Business context and reporting period
This is Panacea Acquisition Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2020—not a standalone Nuvation Bio operating-company report. Panacea was a blank-check company formed in April 2020 and had not commenced operations or generated revenue by quarter-end. It was pursuing a business combination with Nuvation Bio. The merger agreement was signed October 20, 2020, after the reporting date; closing remained subject to conditions.
Key financial metrics
| Metric | Reported amount |
|---|---|
| Revenue | None; operating revenue was not expected before a business combination. |
| General and administrative expenses, three months ended September 30 | $737,653 |
| Interest income, three months ended September 30 | $3,387 |
| Net loss, three months ended September 30 | $734,266; basic and diluted loss per nonredeemable share was $0.20. |
| Net loss, inception through September 30 | $735,266 |
| Cash and cash equivalents at September 30 | $1,344,680 outside the trust account; no cash equivalents reported. |
| Trust investments | $143,753,387, primarily U.S. Treasury money-market investments. |
| Total assets / liabilities | $145,498,702 / $974,031. |
| Shares subject to possible redemption | $139,524,670, representing 13,952,467 shares at $10.00 per share. |
| Stockholders’ equity | $5,000,001. |
| Operating cash flow, inception through September 30 | $(489,257). |
| Debt | No long-term debt reported. An $80,000 related-party promissory note was repaid at the IPO closing; no working-capital loans were outstanding at quarter-end. |
Margins are not meaningful because Panacea had no operating revenue. The filing provides no prior-year comparable operating period; the company was formed in April 2020.
Material changes, outlook and risks
- Panacea raised $143.75 million in its July IPO and $4.875 million through private placement units; $143.75 million was deposited in the trust account. Inception-to-date investing cash outflow was $143.75 million and financing cash inflow was $145.58 million.
- The proposed Nuvation transaction would convert Nuvation shares into Panacea shares using an exchange ratio based on a stated $150 million numerator divided by Nuvation’s fully diluted shares, as defined in the merger agreement. This filing does not provide Nuvation’s standalone financial results.
- A forward purchase agreement provides for a potential $25 million investment at the business-combination closing. A $5.03 million marketing-advisory fee would also be payable upon consummation, in addition to the $10,000 monthly administrative-services fee that began July 1, 2020.
- Panacea expected to use trust funds toward a business combination. If it failed to complete one by July 6, 2022, subject to any extension, it would wind up and redeem public shares under the stated terms. Additional financing might be required, including if redemptions were substantial; issuance of shares or debt could affect existing holders.
- Management said COVID-19 could negatively affect the company’s financial position, operations or target search, but the impact was not determinable. The filing also identifies a risk that negative interest rates could reduce trust value and public-share redemption proceeds.
- Management reported disclosure controls were effective at a reasonable-assurance level and no material change in internal control during the quarter. No legal proceedings were reported. The filing states the company had not filed all required Exchange Act reports during the preceding 12 months.
Important facts for investors to verify
- Review the merger agreement and subsequent filings for closing conditions, final transaction terms, ownership, dilution, and Nuvation’s financial and operating information.
- Confirm the treatment and impact of public-share redemptions, the forward purchase commitment, and any additional financing or security issuance.
- Assess the trust-account balance, permitted withdrawals and redemption protections, including the sponsor’s limited indemnity and the negative-interest-rate risk.
- Verify the potential $5.03 million closing fee, continuing administrative fees, and other transaction costs against later disclosures.