8-K/A
VYNE Therapeutics Inc. (VYNE)
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 12, 2022
VYNE Therapeutics Inc.
(Exact name of registrant as specifiedin its charter)
| Delaware | 001-38356 | 45-3757789 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification Number) |
520 U.S. Highway 22, Suite 204
Bridgewater, New Jersey 08807
(Address of principal executive offices,including Zip Code)
(800) 775-7936
(Registrant’s telephone number,including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| --- | --- |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | TradingSymbol(s) | Name of each exchange<br><br> <br>on which registered |
|---|---|---|
| Common Stock, $0.0001 par value | VYNE | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company x
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. x
Explanatory Note
On January 12, 2022, VYNE Therapeutics Inc. (“VYNE” or the “Company”) entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Journey Medical Corporation (“Journey”) pursuant to which VYNE divested its Molecule Stabilizing Technology franchise, including AMZEEQ, ZILXI, and FCD105, to Journey (the “Sale”).
This Current Report on Form 8-K/A supplements Item 9.01 of the Current Report on Form 8-K filed with the Securities and Exchange Commission on January 13, 2022 related to the completion of the Sale (the "Original Form 8-K"). The purpose of this amendment is to provide certain pro forma financial information in connection with the Sale, and provide additional information with respect to the Company's board of directors (the "Board").
Except as set forth herein, no modifications have been made to the information contained in the Original Form 8-K.
Item 5.02. Departure of Directors or Certain Officers; Electionof Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
The Company deeply regrets to announce that Mr. Rex Bright passed away on January 11, 2022. Mr. Bright was a director of the Company and also served as the Chair of the Company’s Compensation Committee and a member of the Company’s Audit Committee.
David Domzalski, Chief Executive Officer and Board member, said “on behalf of the Company, its entire board of directors and management team, I would like to acknowledge Rex’s tireless dedication and service to the Company. Rex was an outstanding director and he will be missed not only as a colleague, but also as a friend. We are thankful for his guidance, wisdom and outstanding leadership. We extend our sincerest condolences to Rex’s family.”
On January 14, 2022, the Board appointed (i) Patrick LePore to serve as a member of the Company’s Audit Committee and (ii) Elisabeth Sandoval to serve as chairperson of the Compensation Committee.
Item 9.01. Financial Statements and Exhibits.
(b) Pro Forma Financial Information
The Company’s unaudited pro forma condensed consolidated financial information is included as Exhibit 99.1 hereto and is incorporated by reference in this Item 9.01(b).
(d) Exhibits
The following exhibit is being filed herewith.
| Exhibit No. | Description |
|---|---|
| 99.1 | Unaudited Pro Forma Condensed Consolidated Financial Information. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements 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 hereunto duly authorized.
| VYNE THERAPEUTICS INC. | ||
|---|---|---|
| Date: January 14, 2022 | By: | /s/ Mutya Harsch |
| Mutya Harsch<br><br> <br>Chief Legal Officer and General Counsel |
Exhibit99.1
Unaudited Pro Forma Condensed Consolidated FinancialInformation
Overview
On January 12, 2022 (the “Effective Date”), VYNE Therapeutics Inc. (the “Company” or “VYNE”) entered into an Asset Purchase Agreement (the “Agreement”) with Journey Medical Corporation (“Journey” or “Buyer”) pursuant to which the Company sold its Molecule Stabilizing Technology (MST^TM^) franchise, including AMZEEQ^®^, ZILXI^®^, and FCD105 (the “MST Franchise”), to Journey. The assets include certain contracts, including the license agreement with Cutia Therapeutics (HK) Limited (“Cutia”), inventory and intellectual property related to the MST Franchise (together, the “Assets”). Pursuant to the Agreement, the Buyer assumed certain liabilities of the MST Franchise including, among others, those arising from VYNE’s patent infringement suit initiated against Padagis Israel Pharmaceuticals Ltd. There were no current or long-term liabilities recorded by the Company which were transferred to the Buyer. The sale was consummated concurrently with the execution of the Purchase Agreement.
The following unaudited pro forma condensed consolidated financial statements are intended to show how the transaction might have affected the historical financial statements of VYNE if the transaction had been completed at an earlier time as indicated therein. The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X, and were derived from the Company’s historical consolidated financial statements and are being presented to give effect to the sale of the Assets, presented on a discontinued operations basis in accordance with ASC 205, Discontinued Operations. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with:
| i. | The accompanying notes to the unaudited pro forma condensed consolidated financial statements; |
|---|---|
| ii. | The audited consolidated financial statements of the Company and its subsidiaries and the accompanying<br>notes included in the Company’s Current Report on Form 8-K filed with the SEC on August 12,<br>2021; and |
| iii. | The unaudited interim historical financial statements of the Company and its subsidiaries, the accompanying<br>notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s<br>Quarterly Report on Form 10-Q for the nine months ended September 30, 2021 filed with the SEC on November 10, 2021. |
The unaudited pro forma condensed consolidated financial statements of the Company are based on available information and assumptions that the Company’s management believes are reasonable as of the date of this filing. The unaudited pro forma condensed consolidated statements of operations for the years ended December 31, 2020, 2019 and 2018, and the nine months ended September 30, 2021 present the Company’s results as if the transaction had occurred on January 1, 2018, the beginning of the earliest period presented. The unaudited pro forma condensed consolidated balance sheet as of September 30, 2021 reflects the Company’s assets, liabilities, and equity as if the transaction had occurred on September 30, 2021.
The unaudited pro forma condensed consolidated financial statements do not purport to represent the Company’s actual consolidated results of operations or financial condition had the transaction occurred on the dates assumed, nor are they indicative of the Company’s future consolidated results of operations or financial condition.
The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X. Article 11 of Regulation S-X requires that pro forma financial information include the following pro forma adjustments to the historical financial statements of the registrant as follows:
| · | Transaction Accounting Adjustments– Adjustments that reflect only the application of required accounting to the acquisition, disposition, or other transaction. |
|---|---|
| · | Autonomous Entity Adjustments– Adjustments that are necessary to reflect the operations and financial position of the registrant as an autonomous entity when the registrant was previously part of another entity. There are no autonomous entity adjustments included in the pro forma financial information because VYNE currently operates, and after the completion of the transaction will continue to operate, as an independent, standalone entity. |
In addition, Regulation S-X permits registrants to reflect adjustments that depict synergies and dis-synergies of the acquisitions and dispositions for which pro forma effect is being given in our disclosures as management adjustments. The unaudited pro forma condensed consolidated financial statements do not include management adjustments to reflect any potential synergies that may be achievable, or dis-synergy costs that may occur, in connection with the sale of the Assets. We have determined not to reflect such adjustments because we do not believe to present such adjustments would enhance an understanding of the pro forma effects of the transaction.
The transaction accounting adjustments to reflect the sale of the Assets in the unaudited pro forma condensed consolidated financial statements include:
| · | The sale of the Assets of the MST Franchise pursuant to the Agreement and the elimination of operating results related to the MST Franchise<br>presented on a discontinued operations basis in accordance with ASC 205, Discontinued Operations. |
|---|---|
| · | The estimated impact of proceeds received in connection with the transaction, net of transaction costs and income taxes paid, and the<br>estimated gain or loss on the sale of the Assets of the MST Franchise. |
| --- | --- |
The unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and are based upon estimates by VYNE’s management, which are based upon available information and certain assumptions that VYNE’s management believes are reasonable as of the date of this filing. The unaudited pro forma condensed consolidated financial statements are not intended to be indicative of the actual financial position or results of operations that would have been achieved had the transaction been consummated as of the periods indicated above, nor does it purport to indicate results which may be attained in the future. Actual amounts could differ materially from these estimates.
VYNE THERAPEUTICS INC.
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2021
(in thousands)
(Unaudited)
| Transaction Accounting Adjustments | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Historical VYNE<br> <br>(a) | Discontinued Operations<br> <br>(b) | Additional Adjustments <br><br>(c) | Notes | Pro <br><br>Forma | ||||||
| Assets | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 52,306 | $ | — | $ | 15,570 | i | $ | 67,876 | |
| Restricted cash | 605 | — | — | 605 | ||||||
| Trade receivables, net of allowances | 10,084 | — | — | 10,084 | ||||||
| Prepaid and other assets | 5,064 | (739 | ) | 5,000 | i | 9,325 | ||||
| Inventory | 8,070 | (8,070 | ) | — | — | |||||
| Total Current Assets | 76,129 | (8,809 | ) | 20,570 | 87,890 | |||||
| Property and equipment, net | 472 | — | — | 472 | ||||||
| Operating lease right-of-use assets | 1,036 | — | — | 1,036 | ||||||
| Prepaid and other assets | 3,678 | — | — | 3,678 | ||||||
| Total Assets | $ | 81,315 | $ | (8,809 | ) | $ | 20,570 | $ | 93,076 |
See accompanying notes to unaudited pro formacondensed consolidated financial statements.
VYNE THERAPEUTICS INC.
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 2021
(in thousands)
(Unaudited)
| Transaction Accounting Adjustments | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Discontinued Operations<br><br> (b) | Additional Adjustments<br><br> (c) | Notes | Pro<br><br> Forma | ||||||||
| Liabilities and shareholders’ equity | |||||||||||
| Current Liabilities: | |||||||||||
| Trade payables | 7,621 | $ | — | $ | — | $ | 7,621 | ||||
| Accrued expenses | 9,613 | — | — | 9,613 | |||||||
| Employee related obligations | 3,382 | — | — | 3,382 | |||||||
| Operating lease liabilities | 277 | — | — | 277 | |||||||
| Other | 104 | — | — | 104 | |||||||
| Total Current Liabilities | 20,997 | — | — | 20,997 | |||||||
| Liability for employee severance benefits | 206 | — | — | 206 | |||||||
| Operating lease liabilities | 775 | — | — | 775 | |||||||
| Other liabilities | 451 | — | — | 451 | |||||||
| Total Liabilities | 22,429 | — | — | 22,429 | |||||||
| Shareholders' Equity: | |||||||||||
| Preferred stock: 0.0001 par value; 20,000,000 shares authorized at September 30, 2021; no shares issued and outstanding at September 30, 2021 | — | — | — | — | |||||||
| Common stock: 0.0001 par value; 150,000,000 shares at September 30, 2021; 53,510,599 shares issued and outstanding at September 30, 2021 | 5 | — | — | 5 | |||||||
| Additional paid-in capital | 686,836 | — | — | 686,836 | |||||||
| Accumulated deficit | (627,955 | ) | (8,809 | ) | 20,570 | (616,194 | ) | ||||
| Total Shareholders' Equity | 58,886 | (8,809 | ) | 20,570 | 70,647 | ||||||
| Total Liabilities and Shareholders’ Equity | 81,315 | $ | (8,809 | ) | $ | 20,570 | $ | 93,076 |
All values are in US Dollars.
See accompanying notes to unaudited pro formacondensed consolidated financial statements.
VYNE THERAPEUTICS INC.
Pro Forma Condensed Consolidated Statement ofOperations
For the nine months ended September 30, 2021
(in thousands, except per share data)
(Unaudited)
| Transaction Accounting Adjustments | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Historical VYNE (a) | DiscontinuedOperations (b) | AdditionalAdjustments(c) | Notes | ProForma | ||||||
| Revenues | ||||||||||
| Product sales, net | $ | 11,805 | $ | (11,805 | ) | $ | — | $ | — | |
| Royalty revenues | 658 | — | — | 658 | ||||||
| Total Revenues | 12,463 | (11,805 | ) | — | 658 | |||||
| Cost of goods sold | 2,445 | (2,445 | ) | — | — | |||||
| Operating Expenses: | ||||||||||
| Research and development | 19,723 | (4,512 | ) | — | 15,211 | |||||
| Selling, general and administrative | 46,283 | (29,527 | ) | — | 16,756 | |||||
| Total Operating Expenses | 66,006 | (34,039 | ) | — | 31,967 | |||||
| Operating Loss | 55,988 | (24,679 | ) | — | 31,309 | |||||
| Interest Expense | 5,610 | — | — | 5,610 | ||||||
| Other Income, net | 161 | — | — | 161 | ||||||
| Loss Before Income Tax | 61,759 | (24,679 | ) | — | 37,080 | |||||
| Income Tax (Benefit) Expense | — | — | — | — | ||||||
| Net Loss | 61,759 | $ | (24,679 | ) | $ | — | $ | 37,080 | ||
| Loss per share basic and diluted | $ | 1.22 | $ | 0.73 | ||||||
| Weighted average shares outstanding - basic and diluted | 50,776 | 50,776 |
See accompanying notes to unaudited pro formacondensed consolidated financial statements.
VYNE THERAPEUTICS INC.
Pro Forma Condensed Consolidated Statement ofOperations
For the year ended December 31, 2020
(thousands, except per share data)
(Unaudited)
| Transaction Accounting Adjustments | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| HistoricalVYNE<br> <br>(a) | Discontinued<br><br> Operations<br><br> (b) | Additional<br><br> Adjustments<br><br> (c) | Notes | Pro <br><br>Forma | ||||||||
| Revenues | ||||||||||||
| Product sales, net | $ | 10,202 | $ | (10,202 | ) | $ | — | $ | — | |||
| License revenues | 10,000 | (10,000 | ) | — | — | |||||||
| Royalty revenues | 791 | — | — | 791 | ||||||||
| Total Revenues | 20,993 | (20,202 | ) | — | 791 | |||||||
| Cost of goods sold | 1,392 | (1,392 | ) | — | — | |||||||
| Operating Expenses: | ||||||||||||
| Research and development | 43,533 | (10,272 | ) | — | 33,261 | |||||||
| Selling, general and administrative | 89,543 | (42,485 | ) | — | 47,058 | |||||||
| Goodwill and in-process research & development impairments | 54,345 | — | — | 54,345 | ||||||||
| Contingent Stock Remeasurement | 84,726 | — | — | 84,726 | ||||||||
| Total Operating Expenses | 272,147 | (52,757 | ) | — | 219,390 | |||||||
| Operating Loss | 252,546 | (33,947 | ) | — | 218,599 | |||||||
| Interest Expense | 4,390 | — | — | 4,390 | ||||||||
| Other Income, net | (1,110 | ) | — | — | (1,110 | ) | ||||||
| Loss Before Income Tax | 255,826 | (33,947 | ) | — | 221,879 | |||||||
| Income Tax (Benefit) Expense | (258 | ) | — | — | (258 | ) | ||||||
| Net Loss | $ | 255,568 | $ | (33,947 | ) | $ | — | $ | 221,621 | |||
| Loss per share basic and diluted | $ | 7.88 | $ | 6.84 | ||||||||
| Weighted average shares outstanding - basic and diluted | 32,418 | 32,418 |
See accompanying notes to unaudited pro formacondensed consolidated financial statements.
VYNE THERAPEUTICS INC.
Pro Forma Condensed Consolidated Statement ofOperations
For the year ended December 31, 2019
(thousands, except per share data)
(Unaudited)
| Transaction Accounting Adjustments | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Historical VYNE<br> <br>(a) | Discontinued<br><br> Operations <br><br>(b) | Additional<br><br> <br>Adjustments<br><br> <br>(c) | Notes | Pro <br><br>Forma | ||||||||
| Revenues | ||||||||||||
| Royalty revenues | $ | 443 | — | — | $ | 443 | ||||||
| Total Revenues | 443 | — | — | 443 | ||||||||
| Operating Expenses: | ||||||||||||
| Research and development | 51,202 | (36,421 | ) | — | 14,781 | |||||||
| Selling, general and administrative | 45,114 | (23,926 | ) | — | 21,188 | |||||||
| Total Operating Expenses | 96,316 | (60,347 | ) | — | 35,969 | |||||||
| Operating Loss | 95,873 | (60,347 | ) | — | 35,526 | |||||||
| Interest Expense | 921 | — | — | 921 | ||||||||
| Other Income, net | (1,440 | ) | — | — | (1,440 | ) | ||||||
| Loss Before Income Tax | 95,354 | (60,347 | ) | — | 35,007 | |||||||
| Income Tax (Benefit) Expense | (176 | ) | — | — | (176 | ) | ||||||
| Net Loss | $ | 95,178 | $ | (60,347 | ) | $ | — | $ | 34,831 | |||
| Loss per share basic and diluted | $ | 11.22 | $ | 4.11 | ||||||||
| Weighted average shares outstanding - basic and diluted | 8,485 | 8,485 |
See accompanying notes to unaudited pro formacondensed consolidated financial statements.
VYNE THERAPEUTICS INC.
Pro Forma Condensed Consolidated Statement ofOperations
For the year ended December 31, 2018
(thousands, except per share data)
(Unaudited)
| Transaction Accounting Adjustments | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Historical<br><br> <br>VYNE<br> <br><br> <br>(a) | Discontinued<br><br> <br>Operations<br> (b) | Additional<br><br> Adjustments<br><br> (c) | Notes | Pro <br><br>Forma | ||||||||
| Revenues | ||||||||||||
| Royalty revenues | $ | 3,533 | — | — | $ | 3,533 | ||||||
| Other revenues | 62 | — | — | 62 | ||||||||
| Total Revenues | 3,595 | — | — | 3,595 | ||||||||
| Operating Expenses: | ||||||||||||
| Research and development | 64,474 | (53,090 | ) | — | 11,384 | |||||||
| Selling, general and administrative | 14,013 | — | — | 14,013 | ||||||||
| Total Operating Expenses | 78,487 | (53,090 | ) | — | 25,397 | |||||||
| Operating Loss | 74,892 | (53,090 | ) | — | 21,802 | |||||||
| Other Income, net | (941 | ) | — | — | (941 | ) | ||||||
| Loss Before Income Tax | 73,951 | (53,090 | ) | — | 20,861 | |||||||
| Income Tax (Benefit) Expense | 212 | — | — | 212 | ||||||||
| Net Loss | $ | 74,163 | $ | (53,090 | ) | $ | — | $ | 21,073 | |||
| Loss per share basic and diluted | $ | 11.47 | $ | 3.26 | ||||||||
| Weighted average shares outstanding - basic and diluted | 6,466 | 6,466 |
See accompanying notes to unaudited pro formacondensed consolidated financial statements.
Notes to the Unaudited Pro Forma Condensed ConsolidatedFinancial Statements
On January 12, 2022 the “Effective Date”), VYNE Therapeutics Inc. (the “Company” or “VYNE”) entered into an Asset Purchase Agreement (the “Agreement”) with Journey Medical Corporation (”Journey” or “Buyer”) pursuant to which the Company sold its Molecule Stabilizing Technology (MST^TM^) franchise, including AMZEEQ^®^, ZILXI^®^, and FCD105 (the “MST Franchise”), to Journey. The assets include certain contracts, including the license agreement with Cutia Therapeutics (HK) Limited (“Cutia”), inventory and intellectual property related to the MST Franchise (together, the “Assets”). Pursuant to the Agreement, the Buyer assumed certain liabilities of the MST Franchise including, among others, those arising from VYNE’s patent infringement suit initiated against Padagis Israel Pharmaceuticals Ltd. There were no current or long-term liabilities recorded by the Company which were transferred to the Buyer. The sale was consummated concurrently with the execution of the Purchase Agreement.
The Agreement provides that the consideration payable by the Buyer to the Company for the Assets sold and transferred will consist of the following amounts: (i) a payment of $20.0 million on the Effective Date; (ii) a payment of $5.0 million on the one (1)-year anniversary of the Effective Date; and (iii) milestone payments of up to $450.0 million in the aggregate upon the achievement of specified levels of net sales of the products covered by the Agreement. In addition, Journey has agreed to pay VYNE 10% of any upfront payment received by Journey from a licensee or sublicensee in any territory outside of the United States, subject to specified exceptions.
The unaudited pro forma condensed consolidated financial statements reflect the following:
| a) | The Company’s condensed consolidated balance sheet as of September 30, 2021 and consolidated statements<br>of operations for the years ended December 31, 2020, 2019 and 2018 and for the nine months ended September 30, 2021. |
|---|---|
| b) | The sale of the Assets pursuant to the Agreement<br>are presented on a discontinued operations basis in accordance with ASC 205-20, Presentation of Financial Statements – DiscontinuedOperations. Specific adjustments related to this presentation include the following: |
| --- | --- |
| i. | Adjustments to reflect discontinued operations of the assets and liabilities of the MST Franchise consistent<br>with the guidance for discontinued operations under US GAAP. The Company’s current estimates<br>on the discontinued operations basis are preliminary and could change as the Company finalizes the accounting for the discontinued operations<br>to be reported in its Quarterly Report on Form 10-Q for the quarter ending March 31, 2022. |
| --- | --- |
| ii. | The tax impacts have been estimated using the applicable statutory<br>income tax rates in the respective jurisdictions. The estimated income tax adjustments are subject to change and actual amounts may differ<br>from the results reflected herein. |
| --- | --- |
| c) | The estimated cash proceeds<br>received, and deferred cash payments net of transaction costs and taxes related to the gain on the transaction. |
| --- | --- |
| i. | To record the estimated net cash proceeds<br>from the transaction of $20 million paid upon closing and $5 million to be paid upon the one-year anniversary of the Effective Date,<br>less estimated transaction costs of $4.4 million. The Company does not expect to pay any federal or state income taxes based upon utilization<br>of net operating losses. The expected tax effects are calculated based on the amount of taxable<br>gain considering the use of historical net operating losses in place to reduce taxable income, using the applicable statutory income<br>tax rates in the respective jurisdictions, except in jurisdictions for where there was a valuation allowance in place, which resulted<br>in the use of a 0% tax rate. The estimates, including the jurisdictional income tax effects, are subject to change and actual amounts<br>may differ from the results reflected herein. As described above the pro forma statements of operations present the Company’s<br>results as if the transaction had occurred on January 1, 2018. The estimated gain of $11.8 million<br>related to the discontinued operations and the sale has been excluded from the pro forma condensed consolidated statement of operations<br>for the year ended December 31, 2018 as this amount pertains to discontinued operations and does not reflect the impact on income from<br>continuing operations. No proceeds from product payments were included in the pro forma financial statements as they are contingent upon<br>certain milestones and will be accounted for upon the achievement of such milestones. |
| --- | --- |
In addition, on the Effective Date, the parties entered into a Transition Services Agreement (“TSA”) for the Company to continue to perform certain operational and administrative services related to the Assets over specified periods of time (up to 6 months in certain instances with the ability of the parties to mutually agree on an extension period). The TSA details the services to be provided, the term over which the services will be provided, and the compensation to be paid by the Buyer to the Company for providing those services. The unaudited pro forma condensed consolidated financial statements do not include any compensation related to the TSA as the agreement is not finalized and compensation related to the TSA cannot be reasonably estimated.