BUSINESS COMBINATION

6 Months Ended

Jun. 30, 2013

BUSINESS COMBINATION

BUSINESS COMBINATION

2. BUSINESS COMBINATION

Summary

On June 19, 2013, BioSante acquired ANIP in an all-stock, tax-free reorganization. The Company is operating under the leadership of the ANIP management team and the board of directors is comprised of two former directors from BioSante and five former ANIP directors.

BioSante issued to ANIP stockholders shares of BioSante common stock such that the ANIP stockholders owned 57 percent of the combined company’s shares outstanding, and the former BioSante stockholders owned 43 percent. In addition, immediately prior to the Merger, BioSante distributed to its then current stockholders contingent value rights (“CVR”) providing payment rights arising from a future sale, transfer, license or similar transaction(s) involving BioSante’s LibiGel^® (female testosterone gel).

The Merger was accounted for as a reverse acquisition pursuant to which ANIP was considered the acquiring entity for accounting purposes. As such, ANIP's historical results of operations replace BioSante's historical results of operations for all periods prior to the Merger. BioSante, the accounting acquiree, was a pharmaceutical company focused on developing high value, medically-needed products. ANIP entered into the Merger to secure additional capital and gain access to capital market opportunities as a public company.

The results of operations of both companies will be included in the Company’s financial statements for all periods after completion of the Merger.

Transaction Costs

In conjunction with the Merger, the Company incurred approximately $6.6 million in transaction costs, which were expensed in the periods in which they were incurred. Costs incurred through June 30, 2013, include:

Category
Legal fees	$	1,166,894
Accounting fees		118,374
Consulting fees		99,448
Monitoring and advisory fees		390,000
Transaction bonuses		4,501,364
Other		311,075
Total transaction costs	$	6,587,155

Of the total expenses, $928,695 was incurred and expensed in 2012 and $5,658,460 was incurred and expensed in the six months ended June 30, 2013.

Purchase Consideration and Net Assets Acquired

The fair value of BioSante’s common stock used in determining the purchase price was $1.22 per share, the closing price on June 19, 2013. The fair value of the vested BioSante stock options was not material. The following presents the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed on June 19, 2013:

Fair value of BioSante shares outstanding	$	29,795,133
Estimated fair value of vested BioSante stock options		-
Total purchase consideration	$	29,795,133
Assets acquired
Cash and cash equivalents	$	18,197,442
Restricted cash		2,260,100
Teva license intangible asset		10,900,000
Other tangible assets		79,261
Deferred tax assets, net		-
Goodwill		1,838,309
Total assets		33,275,112
Liabilities assumed
Accrued severance		2,964,962
Other liabilities		515,017
Total liabilities		3,479,979
Total net assets acquired	$	29,795,133

The above allocation of the purchase price is based upon certain preliminary valuations and other analyses that have not been completed as of the date of this filing. Any changes in the estimated fair values of the net assets recorded for this business combination upon the finalization of more detailed analyses of the facts and circumstances that existed at the date of the transaction will change the allocation of the purchase price. As such, the purchase price allocations for this transaction are preliminary estimates, which are subject to change within the measurement period. Any subsequent changes to the purchase allocation that are material will be adjusted retrospectively.

The Teva license will be amortized on a straight-line basis over its estimated useful life of 11 years. Goodwill, which is not tax deductible since the transaction was structured as a tax-free exchange, is considered an indefinite-lived asset and relates primarily to intangible assets that do not qualify for separate recognition.

Former BioSante operations did not generate any revenue or expense from the acquisition date through June 30, 2013.

Pro Forma Condensed Combined Financial Information (unaudited)

The following unaudited pro forma condensed combined financial information summarizes the results of operations for the periods indicated as if the Merger had been completed as of January 1, 2012. Pro forma information reflects adjustments relating to (i) elimination of the interest on ANIP’s senior and convertible debt, (ii) elimination of monitoring and advisory fees payable to two ANIP investors, (iii) elimination of transaction costs, and (iv) amortization of intangibles acquired. The pro forma amounts do not purport to be indicative of the results that would have actually been obtained if the Merger had occurred as of January 1, 2012 or that may be obtained in the future.

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Net revenues	$	6,151,539	$	5,295,573	$	11,858,488	$	10,236,375
Net loss	$	(3,352,015)	$	(6,922,844)	$	(4,870,433)	$	(16,655,470)