EXPLANATORY NOTE
On February 10, 2021, (the Closing Date), Nuvation Bio Inc., a Delaware corporation (Legacy Nuvation Bio),
Panacea Acquisition Corp., a Delaware corporation, (Panacea) and Panacea Merger Subsidiary Corp, a Delaware corporation and a direct, wholly owned subsidiary of Panacea (Merger Sub) consummated the transactions contemplated
by an Agreement and Plan of Merger among them dated October 20, 2020 (the Merger Agreement).
Pursuant to the terms of
the Merger Agreement, a combination of Panacea and Legacy Nuvation Bio was effected through the merger of Merger Sub with and into Legacy Nuvation Bio, with Legacy Nuvation Bio surviving as a wholly owned subsidiary of Panacea (the
Merger). On the Closing Date, Legacy Nuvation Bio changed its name to Nuvation Bio Operating Company Inc. and Panacea changed its name to Nuvation Bio Inc. (the Company, Nuvation Bio, we or
us).
We are filing this Amendment No. 1 to Annual Report on Form 10-K/A
(this Amendment) to amend our Annual Report on Form 10-K for the period ended December 31, 2020, originally filed with the Securities and Exchange Commission (the SEC), on
March 11, 2021 (the Original Filing), to restate Panaceas financial statements as of and for the period ended December 31, 2020. This Form 10-K/A amends the Original Filing to reflect the correction of an error in
Panaceas unaudited interim financial statements as of and for the periods ended June 30, 2020 and September 30, 2020, and audited financial statements as of and for the period ended December 31, 2020. The correction involves only
non-cash adjustments.
In this Amendment, unless the context otherwise requires, we use the term Merger to refer to the Merger
collectively with the other transactions described in the Merger Agreement. In the portions of the Original Filing that are not amended hereby, these transactions are sometimes referred to collectively as the Business Combination.
The restatement results from the Panaceas prior accounting for its outstanding warrants issued in connection with its initial public
offering in July 2020 and forward purchase agreements (providing for the potential future issuance of securities, including additional warrants) entered into with certain anchor investors at that time (the FPA) as components of equity
instead of as derivative liabilities. The warrant agreement governing the warrants includes a provision that provides for potential changes to the settlement amounts dependent upon the characteristics of the holder of the warrant.
Upon review of the Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition
Companies (SPACs) promulgated by the SEC on April 12, 2021 (the SEC Staff Statement), our management further evaluated the warrants under Financial Accounting Standard Board (FASB) Accounting Standards
Codification (ASC) Subtopic 815-40, Contracts in Entitys Own Equity. Specifically, the exercise of the warrants may be settled in cash upon the occurrence of a tender offer or exchange
that involves more than 50% of the outstanding shares of our Class A common stock. Because such a tender offer may not result in a change in control and trigger cash settlement and we do not control the occurrence of such event, we concluded
that the warrants do not meet the conditions to be classified in equity.
As a result of the SEC Staff statement and in light of evolving
views as to certain provisions commonly included in warrants issued by SPAC, we re-evaluated Panaceas accounting for its public warrants and private placement warrants issued in connection with its initial public offering (the
Warrants) as well as for the FPA entered into with certain anchor investors (the FPA), and concluded that the Warrants and FPA should be treated as derivative liabilities pursuant to ASC 815-40 rather than as components
of equity as Panacea had previously treated the Warrants and FPA.
As a result, we are restating in this Amendment Panaceas
financial statements for the following periods: (i) as of and for the quarterly period ended June 30, 2020, (ii) as of and for the quarterly period ended September 30, 2020, and (iii) as of and for the period ended
December 31, 2020, in each case to reflect the change in accounting treatment (the Restatement).
Panaceas
accounting for the Warrants and FPA as components of equity rather than as derivative liabilities did not have any effect on our previously reported operating expenses, cash flows or cash.
We are not amending Panaceas previously filed Quarterly Reports on Form 10-Q for the periods affected by the Restatement. The
financial information that has been previously filed or otherwise reported for these periods is superseded by the information in this Amendment, and the financial statements and related financial information contained in such previously filed
reports should no longer be relied upon.
In connection with the Restatement, our management reevaluated the effectiveness of our
disclosure controls and procedures as of December 31, 2020. As a result of that reassessment and in light of the SEC Staff Statement, our management determined that our disclosure controls and procedures as of December 31, 2020 were not
effective due to a material weakness in internal control over financial reporting with respect to the accounting for complex accounting instruments, solely as a result of our classification of the warrants as components of equity instead of as
derivative liabilities. For more information, see Item 9A included in this Amendment.
The Restatement is more fully described in
Note 2 of the notes to the financial statements included herein.
In addition, as required by
Rule 12b-15 under the Securities Exchange Act of 1934, as amended, new certifications by our principal executive officer and principal financial officer are filed as Exhibits 31.1 to 32.2) to this
Amendment under Item 15 of Part IV hereof.
Except as described above, this Amendment does not amend, update or change any other
items or disclosures contained in the Original Filing, and accordingly, this Amendment does not reflect or purport to reflect any information or events occurring after the original filing date or modify or update those disclosures affected by
subsequent events. Accordingly, this Amendment should be read in conjunction with the Original Filing and our other filings with the SEC. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Original
Filing. Unless the context otherwise requires, references to "warrants" in this Amendment refers to both Panacea's public warrants, Panacea's private placement warrants and Panacea's forward purchase warrants.
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