Nuvation Bio Inc. 10-K

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information On February 10, 2021, Panacea and Legacy Nuvation Bio completed the Business Combination. Following the Business Combination, we changed the name of the combined company to Nuvation Bio Inc. Our Class A common stock and warrants to purchase Class A common stock originally began trading as units on The New York Stock Exchange on July 1, 2020. Prior to July 1, 2020, there was no public market for our securities. Following the Business Combination, beginning February 11, 2021, our Class A common stock and warrants to purchase Class A common stock continued trading on The New York Stock Exchange under the symbols “NUVB” and “NUVB.WS,” respectively. Holders of Record As of March 9, 2021, there were approximately 141 holders of record of our Class A common stock and five holders of record of our warrants to purchase shares of our Class A common stock. Dividend Policy We have never declared or paid cash dividends on our capital stock. We intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination related to dividend policy will be made at the discretion of our board of directors. Recent Sales of Unregistered Securities On July 6, 2020, we consummated our initial public offering (the “Initial Public Offering” or “Panacea IPO”) of 14,375,000 Units, which includes the full exercise by the underwriters of their over-allotment option in the amount of 1,875,000. The Units sold in the Initial Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $143,750,000. Cowen and Company, LLC acted as sole book-running manager. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-239138). The Securities and Exchange Commission declared the registration statement effective on June 30, 2020. Simultaneous with the consummation of the Initial Public Offering and the closing of the over-allotment option, we consummated the private placement of an aggregate of 487,500 units at a price of $10.00 per Private Placement Unit, generating total proceeds of $4,875,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Of the gross proceeds received from the Initial Public Offering, the closing of the over-allotment option and the Private Placement Units, $143,750,000 was placed in the Trust Account. We paid a total of $2,875,000 in underwriting discounts and commissions and $515,063 for other offering costs related to the Initial Public Offering. On February 10, 2021, in connection with the closing of the Business Combination, a number of purchasers purchased from the Company an aggregate of 47,655,000 shares of Class A Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of approximately $476.6 million, pursuant to separate subscription agreements entered into concurrently with the Business Combination Agreement. The sale was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Additionally, on February 10, 2021, in connection with the closing of the Business Combination, certain purchasers purchased 2,500,000 shares of Class A common stock and 833,333 forward purchase warrants (the “Forward Purchase Securities”) in a private placement at a price of $10.00 per share for an aggregate purchase price of $25.0 million pursuant to the terms of the forward purchase agreement that Panacea entered into in connection with the Initial Public Offering. Each whole warrant entitles the holder to purchase one share of Class A common stock at an exercise price of $11.50 per share. The sale was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The sales of the PIPE Shares and the Forward Purchase Securities were consummated concurrently with the closing of the Business Combination. On March 2, 2021, we, Legacy Nuvation Bio, GiraF (as defined below) and Dr. Hung entered into an Agreement Regarding Subsequent Shares under which (i) Nuvation Bio agreed to issue 368,408 shares of Class A common stock in satisfaction of Legacy Nuvation Bio’s obligations with respect to the Additional GiraF Shares (as defined below) and (ii) Dr. Hung agreed to surrender for cancellation an equal number of shares of Class A common stock. GiraF contributed to Legacy Nuvation Bio all of its intellectual property rights with respect to specified drug development programs to be pursued by Legacy Nuvation Bio in exchange for, among other things, Legacy Nuvation Bio’s agreement to issue the Additional GiraF Shares. This issuance will be made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. Item 6. Selected Financial Data. Not applicable. 95 Table of Contents Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and related notes included in Part II, Item 8 of this report. Unless otherwise indicated, references in this section to the terms “Panacea,” the “Company,” “we,” “our” and “us” refer to Panacea Acquisition Corp. prior to the Business Combination. The term “Legacy Nuvation Bio” refers to privately-held Nuvation Bio Inc. prior to its merger with Panacea Merger Subsidiary Corp., a wholly owned subsidiary of Panacea Acquisition Corp. The term “Panacea” refers to Panacea Acquisition Corp. prior to the Business Combination. The financial information included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations is that of Panacea prior to the Business Combination because the Business Combination was consummated after the period covered by the financial statements included in this Annual Report on Form 10-K. Accordingly, the historical financial information included in this Annual Report on Form 10-K, unless otherwise indicated or as the context otherwise requires, is that of Panacea prior to the Business Combination. This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Forward-looking statements are identified by words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part I, Item 1A — “Risk Factors,” and elsewhere in this report. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise these statements in light of future developments. We caution investors that our business and financial performance are subject to substantial risks and uncertainties. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Annual Report on Form 10-K. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into or review of, all relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely on these statements. 96 Table of Contents Introduction and Recent Developments As of December 31, 2020, we were a blank check company formed under the laws of the State of Delaware on April 24, 2020 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. On October 20, 2020, we entered into the Agreement and Plan of Merger with Panacea Merger Subsidiary Corp. and Legacy Nuvation Bio, pursuant to which Merger Sub merged with and into Legacy Nuvation Bio, with Legacy Nuvation Bio surviving the merger and as our wholly owned subsidiary. On February 10, 2021, upon consummation of the Business Combination, we changed our name to Nuvation Bio Inc. The discussion below relates to Panacea prior to the Business Combination and, except as otherwise specifically stated, does not reflect the Business Combination. Results of Operations We have neither engaged in any operations (other than searching for a Business Combination after our Initial Public Offering) nor generated any revenues to date. Our only activities from April 24, 2020 (inception) through December 31, 2020 were organizational activities, those necessary to prepare for the Initial Public Offering, described below. We did not generate any operating revenues until after the completion of our Business Combination. We generated non-operating income in the form of interest earned on investments held after the Initial Public Offering. We incurred expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. For the period from April 24, 2020 (inception) through December 31, 2020, we had a net loss of $3,054,441, which consists of operating costs of $3,061,452, offset by interest income on investments held in the Trust Account of $7,011. Liquidity and Capital Resources On July 6, 2020, we consummated the Initial Public Offering of 14,375,000 Units at a price of $10.00 per Unit, which included the full exercise by the underwriter of their over-allotment option in the amount of 1,875,000, generating gross proceeds of $143,750,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 487,500 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement to certain stockholders, generating gross proceeds of $4,875,000. Following the Initial Public Offering, the full exercise of the over-allotment option by the underwriters and the sale of the Private Placement Units, a total of $143,750,000 was placed in the Trust Account. We incurred $3,390,063 in transaction costs, including $2,875,000 of underwriting fees and $515,063 of other offering costs. For the period from April 24, 2020 (inception) through December 31, 2020, cash used in operating activities was $700,826. Net loss of $3,054,441 was reduced by interest earned on investments held in the Trust Account of $7,011, offset by net changes in operating assets and liabilities of $2,360,626. As of December 31, 2020, we had investments held in the Trust Account of $143,757,011. We used substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our Business Combination. During the period ended December 31, 2020, we did not withdraw any interest income from the Trust Account. The remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. As of December 31, 2020, we had $908,111 of cash held outside of the Trust Account. We used the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsors, PA Co-Investments LLC or an affiliate of the Sponsor or PA Co-Investments LLC, or certain of the Company’s officers and directors or their affiliates could, but were not obligated to, loan us funds as may have been required. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may have been convertible into units of the post Business Combination entity. The units would be identical to the Private Placement Units. Except for the foregoing, the terms of such Working Capital Loans, if any, were not determined and no written agreements exist with respect to such loans. As of December 31, 2020, there were no amounts outstanding under such Working Capital Loans. 97 Table of Contents Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of December 31, 2020. We did not participate in transactions that created relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations As of December 31, 2020, we did not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, administrative and support services to us. We began incurring these fees on July 1, 2020. We engaged the underwriters as an advisor in connection with a Business Combination to assist us in holding meetings with its stockholders to discuss the potential Business Combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities in connection with a Business Combination, assist us in obtaining stockholder approval for the Business Combination and assist us with its press releases and public filings in connection with the Business Combination. We paid the underwriters a cash fee for such services upon the consummation of the Business Combination in an amount equal to, in the aggregate, 3.5% of the gross proceeds of the Initial Public Offering, or $5,031,250, which included any proceeds from the full or partial exercise of the over-allotment option. In addition, on June 30, 2020, we entered into a forward purchase agreement with funds affiliated with EcoR1 Capital, LLC that will provide for the purchase by such funds of an aggregate of 2,500,000 shares of Class A common stock and 833,333 redeemable warrants, for an aggregate purchase price of $25,000,000, or $10.00 per one share of Class A common stock and one-third of one redeemable warrant, in a private placement to close substantially concurrently with the closing of a Business Combination. The obligations under the forward purchase agreement did not depend on whether any shares of Class A common stock were redeemed by the Public Stockholders. The shares of Class A common stock and redeemable warrants issued pursuant to the forward purchase agreement were identical to the shares of Class A common stock and redeemable warrants included in the units being sold in the Initial Public Offering, respectively, except that the holders thereof have certain registration rights. On the closing date of the Business Combination, the forward purchase securities were purchased in full. Critical Accounting Policies The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies: Class A Common Stock Subject to Possible Redemption We account for our Class A common stock subject to possible redemption in accordance with the guidance in the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of our consolidated balance sheet. 98 Table of Contents Net Income (Loss) per Common Share We apply the two-class method in calculating earnings per share. Net income per common share, basic and diluted for Class A redeemable common stock is calculated by dividing the interest income earned on the Trust Account, net of applicable franchise and income taxes, by the weighted average number of Class A redeemable common stock outstanding for the period. Net loss per common share, basic and diluted for Class B non-redeemable common stock is calculated by dividing the net income, less income attributable to Class A redeemable common stock, by the weighted average number of Class B non-redeemable common stock outstanding for the period presented. Recent Accounting Standards Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our consolidated financial statements.