Acquisitions

6 Months Ended

Jun. 30, 2022

Business Combinations [Abstract]

Acquisitions

5. Acquisitions

In February 2021, in connection with the Series A and Series A-1 Preferred Stock financing, the Company acquired all of the outstanding equity and convertible debt interests of Oppilan and Zomagen. Certain investors of Oppilan and Zomagen are also investors of the Company and are considered related parties. Details of the acquisitions are as follows:

•Pursuant to the terms of the Share Purchase Agreement (the “Oppilan Purchase Agreement”), upon closing, the Company issued to the shareholders of Oppilan 360,854 shares of Ventyx common stock valued at $3.06 per share, 4,049,143 shares of Series A-1 Preferred Stock valued at $3.06 per share and options to purchase 75,955 shares of Ventyx common stock valued at a weighted average fair value of $1.86 per share in exchange for all of the outstanding equity interests of Oppilan. Oppilan’s lead candidate, VTX002, is a modulator of the S1P1 receptor that has a unique pharmacokinetic and pharmacodynamic profile and has completed Phase 1 clinical testing. A Phase 2 clinical trial of VTX002 for the treatment of moderate-to-severe ulcerative colitis was initiated in the fourth quarter of 2021.

•Pursuant to the terms of the Share Purchase Agreement (the “Zomagen Purchase Agreement”), upon closing, the Company issued to the shareholders of Zomagen 457,944 shares of Ventyx common stock valued at $3.06 per share, 2,003,768 shares of Series A-1 Preferred Stock valued at $3.06 per share and options to purchase 30,483 shares of Ventyx common stock valued at a weighted average fair value of $2.87 per share in exchange for all of the outstanding equity interests of Zomagen. Zomagen’s lead candidate, VTX2735, is a peripheral NLRP3 inhibitor for which we recently completed a Phase 1 trial.

Oppilan and Zomagen do not have an organized workforce that significantly contributes to their ability to create output. Additionally, substantially all of the fair value of the gross assets acquired were in-process research and development (“IPR&D”) intangible assets. The Company concluded that the acquisitions of Oppilan and Zomagen did not meet the definition of a business combination pursuant to the FASB Accounting Standards Codification (“ASC”) 805, Business Combinations.

The fair value of the consideration provided in the acquisitions was $14.0 million and $7.8 million for Oppilan and Zomagen, respectively. The excess of the cost of acquisition over net assets acquired was $12.8 million and $8.9 million for Oppilan and Zomagen, respectively. Management determined that there is no alternative future use of the IPR&D assets acquired and, accordingly, the excess of the cost of acquisition over net assets acquired was expensed as IPR&D at the acquisition date. For the year ended December 31, 2021, we recorded the excess IPR&D costs of $21.7 million in research and development costs within the Company's consolidated statements of operations and comprehensive loss.

The net assets (liabilities) acquired were as follows (in thousands):

	Oppilan			Zomagen			Total
Cash and cash equivalents	$	1,748		$	151		$	1,899
Prepaid expenses and other assets		587			12			599
Property and equipment, net		10			6			16
Other long-term assets		—			7			7
Accounts payable		(453	)		(349	)		(802	)
Accrued expenses		(722	)		(854	)		(1,576	)
Net assets (liabilities) acquired	$	1,170		$	(1,027	)	$	143

The determination of the purchase price and related charge to IPR&D as of December 31, 2021 is as follows (in thousands):

	Oppilan		Zomagen			Total
Net assets (liabilities) acquired	$	1,170	$	(1,027	)	$	143
Fair value of shares issued		13,498		7,534			21,032
Transaction fees		370		207			577
Fair value of vested common stock options exchanged		141		87			228
Purchase price		14,009		7,828			21,837
Acquired IPR&D	$	12,839	$	8,855		$	21,694