.04 | ) | ||||||||||||
| As Previously Reported | Adjustments | As Restated | ||||||||||
Balance sheet as of June 30, 2020 (unaudited) | ||||||||||||
FPA liability | $ | — | $ | 4,174,999 | $ | 4,174,999 | ||||||
Class A common stock | — | — | — | |||||||||
Class B common stock | 359 | — | 359 | |||||||||
Additional paid-in capital | 24,641 | — | 24,641 | |||||||||
Accumulated deficit | (1,000 | ) | (4,174,999 | ) | (4,175,999 | ) | ||||||
Stockholders’ equity | 24,000 | (4,174,999 | ) | (4,150,999 | ) | |||||||
| For the Period from April 24, 2020 Through June 30, 2020 | ||||||||||||
| As Previously Reported | Adjustments | As Restated | ||||||||||
Initial fair value of FPA liability | — | 4,174,999 | 4,174,999 | |||||||||
Net loss | (1,000 | ) | (4,174,999 | ) | (4,175,999 | ) | ||||||
Basic and diluted net loss per share, Non-redeemable Class A and Class B | (0.00 | ) | (1.34 | ) | (1.34 | ) | ||||||
F-10
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the SEC.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant intercompany balances and transactions have been eliminated in consolidation.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s consolidated financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company’s 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 consolidated financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the consolidated financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Class A Common Stock Subject to Possible Redemption
The company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s consolidated balance sheet.
F-11
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
Offering Costs
Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering. Offering costs amounting to $3,210,231 were charged to stockholders’ equity and $179,832 were charged to consolidated statement of operations upon the completion of the Initial Public Offering.
Derivative Liability
The Company accounts for the Warrants and FPA as either equity-classified or liability-classified instruments based on an assessment of the specific terms of the Warrants and FPA and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the Warrants and FPA are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the Warrants and FPA meet all of the requirements for equity classification under ASC 815, including whether the Warrants and FPA are indexed to the Company’s own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of issuance of the Warrants and execution of the FPA and as of each subsequent quarterly period end date while the Warrants and FPA are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the Warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Warrants and FPA was estimated using a Monte Carlo simulation approach (see Note 11).
Income Taxes
The Company follows the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the consolidated financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding for the period. The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase 4,954,167 shares of Class A common stock in the calculation of diluted income per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive.
The Company’s consolidated statement of operations includes a presentation of income (loss) per share for common shares subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income per common share, basic and diluted, for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of Class A redeemable common stock outstanding since original issuance. Net loss per share, basic and diluted, for Class A and B non-redeemable common stock is calculated by dividing the net loss, adjusted for income attributable to Class A redeemable common stock, net of applicable franchise and income taxes, by the weighted average number of Class A and B non-redeemable common stock outstanding for the period. Class A and B non-redeemable common stock includes the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.
F-12
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
| For the Period From April 24, 2020 (inception) Through December 31, 2020 (As Restated) | ||||
Redeemable Class A Common Stock | ||||
Numerator: Earnings allocable to Redeemable Class A Common Stock | ||||
Interest Income | $ | 7,011 | ||
Income and Franchise Tax | (7,011 | ) | ||
|
| |||
Net Earnings | $ | — | ||
Denominator: Weighted Average Redeemable Class A Common Stock | ||||
Redeemable Class A Common Stock, Basic and Diluted | 14,375,000 | |||
Earnings/Basic and Diluted Redeemable Class A Common Stock | $ | — | ||
Non-Redeemable Class A and B Common Stock | ||||
Numerator: Net Loss minus Redeemable Net Earnings | ||||
Net Loss | $ | (18,219,398 | ) | |
Redeemable Net Earnings | 7,011 | |||
|
| |||
Non-Redeemable Net Loss | $ | (18,226,409 | ) | |
Denominator: Weighted Average Non-Redeemable Class A and B Common Stock | ||||
Non-Redeemable Class A and B Common Stock, Basic and Diluted (1) | 3,840,179 | |||
Loss/Basic and Diluted Non-Redeemable Class A and B Common Stock | $ | (4.75 | ) | |
Note: As of December 31, 2020, basic and diluted shares are the same as there are no non-redeemable securities that are dilutive to the Company’s stockholders.
| (1) | The weighted average non-redeemable common stock for the year ended December 31, 2020 includes the effect of 487,500 Private Placement Units, which were issued in conjunction with the initial public offering on July 6, 2020. |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying consolidated balance sheet, primarily due to their short-term nature.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s consolidated financial statements.
F-13
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 4. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 14,375,000 Units, which includes the full exercise by the underwriters of their option to purchase an additional 1,875,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor and PA Co-Investments LLC purchased an aggregate of 487,500 Private Placement Units at a price of $10.00 per Private Placement Unit, for an aggregate purchase price of $4,875,000. The Sponsor purchased 390,000 Private Placement Units and PA Co-Investments LLC purchased 97,500 Private Placement Units. Each Private Placement Unit consists of one share of Class A common stock (“Private Placement Share” or, collectively, “Private Placement Shares”) and one-third of one warrant (each, a “Private Placement Warrant”). Each whole Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment. A portion of the proceeds from the Private Placement Units were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a business combination within the Combination Period, the proceeds from the sale of the Private Placement Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Units and all underlying securities will expire worthless.
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
On May 7, 2020, the Sponsor and Cowen Investments II LLC paid an aggregate of $25,000 to cover certain offering costs of the Company in consideration for 3,593,750 shares of the Company’s Class B common stock (the “Founder Shares”). In May 2020, the Sponsor transferred 25,000 Founder Shares to each of its directors, or an aggregate of 100,000 Founder Shares, at their original purchase price. Cowen Investments II LLC subsequently transferred all of its Founder Shares to PA Co-Investments LLC. The Founder Shares included an aggregate of up to 468,750 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the number of Founder Shares would equal 20% of the Company’s issued and outstanding shares after the Initial Public Offering (not including the Private Placement Shares). As a result of the underwriters’ election to fully exercise their over-allotment option, no Founder Shares are currently subject to forfeiture.
The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a business combination and (B) subsequent to a business combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a business combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Administrative Support Agreement
The Company entered into an agreement, commencing on July 1, 2020 through the earlier of the Company’s consummation of a business combination or its liquidation, to pay an affiliate of the Sponsor a total of $10,000 per month for office space, administrative and support services. For the period from April 24, 2020 (inception) through December 31, 2020, the Company incurred $60,000 in fees for these services, of which such amount is included in accounts payable and accrued expenses in the accompanying consolidated balance sheet.
Promissory Notes — Related Parties
On May 15, 2020, the Sponsor and an affiliate of PA Co-Investments LLC issued unsecured promissory notes to the Company (the “Promissory Notes”), pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. The Promissory Notes were non-interest bearing and payable on the earlier of December 31, 2020 or the consummation of the Initial Public Offering. The outstanding balance under the Promissory Notes of $80,000 was repaid upon the consummation of the Initial Public Offering on July 6, 2020.
F-14
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
Related Party Loans
In addition, in order to fund working capital deficiencies or finance transaction costs in connection with a business combination, the Sponsor, PA Co-Investments LLC or an affiliate of the Sponsor or PA Co-Investments LLC, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a business combination, the Company may repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans may be repaid only out of funds held outside the Trust Account. In the event that a business combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a business combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into units upon consummation of the business combination at a price of $10.00 per unit. The units would be identical to the Private Placement Units. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. As of December 31, 2020, no amounts were outstanding under the Working Capital Loans.
NOTE 7. COMMITMENTS
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
Pursuant to a registration rights agreement entered into on June 30, 2020, the holders of the Founder Shares, Private Placement Units, Private Placement Shares, Private Placement Warrants, certain forward purchase securities and units that may be issued upon conversion of Working Capital Loans and the shares and warrants included therein (and any shares of common stock issuable upon the exercise of the Private Placement Warrants, forward purchase warrants or warrants included in the units issued upon conversion of Working Capital Loans) will be entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a business combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. Notwithstanding the foregoing, PA Co-Investments LLC may not exercise its demand or “piggyback” registration rights after five and seven years, respectively, after the effective date of the registration statement related to the Initial Public Offering and may not exercise its demand rights on more than one occasion. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
On July 6, 2020, the underwriters were paid a cash underwriting discount of $0.20 per Unit, or $2,875,000 in the aggregate.
Business Combination Marketing Agreement
The Company has engaged the underwriters as an advisor in connection with a business combination to assist the Company in holding meetings with its stockholders to discuss the potential business combination and the target business’ attributes, introduce the Company to potential investors that are interested in purchasing the Company’s securities in connection with a business combination, assist the Company in obtaining stockholder approval for the business combination and assist the Company with its press releases and public filings in connection with the business combination. The Company will pay the underwriters a cash fee for such services upon the consummation of a business combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of Initial Public Offering, or $5,031,250, including any proceeds from the full or partial exercise of the over-allotment option. At the closing of the Merger (see Note 12) this amount was paid.
F-15
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
Forward Purchase Agreement
On June 30, 2020, the Company entered into a forward purchase agreement with funds affiliated with EcoR1 Capital, LLC that will provide for the purchase by such funds of an aggregate of 2,500,000 shares of Class A common stock and 833,333 redeemable warrants, for an aggregate purchase price of $25,000,000, or $10.00 per one share of Class A common stock and one-third of one redeemable warrant, in a private placement to close substantially concurrently with the closing of a business combination. The obligations under the forward purchase agreement will not depend on whether any shares of Class A common stock are redeemed by the Public Stockholders. The shares of Class A common stock and redeemable warrants issuable pursuant to the forward purchase agreement will be identical to the shares of Class A common stock and redeemable warrants included in the units being sold in the Initial Public Offering, respectively, except that the holders thereof will have certain registration rights.
On February 10, 2021, certain purchasers purchased 2,500,000 shares of Class A Common Stock and 833,333 forward purchase warrants in a private placement at a price of $10.00 per share for an aggregate purchase price of $25.0 million pursuant to the terms of the forward purchase. The sales of the PIPE Shares and the Forward Purchase Securities were consummated concurrently with the closing of the Merger.
Merger Agreement
On October 20, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Merger Sub and Nuvation Bio.
Pursuant to the transactions contemplated by the terms of the Merger Agreement (the “Closing”), and subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into Nuvation Bio, with Nuvation Bio surviving the merger and as a wholly owned subsidiary of the Company.
As a result of the Merger, among other things,
| (i) | each share of Nuvation Bio Class A common stock and each share of Nuvation Bio Series A preferred stock issued and outstanding immediately prior to the Effective Time will be canceled and converted into the right to receive the number of shares of the Company’s Class A common stock equal to the Exchange Ratio (as defined below). The Company’s Class A common stock will have one vote per share; |
| (ii) | each share of Nuvation Bio Class B common stock issued and outstanding immediately prior to the Effective Time (all of which is owned by David Hung (the “Founder”)) will be canceled and converted into the right to receive the number of shares of the Company’s Class B common stock equal to the Exchange Ratio. The Company’s Class B common stock will have veto rights over business combinations and liquidations, one vote on all other matters and the right to appoint three directors (including the seat occupied by the Chief Executive Officer) plus at least 50% of any directors beyond the initial seven. The Company’s Class B common stock will automatically convert into the Company’s Class A common stock upon the occurrence of certain events, including upon transfers to a non-authorized holder or if the Founder ceases to be Chief Executive Officer of Nuvation Bio, with limited exceptions; |
| (iii) | any shares of Nuvation Bio capital stock held in the treasury of Nuvation Bio or owned by the Company, Merger Sub or Nuvation Bio immediately prior to the Effective Time (each, an “Excluded Share”) will be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto; |
| (iv) | each issued and outstanding share of common stock of Merger Sub will be converted into and become one validly issued, fully paid and nonassessable share of common stock of the surviving corporation; and |
F-16
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
| (v) | each option to purchase Nuvation Bio Class A common stock (each, a “Nuvation Bio Option”) that is outstanding under Nuvation Bio’s 2019 Equity Incentive Plan immediately prior to the Closing, whether vested or unvested, will be assumed by the Company and converted into an option to purchase shares of the Company’s Class A common stock (each, a “Converted Option”) equal to the product (rounded down to the nearest whole number) of (a) the number of shares of Nuvation Bio common stock subject to such Nuvation Bio Option immediately prior to the Effective Time and (b) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (i) the exercise price per share of such Nuvation Bio Option immediately prior to the Effective Time divided by (ii) the Exchange Ratio; provided, however, that the exercise price and the number of shares of the Company’s common stock purchasable pursuant to the Converted Options shall be determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, however, that in the case of any Converted Option to which Section 422 of the Code applies, the exercise price and the number of shares of the Company’s common stock purchasable pursuant to such option shall be determined in accordance with the foregoing, subject to such adjustments in a manner consistent with Treasury Regulation Section 1.424-1, such that the Converted Option will not constitute a modification of such Nuvation Bio Option for purposes of Section 409A or Section 424 of the Code. Except as specifically provided above, following the Effective Time, each Converted Option shall continue to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Nuvation Bio Option immediately prior to the Effective Time. At or prior to the Effective Time, the Company shall take any actions that are necessary to effectuate the treatment of the Nuvation Bio Options pursuant to this paragraph. |
The “Exchange Ratio” means the quotient of (i) 150,000,000; divided by (ii) Nuvation Bio’s “fully diluted company shares” (as defined in the Merger Agreement).
The Merger was consummated on February 10, 2021 as further described in Note 12.
NOTE 8. STOCKHOLDERS’ EQUITY
Preferred Stock — On June 30, 2020, the Company amended its Certificate of Incorporation such that the Company is authorized to issue 5,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At December 31, 2020, there were no shares of preferred stock issued or outstanding.
Class A Common Stock — The Company is authorized to issue 500,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At December 31, 2020, there was 3,432,888 shares of Class A common stock issued and outstanding, excluding 11,429,612 shares of Class A common stock subject to possible redemption.
Class B Common Stock — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At December 31, 2020, there were 3,593,750 shares of Class B common stock issued and outstanding.
Prior to the Company’s initial business combination, holders of the Class B common stock will have the right to elect all of the Company’s directors and remove members of the Company’s board of directors for any reason. On any other matter submitted to a vote of our stockholders, holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by applicable law or stock exchange rule.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a business combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of a business combination, other than the forward purchase securities described in the prospectus, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such anti-dilution adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering (not including the shares of Class A common stock underlying the Private Placement Units) plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a business combination (net of the number of shares of Class A common stock redeemed in connection with a business combination), excluding forward purchase securities and any shares or equity-linked securities issued, or to be issued, to any seller in a business combination.
F-17
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
NOTE 9. WARRANTS
Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a business combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a business combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon the exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants.
The Company has agreed that as soon as practicable, but in no event later than 20 business days after the closing of a business combination, the Company will use its commercially reasonable efforts to file with the SEC, and within 60 business days following a business combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemptions of warrants when the price of Class A common stock equals or exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the Public Warrants:
| • | in whole and not in part; |
| • | at a price of $0.01 per warrant; |
| • | upon not less than 30 days’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder; and |
| • | if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Redemption of warrants when the price per share of Class common stock equals or exceeds $10.00 — Commencing ninety days after the warrants become exercisable, the Company may redeem the outstanding Public Warrants:
| • | in whole and not in part; |
| • | at a price of $0.10 per warrant provided that holders will be able to exercise their warrants prior to redemption and receive that number of shares of Class A common stock determined based on the redemption date and the “fair market value” of the Company’s Class A common stock; |
| • | upon a minimum of 30 days’ prior written notice of redemption; |
| • | if, and only if, the last reported sale price of the Company’s Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders; |
| • | if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto is available throughout the 30-day period after the written notice of redemption is given. |
F-18
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
If the Company calls the Public Warrants for redemption as described above under “— Redemptions of warrants when the price of Class A common stock equals or exceeds $18.00,” the Company’s management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a business combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of an initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and, in the case of any such issuance to the Sponsor or PA Co-Investments LLC or their affiliates, without taking into account any Founder Shares held by the Sponsor or PA Co-Investments LLC or their affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a business combination on the date of the completion of a business combination (net of redemptions), and (z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company completes their initial business combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that (1) the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until 30 days after the completion of a business combination, subject to certain limited exceptions, (2) the Private Placement Warrants will be exercisable on a cashless basis, (3) the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or their permitted transferees, (4) the holders of the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will have certain registration rights and (5) Private Placement Warrants held by PA Co-Investments LLC will not be exercisable more than five years from the effective date of the registration statement related to the Initial Public Offering in accordance with FINRA Rule 5110(f)(2)(G)(i). If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 10. INCOME TAX
The Company’s net deferred tax asset is summarized as follows as of December 31, 2020:
Deferred tax asset | ||||
Net operating loss carryforward | $ | 26,444 | ||
Organizational costs/startup expenses | 828,299 | |||
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Total deferred tax assets | 854,743 | |||
Valuation allowance | (854,743 | ) | ||
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Deferred tax asset, net of allowance | $ | — | ||
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F-19
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
The income tax provision consists of the following for the period April 24, 2020 (inception) through December 31, 2020:
Federal | ||||
Current | $ | — | ||
Deferred | (641,433 | ) | ||
State | ||||
Current | $ | — | ||
Deferred | (213,310 | ) | ||
Change in valuation allowance | 854,743 | |||
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Income tax provision | $ | — | ||
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As of December 31, 2020, the Company had $94,497 of U.S. federal and state net operating loss carryovers available to offset future taxable income.
In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the period from April 24, 2020 (inception) through December 31, 2020, the change in the valuation allowance was $854,743.
A reconciliation of the federal income tax rate to the Company’s effective tax rate at December 31, 2020 is as follows:
Statutory federal income tax rate | 21.0 | % | ||
State taxes, net of federal tax benefit | 7.0 | % | ||
Change in valuation of warrant liability | (12.6 | )% | ||
Change in valuation of FPA liability | (10.7 | )% | ||
Change in valuation allowance | (4.7 | )% | ||
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Income tax provision | 0.00 | % | ||
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The Company files income tax returns in the U.S. federal jurisdiction in various state and local jurisdictions and is subject to examination by the various taxing authorities.
NOTE 11. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. | |
At December 31, 2020, assets held in the Trust Account were comprised of $143,757,011 in money market funds which are invested primarily in U.S. Treasury Securities. Through December 31, 2020, the Company did not withdraw any of interest earned on the Trust Account to pay for its franchise and income tax obligations.
F-20
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
At December 31, 2020, there were 4,791,667 Public Warrants and 162,500 Private Placement Warrants outstanding.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at December 31, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | December 31, 2020 | Level 1 | Level 2 | Level 3 | ||||||||||||
Assets | ||||||||||||||||
Investments held in Trust Account – U.S. Treasury Securities Money Market Fund | $ | 143,757,011 | $ | 143,757,011 | $ | — | $ | — | ||||||||
Liabilities | ||||||||||||||||
Warrant Liability – Public Warrants | $ | 15,333,334 | $ | — | $ | — | $ | 15,333,334 | ||||||||
Warrant Liability – Private Placements Warrants | 609,375 | — | — | 609,375 | ||||||||||||
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Total warrant liabilities | $ | 15,942,709 | $ | $ | $ | 15,942,709 | ||||||||||
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FPA liability | $ | 6,966,666 | $ | $ | $ | 6,966,666 | ||||||||||
The Company utilizes a Monte Carlo simulation model to value the Warrants and FPA at each reporting period, with changes in fair value recognized in the consolidated statement of operations. The estimated fair value of the warrant liability is determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The annualized volatility of the equity was based on a calibration to the publicly traded warrant price as of the valuation date. The risk-free interest rate was estimated using linear interpolation assuming a term consistent with the time until the warrants expire, and yield information was based on U.S. Treasury Constant Maturities. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates remaining at zero.
The aforementioned warrant liabilities are not subject to qualified hedge accounting.
There were no transfers between Levels 1, 2 or 3 during the year ended December 31, 2020.
The following table provides quantitative information regarding Level 3 fair value measurements:
| At July 6, 2020 | As of | |||||||
| (Initial Measurement) | December 31, 2020 | |||||||
Stock price | $ | 8.50 | $ | 11.60 | ||||
Strike price | $ | 11.50 | $ | 11.50 | ||||
Term (in years) | 5.0 | 5.0 | ||||||
Volatility | 40.0 | % | 40.0 | % | ||||
Risk-free rate | 0.46 | % | 0.38 | % | ||||
Dividend yield | 0.0 | % | 0.0 | % | ||||
Fair value of warrants | $ | 1.60 | $ | 3.22 | ||||
Fair value of FPA liability | $ | 1.25 | $ | 2.09 | ||||
The following table presents the fair value of the Warrant liabilities and FPA liability at July 6, 2020 and December 31, 2020:
At July 6, 2020
| Securities | Value | Fair value | ||||||||||
Private placement | 162,500 | $ | 305,500 | $ | 1.88 | |||||||
Public | 4,791,667 | 7,618,750 | $ | 1.59 | ||||||||
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Total warrants | 4,954,167 | $ | 7,924,250 | $ | 1.60 | |||||||
FPA liability | 3,333,333 | $ | 4,174,999 | $ | 1.25 | |||||||
F-21
PANACEA ACQUISITION CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2020
At December 31, 2020
| Securities | Value | Fair value | ||||||||||
Private placement | 162,500 | $ | 609,375 | $ | 3.75 | |||||||
Public | 4,791,667 | 15,333,334 | $ | 3.20 | ||||||||
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Total warrants | 4,954,167 | $ | 15,942,709 | $ | 3.22 | |||||||
FPA liability | 3,333,333 | $ | 6,966,666 | $ | 2.09 | |||||||
The following table presents a summary of the changes in the fair value of the warrant liability, measured on a recurring basis.
| Public | Private Placement | |||||||
Fair value as of April 24, 2020 (inception) | $ | — | $ | — | ||||
Fair value as of July 6, 2020 (issuance) | 7,618,750 | 305,500 | ||||||
Change in fair value(1) | 7,714,584 | 303,875 | ||||||
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Fair value as of December 31, 2020 | $ | 15,333,334 | $ | 609,375 | ||||
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The following table presents a summary of the changes in the fair value of the FPA liability, measured on a recurring basis.
| FPA Liability | ||||
Fair value as of April 24, 2020 (inception) | $ | — | ||
Change in fair value(1) | 6,966,666 | |||
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Fair value as of December 31, 2020 | $ | 6,966,666 | ||
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| (1) | Represents the non-cash change in valuation and is included in change in fair value of warrants liability and FPA liability on the consolidated statement of operations. |
NOTE 12. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the consolidated financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the consolidated financial statements.
On February 10, 2021 (the “Closing Date”), Nuvation Bio Inc. (“Legacy Nuvation Bio”), Panacea Acquisition Corp. (“Panacea”) and Panacea Merger Subsidiary Corp, a wholly owned subsidiary of Panacea (“Merger Sub”), consummated the transactions contemplated by the Agreement and Plan of Merger among them, dated October 20, 2020. Pursuant to the terms of the Merger Agreement, a combination of Panacea and Legacy Nuvation Bio was effected through the merger of Merger Sub with and into Legacy Nuvation Bio, with Legacy Nuvation Bio surviving as a wholly owned subsidiary of Panacea (the “Merger”). Unless the context otherwise requires, the term “Merger” refers to the Merger collectively with the other transactions described in the Merger Agreement. On the Closing Date, Legacy Nuvation Bio changed its name to Nuvation Bio Operating Company Inc. and Panacea changed its name from Panacea Acquisition Corp. to Nuvation Bio Inc. (the “Company”).
In connection with Special Meeting and the Merger, holders of 3,350 shares of Panacea Class A common stock, par value $.0001 per share (“Panacea Class A Common Stock”), or approximately 0.02% of the shares with redemption rights, exercised their right to redeem their shares for cash at a redemption price of approximately $10.00 per share, for an aggregate redemption amount of $33,502.
At the effective time of the Merger (the “Effective Time”), each share of Legacy Nuvation Bio Class A common stock, par value $0.0001 per share (“Legacy Nuvation Bio Class A Common Stock”), and each share of Legacy Nuvation Bio Series A preferred stock, par value $0.0001 per share (“Legacy Nuvation Bio Preferred Stock”), was converted into and exchanged for approximately 0.196 shares (the “Exchange Ratio”) of the Company’s Class A common stock, par value $0.0001 per share (“Class A Common Stock”). Additionally, each share of Legacy Nuvation Bio Class B common stock, par value $0.0001 (“Legacy Nuvation Bio Class B Common Stock” and together with Legacy Nuvation Bio Class A Common Stock, the “Legacy Nuvation Bio Common Stock”) (all of which were owned by David Hung, M.D., the founder, President and Chief Executive Officer of Legacy Nuvation Bio) was canceled and converted into and exchanged for approximately 0.196 shares of the Company’s Class B common stock, par value $0.0001 per share (“Class B Common Stock” and together with the Class A Common Stock, the “Company Common Stock”).
On the Closing Date, a number of purchasers (each, a “Subscriber”) purchased from the Company an aggregate of 47,655,000 shares of Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of approximately $476.6 million, pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into concurrently with the Merger Agreement, effective as of October 20, 2020.
Additionally, on the Closing Date, certain purchasers purchased 2,500,000 shares of Class A Common Stock and 833,333 forward purchase warrants (the “Forward Purchase Securities”) in a private placement at a price of $10.00 per share for an aggregate purchase price of $25.0 million (the “Forward Purchase”) pursuant to the terms of the forward purchase agreement (the “Forward Purchase Agreement”) that Panacea entered into in connection with Panacea’s initial public offering. The sales of the PIPE Shares and the Forward Purchase Securities were consummated concurrently with the closing of the Merger (the “Closing”).
As of the Closing Date and following the completion of the Merger, the Company had the following outstanding securities:
| • | 216,650,055 shares of Class A Common Stock; |
| • | 1,000,000 shares of Class B Common Stock; |
| • | 5,787,500 warrants, each exercisable for one share of Class A Common Stock at a price of $11.50 per share; and |
| • | 9,571,976 shares of Class A Common Stock issuable upon exercise of Exchanged Options with a weighted average exercise price of $4.41 per share. |
F-22
