Coronado Biosciences, Inc. (the “Company”), incorporated in Delaware on June 28, 2006, is a biopharmaceutical company involved in the development of novel immunotherapy agents for the treatment of autoimmune diseases and cancer, namely CNDO-201 or Trichuris suis ova (“TSO”) and CNDO-109.  

 

As part of the Company’s growth strategy it has commenced and will continue to leverage its substantial biopharmaceutical business, financial and drug development expertise to invest in the acquisition, development and commercialization of novel pharmaceutical and other biomedical products. The Company is employing a variety of approaches and corporate structures to acquire rights to or finance a diverse portfolio of innovative pharmaceutical and biotechnology products, technologies and companies. These may include licensing, partnerships, joint ventures, direct financings and private or public spin-outs. As the Company continues to seek to acquire and advance investment opportunities with high growth potential, it is also exploring strategic options to realize value from our existing product candidates CNDO-201 and CNDO-109 clinical programs.

 

As of December 31, 2014, the Company has several subsidiaries: Innmune Limited, Coronado SO Co. (“Coronado SO”), Inc., Cyprium Inc., Altamira Bio Inc. (formerly TSO Development Corporation, Inc.), Journey Medical Corporation (“JMC”) and CB Securities Corporation.

 

 

On March 17, 2014, the Company made a $250,000 investment in a third party medical device company developing a laser device to treat migraine headaches. The investment represents a 35% ownership position in the company. The Company elected the fair value option and recorded this investment in long-term investment, at fair value in its Consolidated Balance Sheets as of December 31, 2014. (See Note 9). 

 

Also on March 17, 2014, the Company provided a $50,000 bridge loan to a third party emerging specialty pharmaceutical company developing, marketing and distributing Epilepsy drugs. The bridge loan was due on June 16, 2014, accrued interest at a rate of 8% and was secured by the third party’s assets. As of December 31, 2014, the bridge loan remained outstanding and the Company believes the loan is collectable since the assets securing the loan are believed to be worth more than the carrying amount of the loan. The Company recorded this bridge loan in other current assets in its Consolidated Balance Sheets as of December 31, 2014.

 

On April 18, 2014, the Company paid $243,000 to acquire an option to purchase (“Option”) the exclusive rights to a pharmaceutical product from a third party and on August 12, 2014, the Company paid $50,000 to extend the Option for a total purchase price of $293,000. On September 30, 2014, the Option expired and the Company chose not to exercise the Option. Therefore, in connection with the expiration of the Option, the Company realized a loss of $293,000 which is recorded in change in fair value of short-term investment in the Consolidated Statements of Operations during the year ended December 31, 2014. (See Note 9).

 

In September 2014, the Company formed a blank check company incorporated in the Cayman Islands, CB Pharma Acquisition Corp. (“CB Pharma”), for the purpose of entering into a business combination with one or more businesses or entities, with a current focus in the specialty pharmaceuticals and generic drug industries, among other. Upon the formation of CB Pharma, the Company purchased 1.1 million insider shares of CB Pharma for $25,000, net of repurchase for 100,000 shares, since the over allotment option was not fully exercised. In December 2014, CB Pharma closed its initial public offering (“IPO”), including an over-allotment exercise, and a private placement raising net proceeds of $42.9 million, which proceeds are held in a trust account pending closing of a business combination. In conjunction with the IPO, the Company purchased 265,000 units of CB Pharma at $10.00 per unit for an aggregate purchase price of $2.7 million in a private placement. Each unit purchased includes the right to one-tenth of an ordinary share upon consummation of an initial business combination and a warrant exercisable for one-half an ordinary share to be exercised at $11.50 per share. The warrants are non-redeemable, and may be exercised the later of the completion of an initial business combination or 12 months following the prospectus date of December 12, 2014. None of the shares the Company purchased have liquidation rights. At December 31, 2014, the Company’s investment in CB Pharma represented approximately 23% ownership in CB Pharma. The Company elected the fair value option to record this long-term investment and recorded a change in fair value of the investment of $1.2 million, for a total fair-value of $3.9 million as of December 31, 2014. The change in fair value was recorded in the Consolidated Statement of Operations as of December 31, 2014. (See Note 9).

 

 In October 2014, the Company commenced operations of JMC. JMC is a wholly owned subsidiary that will acquire and license dermatology products for acne, steroid responsive dermatoses, pigmentation and antifungals for promotion to dermatologists and pediatricians. JMC is headquartered in Scottsdale, AZ and as of December 31, 2014, it had four full-time employees.