BUSINESS COMBINATION

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

BUSINESS COMBINATION

2. BUSINESS COMBINATION

On June 19, 2013, BioSante acquired ANIP in an all-stock, tax-free reorganization. Since the merger we have been operating under the leadership of the ANIP management team and ANIP's historical results of operations have replaced BioSante's historical results of operations for all periods prior to the Merger.

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 our consolidated financial statements for all periods after completion of the Merger.

Transaction Costs

In conjunction with the Merger, we incurred approximately $7.1 million in transaction costs, which were expensed in the periods in which they were incurred. These costs 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, $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 earnings. No transaction-related expenses were incurred in the year ended December 31, 2014 or 2015.

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 final 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
Testosterone Gel NDA(1)		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

⁽¹⁾ As part of the Merger, we acquired a testosterone gel product that was licensed to Teva (the "Testosterone Gel NDA"). In May 2015, we acquired from Teva the approved New Drug Application ("NDA") for the previously-licensed product (Note 6).

The Testosterone Gel NDA 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, we 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 no revenue and no expense in the year ended December 31, 2015 and 2014. Former BioSante operations generated $0.5 million of revenue in a non-recurring payment related to the testosterone gel NDA, 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 2013 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.

(in thousands)	Year ended December 31,
	2013
Net revenues	$	30,228
Net income/(loss)	$	89