Note 3 - Merger

9 Months Ended

Mar. 31, 2013

Business Combination Disclosure [Text Block]

(3)    Merger

Reverse Stock Split

On November 8, 2012, in connection with the merger - described below and as approved by Nabi’s stockholders and board of directors, Nabi filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to affect a reverse stock split of Nabi’s common stock at a ratio of 1:6. As a result of the reverse stock split, each six shares of Nabi common stock issued and outstanding immediately prior to the reverse stock split were automatically combined into and became one share of Nabi common stock. Also, as a result of the reverse stock split, the per share exercise price of, and the number of shares of common stock underlying, the Company outstanding stock options immediately prior to the reverse stock split were automatically proportionally adjusted based on the one-for-six split ratio in accordance with the terms of such options. The reverse stock split did not alter the par value or modify any voting rights or other terms of the common stock.

Merger between Nabi Biopharmaceuticals and Biota Holdings Limited

On November 8, 2012, Nabi and Biota Holdings Limited completed a merger (the “Merger”), and the resulting company was renamed Biota Pharmaceuticals, Inc. Former Biota Holdings Limited shareholders retained approximately 83% of the Company’s shares of common stock, while former Nabi shareholders retained approximately 17% as consideration for Nabi’s net assets, the vast majority of which was $27 million in net cash on hand on the date of the merger. As Nabi had minimal ongoing activity with respect to its development programs and related operations at the time of the merger, the Company’s future operations will be largely represented by the operations of Biota Holdings Limited. Further, due to the fact that former Biota Holdings Limited shareholders held a significant majority of the voting interest in the Company upon the completion of the merger, the merger has been accounted for as a “reverse merger”, such that, notwithstanding the fact that Nabi was the legal acquirer, Biota Holdings Limited is considered the accounting acquirer for financial reporting purposes. Accordingly, the financial statements of Biota Holdings Limited are treated as the historical financial statements of the Company, with the operating results of Nabi being included from November 8, 2012. As a result of the reverse merger, historical common stock amounts and additional paid-in capital have been adjusted.

Exchange Ratio

Upon completion of the merger, each outstanding share of Biota Holdings Limited common stock converted into the right to receive 0.1249539870 shares of Nabi common stock as determined by the exchange ratio - as calculated pursuant to the terms of the merger, as amended. Pursuant to the various agreements, Biota Holdings Limited stockholders received shares of Nabi common stock representing approximately 83% of the outstanding combined shares of the resulting combined company. Nabi stockholders continued to own their shares of existing Nabi common stock, which represented approximately 17% of the outstanding combined shares of the resulting combined company. The issued share capital upon completion of the merger was comprised of the following:

	No. of Shares
Ex-Nabi stockholders		4,720,999
Ex-Biota Holdings Limited stockholders		23,416,347
Total		28,137,346

Purchase Consideration and Net Assets Acquired

The purchase consideration in a reverse merger is determined with reference to the value of equity that the accounting acquirer (in this case Biota Holdings Limited,) issues to the stockholders of the accounting acquiree (Nabi, in this case) to give them their interest in the combined entity.Further, as a result of the merger, stock options to purchase an aggregate of 0.5 million shares of Nabi common stock that were held by officers and directors of Nabi immediately vested. The fair values of  Nabi’s outstanding stock options were determined using the Black-Scholes option pricing model with the following assumptions: a strike price range of $11.34 – $99.91; a volatility range between 78.79% – 99.62%; a risk-free interest rate range of 0.12% – 0.87%; and an expected life range of 0.3 – 6.1 years.

The purchase price, based on the price per share of the Company’s common stock as of the date of the merger is as follows:

Number of shares issued to Nabi stockholders	4,720,999
Fair value per share, using the volume weighted share price on November 9, 2012	$4.0168
Implied purchase consideration (in thousands)	$18,963
Number of stock options outstanding to former Nabi employees and directors	508,918
Fair value per option	$0.456
Implied purchase consideration (in thousands)	$232
Total implied purchase consideration (in thousands)	$19,195

The net assets acquired as a result of the merger consist of (in thousands):

Cash	$32,687
Accrual for severance obligations and employee benefits	(4,977	)
Accounts payable	(694	)
Other liabilities	(16	)
Net cash received	$27,000
Excess of net assets acquired over total fair value purchase consideration/gain recorded on merger	$7,805

Due to the significant uncertainty associated with future cash flows from these assets, no purchase consideration has been allocated to the residual value of any of Nabi’s drug development programs, including NicVAX® or any next-generation nicotine vaccine, or the potential royalty of Phoslyra that was sold to a third party in 2006.

Pursuant to the merger, Biota Holdings Limited received net cash of $27 million from Nabi, while Nabi stockholders received a proportion of the combined entity based on the Biota Holdings Limited share price upon completion of the merger. Movements in the Biota Holdings Limited share price and the U.S. and Australian dollar exchange rates between the date of the determination of the exchange ratio and the date of the completion of the merger, coupled with changes in the fair value of certain assets and liabilities, resulted in the net assets acquired exceeding the calculated purchase consideration. The resulting gain of $7.8 million recorded on the completion of the merger is recognized as non-operating income in the condensed consolidated statements of operations.

Acquisition-related Costs

Acquisition-related costs associated with the merger, including advisory, investment banking, legal, accounting and various other costs of Nil and $4.6 million have been included as a general and administrative expense for the three and nine month periods ended March 31, 2013, respectively. Total acquisition-related costs were approximately $6.5 million.

Pro forma Financial Information

The following table presents selected unaudited financial information, as if the merger with Nabi had occurred on July 1, 2011 (in thousands, expect per share data).

	Three Months Ended March 31,						Nine Months Ended March 31,
	2013			2012			2013			2012
Pro forma net revenue		$13,128			$7,722			$25,610			$8,792
Pro forma net loss		$(3,986	)		$(2,473	)		$(8,931	)		$(13,600	)
Pro forma basic loss per share		$(0.14	)		$(0.11	)		$(0.32	)		$(0.60	)
Pro forma diluted loss per share		$(0.14	)		$(0.11	)		$(0.32	)		$(0.60	)