Kiora Pharmaceuticals, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Acquisitions

Acquisitions

12 Months Ended

Dec. 31, 2022

Bayon Therapeutics, Inc. Acquisition

Effective October 21, 2021, the Company acquired all of the capital stock of Bayon, a privately held ophthalmic specialty pharmaceutical company focused on developing light sensitive small molecules. With the Bayon acquisition, Bayon became a wholly-owned subsidiary of Kiora. The assets acquired and liabilities assumed have been recorded at fair value on the date of the acquisition. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill, which is not expected to be deductible for tax purposes.

Under the terms of the Bayon acquisition agreement, in consideration for 100% of the outstanding equity interests in Bayon, the Company paid cash in the amount of $0.1 million to certain sellers and creditors and issued 845 shares of Kiora common stock. The former stockholders of Bayon are also eligible to receive up to $7.1 million in additional cash or stock payments based on clinical trial and FDA approval milestones for Bayon’s product candidates, as set forth in the Purchase Agreement. If milestone payments are exercised for shares, shares will be issued at a price of $80.40 per share for the Phase 1b milestones. The remaining

milestones will be calculated at a $132.00 per share. The cash or stock earn-out payments were recorded as contingent consideration and fair valued at $1.0 million at the acquisition date.

The fair value of the shares issued in the Bayon acquisition was approximately $0.1 million based on the average closing price of the Company’s Common Stock for five trading days immediately preceding the closing date, or $80.40 per share.

The following table summarizes the preliminary purchase price allocation and the estimated fair value of the net assets acquired and liabilities assumed in the Bayon acquisition at the date of acquisition.


	Bayon
Current Assets(1)	$	5,290
In-Process R&D	1,063,000
Goodwill	406,599
Accounts Payable	(36,525)
Deferred Tax Liability	(265,808)
Total Consideration	$	1,172,556

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(1) Current Assets include cash and receivables of $3.9 thousand and $1.4 thousand, respectively.


	Common Shares	Price per Share(a)		Amount
Contingent consideration at fair value	—	—		$	1,007,556
Cash Consideration	—	—		97,066
Kiora Common Stock	845	$	80.40	67,934
Total Fair Value of Consideration				$	1,172,556

Net loss in the Consolidated Statement of Operations for the twelve months ended December 31, 2021 includes net losses of Bayon of $0.1 million from the date of acquisition. The acquired intangible assets, which consist solely of in-process research and development, will not be amortized until the underlying development programs are completed. Upon obtaining regulatory approval, the intangible assets are then accounted for as finite-lived intangible assets and amortized on a straight-line basis over its estimated useful life.

The Company recognized approximately $0.1 million of acquisition-related costs for the Bayon acquisition that were expensed in the year ended December 31, 2021 as a component of general and administrative expense.