References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Biotech Acquisition Company References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsor" refer to Biotech Sponsor LLC. The following discussion and analysis of
the Company's financial condition and results of operations should be read in
conjunction with the financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Exchange Act that are not historical facts, and involve
risks and uncertainties that could cause actual results to differ materially
from those expected and projected. All statements, other than statements of
historical fact included in this Form 10-Q including, without limitation,
statements in this "Management's Discussion and Analysis of Financial Condition
and Results of Operations" regarding the Company's financial position, business
strategy and the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange
Commission (the "SEC"). The Company's securities filings can be accessed on the
EDGAR section of the SEC's website at www.sec.gov. Except as expressly required
by applicable securities law, the Company disclaims any intention or obligation
to update or revise any forward-looking statements whether as a result of new
information, future events or otherwise.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
on September 3, 2020, for the purpose of effecting a merger, share exchange,
asset acquisition, share purchase, reorganization or other similar business
combination with one or more businesses. We intend to effectuate our business
combination using cash from the proceeds of our initial public offering and the
sale of the private placement warrants, our capital shares, debt or a
combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a business
combination will be successful.
Proposed Merger with Blade
On November 8, 2021, the Company entered into an Agreement and Plan of Merger
(the "Merger Agreement") with Blade Therapeutics, Inc., a Delaware corporation
("Blade"), Blade Merger Subsidiary, Inc., a Delaware corporation and a
wholly-owned subsidiary of the Company ("Blade Merger Sub"), Biotech Sponsor
LLC, a Delaware limited liability company, in the capacity as the representative
from and after the closing of the transactions contemplated in the Merger
Agreement (the "Closing") of the shareholders of the Company as of immediately
prior to the Closing and their successors and assignees (in such capacity, the
"BAC Representative"), and Jean-Frédéric Viret in the capacity as the
representative of the Earnout Participants (as defined in the Merger Agreement)
from and after the Closing (in such capacity, the "Blade Representative").
Pursuant to the Merger Agreement, and subject to the terms and conditions set
forth therein, (i) prior to the Closing, the Company will transfer by way of
continuation out of the Cayman Islands and into the State of Delaware to
re-domicile and become a Delaware corporation (the "Domestication") and (ii) at
the Closing, and following the Domestication and the PIPE Investment (defined
below), Blade Merger Sub will merge with and into Blade (the "Merger"), with
Blade continuing as the surviving entity and wholly-owned subsidiary of the
Company, and with each Blade stockholder receiving ordinary shares of the
Company at the Closing. Simultaneously with entering into the Merger Agreement,
the Company entered into the Blade Subscription Agreements (as defined below)
with investors (the "PIPE Investors") pursuant the investors will purchase a
total of 2,430,000 shares of the Company's ordinary shares in a "private
investment in public equity" transaction (the "PIPE") for a purchase price equal
to $10.00 per share and aggregate gross proceeds to the Company equal to
$24,300,000. The PIPE Investors include certain existing Blade shareholders.
The total consideration received by Blade security holders from the Company at
the Closing will have an aggregate value equal to $280,000,000 less the value of
certain contingent payments that may become payable to Blade's current Series
C-1 Preferred Stockholders (the "Merger Consideration"), payable, in the case of
Blade stockholders, solely in newly issued shares of the Company's common stock
and, in the case of Blade option holders, by assumption of such options by the
Company (valued based on the net spread of such options), plus the additional
contingent right to receive the Earnout Shares (as defined below) after the
Closing, as described below. All preferred stock of Blade and all convertible
promissory notes of Blade will be required to be converted into shares of Blade
common stock prior to the Closing, and will share in the Merger Consideration.
All warrants of Blade will be required to be exercised in full on a cash or
cashless basis or terminated without exercise, as applicable and in accordance
with their respective terms prior to the Closing.
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In addition to the Merger Consideration set forth above, the Earnout
Participants will also have a contingent right to receive up to an additional
3,500,000 shares of the Company's ordinary shares (the "Earnout Shares") after
the Closing based on the stock price performance of the post-Closing Company's
common stock (the "Earnout Period"). The Earnout Shares will become issuable if,
during the Earnout Period, the closing price of the post-Closing Company's
common stock is equal to or greater than $15.00 per share for any 20 trading
days within any 30 trading day period (the "Price Earnout Milestone") or, prior
to the occurrence of a Price Earnout Milestone, (A) the Company consummates a
sale, merger, consolidation, liquidation, exchange offer or other similar
transaction that results in the stockholders of the post-Closing Company
immediately prior to such transaction having beneficial ownership of less than
fifty percent (50%) of the outstanding voting securities of the Company or the
surviving entity in such transaction, directly or indirectly, immediately
following such transaction, (B) the Company consummates a "going private
transaction" or otherwise ceases to be subject to the reporting obligations
under the Securities Exchange Act of 1934, as amended (the "Exchange Act") or
(C) the post-Closing Company's common stock ceases to be listed on a national
securities exchange. Unlike the Merger Consideration, the Earnout Shares will be
allocated among Blade's security holders on a fully-diluted basis as of the
Closing, without treating assumed Blade options on a net exercise basis, and
with holders of unvested Blade options receiving restricted stock units for a
number of shares of common stock of the post-Closing Company equal to such
portion of the Earnout Shares otherwise issuable to such Earnout Participant in
respect of such unvested Blade options.
Simultaneously with the execution and delivery of the Merger Agreement, the
Company and the Sponsor entered into a letter agreement pursuant to which the
Sponsor agreed to place 1,150,000 of Class B ordinary shares into escrow and
subject such shares to vesting and forfeiture unless the milestones applicable
to the Earnout Shares are achieved during the Earnout Period.
Simultaneously with the execution of the Merger Agreement, the Company and Blade
entered into subscription agreements (collectively, the "Blade Subscription
Agreements") with PIPE Investors for an aggregate purchase of 2,430,000 shares
of the Company's ordinary shares, par value $0.0001 per share (the "PIPE
Shares"), at a price of $10.00 per share, for an aggregate of $24,300,000, in a
private placement to be consummated simultaneously with the Closing (the "PIPE
Investment"). The consummation of the transactions contemplated by the Blade
Subscription Agreements is conditioned on the concurrent Closing and other
customary closing conditions. Among other things, each PIPE Investor agreed in
its respective Blade Subscription Agreement that it and its affiliates will not
have any right, title, interest or claim of any kind in or to any monies in the
Company's trust account held for its public shareholders, and agreed not to, and
waived any right to, make any claim against the trust account (including any
distributions therefrom).
The Company expects that the Merger will be accounted for as a reverse
recapitalization in accordance with GAAP. Under this method of accounting, the
Company, who is the legal acquirer, will be treated as the "acquired" company
for financial reporting purposes and Blade will be treated as the accounting
acquirer. Accordingly, for accounting purposes, the Merger will be treated as
the equivalent of a capital transaction in which Blade is issuing stock for the
net assets of the Company with no goodwill or other intangible assets recorded.
On May 9, 2022, the Company announced that the Company's registration statement
on Form S-4 filed with the SEC on March 15, 2022 (File No. 333-263577) in
connection with the Blade Merger, as amended, was declared effective by the SEC
on May 9, 2022. The Company will hold an Extraordinary General Meeting of its
shareholders (the "Meeting") at 10:00 a.m., Eastern Time, on June 1, 2022, at
the offices of Ellenoff Grossman and Schole LLP located at 1345 Avenue of the
Americas, 11th Floor, New York, New York, 10105 and virtually via live webcast
at https://www.cstproxy.com/biotechacquisition/2022. At the Meeting, the
Company's shareholders will be asked to consider and vote upon proposals to
approve the Business Combination and related matters. The Company's shareholders
of record as of March 28, 2022 are eligible to attend and vote at the Meeting.
The Closing will occur as soon as practicable after the Meeting.
Results of Operations
We classify the warrants issued in connection with our IPO and concurrent
private placement as liabilities at their fair value and adjust the warrant
liability to fair value at each reporting period. This liability is subject to
re-measurement at each consolidated balance sheet date until all the warrants
are exercised or expired, and any change in fair value is recognized in our
statements of operations.
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We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through March 31, 2022 were
organizational activities and those necessary to prepare for our initial public
offering, described below, and identifying a target company for a business
combination. We do not expect to generate any operating revenues until after the
completion of our initial business combination. We generate non-operating income
in the form of interest income on marketable securities held in the trust
account. We incur expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses in connection with searching for, and completing, a business
combination.
For the three months ended March 31, 2022, we had a net income of $4,677,182,
which consists of the change in fair value of warrant liabilities of $6,553,784,
interest earned from a bank of $3, and interest earned from marketable
securities held in the Trust Account of $20,506, offset by operating and
formation costs of $1,897,111.
For the three months ended March 31, 2021, we had a net income of $2,546,530,
which consists of the change in fair value of warrant liabilities of $3,210,000,
interest earned from a bank of $14, and interest earned from marketable
securities held in the Trust Account of $3,907, offset by operating and
formation costs of $147,072 and transaction costs incurred in connection with
IPO of $520,319.
Liquidity and Capital Resources
On January 28, 2021, we consummated our initial public offering of 23,000,000
units, at a price of $10.00 per unit, which included the full exercise of the
underwriter's over-allotment option in the amount of 3,000,000 units, generating
gross proceeds of $230,000,000. Simultaneously with the closing of our initial
public offering, we consummated the sale of 6,000,000 private placement warrants
to the sponsor at a price of $1.00 per private placement warrant generating
gross proceeds of $6,000,000.
Following our initial public offering, the full exercise of the over-allotment
option, and the sale of the private placement warrants, a total of $230,000,000
was placed in the trust account. We incurred $13,114,249 in transaction costs,
including $4,000,000 of underwriting fees, $8,650,000 of deferred underwriting
commission and $464,249 of other offering costs.
For the three months ended March 31, 2022, net cash used in operating activities
was $102,331. Net income of $4,677,182 was affected by noncash charges (income)
related to the change in fair value of the warrant liabilities of $6,553,784,
and interest earned on marketable securities held in the Trust Account of
$20,506. Changes in operating assets and liabilities provided $1,794,777 of cash
from operating activities.
For the three months ended March 31, 2021, net cash used in operating activities
was $864,719. Net income of $2,546,530 was affected by noncash charges (income)
related to the change in fair value of the warrant liabilities of $3,210,000,
transaction costs incurred in connection with IPO of $520,319, and interest
earned on marketable securities held in the Trust Account of $3,907. Changes in
operating assets and liabilities used $717,661 of cash from operating
activities.
At March 31, 2022, we had marketable securities held in the trust account of
$230,041,744. We are using substantially all of the funds held in the trust
account, including any amounts representing interest earned on the trust account
(less deferred underwriting commission and income taxes payable), to complete
our business combination. To the extent that our share capital or debt is used,
in whole or in part, as consideration to complete our business combination, 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.
At March 31, 2022, we had cash and cash equivalents of $104,056 held outside of
the trust account. We are using 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, our sponsor or our officers, or
directors or any of their respective affiliates may, but are not obligated to,
loan us funds as may be required. If we complete a business combination, we
would repay such loaned amounts. In the event that a business combination does
not close, we may use a portion of the working capital held outside the trust
account to repay such loaned amounts but no proceeds from our trust account
would be used for such repayment. As of March 31, 2022, we borrowed $114,980
under the promissory note to fund ongoing working capital needs.
24
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a business combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our business combination. In such circumstances, our sponsor or our officers
or directors or any of their respective affiliates may, but are not obligated
to, loan us additional funds as may be required. However, the terms of any such
loans have not been determined, except to the extent described in the preceding
paragraph. Moreover, we may need to obtain additional financing either to
complete our business combination or because we become obligated to redeem a
significant number of our public shares upon consummation of our business
combination, in which case we may issue additional securities or incur debt in
connection with such business combination. Subject to compliance with applicable
securities laws, we would only complete such financing simultaneously with the
completion of our business combination. If we are unable to complete our
business combination because we do not have sufficient funds available to us, we
will be forced to cease operations and liquidate the trust account. In addition,
following our business combination, if cash on hand is insufficient, we may need
to obtain additional financing in order to meet our obligations.
Going Concern
We have until January 28, 2023 to consummate a Business Combination. It is
uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution. It is uncertain that we will
have sufficient funds to operate our business prior to a Business Combination or
be able to consummate a Business Combination by this time. Management has
determined that the liquidity condition and mandatory liquidation, should a
Business Combination not occur, and potential subsequent dissolution raises
substantial doubt about our ability to continue as a going concern. Management
intends to complete a Business Combination by January 28, 2023. No adjustments
have been made to the carrying amounts of assets or liabilities should we be
required to liquidate after January 28, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2022. We do not participate in
transactions that create 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
We do 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 our sponsor a monthly fee of $10,000 for office space and
administrative and support services. We began incurring these fees on January
26, 2021. On January 20, 2022, our sponsor agreed to return to us 11 months of
prior payments that we had made under this agreement, totaling $110,000. Our
sponsor has informed us that we will continue to be provided with office space
and administrative and support services, but that we are no longer being charged
for them.
The underwriters are entitled to a deferred fee of (i) 3.5% of the gross
proceeds of the initial 20,000,000 units sold in our IPO, or $7,000,000, and
(ii) 5.5% of the gross proceeds from the units sold pursuant to the
over-allotment option, representing a total deferred fee of $8,650,000. The
deferred fee will become payable to the underwriters from the amounts held in
the trust account solely in the event that we complete a business combination,
subject to the terms of the underwriting agreement.
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Financial Advisor Fees
We retained Cantor as a financial advisor and entered into a formal engagement
agreement on July 1, 2021 (the "Cantor Engagement Letter"). Cantor's financial
advisory engagement was separate from the Initial Public Offering underwriting
engagement that we and Cantor had entered into with respect to the Initial
Public Offering. Under Cantor's financial advisory engagement, a portion of
Cantor's fees would be dependent on the level of our shareholder redemptions
made in connection with the Initial Business Combination.
Pursuant to the July 1, 2021 Cantor Engagement Letter, in consideration of the
services pursuant to the Cantor Engagement Letter, we agreed to pay Cantor the
following compensation:
If we consummate the Business Combination or enter into a definitive agreement
pursuant to which the Business Combination is subsequently consummated, a cash
fee equal to the sum of $1.5 million plus an incentive fee. The incentive fee is
based on a range of our shareholder redemptions in connection with the Business
Combination (or any extension of our deadline for consummating a Business
Combination prior thereto) and the cash that remains in the Trust Account upon
the Closing of the Business Combination. The incentive fee could range between
$300,000 and $1.5 million; provided however, that no incentive fee would be
payable if less than 50% of the cash in the Trust Account remains at Closing.
The financial advisor fee is contingent upon the consummation of the Business
Combination.
Placement Agent Fees
In September 2021, we entered into a letter agreement (the "Letter Agreement")
with Barclays to act as its lead placement agent and Cantor to act as its
co-placement agent, (collectively, the Placement Agents"). Pursuant to the terms
of the Letter Agreement, we will pay the Placement Agents in the aggregate a
cash fee equal to five percent (5%) of the gross proceeds received by us from
the closing of the sale of the securities, with such fee allocated sixty-five
percent (65%) to Barclays and thirty-five percent (35%) to Cantor.
Notwithstanding the foregoing, in the event that any portion of the gross
proceeds received by us from the sale of the securities is generated from
investments by the existing shareholders, affiliates or related investment funds
("Target Existing Shareholder Investments"), we shall only pay the Placement
Agents a fee equal to three percent (3%) of the gross proceeds of such Target
Existing Shareholder Investments, with such fee allocated seventy-five percent
(75%) to Barclays and twenty-five percent (25%) to Cantor.
Common Stock Purchase Agreement
On May 3, 2022, we entered into a Common Stock Purchase Agreement (the "Purchase
Agreement") with CF Principal Investments LLC ("CFPI"), an affiliate of Cantor
Fitzgerald, related to a committed equity facility (the "Facility"). Pursuant to
the Purchase Agreement, after the Closing, Blade Biotherapeutics Inc. ("Blade
Biotherapeutics", the surviving company) will have the right to sell to CFPI
from time to time at its option up to $75,000,000 of Blade Biotherapeutics'
common stock, subject to the terms, conditions and limitations set forth in the
Purchase Agreement.
Sales of the shares of Blade Biotherapeutics' common stock to CFPI under the
Purchase Agreement, and the timing of any such sales, will be determined by
Blade Biotherapeutics from time to time in its sole discretion (subject to the
terms and conditions set forth therein) and will depend on a variety of factors,
including, among other things, market conditions, the trading price of the
common stock, as well as determinations by Blade Biotherapeutics about the use
of proceeds of such common stock sales. The net proceeds from any such sales
under the Purchase Agreement will depend on the frequency with, and the price
at, which the shares of common stock are sold to CFPI. It is anticipated that
Blade Biotherapeutics will use the proceeds from any such sales under the
Purchase Agreement for working capital and general corporate purposes.
Upon the initial satisfaction of the conditions to CFPI's obligation to purchase
shares of common stock set forth under the Purchase Agreement (the
"Commencement"), including that a registration statement registering the resale
by CFPI of the shares of common stock under the Securities Act of 1933, as
amended (the "Securities Act"), purchased pursuant to the Purchase Agreement
(the "Resale Registration Statement") is declared effective by the Securities
and Exchange Commission (the "SEC") and a final prospectus relating thereto is
filed with the SEC, Blade Biotherapeutics will have the right, but not the
obligation, from time to time, at its sole discretion and on the terms and
subject to the limitations contained in the Purchase Agreement, until no later
than the first day of the month following the 36-month anniversary of the date
that the Resale Registration Statement is declared effective, to direct CFPI to
purchase up to a specified maximum amount of common stock as set forth in the
Purchase Agreement by delivering written notice to CFPI prior to the
commencement of trading on any trading day. The purchase price of the common
stock that Blade Biotherapeutics elects to sell to CFPI pursuant to the Purchase
Agreement will be 97% of the VWAP of the common stock during the applicable
purchase date on which Blade Biotherapeutics has timely delivered a written
notice to CFPI, directing it to purchase common stock under the Purchase
Agreement.
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The Purchase Agreement provides that, prior to the Commencement, Blade
Biotherapeutics shall issue a number of shares of Blade Biotherapeutics' common
stock equal to the quotient of $2,250,000 divided by the last closing trading
price for the common stock on Nasdaq for a share of Blade Biotherapeutics's
common stock on the earlier of (i) the second trading day immediately prior to
the filing of the Resale Registration Statement and (ii) the date on which CFPI
sends an invoice to Blade Biotherapeutics with respect to such commitment fee.
In addition, pursuant to the Purchase Agreement, we have agreed to reimburse
CFPI for certain expenses incurred in connection with the Facility. The Purchase
Agreement contains customary representations, warranties, conditions and
indemnification obligations by each party.
The Purchase Agreement shall automatically terminate if Merger Agreement is
validly terminated in accordance with the terms thereof prior to the Closing.
Blade Biotherapeutics has the right to terminate the Purchase Agreement at any
time after the Commencement, at no additional cost or penalty, upon five (5)
trading days' prior written notice.
Registration Rights Agreement
On May 3, 2022, we entered into a Registration Rights Agreement (the
"Registration Rights Agreement") with CFPI related to the Facility. Pursuant to
the Registration Rights Agreement, we have agreed to provide CFPI with certain
registration rights with respect to the common stock issued under the Purchase
Agreement and the Facility, following the Closing. We have agreed that Blade
Biotherapeutics shall file the Resale Registration Statement within thirty (30)
days after the Closing and shall use its commercially reasonable efforts to
cause the Resale Registration Statement to be declared effective by the SEC as
soon as reasonably practicable thereafter, but not later than the fifth business
day after the date that Blade Biotherapeutics receives notice from the SEC, that
it will not review the Resale Registration Statement (or 120 calendar days
following the filing thereof if the SEC does review).
Legal Fees
As of March 31, 2022, we had a total of $1,525,842 in contingent fees to be paid
to our legal advisors upon consummation of the Business Combination, which is
included in accrued expenses in the accompanying condensed consolidated balance
sheet as of March 31, 2022.
Critical Accounting Policies
The preparation of condensed 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 condensed 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:
Warrant Liabilities
We account for the warrants in accordance with the guidance contained in ASC
815-40, under which the warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, we classify the warrants as
liabilities at their fair value and adjust the warrants to fair value in respect
of each reporting period. This liability is subject to re-measurement at each
balance sheet date until the warrants are exercised, and any change in fair
value is recognized in our statements of operations. The private placement
warrants and the public warrants for periods where no observable traded price
was available are valued using a lattice model, specifically a binomial lattice
model incorporating the Cox-Ross-Rubenstein methodology. For periods subsequent
to the severability of the public warrants from the units, the public warrant
quoted market price was used as the fair value as of each relevant date.
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Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
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,
ordinary shares are classified as shareholders' equity. Our ordinary shares
feature certain redemption rights that are considered to be outside of our
control and subject to occurrence of uncertain future events. Accordingly,
Class A ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders' deficit section of our unaudited condensed
consolidated balance sheets.
Net Income per Ordinary Share
Net income per ordinary shares is computed by dividing net income by the
weighted average number of ordinary shares outstanding for the period.
Remeasurement associated with the redeemable shares of Class A ordinary shares
is excluded from earnings per share as the redemption value approximates fair
value.
The calculation of diluted income per share does not consider the effect of the
warrants issued in connection with the (i) Initial Public Offering, and (ii) the
private placement since the exercise of the dilutive warrants is contingent upon
the occurrence of future events. Additionally, the private placement warrants
are excluded from the calculation due to being not-in-the-money, therefore,
anti-dilutive as of March 31, 2022. The warrants are exercisable to purchase
17,500,000 Class A ordinary shares in the aggregate. As of March 31, 2022 and
2021, we did not have any dilutive securities or other contracts that could,
potentially, be exercised or converted into ordinary shares and then share in
the earnings of the Company. As a result, diluted net income per ordinary shares
is the same as basic net loss per ordinary share for the periods presented.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception, and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. The Company is currently assessing the impact, if any,
that ASU 2020-06 would have on its financial position, results of operations or
cash flows.
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 condensed consolidated financial statements.
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BIOTECH ACQUISITION COMPANY 