BUSINESS COMBINATION

12 Months Ended

Dec. 31, 2013

BUSINESS COMBINATION

BUSINESS COMBINATION

2.   BUSINESS COMBINATION

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% of the combined company’s shares outstanding, and the former BioSante stockholders owned 43%. 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 publicly-traded 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 are included in the Company’s consolidated financial statements for all periods after completion of the Merger.

Transaction Costs

In conjunction with the Merger, the Company incurred approximately $7.1 million in transaction costs, which were expensed in the periods in which they were incurred. Costs incurred through December 31, 2013, include:

Category	(in thousands)
Legal fees	$	1,227
Accounting fees		122
Consulting fees		119
Monitoring and advisory fees		390
Transaction bonuses		4,801
Other		429
Total transaction costs	$	7,088

Of the total expenses, $0.9 million was incurred and expensed in the year ended December 31, 2012 as selling, general and administrative expense in the accompanying consolidated statements of operations. The remaining $6.2 million was incurred and expensed in the year ended December 31, 2013, $5.5 million as selling, general and administrative expense $0.3 million as interest expense, and $0.4 million as other expense, in the accompanying consolidated statements of operations. 

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, which resulted in a total purchase consideration of $29.8 million. The fair value of all additional consideration, including the vested BioSante stock options and CVRs, was immaterial. The following presents the preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed on June 19, 2013:

	(in thousands)
Total purchase consideration	$	29,795
Assets acquired
Cash and cash equivalents		18,198
Restricted cash		2,260
Teva license intangible asset		10,900
Other tangible assets		79
Deferred tax assets, net		-
Goodwill		1,838
Total assets		33,275
Liabilities assumed
Accrued severance		2,965
Other liabilities		515
Total liabilities		3,480
Total net assets acquired	$	29,795

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. Any subsequent changes to the purchase allocation during the measurement period that are material will be adjusted retrospectively.

The Teva license is related to a generic male testosterone gel product and is being 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. As a result of purchase accounting related to the Merger, the Company established deferred tax assets of $9.6 million, deferred tax liabilities of $3.9 million, and a valuation allowance of $5.7 million, netting to deferred tax assets of $0.

Former BioSante operations generated $0.5 million of revenue in a non-recurring payment related to the Teva license, and no expense from the acquisition date through December 31, 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 equity-linked securities, (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.

	Year ended December 31,
(in thousands)	2013		2012
Net revenues	$	30,228	$	22,671
Net income/(loss)	$	89	$	(27,718)