Business Context and Reporting Period
This special Form 10-K was filed by Upjohn Inc., the entity intended to become Viatris following its planned combination with Mylan. The filing contains only audited financial statements for the period from February 14, 2019, the date of incorporation, through December 31, 2019. Upjohn was a newly formed, wholly owned Pfizer subsidiary and had not commenced operations or conducted material activities during the period.
The filing was required under SEC Rule 15d-2 because the Form S-4 registration statement for the proposed transaction did not include Upjohn’s certified financial statements for fiscal 2019. KPMG LLP issued an unqualified audit opinion on May 7, 2020.
Key Financial Metrics
| Metric | Period ended December 31, 2019 |
|---|---|
| Revenue | $0 |
| Operating expenses | $0 |
| Net income | $0 |
| Earnings per share | $0 |
| Total assets | $0 |
| Total liabilities | $0 |
| Shareholders’ equity | $0 |
| Net cash provided by operating activities | $0 |
| Net cash provided by investing activities | $0 |
| Net cash provided by financing activities | $0 |
| Cash and cash equivalents at year-end | $0 |
- The balance sheet records $1 of common stock, offset by a $1 receivable from Pfizer for the unpaid stock issuance; total equity is reported as $0.
- Upjohn had 100 shares issued and outstanding, all held by Pfizer, with 1,000 shares authorized.
- The filing does not report debt outstanding at December 31, 2019. It states that Upjohn expected to issue $12 billion of debt in connection with the planned separation from Pfizer.
- No meaningful margins, liquidity ratios, working-capital balances, or operating cash generation can be evaluated because the company had no operations.
Material Changes Versus the Prior Comparable Period
No prior comparable period is presented. Upjohn was incorporated on February 14, 2019, and the financial statements cover its initial period of existence. The company reported no operating activity, revenue, expenses, income, assets, liabilities, or cash flows during the period.
Transaction, Outlook, Risks, and Unusual Items
- Pfizer planned to contribute its global, primarily off-patent branded and generic established-medicines business to Upjohn.
- Upjohn was expected to be separated from Pfizer and combined with Mylan in an all-stock Reverse Morris Trust transaction. The resulting company was expected to be named Viatris.
- Upon completion, Pfizer stockholders were expected to own 57% of the combined company and former Mylan shareholders 43%; the filing states that the shares were expected to trade on Nasdaq.
- Upjohn expected to issue $12 billion of debt and pay Pfizer $12 billion as partial consideration for the contributed business.
- The transaction was generally expected to close in the second half of 2020, subject to Mylan shareholder approval, regulatory approvals, and other customary closing conditions.
- The transaction was expected to be tax-free to Pfizer and its stockholders, although completion remained contingent on the stated conditions.
- The principal unusual item is that the registrant was a newly formed transaction vehicle rather than an operating pharmaceutical company during the reporting period.
Important Facts for Investors to Verify
- Confirm that the filing relates to Upjohn Inc., the predecessor transaction entity, rather than an operating-period filing for Viatris Inc.
- Verify completion, timing, and final terms of the Pfizer-Upjohn-Mylan transaction, including regulatory and shareholder approvals.
- Verify the actual debt issued, use of proceeds, and capitalization at the transaction closing.
- Compare the eventual Viatris operating financial statements with this initial, non-operating entity filing.
- Review the Form S-4 and subsequent filings for final ownership percentages, listing arrangements, tax treatment, and transaction contingencies.