EX-99.3 5 tm243472d1_ex99-3.htm EXHIBIT 99.3

Exhibit 99.3

 

STANDARD BIOTOOLS AND SOMALOGIC UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

On October 4, 2023, Standard BioTools Inc. (“Standard BioTools”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with SomaLogic, Inc. (“SomaLogic”) and Martis Merger Sub Inc. (“Merger Sub”). The merger contemplated by the Merger Agreement was implemented through a merger of Merger Sub with and into SomaLogic, with SomaLogic becoming a wholly owned subsidiary of Standard BioTools (the “Merger”). The Merger closed on the morning of January 5, 2024, prior to market opening (the “Effective Time”).

 

The following unaudited pro forma condensed combined financial information is based on the historical consolidated financial statements of Standard BioTools and SomaLogic; and is adjusted to give effect to the Merger. Under the terms of the Merger Agreement, upon consummation of the Merger, SomaLogic shareholders will receive 1.11 shares (the “Exchange Ratio”) of Standard BioTools common stock (“Standard BioTools Common Stock”) for each share of SomaLogic common stock (“SomaLogic Common Stock”) issued and outstanding as of the Effective Time and cash in lieu of the fractional shares. In connection with the Merger, all SomaLogic Common Stock were cancelled and converted into the right to receive Standard BioTools Common Stock. Based on a stock price of $2.00 as of the open of market on January 5, 2024, the purchase price is approximately $441.5 million. Upon the close of the Merger, Standard BioTools shareholders own approximately 43% of the combined company, and SomaLogic shareholders own approximately 57% of the combined company on a fully diluted basis. The combined company is accounting for the transaction as a business combination between Standard BioTools and SomaLogic using the acquisition method of accounting with Standard BioTools as the accounting acquirer.

 

The following unaudited pro forma condensed combined balance sheet as of September 30, 2023, and the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2022, and the nine months ended September 30, 2023, are presented herein. The unaudited pro forma condensed combined balance sheet combines the unaudited condensed consolidated balance sheets of Standard BioTools and SomaLogic as of September 30, 2023 and gives effect to the Merger as if it occurred on September 30, 2023. The unaudited pro forma condensed combined statements of operations combine the historical results of Standard BioTools and SomaLogic for the year ended December 31, 2022 and the nine months ended September 30, 2023 and give effect to the Merger as if it occurred on January 1, 2022.

 

The historical financial information has been adjusted in the unaudited pro forma condensed combined financial information to give effect to pro forma adjustments deemed to be directly related to the Merger and expected to be incurred either prior to the transaction or post-close, irrespective of whether such adjustment is deemed to be recurring.

 

The pro forma adjustments are subject to modification based on the final determination of the fair value of the assets acquired and liabilities assumed and additional information that may become available. This may cause the final adjustments to be materially different from the unaudited pro forma condensed combined financial information presented below. Management performed a preliminary review of SomaLogic’s accounting policies and did not identify any material adjustments to be made to align accounting policies. Standard BioTools management is in-process of performing a detailed review of SomaLogic’s accounting policies in an effort to determine if differences in accounting policies require further adjustment or reclassification of SomaLogic’s results of operations or assets or liabilities to conform to Standard BioTools accounting policies and classification. As a result, Standard BioTools may subsequently identify additional differences in the accounting policies which could have a material impact on the unaudited pro forma condensed combined financial information.

 

The unaudited pro forma condensed combined financial information presented is for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the business combination had been completed on the dates set forth above, nor is it indicative of future results or financial position of the combined company. The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may result from the business combination. The pro forma adjustments, which Standard BioTools believes are reasonable under the circumstances, are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma condensed combined financial information. Actual results and valuations may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.

 

 

 

These unaudited pro forma condensed combined financial statements should be read in conjunction with the following:

 

●The accompanying notes to the unaudited pro forma condensed combined financial information;

 

●The historical audited consolidated financial statements of Standard BioTools as of and for the year ended December 31, 2022, included in Standard BioTools’ Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 14, 2023;

 

●The historical unaudited condensed consolidated financial statements of Standard BioTools as of and for the nine months ended September 30, 2023, included in Standard BioTools’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 7, 2023;

 

●The historical audited consolidated financial statements of SomaLogic as of and for the year ended December 31, 2022, included in SomaLogic’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 28, 2023; and

 

●The historical unaudited condensed consolidated financial statements of SomaLogic as of and for the nine months ended September 30, 2023, included in SomaLogic’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, filed with the SEC on November 8, 2023.

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2023

(In thousands)

 

  

Standard
BioTools Inc

(Historical)

  

SomaLogic Inc

(Note 3)

   Transaction
Accounting
Adjustments		   Note 5 

Pro Forma

Combined

 
Assets                       
Current assets:                       
Cash and cash equivalents  $79,655   $305,571   $(1,900)  A  $383,326 
Short-term investments   49,195    148,239    -       197,434 
Accounts receivable   16,560    20,730    -       37,290 
Inventories, net   21,927    13,884    -       35,811 
Prepaid expenses and other current assets   3,404    5,681    (379)  B   8,706 
Total current assets   170,741    494,105    (2,279)      662,567 
Property and equipment, net   24,538    18,172    -       42,710 
Non-current inventories, net   -    11,119    -       11,119 
Accounts receivable, net of current portion   -    8,681    -       8,681 
Operating lease right-of-use asset, net   31,191    4,268    74   C   35,533 
Other non-current assets   2,390    1,604    -       3,994 
Intangible assets        16,700    (16,700)  D   - 
Developed technology, net   4,200    -    5,800   D   10,000 
Trade Name   -    -    2,800   D   2,800 
Customer Relationships   -    -    2,500   D   2,500 
Goodwill   106,225    10,399    (10,399)  D   106,225 
Total assets  $339,285   $565,048   $(18,204)     $886,129 
Liabilities and stockholders' equity                       
Current liabilities:                       
Accounts payable  $7,327   $11,458   $-      $18,785 
Accrued compensation and related benefits   10,423    9,363    (159)  E   19,627 
Operating lease liabilities, current   3,980    1,970    (142)  C   5,808 
Deferred revenue, current  $11,234    3,074   $-       14,308 
Deferred grant income, current   3,637    -    -       3,637 
Other accrued liabilities   10,199    1,916    11,969   F   24,084 
Term loan, current   5,000    -    -       5,000 
Total current liabilities   51,800    27,781    11,668       91,249 
Convertible notes, net   54,975    -    -       54,975 
Term loan, non-current   4,615    -    -       4,615 
Deferred tax liability   1,017    1,060    (1,060)  G   1,017 
Operating lease liabilities, non-current   31,150    2,763    (249)  C   33,664 
Deferred revenue, non-current   3,474    30,944    -       34,418 
Deferred grant income, non-current   11,635    -    -       11,635 
Warrant Liability        2,317    -       2,317 
Other non-current liabilities   1,086    3,444    -       4,530 
Total liabilities   159,752    68,309    10,359       238,420 
Mezzanine equity:   311,253    -    -       311,253 
Stockholders’ equity (deficit):                       
Preferred stock   -    -    -       - 
Common stock   82    19    190   E,H,I   291 
Additional paid-in capital   856,926    1,186,420    (745,017)  E,H,I   1,298,329 
Accumulated other comprehensive loss   (1,949)   (14)   14   I   (1,949)
Accumulated deficit   (980,976)   (689,686)   716,250   A-I   (954,412)
Treasury stock at cost   (5,803)   -    -       (5,803)
Total stockholders’ equity (deficit)   (131,720)   496,739    (28,563)      336,456 
Total liabilities and stockholders’ equity (deficit)  $339,285   $565,048   $(18,204)     $886,129 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023

(In thousands, except for share and per share amounts)

 

  

Standard
BioTools Inc

(Historical)

  

SomaLogic Inc

(Note 3)

   Transaction
Accounting
Adjustments		   Note 5 

Pro Forma

Combined

 
Revenue:                       
Product revenue  $57,814   $7,513   $-      $65,327 
Service revenue   19,268    52,882    -       72,150 
Development revenue   -    2,288    -       2,288 
Other revenue   1,070    212    -       1,282 
Total revenue   78,152    62,895    -       141,047 
Cost of revenue                     - 
Cost of product revenue   33,276    3,773    3   D,E   37,052 
Cost of service and other revenue   7,783    31,353    (48)  D,E   39,088 
Total costs of revenue   41,059    35,126    (45)      76,140 
Gross Profit   37,093    27,769    45       64,907 
Operating expenses:                       
Research and development   19,039    35,340    (2,633)  E   51,746 
Selling, general and administrative   66,187    87,642    (6,836)  D,E   146,993 
Restructuring and related charges   5,415    -    -       5,415 
Transaction-related expenses   1,666    4,157    -       5,823 
Total operating expenses   92,307    127,139    (9,469)      209,977 
Income (loss) from operations   (55,214)   (99,370)   9,514       (145,070)
Interest expense   (3,469)   -    -       (3,469)
Change in fair value of warrant liability   -    1,896    -       1,896 
Change in fair value of earn-out liability   -    15    -       15 
Other income, net   4,417    16,810    -       21,227 
Income (loss) before income taxes   (54,266)   (80,649)   9,514       (125,401)
Income tax benefit (expense)   (614)   (482)   -   G   (1,096)
Net (loss) income  $(54,880)  $(81,131)  $9,514      $(126,497)
Net loss per share, basic and diluted   (0.69)   (0.43)   -       (0.44)
Shares used in computing net loss per share, basic and diluted   78,967    186,781    22,796   K   288,544 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2022

(In thousands, except for share and per share amounts)

 

  

Standard
BioTools Inc

(Historical)

  

SomaLogic Inc

(Note 3)

   Transaction
Accounting
Adjustments		   Note 5 

Pro Forma

Combined

 
Revenue:                       
Product revenue  $72,454   $4,243   $       $76,697 
Service revenue   23,712    63,038    -       86,750 
Development revenue   818    3,051    -       3,869 
Other revenue   964    27,334    -       28,298 
Total revenue   97,948    97,666    -       195,614 
Cost of revenue             -       - 
Cost of product revenue   52,555    1,945    (6)  D,E   54,494 
Cost of service and other revenue   8,342    41,419    (314)  D,E   49,447 
Total costs of revenue   60,897    43,364    (320)      103,941 
Gross Profit   37,051    54,302    320       91,673 
Operating expenses:                       
Research and development   38,498    73,444    (4,620)  E   107,322 
Selling, general and administrative   114,758    156,619    (22,879)  A,D,E   248,498 
Transaction-related expenses   -    -    11,969   F   11,969 
Total operating expenses   153,256    230,063    (15,530)      367,789 
Income (loss) from operations   (116,205)   (175,761)   15,850       (276,116)
Interest expense   (4,331)   -    -       (4,331)
Change in fair value of warrant liability   -    30,968    -       30,968 
Change in fair value of earn-out liability   -    26,870    -       26,870 
Loss on forward sale of Series B Preferred Stock   (60,081)   -    -       (60,081)
Loss on bridge loans   (13,719)   -    -       (13,719)
Surplus funding from NIH Contract   153    -    -       153 
Gain on bargain purchase   -    -    40,427   J   40,427 
Other income, net   1,255    8,049    -       9,304 
Income (loss) before income taxes   (192,928)   (109,874)   56,277       (246,525)
Income tax benefit (expense)   2,830    717    -   G   3,547 
Net (loss) income  $(190,098)  $(109,157)  $56,277      $(242,978)
Net loss per share, basic and diluted   (2.43)   (0.59)   -       (0.84)
Shares used in computing net loss per share, basic and diluted   78,305    183,992    25,585   K   287,882 

 

 

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

1.Description of Transaction

 

On October 4, 2023, Standard BioTools, SomaLogic and Merger Sub entered into the Merger Agreement. The Merger contemplated by the Merger Agreement was implemented through a merger of Merger Sub with and into SomaLogic, with SomaLogic becoming a wholly owned subsidiary of Standard BioTools. The Merger closed on the morning of January 5, 2024, prior to market opening.

 

At the Effective Time of the Merger, each share of SomaLogic Common Stock issued and outstanding immediately prior to the Effective Time of the Merger was cancelled and became the right to receive 1.11, fully paid and non-assessable shares of Standard BioTools Common Stock, and cash in lieu of fractional shares. The Merger Agreement also provided that at the Effective Time, each SomaLogic restricted stock unit (each, a “SomaLogic RSU”), other than those SomaLogic RSUs that accelerated or lapsed as a result of the Merger, was assumed by Standard BioTools, the number of which was adjusted in accordance with the Exchange Ratio, and in accordance with the terms of the Merger Agreement. In addition, each outstanding and unexercised option to acquire SomaLogic Common Stock granted under the SomaLogic equity plan (each, a “SomaLogic Stock Option”) became an option to acquire Standard BioTools Common Stock (each, a “Standard BioTools Stock Option”), with the number of shares and exercise price adjusted by the Exchange Ratio, in accordance with the terms of the Merger Agreement. Immediately following the Effective Time, SomaLogic shareholders and Standard BioTools shareholders own approximately 57% and 43%, respectively, of the Standard BioTools Common Stock, calculated based on a fully diluted basis.

 

The Merger is accounted for as an acquisition of a business pursuant to Accounting Standards Codification Topic 805 — Business Combinations (“ASC 805”). Based on the facts and considerations of the criteria in ASC 805, Standard BioTools is the accounting acquirer and will record assets acquired and liabilities assumed from SomaLogic at their respective fair values. As the estimated fair value of the assets acquired and liabilities assumed exceeds the purchase price, the transaction resulted in a bargain purchase gain. Standard BioTools is considered to be the accounting acquirer based on an evaluation of all the facts and circumstances, including but not limited to:

 

●Standard BioTools initiated the transaction negotiations as part of management’s strategic focus to achieve growth through mergers and acquisitions.

 

●Standard BioTools shares are issued to effect the Merger and will remain outstanding. The merged entity retained the Standard BioTools name.

 

●The composition of the combined company’s board of directors consists of seven total members. Pursuant to the Merger Agreement, three directors were appointed by Standard BioTools (one of which will be the designee of the holders of the Series B-2 Preferred Stock), three directors were appointed by SomaLogic and the holders of Series B-1 Preferred Stock appointed the seventh director based on its rights as a holder of the Series B-1 Preferred Stock. As such, Standard BioTools was determined for accounting purposes to have the right to appoint four of the seven total members of the board. All directors were appointed with term limits while two of the directors appointed by Standard BioTools are not subject to a term limit.

 

●The Chief Executive Officer, Chief Financial Officer, and Chief Operating Officer of Standard BioTools will continue to serve in the respective roles in the combined company.

 

2.Basis of presentation

 

The unaudited pro forma condensed combined financial statements and related notes are prepared in accordance with Article 11 of Regulation S-X and present the historical financial information of Standard BioTools and SomaLogic and present the pro forma effects of the Merger and certain transaction accounting adjustments described herein. The historical financial information of Standard BioTools and SomaLogic have been prepared in accordance with U.S. GAAP.

 

 

 

The business combination is accounted for using the acquisition method of accounting as per the provisions of ASC 805, using the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and based on the historical consolidated financial statements of Standard BioTools and the historical consolidated financial statements of SomaLogic. Under ASC 805, all assets acquired, and liabilities assumed in a business combination are recognized and measured at their estimated acquisition date fair value, while transaction costs and restructuring costs associated with the business combination are expensed as incurred. The excess of the estimated fair value of assets acquired and liabilities assumed over the purchase price is recorded as a bargain purchase gain.

 

The pro forma adjustments represent Management’s best estimates and are based upon currently available information and certain assumptions that management believes are reasonable under the circumstances. The estimated fair values assigned in this unaudited pro forma condensed combined financial information are preliminary and represent Management’s current best estimate of fair value and are subject to revision which may result in material adjustments through the end of the measurement period.

 

The unaudited condensed combined pro forma financial statements are not necessarily indicative of what the combined company’s financial position or results of operations would have been had the Merger been completed on the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined Company.

 

There were no material transactions between Standard BioTools and SomaLogic during the periods presented in the unaudited pro forma condensed combined financial statements.

 

3.Reclassifications

 

Certain reclassifications were made to align SomaLogic’s financial statement presentation with that of Standard BioTools based on information available to date.

 

SomaLogic Financial Statement Line  SomaLogic
Historical
Amount		   Reclassifications   SomaLogic
Historical
Reclassified
Amount		   Standard BioTools Financial
Statement Line
(in thousands)               
Balance Sheet as on September 30, 2023         
Investments  $148,239   $-   $148,239   Short-term investment
Inventory   13,884    -    13,884   Inventories, net
Deferred costs of services   379    -    379   Prepaid expenses and other current assets
Other long-term assets   5,872    (4,268)   1,604   Other non-current assets
         4,268    4,268   Operating lease right-of-use asset, net
Total Assets   168,374    -    168,374    
Accrued Liabilities   (10,829)   9,363    (1,466)  Other accrued liabilities
         (9,363)   (9,363)  Accrued compensation and related benefits
Other current liabilities   (2,420)   1,970    (450)  Other accrued liabilities
         (1,970)   (1,970)  Operating lease liabilities, current
Deferred revenue   (3,074)   -    (3,074)  Deferred revenue, current
Deferred revenue, net of current portion   (30,944)   -    (30,944)  Deferred revenue, non-current
Other long-term liabilities   (7,267)   3,823    (3,444)  Other non-current liabilities
         (1,060)   (1,060)  Deferred tax liability
         (2,763)   (2,763)  Operating lease liabilities, non-current
Total Liabilities  $(54,534)  $-   $(54,534)   
                   
Income Statement for the nine months ended September 30, 2023         
Assay services revenue  $52,882   $-   $52,882   Service revenue
Collaboration revenue   2,288    -    2,288   Development revenue
Cost of assay services revenue   (31,353)   -    (31,353)  Cost of service revenue
Transaction costs   (4,157)   -    (4,157)  Transaction-related expenses
Interest income and other, net   16,810    -    16,810   Other income, net
Income tax benefit (provision)   (482)   -    (482)  Income tax benefit (expense)
Net (loss) income  $35,988   $-   $35,988    
                   
Income Statement for the year ended December 31, 2022         
Assay services revenue  $63,038   $-   $63,038   Service revenue
Collaboration revenue   3,051    -    3,051   Development revenue
Cost of assay services revenue   (41,419)   -    (41,419)  Cost of service revenue
Interest income and other, net   8,049    -    8,049   Other income, net
Income tax benefit (provision)   717    -    717   Income tax benefit (expense)
Net (loss) income  $33,436   $-   $33,436    

 

 

 

4.Purchase price and preliminary allocation

 

Purchase price

 

As of the Effective Time, SomaLogic shareholders are entitled to receive approximately 209.6 million shares of Standard BioTools Common Stock. In addition, pursuant to the terms of the Merger Agreement, Standard BioTools substituted all outstanding and unexercised SomaLogic Stock Options and all outstanding SomaLogic RSUs with Standard BioTools Stock Options and RSUs with similar remaining vesting terms and adjusted exercise prices in connection with Exchange Ratio. Additionally, the SomaLogic ESPP Options were exercised immediately prior to the Merger, and are included in the SomaLogic Common Stock issued and outstanding as of January 5, 2024.

 

The accompanying unaudited pro forma condensed combined financial statements reflect a purchase price of approximately $441.5 million, determined as of January 5, 2024, which consists of the following (in thousands, except exchange ratio and share price):

 

Preliminary purchase price    
SomaLogic Common Stock issued and outstanding as of January 5, 2024   188,808 
Fixed Exchange Ratio   1.11 
Number of shares of Standard BioTools Common Stock issued   209,577 
Standard BioTools Common Stock opening price at January 5, 2024  $2.00 
Preliminary purchase price paid for SomaLogic Common Stock (1)  $419,154 
Fair value of replacement Standard BioTools Stock Options attributable to the purchase price (2)  $22,306 
Total Preliminary Purchase Price  $441,460 
Fair value of net assets acquired   481,887 
Bargain Purchase Gain   (40,427)

 

(1)SomaLogic shareholders are entitled to receive 209.6 million shares of Standard BioTools Common Stock. The aggregate fair value of those shares is $2.00 per share, which is based on the opening price on the closing date.

 

(2)Standard BioTools issued approximately 28.0 million Standard BioTools Stock Options as replacement awards to outstanding and unexercised holders of SomaLogic Stock Options. The aggregate fair value of those replacement awards of $35.5 million has been estimated using the Black Scholes option pricing model and $2.00 per share. Of that amount, $22.3 million was allocated to purchase consideration, based on the portion of the replacement awards’ fair value attributable to pre- combination employee services, and $13.2 million was allocated to future employee services and will be expensed as stock-based compensation on a straight-line basis over the remaining service periods of those awards.

 

 

 

Preliminary purchase price allocation

 

For purposes of developing the unaudited pro forma condensed combined financial information as of September 30, 2023, acquired assets of SomaLogic, including identifiable intangible assets, and liabilities assumed, have been recorded at their estimated fair values. Standard BioTools has engaged a third-party valuation company to assist it in completing the valuation of certain assets to be acquired and liabilities to be assumed. The pro forma adjustments are based on preliminary estimates of the fair values of assets acquired and liabilities assumed and information currently available. Detailed valuations and assessments, including valuations of intangible and tangible assets and liabilities assumed, as well as the assessment of the tax positions and rates of the combined business, are in process and may not be completed until the end of the measurement period (up to one year from the Merger closing date). The estimated fair values assigned in this unaudited pro forma condensed combined financial information are preliminary and represent management’s current best estimate of fair value and are subject to revision, which may result in material adjustments through the end of the measurement period.

 

The following table sets forth a preliminary allocation of the estimated purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed of SomaLogic based on SomaLogic’s unaudited interim consolidated balance sheet as of September 30, 2023, with the excess of the fair value of net assets acquired over the purchase price recorded as a bargain purchase gain (in thousands):

 

Total current assets  $493,726 
Property and equipment, net   18,172 
Non-current Inventory   11,119 
Accounts receivable, net of current portion   8,681 
Operating lease right-of-use asset, net   4,342 
Other non-current assets   1,604 
Trade Name   2,800 
Developed Technology   5,800 
Customer Relationships   2,500 
Total assets acquired  $548,744 
Total current liabilities   27,638 
Operating lease liabilities, non-current   2,514 
Deferred revenue, non-current   30,944 
Other non-current liabilities   5,761 
Total liabilities assumed   66,857 
Net Assets Acquired  $481,887 
Total preliminary estimated purchase price   441,460 
Gain on bargain purchase  $(40,427)

 

The preliminary purchase price allocation resulted in a bargain purchase gain because the value of the purchase price is primarily driven by the price of Standard BioTools Common Stock and is highly sensitive to changes in the stock price. The price of a share of Standard BioTools Common Stock fell from a closing price of $2.70 on October 3, 2023, the day before the Merger was announced, compared to the share price of $2.00 as of the opening of market on January 5, 2024. The bargain purchase gain is recognized on a separate line item within the unaudited pro forma condensed combined statement of operations.

 

5.Transaction accounting adjustments

 

The adjustments included in the unaudited preliminary pro forma condensed combined financial statements are as follows:

 

A.Represents an adjustment to reflect $1.9 million in cash transaction bonuses paid upon closing of the Merger by Standard BioTools to SomaLogic executives newly appointed as executives of Standard BioTools.

 

B.Represents an adjustment to remove the deferred cost of services of $0.4 million, as unamortized fulfilment costs of an acquiree do not meet the definition of an asset to the acquirer.

 

 

 

C.Represents an adjustment to the right-of-use assets and lease liabilities for real estate leases acquired as part of the Merger. Standard BioTools calculated the lease liability based on the remaining lease payments and Standard BioTool’s incremental borrowing rate as of September 30, 2023. This resulted in a decrease to the current lease liability of $0.1 million, presented in operating lease liabilities, current, and a decrease to the noncurrent lease liability of $0.2 million, presented in operating lease liabilities, non-current. The right-of-use asset is calculated based on the lease liability, as there were no lease incentives or tenant improvement allowances to be received post-close. This resulted in an increase to operating lease right-of-use asset, net of $0.1 million.

 

D.Represents an adjustment to eliminate SomaLogic’s historical intangible assets of $16.7 million and historical goodwill of $10.4 million. This adjustment also establishes the estimated fair values of the acquired identifiable intangible assets consisting of trade name, developed technology and customer relationships at a total estimated fair value of $11.1 million, which, as noted above, is preliminary and subject to change through the end of the measurement period.

 

The fair value of the intangible assets has been estimated based on third-party preliminary studies utilizing income and market-based methodologies and corroborated with publicly available market benchmarks.

 

Estimated useful lives (where relevant for the purposes of the unaudited pro forma condensed combined financial information) are based on the time periods during which the intangibles are expected to result in substantial incremental cash flows. The following table summarizes the estimated fair values of SomaLogic’s identifiable intangible assets, their estimated useful lives and the impact to amortization reflected in the condensed combined statements of operations (in thousands, except for useful lives):

 

           Pro Forma Amortization Expense 
   Fair Value   Estimated
Useful Life (in
years)		   Year Ended
December 31,
2022		   Nine Months
Ended
September 30,
2023		 
Trade name  $2,800    8   $350   $263 
Developed technology   5,800    11    528    395 
Customer relationships   2,500    13    192    144 
Total  $11,100        $1,070   $802 

 

The amortization expense related to developed technology is presented in cost of products and cost of services proportionately with SomaLogic’s historic product and service revenue, respectively, and the amortization expense related to customer relationships and trade name is presented in selling, general and administrative expenses. The following table summarizes the total amortization expense presented in the condensed combined statement of operations (in thousands):

 

   Pro Forma Amortization Expense 
   Year Ended
December  31,
2022		   Nine Months
Ended
September 30,
2023		 
Cost of product revenue  $33   $49 
Cost of service revenue   495    346 
Selling, general and administrative   542    407 
Total  $1,070   $802 

 

E.Represents $22.3 million of consideration transferred related to the pre-combination employee services for the replacement stock options granted to SomaLogic employees by Standard BioTools. This adjustment also represents the elimination of the existing SomaLogic liability related to the ESPP Options of $0.2 million, which was settled immediately prior to the Merger.

 

 

 

Also, represents the adjustment to eliminate SomaLogic’s historical stock-based compensation expense and record the incremental stock-based compensation expense related to the post-combination expense for the replacement Standard BioTools Stock Options and RSUs. The total pro forma stock-based compensation expense includes SomaLogic Common Stock subject to vesting conditions issued to Palamedrix founder employees, and the value of milestone consideration replacement awards of Palamedrix non-founder and founder employees, per SomaLogic’s acquisition of Palamedrix in 2022. This adjustment also includes the stock-based compensation expense from new Performance Units (each, a “PSU”) and Stock Options which will be issued to new executives upon the close of the Merger. The incremental expense is allocated to each financial statement line item as follows (in thousands):

 

Year Ended December 31, 2022                        
   Removal of
historical
SomaLogic
expense		   Post-
combination
stock options
expense		   Post-
combination
RSU
expense		   Palamedrix
Founder
expense		   New
Executive
PSU
expense		   Total
Adjustment		   Total Pro
Forma
Expense		 
Cost of product revenue  $(53)  $9   $5   $-   $-   $(40)  $13 
Cost of service revenue   (1,080)   176    97    -    -    (808)   272 
Research and development   (8,186)   1,107    610    1,848    -    (4,620)   3,566 
Selling, general and administrative   (34,290)   5,581    3,073    -    315    (25,322)   8,968 
Total stock-based compensation expense  $(43,609)  $6,873   $3,785   $1,848   $315   $(30,790)   12,819 

 

Nine Months Ended September 30, 2023                    
   Removal of
historical
SomaLogic
expense		   Post-
combination
stock options
expense		   Post-
combination
RSU
expense		   Palamedrix
Founder
expense		   New
Executive
(PSU
expense		   Total
Adjustment		   Total Pro
Forma
Expense		 
Cost of product revenue  $(67)  $13   $6   $-   $-   $(47)  $20 
Cost of service revenue   (556)   108    52    -    -    (395)   161 
Research and development   (4,569)   694    334    908    -    (2,633)   1,936 
Selling, general and administrative   (10,302)   2,010    964    -    86    (7,243)   3,059 
Total stock-based compensation expense  $(15,494)  $2,825   $1,356   $908   $86   $(10,318)  $5,176 

 

F.Represents an adjustment to reflect an accrual of additional $12.0 million in transaction costs incurred by Standard BioTools from October 1, 2023 that are not reflected in the historical financial statements. Additionally, $5.8 million of transaction costs have been incurred as of September 30, 2023 and are included in the historical balance sheets and statements of operations of Standard BioTools and SomaLogic for the nine months ended September 30, 2023.

 

G.Represents an adjustment to deferred tax liabilities for the tax effects of recognizing the preliminary purchase price allocation reflected herein (calculated at an estimated federal and state blended statutory rate of 24.34%). This resulted in an adjustment to deferred tax liabilities of $1.1 million as of September 30, 2023. These adjustments are based on estimates of the fair value of SomaLogic’s assets to be acquired, liabilities to be assumed, and the related purchase price allocations. These estimates are subject to further review by Standard BioTools’ and SomaLogic’s respective managements, which may result in material adjustments to deferred taxes with an offsetting adjustment to the bargain purchase gain.

 

The unaudited pro forma condensed combined financial information does not reflect any adjustments for the income tax effect of the transaction accounting adjustments described above, as both companies continue to experience losses, are in historical cumulative loss positions and have established valuation allowances offsetting net deferred tax assets. The income tax effects of the pro forma adjustments would be fully offset by corresponding adjustments to the valuation allowances, resulting in no net effect on the pro forma condensed combined statements of operations.

 

 

 

The effective tax rate of the combined company could be significantly different than what is presented in these unaudited pro forma financial statements depending on post-business combination activities, including legal entity restructuring, repatriation decisions, and the geographical mix of taxable income.

 

H.Represents the portion of the purchase price related to the issuance of 209.6 million shares of Standard BioTools Common Stock to SomaLogic shareholders, worth $419.2 million. The fair value of the Standard BioTools Common Stock was based on the opening price on January 5, 2024 of $2.00 per share

 

I.Represents an adjustment to eliminate SomaLogic’s historical equity.

 

J.Represents the excess of the estimated fair value of the net assets acquired over the purchase price as a gain on bargain purchase of $40.4 million for the year ended December 31, 2022.

 

K.Represents an adjustment to the weighted average shares outstanding due to the increase of the number of shares outstanding in relation to the transaction. The detail of the adjustment to the weighted average shares outstanding is as follows:

 

   Nine Months ended
September 30, 2023		   Year ended
December 31, 2022		 
Number of Standard BioTools Common Stock issued as preliminary purchase price   209,577    209,577 
Elimination of SomaLogic’ s historical shares used in computing net loss per share, basic and diluted   (186,781)   (183,992)
Total proforma adjustment to shares used in computing net loss per share, basic and diluted   22,796    25,585 

 

6.Pro Forma Loss Per Share

 

The pro forma combined basic and diluted earnings per share have been adjusted to reflect the pro forma net loss for the year ended December 31, 2022, and the nine months ended September 30, 2023. In addition, the number of shares used in calculating the pro forma combined basic and diluted net loss per share has been adjusted to reflect the total number of shares of common stock of the combined company that is outstanding as of the closing date (see Note 5 adjustment K). For the year ended December 31, 2022 and the nine months ended September 30, 2023, the pro forma weighted average shares outstanding and proforma net loss per share has been calculated as follows:

 

(In thousands, except per share data)  Nine Months ended
September 30, 2023		   Year ended
December 31, 2022		 
Pro forma net loss  $(126,497)  $(242,978)
Total weighted average shares outstanding   288,545    287,882 
Pro forma basic net loss per share - basic and diluted***   (0.44)   (0.84)

 

*** The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive:

 

   Nine Months ended
September 30, 2023		   Year ended
December 31, 2022		 
Replacement Stock Options and RSUs issued as part of the Merger   30,901    30,901 
New stock options and PSUs issued for executives as part of the Merger   400    400 
Replacement awards for the Palamedrix founders issued as part of the Merger   588    588 
Standard BioTools' Stock options, RSUs, and performance stock awards   16,872    15,455 
Standard BioTools’ Series B Preferred Stock   75,164    75,164 
Standard BioTools’ 2019 Convertible Notes   18,966    18,966 
Standard BioTools’ 2019 Convertible Notes potential make-whole shares   2,181    4,741 
Standard BioTools’ 2014 Convertible Notes   10    10 
SomaLogic Public warrants and private placement warrants   10,533    10,533 
Total anti-dilutive shares   155,615    156,758