CHIMERIX : UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - Form 8-K

CHIMERIX, INC.

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

Sale of TEMBEXA

On September 26, 2022 (the "Closing Date"), Chimerix, Inc. (the "Company"), completed the previously announced sale of the Company's exclusive worldwide rights to brincidofovir, including TEMBEXA and related assets (the "EBS Agreement") to Emergent BioSolutions, Inc. ("EBS"). Based on the terms of the EBS Agreement, EBS is expected to pay to the Company: (i) an upfront payment of $238 million; (ii) up to an aggregate of $124 million in milestone payments payable upon the exercise of the options under the procurement contract (the "BARDA Agreement") with the Biomedical Advanced Research and Development Authority ("BARDA") for the delivery of up to 1.7 million treatment courses of tablet and suspension formulations of TEMBEXA® to the U.S. government; (iii) royalty payments equal to 15% of the gross profits from the sales of TEMBEXA made outside of the United States; (iv) royalty payments equal to 20% of the gross profits from the sales of TEMBEXA made in the United States in excess of 1.7 million treatment courses; and (v) up to an additional $12.5 million upon the achievement of certain other developmental milestones.

Unaudited Pro Forma Consolidated Financial Statements

The sale of TEMBEXA constitutes a significant disposition of a business for purposes of Item 2.01 of Form 8-K. As a result, the following unaudited pro forma consolidated statements of operations and comprehensive loss for the six months ended June 30, 2022 and the year ended December 31, 2021 are presented as if the disposition had occurred immediately prior to January 1, 2021. The following unaudited pro forma consolidated balance sheet as of June 30, 2022 is presented as if the disposition had occurred on June 30, 2022. The Company determined the disposition does not represent a strategic shift, and accordingly, the Company has not accounted for the disposition as a discontinued operation. The effects of recording certain adjustments associated with contingent consideration related to TEMBEXA have been excluded as the Company has made a policy election to account for these amounts when the contingency has been resolved in accordance with Accounting Standards Codification 450, Contingencies.

The unaudited pro forma consolidated financial statements have been derived from historical financial statements prepared in accordance with U.S. generally accepted accounting principles ("US GAAP") and are presented based on assumptions, adjustments, and currently available information described in the accompanying notes. They are intended for informational purposes only and are not intended to represent the Company's financial position or results of operations had the disposition occurred on the dates indicated, or to project the Company's financial performance for any future period. Pro forma adjustments have been made for events that are directly attributable to the disposition and factually supportable.

The unaudited pro forma consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the following: (i) the accompanying notes to the unaudited pro forma consolidated financial statements; (ii) the Company's audited consolidated financial statements for the year ended December 31, 2021 and related notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 1, 2022; and (iii) the Company's unaudited consolidated financial statements as of and for the six month period ended June 30, 2022 and related notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Quarterly Report on Form 10-Q filed with the SEC on August 8, 2022.

CHIMERIX, INC.

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET

As of June 30, 2022

(In thousands of US dollars, except share data)

		As Reported			Pro Forma Adjustments			Notes		Pro Forma
Assets
Current assets
Cash and cash equivalents		$	28,086			$	233,347			(a)		$	261,433
Short-term investments, available-for-sale			14,705				-						14,705
Inventories			4,126				(4,126	)		(b)			-
Prepaid expenses and other current assets			3,853				(259	)		(b)			3,594
Total current assets			50,770				228,962						279,732
Property and equipment, net of accumulated depreciation			205				-						205
Operating lease right-of-use assets			2,189				-						2,189
Other long-term assets			399				-						399
Total assets		$	53,563			$	228,962					$	282,525
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable		$	1,743			$	(84	)		(b)		$	1,659
Accrued liabilities			16,682				3,198			(b)			19,880
Income tax payable			-				198			(c)			198
Deferred revenue			4,846				(4,640	)		(b)			206
Total current liabilities			23,271				(1,328	)					21,943
Loan fees			250				-						250
Lease-related obligations			2,114				-						2,114
Total liabilities			25,635				(1,328	)					24,307
Stockholders' equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding at June 30, 2022			-				-						-
Common stock, $0.001 par value, 200,000,000 shares authorized, 87,436,180 shares issued and outstanding at June 30, 2022			87				-						87
Additional paid-in capital			961,740				-						961,740
Accumulated other comprehensive loss, net			(68	)			-						(68	)
Accumulated deficit			(933,831	)			230,290			(d)			(703,541	)
Total stockholders' equity			27,928				230,290						258,218
Total liabilities and stockholders' equity		$	53,563			$	228,962					$	282,525

CHIMERIX, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

For the Six Months Ended June 30, 2022

(In thousands of US dollars, except share data)

		As Reported			Pro Forma Adjustments			Notes		Pro Forma
Revenues:
Licensing revenue		$	455			$	(9	)		(e)		$	446
Total revenues			455				(9	)					446
Cost of goods sold			114				(114	)		(e)			-
Gross profit			341				105						446
Operating expenses:
Research and development			37,087				(538	)		(e)			36,549
General and administrative			11,472				(1,340	)		(e)			10,132
Total operating expenses			48,559				(1,878	)					46,681
Loss from operations			(48,218	)			1,983						(46,235	)
Other loss:
Interest income and other, net			(17	)			-						(17	)
Net loss			(48,235	)			1,983						(46,252	)
Other comprehensive loss:
Unrealized loss on debt investments, net			(47	)			-						(47	)
Comprehensive loss		$	(48,282	)		$	1,983					$	(46,299	)
Per share information:
Net loss, basic and diluted		$	(0.55	)								$	(0.53	)
Weighted-average shares outstanding, basic and diluted			87,263,452										87,263,452

CHIMERIX, INC.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS

For the Year Ended December 31, 2021

(In thousands of US dollars, except share data)

		As Reported			Pro Forma Adjustments			Notes		Pro Forma
Revenues:
Contract and grant revenue		$	1,928			$	(1,557	)		(e)		$	371
Licensing revenue			51				(5	)		(e)			46
Total revenues			1,979				(1,562	)					417
Operating expenses:
Research and development			73,817				(3,410	)		(e)			70,407
General and administrative			18,672				(1,129	)		(e)			17,543
Acquired in-process research and development			82,890				-						82,890
Total operating expenses			175,379				(4,539	)					170,840
(Loss) gain from operations			(173,400	)			2,977						(170,423	)
Other income:
Interest income and other, net			164				-						164
Net gain on sale of business			-				233,692			(f)			233,692
(Loss) income before income tax expense			(173,236	)			236,669						63,433
Income tax expense			-				317			(g)			317
Net (loss) income			(173,236	)			236,352						63,116
Other comprehensive (loss) income:
Unrealized loss on debt investments, net			(21	)			-						(21	)
Comprehensive (loss) income		$	(173,257	)		$	236,352					$	63,095
Per share information:
Net (loss) income, basic		$	(2.04	)								$	0.75
Weighted-average shares outstanding, basic			84,930,255										84,390,255
Net (loss) income, diluted		$	(2.04	)								$	0.71
Weighted-average shares outstanding, diluted			84,930,255										89,603,114

CHIMERIX, INC.

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following adjustments have been reflected in the unaudited pro forma consolidated financial statements:

(a) Adjustment reflects estimated cash proceeds from the upfront payment of $238.0 million less an upfront payment of $4.6 million received for a procurement of TEMBEXA which was not fulfilled prior to June 30, 2022.

(b) Adjustment reflects assets and liabilities transferred to EBS as a part of the disposition.

(c) Adjustment reflects the income tax payable that relates to the estimated gain arising on the disposition.

(d) Adjustment reflects the estimated gain of $230.5 million arising from the disposition net of $0.2 million in income tax expense related to the gain. The actual net gain on the disposition will be recorded in the Company's financial statements for the third quarter of 2022 and may differ from the current estimate.

(e) Adjustment reflects the elimination of revenues, cost of goods sold and operating expenses which are specific to TEMBEXA.

(f) Adjustment reflects the estimated gain of $233.7 million arising from the disposition. The actual net gain on the disposition will be recorded in the Company's financial statements for the third quarter of 2022 and may differ from the current estimate.

(g) Adjustment reflects the income tax expense related to the net change in revenues and operating expenses, including the net gain on sale of business, that arises from the disposition. The tax effect of the pro forma adjustment was calculated using the historical statutory rates in effect for the periods presented.