Viamet Pharmaceuticals Corp.

NEW YORK--(BUSINESS WIRE)-- Acacia Research Corp. (Nasdaq: ACTG) (“Acacia” or the “Company”) today reported financial results for the three and nine months ended September 30, 2022. Key Business Highlights Completed an agreement to streamline the Company’s capital structure, further strengthen its financial position, and position it as a unique corporate acquisition platform backed by Starboard Value LP (“Starboard”). Gavin Molinelli, Partner and Portfolio Manager at Starboard, has joined Acacia’s Board of Directors (the “Board”) as Chairman. Generated $15.9 million in consolidated revenue for the quarter, up from $1.6 million in revenue in the third quarter of 2021. Recorded $36.1 million in realized gains from the sale of our equity securities during the quarter, driven primarily by continued harvesting of gains in the Life Science Portfolio. Realized and unrealized gains from the Life Science portfolio totaled $265 million at September 30, 2022, based on the value of public holdings and the carrying value of the Private Securities. Repaid $55.0 million in Senior Secured Notes held by Starboard during the quarter. Repurchased $11.5 million shares during the third quarter, completing the Company’s $40.0 million stock repurchase program. Third Quarter 2022 Financial Highlights (In millions, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 (unaudited) (unaudited) Intellectual property operations $ 6.3 $ 1.6 $ 17.0 $ 24.8 Industrial operations 9.6 — 29.1 — Total revenues $ 15.9 $ 1.6 $ 46.1 $ 24.8 Operating loss $ (11.4 ) $ (12.7 ) $ (25.5 ) $ (16.8 ) Unrealized gains (losses) 1 $ (36.4 ) $ 66.5 $ (266.2 ) $ 115.5 Realized gains $ 36.1 $ 37.7 $ 114.4 $ 53.1 Non-cash derivative liability (loss) 2 $ 41.6 $ 0.6 $ 34.6 $ (203.9 ) GAAP Net income (loss) $ 28.1 $ 89.8 $ (106.7 ) $ (55.0 ) GAAP Diluted income (loss) per share $ 0.02 $ 0.86 $ (2.63 ) $ (1.20 ) 1 Unrealized gains and (losses) are related to the change in fair value of equity securities as of the end of the reported period. 2 The non-cash derivative liability (loss) is related to the change in fair value of Acacia’s Series A and B warrants and embedded derivatives. Martin D. McNulty, Jr. “MJ”, Interim Chief Executive Officer, stated, “During the quarter, Acacia and Starboard completed the process of establishing a well-capitalized and differentiated corporate acquisition vehicle. As part of this process, Acacia’s capital structure has been significantly streamlined, and we now have a platform that can scale, working with partners to complete complex or large transactions, and taking full advantage of opportunities in our target markets.” “The ongoing market turmoil continues to affect relative valuations, and our pipeline of potential transactions is the largest and strongest it has been,” added Mr. McNulty. “We maintain rigor in our evaluation process, but we are moving methodically to pursue acquisitions of attractive businesses we would like to own. The new Acacia comprises a strong capital base and a talented team of professionals who are actively identifying, evaluating and advancing opportunities to grow our business.” Third Quarter 2022 Financial Summary: Total revenues were $15.9 million, compared to $1.6 million in the same quarter last year. Printronix generated $9.6 million in revenue in the quarter. The Intellectual Property business generated $6.3 million in licensing and other revenue during the quarter, compared to $1.6 million in the same quarter last year. General and administrative expenses were $15.0 million, compared to $10.3 million in the same quarter of last year due to the inclusion of Printronix operating expenses and increased parent business development expense. Operating loss of $11.4 million, compared to an operating loss of $12.7 million in the same quarter of last year, with the improvement due to higher intellectual property revenue and profit. Printronix contributed $0.4 million in operating income. GAAP net income of $28.1 million, or $0.02 per diluted share, compared to GAAP net income of $89.8 million, or $0.86 per diluted share, in the third quarter of last year. Net income included $36.1 million in realized gains, offset by $36.4 million in unrealized losses, related to the decline in share price of certain holdings, as well as the reversal of unrealized gains previously recorded for shares sold during the quarter for realized gains. The Company recognized non-cash income of $41.6 million related to the change in fair value of the Starboard warrants and embedded derivative liabilities due to the decline in Acacia’s stock price during the quarter. During the third quarter last year, Acacia recognized $101 million in realized and unrealized gains in the value of the life sciences portfolio, primarily related to the IPO of Oxford Nanopore in September, 2021. Life Sciences Portfolio Acacia has generated $452.3 million in proceeds from sales and royalties of the Life Sciences Portfolio through September 30, 2022, which was purchased for an aggregate price of $297 million. The remaining positions in the Life Sciences Portfolio represent $109.4 million in book value as shown below: Public Securities Based on Market Value (at September 30, 2022) Company Ticker Number of Shares Value Oxford Nanopore Technologies plc LSE: ONT 7.9 mm $22.5 mm Arix Bioscience plc LSE: ARIX 29.0 mm $33.8 mm Total Public Holdings $56.3 mm Private Securities Based on Cost or Equity Accounting Value (at September 30, 2022) Company Ownership Percentage Value Viamet Pharmaceuticals, Inc. 1 26% AMO Pharma 18% > $53.1 mm NovaBiotics 4% Total Private Holdings $53.1 mm (1) Viamet value is based on equity method accounting, reflecting Acacia’s share of Viamet through ownership of MalinJ1. Balance Sheet and Capital Structure Cash, cash equivalents and equity investments measured at fair value totaled $323.3 million at September 30, 2022 compared to $670.7 million at December 31, 2021. During the first nine months of 2022, Acacia has repaid $120.0 million in principal amount of Senior Secured Notes held by Starboard, and repurchased $51 million in Acacia shares. Equity securities without readily determinable fair value totaled $5.8 million at September 30, 2022, which amount was unchanged from December 31, 2021. Investment securities representing equity method investments totaled $47.3 million at September 30, 2022 (net of noncontrolling interests), compared to $19.9 million at December 31, 2021. The increase relates to milestone payments earned by MalinJ1 through its interest in Viamet, but not yet received. Acacia owns 64% of MalinJ1. Total indebtedness, which represents the Senior Secured Notes issued to Starboard, was $61.4 million at September 30, 2022. During the third quarter, the Company repaid $55.0 million in Starboard Notes. The Company’s book value totaled $282.5 million, or $7.33 per share, at September 30, 2022, compared to $268.2 million, or $6.60 per share at June 30, 2022, and $430.5 million, or $8.80 per share, at December 31, 2021. Acacia’s book value reflects the impact of the outstanding warrant and embedded derivative liabilities. Assuming the full impact of the recapitalization transactions under the recently announced agreement with Starboard, Acacia’s pro forma book value would rise to $520.1 million, or $5.22 per share. Pro Forma Book Value and Changes to Derivative Valuations At September 30, 2022, book value was $282.5 million and there were 38.5 million shares of common stock outstanding, for a book value per share of $7.33, compared to $268.2 million, or $6.60 per share at June 30, 2022 and $430.5 million, or $8.80 per share at December 31, 2021. The decrease in book value since December 31, 2021 is due to the decline in the fair value of certain assets. Total liabilities for warrants and convertible preferred stock to be eliminated upon exercise or expiration of all such warrants and convertible preferred stock were $91.5 million at September 30, 2022. Book value and book value per share calculations are performed in accordance with GAAP. The calculation of book value under GAAP requires the Company to reflect the impact of liabilities associated with potential issuances of shares related to the exercise of the Company’s Series A and Series B warrants and conversion of the Company’s Series A preferred stock. The value of those liabilities varies over time based on fluctuations in the trading price of the Common Stock. The agreement reached with Starboard to streamline the Company’s capital structure and strengthen its financial position (the “recapitalization transactions”) is expected to eliminate all of these instruments over time, and will therefore eliminate the associated liabilities. Management believes that providing investors with a presentation of pro forma book value and pro forma book value per share that reflect the anticipated impact of the completion of each component of the recapitalization transactions may assist investors in understanding the Company’s financial condition and capital structure (see below for a description of the material components of the recapitalization transactions). However, these pro forma calculations have limitations and should not be considered in isolation or as a substitute for the actual book value and book value per share amounts reflected in the Company’s balance sheet at September 30, 2022. For example, there is considerable uncertainty regarding the timing and completion of the recapitalization transactions, and it is possible that certain aspects of the transactions will not be completed, or will be completed on terms that are different from the Company’s current expectations, which could result in material changes to the Company’s pro forma book value and pro forma book value per share calculations. Book value at September 30, 2022 reflects the following: $60.0 million in principal amount of Senior Secured Notes issued to Starboard, all of which may be used to exercise Series B warrants at $3.65 per share; $35.0 million in face value ($18.5 million in book value) of Series A preferred stock issued to Starboard; and $91.5 million of warrants and embedded derivative liabilities associated with all preferred stock and warrants held by Starboard, to be eliminated upon exercise or expiration of all such warrants and preferred stock. Upon completion of the recapitalization transactions with Starboard: $18.3 million of cash would be added upon exercise of the remaining Series A warrants, and 5.0 million shares of common stock would be issued; Starboard will purchase 15.0 million new shares in a proposed rights offering, at $5.25 per share, for total proceeds of $78.8 million in the first quarter of 2023; $35.0 million in face value of Series A preferred stock would be eliminated, and 9.6 million shares of common stock would be issued in June 2023, following Acacia’s Annual Meeting of Stockholders; $61.4 million of liabilities attributable to the Senior Secured Notes would be eliminated, and Starboard would invest an additional $55.0 million in cash related to the Series B warrant exercise, and 31.5 million shares of common stock would be issued in July 2023; $91.5 million of warrant and embedded derivative liabilities attributable to the Series A Warrants, Series B warrants and Series A preferred stock would be eliminated by July 2023; Acacia would pay Starboard a total of $75.0 million as consideration for early exercise of the Series A warrants, Series B warrants, and convertible preferred stock, by July 2023; and Acacia will incur transaction costs associated with the negotiation and consummation of the recapitalization transactions. The expected impact of the completion of the recapitalization transactions would be an incremental $237.6 million in book value, and an incremental 61.1 million of shares outstanding. Assuming such completion, pro forma book value would be $520.1 million, and diluted shares outstanding would be 99.6 million, resulting in pro forma book value per share of $5.22 at September 30, 2022. See Attachment A which illustrates the anticipated sequential impact of each component of the recapitalization transactions on pro forma book value and pro forma book value per share through the expected date of completion of such transactions through July 2023. In previous quarterly reports, prior to the approval of the recapitalization transactions, Acacia had presented a similar pro forma book value per share calculation assuming the exercise of all outstanding Series A and Series B warrants, as well as the conversion of the Series A preferred stock. This resulted in a reported pro forma book value per share of $5.87 at June 30, 2022, $5.91 at March 31, 2022, and $6.51 at December 31, 2021. The $5.25 per share cash exercise feature of 68.5 million Series B warrants expired on October 28, 2022. Share Repurchase Program During the third quarter, the Company completed its $40.0 million stock repurchase program by acquiring 2.3 million shares at an average price of $4.98 per share, for a total investment of $11.5 million. With the completion of the previously authorized program, the Board will continue to evaluate uses of capital in the future. Investor Conference Call The Company will host a conference call today, November 10, 2022 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). To access the live call, please dial 888-506-0062 (U.S. and Canada) or 973-528-0011 (international) and if requested, reference conference ID 536777. The conference call will also be simultaneously webcasted on the investor relations section of the Company’s website at under Events & Presentations. Following the conclusion of the live call, a replay of the webcast will be available on the Company's website for at least 30 days. About the Company Acacia is a permanent capital platform with a strategy to purchase businesses based on the differentials between public and private market valuations. Acacia leverages its (i) access to flexible capital that can be deployed opportunistically as a result of its strategic partnership with Starboard, (ii) disciplined focus on identifying opportunities where it can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price, (iii) willingness to invest across industries and in off-the-run, often misunderstood assets that suffer from a complexity or multi-factor discount, (iv) relationships and partnership abilities across functions and sectors, and (v) strong expertise in corporate governance and operational transformation. Acacia seeks to identify opportunities where it believes it is an advantaged buyer, where it can avoid structured sale processes and create the opportunity to purchase businesses, divisions and/or assets of companies at an attractive price due to Acacia’s unique capabilities, relationships or expertise, or Acacia believes the target would be worth more to it than to other buyers. Additional information about Acacia and its subsidiaries is available at . Additional Information and Where to Find It This communication may be deemed solicitation material in respect of the proposed transaction between the Company and Starboard. This communication does not constitute a solicitation of any vote or approval. In connection with the proposed transaction, the Company plans to the Securities and Exchange Commission (the “SEC”) and mail or otherwise provide to its stockholders a proxy statement regarding the proposed transaction. The Company may also documents with the SEC regarding the proposed transaction. This document is not a substitute for the proxy statement or any other document that may be filed by the Company with the SEC. BEFORE MAKING ANY VOTING DECISION, THE COMPANY’S STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT IN ITS ENTIRETY WHEN IT BECOMES AVAILABLE AND ANY OTHER DOCUMENTS FILED BY THE COMPANY WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION OR INCORPORATED BY REFERENCE THEREIN BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Stockholders may obtain a free copy of the proxy statement and other documents the Company files with the SEC (when available) through the website maintained by the SEC at or on the Company’s investor relations website at as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC. No Offer or Solicitation This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Participants in the Solicitation The Company and its directors, executive officers and certain employees and other persons may be deemed to be participants in the solicitation of proxies from the Company’s stockholders in connection with the proposed transaction. Security holders may obtain information regarding the names, affiliations and interests of the Company’s directors and executive officers in the Company’s Annual Report on Form 10-K filed on March 31, 2022 (the “Annual Report”). To the extent the holdings of the Company’s securities by the Company’s directors and executive officers have changed since the amounts set forth in the Annual Report, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. Additional information regarding the interests of such individuals in the proposed transaction will be included in the proxy statement relating to the proposed transaction when it is filed with the SEC. These documents (when available) may be obtained free of charge from the SEC’s website at and the investor relations page of the Company’s website at . Safe Harbor Statement This news release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon the Company’s current expectations and speak only as of the date hereof. The Company’s actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the Company’s ability to successfully implement its strategic plan, the ability to complete the transactions contemplated by the recently announced Recapitalization Agreement and changes to our relationship and arrangements with Starboard Value LP, the ability to successfully identify and complete strategic acquisitions of businesses, divisions, and/or assets, the ability to successfully develop licensing programs and attract new business, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments addressing licensing and enforcement of patents and/or intellectual property in general, general economic conditions, including the impact of the COVID-19 pandemic, and the success of the Company’s investments. The Company’s Annual Report on Form 10-K, and other SEC filings discuss some of the important risks and uncertainties that may affect the Company’s business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The results achieved by the Company in prior periods are not necessarily indicative of the results to be achieved by us in any subsequent periods. It is currently anticipated that the Company’s financial results will vary, and may vary significantly, from quarter to quarter. ACACIA RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) September 30, 2022 December 31, 2021 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 241,874 $ 308,943 Equity securities at fair value 81,384 361,778 Equity securities without readily determinable fair value 5,816 5,816 Investment securities - equity method investments 72,106 30,934 Accounts receivable, net 7,040 9,517 Inventories, net 13,802 8,930 Prepaid expenses and other current assets 5,173 4,764 Total current assets 427,195 730,682 Long-term restricted cash — 418 Property, plant and equipment, net 3,700 4,183 Goodwill 7,470 7,470 Other intangible assets, net 39,692 48,793 Leased right-of-use assets 2,393 2,027 Other non-current assets 4,819 5,283 Total assets $ 485,269 $ 798,856 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,097 $ 5,440 Accrued expenses and other current liabilities 9,258 6,227 Accrued compensation 5,070 3,698 Royalties and contingent legal fees payable 3,259 2,463 Deferred revenue 1,403 1,114 Senior secured notes payable 61,350 181,248 Total current liabilities 85,437 200,190 Deferred revenue, net of current portion 665 581 Series A warrant liabilities 9,396 11,291 Series A embedded derivative liabilities 22,389 18,448 Series B warrant liabilities 59,742 96,378 Long-term lease liabilities 2,186 2,027 Deferred income tax liabilities, net 2,710 18,552 Other long-term liabilities 1,781 6,161 Total liabilities 184,306 353,628 Commitments and contingencies Series A redeemable convertible preferred stock, par value $0.001 per share; stated value $100 per share; 350,000 shares authorized, issued and outstanding as of September 30, 2022 and December 31, 2021; aggregate liquidation preference of $35,000 as of September 30, 2022 and December 31, 2021 18,482 14,753 Stockholders' equity: Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock, par value $0.001 per share; 300,000,000 shares authorized; 38,540,276 and 48,807,748 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively 38 49 Treasury stock, at cost, 16,183,703 and 5,388,469 shares as of September 30, 2022 and December 31, 2021, respectively (98,258 ) (47,281 ) Additional paid-in capital 644,329 648,389 Accumulated deficit (288,403 ) (181,724 ) Total Acacia Research Corporation stockholders' equity 257,706 419,433 Noncontrolling interests 24,775 11,042 Total stockholders' equity 282,481 430,475 Total liabilities, redeemable convertible preferred stock, and stockholders' equity $ 485,269 $ 798,856 ACACIA RESEARCH CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenues: Intellectual property operations $ 6,320 $ 1,582 $ 16,997 $ 24,785 Industrial operations 9,558 — 29,105 — Total revenues 15,878 1,582 46,102 24,785 Costs and expenses: Cost of revenues - intellectual property operations 5,282 3,959 14,480 18,525 Cost of sales - industrial operations 4,648 — 13,432 — Engineering and development expenses - industrial operations 156 — 491 — Sales and marketing expenses - industrial operations 2,119 — 6,429 — General and administrative expenses 15,038 10,345 36,813 23,014 Total costs and expenses 27,243 14,304 71,645 41,539 Operating loss (11,365 ) (12,722 ) (25,543 ) (16,754 ) Other (expense) income: Equity securities investments: Change in fair value of equity securities (36,352 ) 66,502 (266,202 ) 115,509 Gain on sale of equity securities 36,060 37,688 114,434 53,124 Earnings on equity investment in joint venture 850 — 42,935 2,737 Net realized and unrealized gain (loss) 558 104,190 (108,833 ) 171,370 Change in fair value of investment — — — (2,752 ) Gain on sale of investment — — — 3,591 Change in fair value of the Series A and B warrants and embedded derivatives 41,638 619 34,590 (203,866 ) Loss on foreign currency exchange (1,905 ) (17 ) (4,532 ) (193 ) Interest expense on Senior Secured Notes (1,072 ) (2,378 ) (5,532 ) (5,142 ) Interest income and other, net 1,221 76 3,091 135 Total other income (expense) 40,440 102,490 (81,216 ) (36,857 ) Income (loss) before income taxes 29,075 89,768 (106,759 ) (53,611 ) Income tax (expense) benefit (679 ) (11 ) 14,399 (531 ) Net income (loss) including noncontrolling interests in subsidiaries 28,396 89,757 (92,360 ) (54,142 ) Net income attributable to noncontrolling interests in subsidiaries (306 ) — (14,319 ) (906 ) Net income (loss) attributable to Acacia Research Corporation $ 28,090 $ 89,757 $ (106,679 ) $ (55,048 ) Income (loss) per share: Net income (loss) attributable to common stockholders - Basic $ 20,587 $ 73,110 $ (112,507 ) $ (58,595 ) Weighted average number of shares outstanding - Basic 38,052,426 48,949,504 42,830,700 48,759,873 Basic net income (loss) per common share $ 0.54 $ 1.49 $ (2.63 ) $ (1.20 ) Net income (loss) attributable to common stockholders - Diluted $ 1,539 $ 80,308 $ (112,507 ) $ (58,595 ) Weighted average number of shares outstanding - Diluted 71,164,236 93,081,502 42,830,700 48,759,873 Diluted net income (loss) per common share $ 0.02 $ 0.86 $ (2.63 ) $ (1.20 ) Attachment A The following table illustrates the anticipated sequential impact of each component of the recapitalization transactions on pro forma book value through the expected completion of such transactions through July 2023: Pro Forma Book Value at 9/30/2022 Q4-22 Q1-23 Q2-23 Q3-23 $ in Millions Basic Series A Warrants Exercised Series A Payment* Remove Liability Transaction Fees 12/31/22 Fully Diluted Rights Offering** 3/31/23 Fully Diluted Series A Preferred Converted Remove Liability 6/30/23 Fully Diluted Senior Secured Notes Converted Series B Warrants Exercised Series B Payment* Remove Liability 9/30/23 Fully Diluted Cash and cash equivalents 241.9 18.3 (9.0 ) (9.4 ) 241.8 78.8 320.5 320.5 (1.4 ) 55.0 (66.0 ) 308.2 Equity securities at fair value 81.4 81.4 81.4 81.4 81.4 Equity securities without readily determinable fair value 5.8 5.8 5.8 5.8 5.8 Investment securities - equity method investments 72.1 72.1 72.1 72.1 72.1 Other assets 84.1 84.1 84.1 84.1 84.1 Total assets 485.3 18.3 (9.0 ) - (9.4 ) 485.2 78.8 563.9 - - 563.9 (1.4 ) 55.0 (66.0 ) - 551.5 Notes payable (61.4 ) (61.4 ) (61.4 ) (61.4 ) 61.4 - Warrant and derivative liabilities (91.5 ) 9.4 (82.1 ) (82.1 ) 22.4 (59.7 ) 59.7 - Other liabilities (31.4 ) (31.4 ) (31.4 ) (31.4 ) (31.4 ) Total liabilities (184.3 ) - - 9.4 - (174.9 ) - (174.9 ) - 22.4 (152.5 ) 61.4 - - 59.7 (31.4 ) Preferred stock (18.5 ) (18.5 ) (18.5 ) 18.5 - - Total liabilities and preferred stock (202.8 ) - - 9.4 - (193.4 ) - (193.4 ) 18.5 22.4 (152.5 ) 61.4 - - 59.7 (31.4 ) Book value - stockholders equity 282.5 18.3 (9.0 ) 9.4 (9.4 ) 291.8 78.8 370.5 18.5 22.4 411.4 60.0 55.0 (66.0 ) 59.7 520.1 Shares outstanding - basic 38.5 5.0 - - - 43.5 15.0 58.5 9.6 - 68.1 16.4 15.1 - - 99.6 Book value per share 5.22 KPIs: Cash and cash equivalents 241.9 241.8 320.5 320.5 308.2 Cash and equity securities at fair value 323.3 323.1 401.9 401.9 389.5 Cash and equity securities at fair value / share 3.91 *Note: This amount reflects a portion of the $75.0 million payment the Company intends to make to Starboard in consideration for the early exercise of the Series A warrants, Series B warrants, and convertible preferred stock. **Note: The amounts in this column assume Starboard purchases an aggregate of 15.0 million shares in the rights offering and further assume no participation in the rights offering by any other stockholders.

Aug. 11, 2022 12:00 UTC NEW YORK--(BUSINESS WIRE)-- Acacia Research Corp. (Nasdaq: ACTG) (“Acacia” or the “Company”) today reported financial results for the three and six months ended June 30, 2022. Key Business Highlights Generated $16.7 million in consolidated revenue for the quarter, down from $17.4 million in revenue in the second quarter of 2021. Recorded $11.5 million in realized gains during the quarter, including $5.2 million from the Life Science Portfolio. Repurchased 6.1 million shares at an average price of $4.64 as part of $40.0 million repurchase authorization. The Company completed this buyback subsequent to the end of the quarter. In April 2022, Mycovia Pharmaceuticals received FDA approval on its drug VIVJOA™ (otesecanazole) for the treatment of recurrent vulvovaginal candidiasis, triggering a $26.7 million milestone payment to Acacia for its share of ownership of Viamet Pharmaceuticals, anticipated to be received later in 2022. Repaid $50 million in debt owed to Starboard Value LP, during the quarter. Realized and unrealized gains from the Life Science portfolio totaled $267 million at June 30, 2022, based on the value of public holdings and the carrying value of the Private Securities. Second Quarter 2022 Financial Highlights (In millions, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 (unaudited) (unaudited) Intellectual property operations $ 8.1 $ 17.4 $ 10.7 $ 23.2 Industrial operations 8.7 — 19.5 — Total revenues $ 16.7 $ 17.4 $ 30.2 $ 23.2 Operating (loss) income $ (5.7 ) $ 1.6 $ (14.2 ) $ (4.0 ) Unrealized gains (losses) 1 $ (57.6 ) $ 11.2 $ (229.9 ) $ 49.0 Realized gains $ 11.5 $ 14.6 $ 78.4 $ 15.4 Non-cash derivative liability (loss) 2 $ (35.1 ) $ (5.6 ) $ (7.0 ) $ (204.5 ) GAAP Net (loss) income $ (61.5 ) $ 19.7 $ (134.8 ) $ (144.8 ) GAAP Diluted (loss) income per share $ (1.44 ) $ 0.23 $ (3.06 ) $ (3.02 ) 1 Unrealized gains and (losses) are related to the change in fair value of Acacia’s equity securities as of the end of the reported period. 2 The non-cash derivative liability (loss) is related to the change in fair value of Acacia’s Series A and B warrants and embedded derivatives. Clifford Press, Chief Executive Officer, stated, “Our strategic partnership with Starboard Value LP has generated significant value since it was initiated two and a half years ago. We have formed a Special Committee of the Board of Directors that is being advised by independent advisors to review the Starboard relationship with the objective of establishing a simplified capital structure with increased capital resources for the next phase of the Company’s growth.” “Recent economic conditions, including rising interest rates, have increased the quantity and quality of companies in our pipeline,” added Mr. Press. “We evaluate ongoing transactions in light of changing business conditions and adjusted valuations and maintain a strong capital base to act on opportunities.” Second Quarter 2022 Financial Summary: Total revenues were $16.7 million, compared to $17.4 million in the same quarter last year. Printronix generated $8.7 million in revenue in the quarter. The Intellectual Property business generated $8.1 million in licensing and other revenue during the quarter, compared to $17.4 million in the same quarter last year. General and administrative expenses were $10.7 million, compared to $6.5 million in the same quarter of last year due to the inclusion of Printronix operating expenses, as well as increased business development and personnel expenses related to the Company’s transaction organization. Deal costs are expensed as incurred, and not capitalized. Operating loss of $5.7 million, compared to operating income of $1.6 million in the same quarter of last year, primarily as a result of the Company’s acquisition infrastructure buildout. Printronix contributed $1.1 million in operating loss, a reflection of seasonality. GAAP Net loss of $61.5 million, or $1.44 per diluted share, compared to net income of $19.7 million, or $0.23 per diluted share, in the second quarter of last year. Net loss included $11.5 million in realized gains, offset by $57.6 million in unrealized losses, related to the decline in share price of certain holdings, as well as the reversal of unrealized gains previously recorded for shares sold during the quarter for realized gains. The Company recognized a non-cash expense of $35.1 million related to the change in fair value of the Starboard warrants and embedded derivative liabilities due to the appreciation in Acacia’s stock price during the quarter. Balance Sheet and Capital Structure Cash, cash equivalents and equity investments measured at fair value totaled $390.3 million as of June 30, 2022 compared to $670.7 million as of December 31, 2021. Equity securities without readily determinable fair value totaled $5.8 million at June 30, 2022, compared to $5.8 million at December 31, 2021. Investment securities representing equity method investments totaled $48.0 million at June 30, 2022 (net of noncontrolling interests), compared to $19.9 million at December 31, 2021. The increase relates to milestone payments during the quarter earned by MalinJ1 through its interest in Viamet, but not yet received. Acacia owns 64% of MalinJ1. Total indebtedness, which represents the Senior Secured Notes issued to Starboard Value LP, was $115.8 million at June 30, 2022. During the second quarter, the Company repaid $50 million in Starboard Notes. Subsequent to the end of the quarter, the Company repaid an additional $55 million in Starboard Notes. The Company’s current book value totaled $268.2 million, or $6.60 per share, as of June 30, 2022, compared to $345.5 million, or $7.42 per share, as of March 31, 2022, and $430.5 million, or $8.80 per share, as of December 31, 2021. Acacia’s current book value reflects the impact of the outstanding warrant and the embedded derivative liabilities. Assuming full exercise of all issued derivatives, Acacia’s pro forma book value would rise to $911.3 million, or $5.87 per share, down from $952.2 million, or $5.91 per share, as of March 31, 2022, and $1.1 billion, or $6.51 per share, as of December 31, 2021. Pro forma book value per share has declined by 10% during the first half of the year primarily due to the decline in the value of the Company’s Oxford Nanopore Technologies holding. Acacia has generated $407.9 million in proceeds from sales and royalties of the Life Science Portfolio through June 30, 2022, which was purchased for an aggregate price of $297 million. The remaining positions in the Life Science Portfolio represent $155.9 million in book value as shown below: Public Securities Based on Market Value (at June 30, 2022) Company Ticker Number of Shares Value Oxford Nanopore Technologies plc 1 LSE: ONT 13.8 mm $46.2 mm Arix Bioscience plc LSE: ARIX 29.0 mm $38.9 mm Immunocore Holdings plc 2 NASDAQ: IMCR 0.46 mm $17.0 mm Total Public Holdings $102.1 mm (1) Sold 300,000 shares in the second quarter of 2022 for approximately $1.2 million of gross proceeds. (2) Sold 225,000 shares in the second quarter of 2022 for approximately $7.8 million of gross proceeds. Private Securities Based on Cost or Equity Accounting Value (at June 30, 2022) Company Ownership Percentage Value Viamet Pharmaceuticals, Inc. 3 26% AMO Pharma 24% — $53.8 mm NovaBiotics 4% Total Private Holdings $53.8 mm (3) Viamet value is based on equity method accounting value, reflecting Acacia’s share of Viamet through ownership of MalinJ1. Pro Forma Book Value and Changes to Derivative Valuations As of June 30, 2022, book value was $268.2 million and there were 40.6 million shares of common stock outstanding, for a book value per share of $6.60, down from $7.42 as of March 31, 2022, and $8.80 as of December 31, 2021. The decrease since December 31, 2021 is due to the decrease in our asset values, primarily cash and equity securities at fair value. Total liabilities for warrants and preferred stock to be eliminated upon exercise or expiration of all such warrants and preferred stock were $115.3 million as of June 30, 2022. All of these derivative liabilities would be eliminated upon exercise or expiration of all such warrants and preferred stock. Under GAAP, book value reflects the impact of the liabilities associated with potential issuance of shares related to the exercise of the Company’s warrants and conversion of the Company’s convertible preferred stock. As the value of those liabilities varies with fluctuations in the Company’s stock price, management believes a presentation of book value assuming full exercise of all warrants and conversion of all preferred stock presents a useful measure of book value for investors. However, this calculation has its limitations as an analytical tool and should not be considered in isolation or as a substitute for an analysis of book value calculated in accordance with GAAP. Book value as of June 30, 2022 reflects the impact of the following: $115.8 million of face value of Notes issued to Starboard Value LP, all of which may be used to exercise Series B warrants at $3.65 per share; $35.0 million in face value of Series A preferred stock issued to Starboard Value LP; and $115.3 million of warrants and embedded derivative liabilities associated with all preferred stock and warrants held by Starboard Value LP, to be eliminated upon exercise or expiration of all such warrants and preferred stock. Assuming Starboard Value LP converted all preferred stock and exercised all warrants: $115.0 million of liabilities attributable to the Notes would be eliminated, and 31.5 million shares of common stock would be issued; $35.0 million in face value of preferred stock would be eliminated, and 9.6 million shares of common stock would be issued; $115.3 million of embedded derivative liabilities attributable to the warrants and preferred stock would be eliminated; and $377.8 million of cash would be added upon exercise of the remaining Series B warrants and Series A warrants, and 73.5 million shares of common stock would be issued. The expected impact of this would be an incremental $643.1 million in book value, and an incremental 114.6 million of shares outstanding. Assuming such conversion and exercise, pro forma book value would be $911.3 million, and diluted shares outstanding would be 155.2 million, resulting in book value per share of $5.87, as compared to $5.91 as of March 31, 2022, and $6.51 as of December 31, 2021. The $5.25 per share cash exercise feature of 68.5 million Series B warrants will expire on August 25, 2022. Share Repurchase Program As previously reported, effective March 31, 2022, the Company’s Board of Directors approved a new stock repurchase program for up to $40.0 million of shares of common stock. During the quarter, the Company repurchased 6.1 million shares at an average price of $4.64 per share, for a total of $28.5 million. Subsequent to the end of the quarter, the Company completed the $40 million authorization. As of August 8, 2022, the number of shares outstanding was 38.3 million. The Board will continue to evaluate uses of capital in the future. Investor Conference Call: The Company will host a conference call today, August 11, 2022 at 11 a.m. Eastern Time (8 a.m. Pacific Time). To access the live call, please dial 888-506-0062 (U.S. and Canada) or 973-528-0011 (international) and if requested, reference conference ID 536777. The conference call will also be simultaneously webcasted on the investor relations section of the Company’s website at under Events & Presentations. Following the conclusion of the live call, a replay of the webcast will be available on the Company's website for at least 30 days. About the Company Acacia is a permanent capital platform with a strategy to purchase businesses based on the differentials between public and private market valuations. Acacia leverages its (i) access to flexible capital that can be deployed opportunistically as a result of its strategic partnership with Starboard Value LP, (ii) disciplined focus on identifying opportunities where it can be an advantaged buyer, initiate a transaction opportunity spontaneously, avoid a traditional sale process and complete the purchase of a business, division or other asset at an attractive price, (iii) willingness to invest across industries and in off-the-run, often misunderstood assets that suffer from a complexity or multi-factor discount, (iv) relationships and partnership abilities across functions and sectors, and (v) strong expertise in corporate governance and operational transformation. Acacia seeks to identify opportunities where it believes it is an advantaged buyer, where it can avoid structured sale processes and create the opportunity to purchase businesses, divisions and/or assets of companies at an attractive price due to Acacia’s unique capabilities, relationships or expertise, or Acacia believes the target would be worth more to it than to other buyers. Additional information about Acacia and its subsidiaries is available at . Safe Harbor Statement This news release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements are based upon the Company’s current expectations and speak only as of the date hereof. The Company’s actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including the Company’s ability to successfully implement its strategic plan, the ability of the Company to renegotiate the terms of its relationship with Starboard Value LP, the ability to successfully identify and complete strategic acquisitions of businesses, divisions, and/or assets, the ability to successfully develop licensing programs and attract new business, changes in demand for current and future intellectual property rights, legislative, regulatory and competitive developments addressing licensing and enforcement of patents and/or intellectual property in general, general economic conditions, including the impact of the COVID-19 pandemic and the success of the Company’s investments. The Company’s Annual Report on Form 10-K, and other SEC filings discuss some of the important risks and uncertainties that may affect the Company’s business, results of operations and financial condition. We undertake no obligation to revise or update publicly any forward-looking statements for any reason. The results achieved by the Company in prior periods are not necessarily indicative of the results to be achieved by us in any subsequent periods. It is currently anticipated that the Company’s financial results will vary, and may vary significantly, from quarter to quarter. ACACIA RESEARCH CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share data) June 30, 2022 December 31, 2021 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 263,945 $ 308,943 Equity securities at fair value 126,345 361,778 Equity securities without readily determinable fair value 5,816 5,816 Investment securities - equity method investments 73,020 30,934 Accounts receivable, net 13,692 9,517 Inventories, net 12,056 8,930 Prepaid expenses and other current assets 5,291 4,764 Total current assets 500,165 730,682 Long-term restricted cash — 418 Property, plant and equipment, net 3,883 4,183 Goodwill 7,470 7,470 Other intangible assets, net 42,725 48,793 Leased right-of-use assets 2,415 2,027 Other non-current assets 5,041 5,283 Total assets $ 561,699 $ 798,856 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK, AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 5,484 $ 5,440 Accrued expenses and other current liabilities 6,841 6,227 Accrued compensation 4,108 3,698 Royalties and contingent legal fees payable 2,581 2,463 Deferred revenue 1,378 1,114 Senior secured notes payable 115,828 181,248 Total current liabilities 136,220 200,190 Deferred revenue, net of current portion 623 581 Series A warrant liabilities 12,785 11,291 Series A embedded derivative liabilities 23,599 18,448 Series B warrant liabilities 96,781 96,378 Long-term lease liabilities 2,254 2,027 Deferred income tax liabilities, net 3,052 18,552 Other long-term liabilities 1,066 6,161 Total liabilities 276,380 353,628 Commitments and contingencies Series A redeemable convertible preferred stock, par value $0.001 per share; stated value $100 per share; 350,000 shares authorized, issued and outstanding as of June 30, 2022 and December 31, 2021; aggregate liquidation preference of $35,000 as of June 30, 2022 and December 31, 2021 17,145 14,753 Stockholders' equity: Preferred stock, par value $0.001 per share; 10,000,000 shares authorized; no shares issued or outstanding — — Common stock, par value $0.001 per share; 300,000,000 shares authorized; 40,622,465 and 48,807,748 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively 41 49 Treasury stock, at cost, 13,877,003 and 5,388,469 shares as of June 30, 2022 and December 31, 2021, respectively (86,781 ) (47,281 ) Additional paid-in capital 646,352 648,389 Accumulated deficit (316,493 ) (181,724 ) Total Acacia Research Corporation stockholders' equity 243,119 419,433 Noncontrolling interests 25,055 11,042 Total stockholders' equity 268,174 430,475 Total liabilities, redeemable convertible preferred stock, and stockholders' equity $ 561,699 $ 798,856 ACACIA RESEARCH CORPORATION UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except share and per share data) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues: Intellectual property operations $ 8,062 $ 17,400 $ 10,677 $ 23,203 Industrial operations 8,655 — 19,547 — Total revenues 16,717 17,400 30,224 23,203 Costs and expenses: Cost of revenues - intellectual property operations 4,634 9,253 9,198 14,566 Cost of sales - industrial operations 4,592 — 8,784 — Engineering and development expenses - industrial operations 145 — 335 — Sales and marketing expenses - industrial operations 2,294 — 4,310 — General and administrative expenses 10,722 6,503 21,775 12,669 Total costs and expenses 22,387 15,756 44,402 27,235 Operating (loss) income (5,670 ) 1,644 (14,178 ) (4,032 ) Other (expense) income: Equity securities investments: Change in fair value of equity securities (57,647 ) 11,158 (229,850 ) 49,007 Gain on sale of equity securities 11,498 14,617 78,374 15,436 Earnings on equity investment in joint venture 42,085 7 42,085 2,737 Net realized and unrealized (loss) gain (4,064 ) 25,782 (109,391 ) 67,180 Change in fair value of investment — — — (2,752 ) Gain on sale of investment — — — 3,591 Change in fair value of the Series A and B warrants and embedded derivatives (35,146 ) (5,576 ) (7,048 ) (204,485 ) Loss on foreign currency exchange (1,814 ) (152 ) (2,627 ) (176 ) Interest expense on Senior Secured Notes (1,859 ) (1,607 ) (4,460 ) (2,764 ) Interest income and other, net 863 85 1,870 59 Total other (expense) income (42,020 ) 18,532 (121,656 ) (139,347 ) (Loss) income before income taxes (47,690 ) 20,176 (135,834 ) (143,379 ) Income tax benefit (expense) 200 (510 ) 15,078 (520 ) Net (loss) income including noncontrolling interests in subsidiaries (47,490 ) 19,666 (120,756 ) (143,899 ) Net income attributable to noncontrolling interests in subsidiaries (14,013 ) (6 ) (14,013 ) (906 ) Net (loss) income attributable to Acacia Research Corporation $ (61,503 ) $ 19,660 $ (134,769 ) $ (144,805 ) (Loss) income per share: Net (loss) income attributable to common stockholders - Basic $ (63,443 ) $ 15,234 $ (138,560 ) $ (147,099 ) Weighted average number of shares outstanding - Basic 43,988,677 48,729,020 45,259,435 48,662,897 Basic net (loss) income per common share $ (1.44 ) $ 0.31 $ (3.06 ) $ (3.02 ) Net (loss) income attributable to common stockholders - Diluted $ (63,443 ) $ 18,928 $ (138,560 ) $ (147,099 ) Weighted average number of shares outstanding - Diluted 43,988,677 83,086,980 45,259,435 48,662,897 Diluted net (loss) income per common share $ (1.44 ) $ 0.23 $ (3.06 ) $ (3.02 )

MALVERN, Pa. & SAN DIEGO--(BUSINESS WIRE)-- PhaseBio Pharmaceuticals, Inc. (Nasdaq: PHAS), a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapies for cardiopulmonary diseases, today reported financial results for the fourth-quarter and full-year ended December 31, 2020 and provided an update on clinical trial activities. “Throughout 2020, PhaseBio made significant progress advancing our pipeline of therapies for serious cardiopulmonary diseases,” said Jonathan P. Mow, Chief Executive Officer of PhaseBio Pharmaceuticals. “Our progress was driven by the continued global expansion of the pivotal Phase 3 REVERSE-IT trial of our lead product candidate bentracimab, which has now enrolled more than half of the first 100 patients needed to support a BLA submission. We’ve generated this momentum by expanding the REVERSE-IT trial into Canada and the European Union, and we also recently announced a commercial supply agreement with BioVectra to support the continued development and eventual commercial supply of bentracimab, if approved.” Mow continued, “Looking ahead into 2021, we are excited to continue advancing this pivotal program through key planned milestones including publishing Phase 2a data, announcing the interim analysis of the first 100 patients from the REVERSE-IT Phase 3 trial, initiating additional trial sites abroad, and working with key collaborators on our bentracimab commercialization plans. We also remain focused on advancing pemziviptadil for pulmonary arterial hypertension and are targeting to report Phase 2b data in the second half of 2021.” Bentracimab (PB2452) Highlights Accelerated Enrollment in Ongoing REVERSE-IT Phase 3 Clinical Trial: As of March 2021, the REVERSE-IT Phase 3 clinical trial had enrolled 60 of the first approximately 100 patients needed to support a Biologics License Application (BLA), nearly all of whom to date have required urgent surgery or an invasive procedure. PhaseBio is attempting to accelerate enrollment of patients with uncontrolled major or life-threatening bleeding, including by working to increase the number of enrolling clinical trial sites in the United States, Canada, and the European Union as it is believed that a broader site footprint will increase the probability of enrolling these patients. All of the first approximately 100 patients enrolled in the REVERSE-IT trial will be measured against the same VerifyNow® PRUTest biomarker that is the primary endpoint for all patients enrolled in the REVERSE-IT trial. The trial is enrolling faster than PhaseBio originally projected, and PhaseBio now expects to complete enrollment of the first 100 patients in mid-2021 and is targeting to submit a BLA for bentracimab in mid-2022, although those timelines could be impacted by the continued scope and duration of the COVID-19 pandemic. Bentracimab is a novel, human monoclonal antibody fragment that in earlier clinical trials has shown immediate and sustained reversal of the antiplatelet effects of Brilinta® (ticagrelor). Announced Supply Agreement with BioVectra for Bentracimab to Support Development and Commercialization: In March 2021, PhaseBio announced a commercial scale supply agreement with BioVectra, an innovative global contract development and manufacturing organization (CDMO), for the production of bentracimab. Under the terms of the agreement, BioVectra will provide its integrated CDMO services for the manufacturing of the active pharmaceutical ingredient (API) of bentracimab for use in PhaseBio’s ongoing Phase 2b and Phase 3 clinical trials and for global commercial use if bentracimab receives regulatory approval. Expanded REVERSE-IT Trial into the European Union and Dosed First Patients: In January 2021, PhaseBio announced that, working with its financing and co-development partner SFJ Pharmaceuticals, PhaseBio had expanded the REVERSE-IT trial into the European Union, having opened trial sites for enrollment and began dosing its first patients. Expanded REVERSE-IT Trial into Canada and Dosed First Patients: In October 2020, PhaseBio announced that it had expanded the Phase 3 trial of bentracimab into Canada, where the first patients outside of the United States were enrolled and dosed. Cardiovascular disease remains a leading cause of mortality in the United States, Canada and globally. The company also announced that the global Phase 3 trial had been named REVERSE-IT (Rapid and SustainEd ReVERSal of TicagrElor – Intervention Trial). Initiated Phase 3 Clinical Trial for Bentracimab: In March 2020, PhaseBio commenced the pivotal Phase 3 clinical trial to evaluate reversal of the antiplatelet effects of ticagrelor in patients with uncontrolled major or life-threatening bleeding or requiring urgent surgery or an invasive procedure. Received PRIME Designation for Bentracimab from European Medicines Agency: In February 2020, bentracimab was granted PRIority MEdicines (PRIME) designation by the European Medicines Agency (EMA) for the reversal of the antiplatelet effects of ticagrelor in patients with uncontrolled major or life-threatening bleeding or requiring urgent surgery or an invasive procedure. The EMA prioritizes PRIME designated drugs for special support, including enhanced interactions and dialogue with the EMA during development, as well as a pathway for accelerated evaluation and review for marketing authorization. Received Written Scientific Advice from EMA Confirming the Bentracimab Clinical Development Plan: In February 2020, PhaseBio received written guidance from the Committee for Medicinal Products for Human Use (CHMP) of the EMA that generally agreed with PhaseBio’s proposed development plan for bentracimab. After reviewing the Scientific Advice from CHMP, PhaseBio believes that the development plan for bentracimab has been designed to support regulatory filings in the European Union. PhaseBio similarly believes that the development plan for bentracimab has been designed to support regulatory filings in the United States based on feedback from the U.S. Food and Drug Administration. Entered Into Financing and Co-Development Collaboration with SFJ Pharmaceuticals®: In January 2020, PhaseBio announced a financing and co-development collaboration with SFJ Pharmaceuticals (SFJ) to support the development of bentracimab. Under the terms of the agreement, SFJ agreed to fund up to $120 million to support the clinical development of bentracimab and to assume a central role in global clinical development and regulatory activities for bentracimab outside of the United States. From execution of the co-development agreement through December 31, 2020, SFJ Pharmaceuticals has funded or reimbursed $47.1 million of clinical trial costs and other expenses of the initial $90 million commitment under the agreement, leaving $42.9 million of funding remaining available to support the Phase 3 program through the end of 2021. PhaseBio is eligible to receive up to an additional $30 million of funding if specific, pre-defined clinical development milestones for bentracimab are met. Pemziviptadil (PB1046) and Other Pipeline Highlights Presented Data from Phase 1b/2a Trial of Pemziviptadil for the Treatment of Pulmonary Arterial Hypertension at Pulmonary Vascular Research Institute Virtual World Congress: In January 2021, PhaseBio announced presentation of data from a Phase 1b/2a pilot study highlighting three patients who received pemziviptadil (PB1046), the company’s first-in-class, sustained-release vasoactive intestinal peptide (VIP) analogue for the treatment of pulmonary arterial hypertension (PAH). The data, which were presented virtually at the 15th Pulmonary Vascular Research Institute (PVRI) World Congress on January 27, 2021, continue to highlight the favorable safety and tolerability pro pemziviptadil, as well as clinically-meaningful, long-term improvement of six-minute walk test (6MWT) distance for one patient after 18 months of treatment. Additionally, the data demonstrate stability in functional status with no clinically-meaningful deterioration for two patients at two and six months after treatment. All three patients completed the study with no drug-related serious adverse events associated with study drug discontinuation and pemziviptadil appeared to be well tolerated. Resumed Enrollment in Ongoing Phase 2b Trial of Pemziviptadil in PAH: In October 2020, PhaseBio announced that the ongoing Phase 2b trial of pemziviptadil in patients with PAH, named the VIP trial (Vasoactive Intestinal Peptide in adult patients with pulmonary arterial hypertension), resumed enrollment after a pause related to the impacts of the COVID-19 pandemic and re-prioritization of drug supply to the VANGARD trial. At the time of announcement, approximately one-third of the patients targeted for enrollment had completed the initial 16-week protocol, with approximately 90% of these patients electing to enroll in VIP EXTEND (Vasoactive Intestinal Peptide extension trial in adult patients with pulmonary arterial hypertension), the open label extension of the Phase 2b trial. PhaseBio is targeting to report results from the VIP in the second half of 2021, although that timeline could be impacted by the continued scope and duration of the COVID-19 pandemic. Bolstered Pipeline with Acquisition of Novel Oral Aldosterone Synthase Inhibitor for Treatment-Resistant Hypertension: In January 2020, PhaseBio signed an agreement with Viamet Pharmaceuticals Holdings, LLC and its wholly-owned subsidiary, Selenity Pharmaceuticals (Bermuda), Ltd., under which PhaseBio acquired all of the assets and intellectual property rights related to certain novel aldosterone synthase inhibitors, including the company’s lead development compound, now called PB6440, being developed for treatment-resistant hypertension. In preclinical studies completed to date, PB6440 was observed to be a highly potent and selective inhibitor of aldosterone synthase (CYP11B2) versus the closely related steroid 11β-hydroxylase enzyme (CYP11B1). PB6440 demonstrated dose-dependent aldosterone reduction without a significant increase in 11-deoxycorticosterone or deoxycortisol in both rodent and primate models. Operational Updates Appointed New Member to the Board of Directors: In February 2020, Alex C. Sapir was appointed to the company’s board of directors. Fourth-Quarter and Full-Year 2020 Financial Results Cash Position Cash and cash equivalents at December 31, 2020 were $28.1 million, compared to $74.0 million at December 31, 2019. The decrease reflects cash used in operating activities. Quarter Ending Dec. 31, 2020 Net loss for the quarter was $30.4 million, compared to a net loss of $11.3 million for the prior-year period. Research and development expense increased to $22.4 million, as compared to $8.4 million for the same period in 2019, driven by an increase in manufacturing, clinical and nonclinical development activities related to bentracimab and pemziviptadil. General and administrative expense decreased to $3.6 million, compared to $3.7 million for prior-year period. Year Ending Dec. 31, 2020 Net loss for the year was $98.6 million, compared to a net loss of $39.2 million for the prior-year period. Research and development expense increased to $72.1 million, as compared to $30.9 million for the same period in 2019, driven by an increase in manufacturing, clinical and nonclinical development activities related to bentracimab and pemziviptadil. General and administrative expense increased to $13.1 million, compared to $11.2 million for prior-year period, primarily due to increases in professional services, personnel, and insurance-related expenses. About PhaseBio PhaseBio Pharmaceuticals, Inc. is a clinical-stage biopharmaceutical company focused on the development and commercialization of novel therapies for cardiovascular and cardiopulmonary diseases. The company’s pipeline includes: bentracimab (PB2452), a novel reversal agent for the antiplatelet therapy ticagrelor; pemziviptadil (PB1046), a once-weekly vasoactive intestinal peptide receptor agonist for the treatment of pulmonary arterial hypertension; and PB6440, an oral agent for the treatment of resistant hypertension. PhaseBio’s proprietary elastin-like polypeptide technology platform enables the development of therapies with potential for less-frequent dosing and improved pharmacokinetics, including pemziviptadil, and drives both internal and partnership drug-development opportunities. PhaseBio is located in Malvern, PA, and San Diego, CA. For more information, please visit , and follow us on Twitter @PhaseBio and LinkedIn. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “expects,” “intends,” “projects,” and “future” or similar expressions are intended to identify forward-looking statements. Forward-looking statements include statements concerning or implying the conduct or timing of our clinical trials and our research, development and regulatory plans for our product candidates, the potential for these product candidates to receive regulatory approval from the FDA or equivalent foreign regulatory agencies, and whether, if approved, these product candidates will be successfully distributed and marketed, as well as the success of our partnerships with SFJ Pharmaceuticals and BioVectra. Forward-looking statements are based on management's current expectations and are subject to various risks and uncertainties that could cause actual results to differ materially and adversely from those expressed or implied by such forward-looking statements. Accordingly, these forward-looking statements do not constitute guarantees of future performance, and you are cautioned not to place undue reliance on these forward-looking statements. Risks regarding our business are described in detail in our Securities and Exchange Commission (“SEC”) filings, including in our Annual Report on Form 10-K for the year ended December 31, 2020. These forward-looking statements speak only as of the date hereof, and PhaseBio Pharmaceuticals, Inc. disclaims any obligation to update these statements except as may be required by law. PhaseBio Pharmaceuticals, Inc. Condensed Balance Sheets (in thousands) December 31, 2020 December 31, 2019 Assets: Cash and cash equivalents $ 28,122 $ 74,025 Other receivables, prepaid expenses and other current assets 12,027 4,798 Property and equipment, net 8,224 1,924 Operating lease right-of-use assets 1,927 1,715 Other non-current assets 57 32 Total assets $ 50,357 $ 82,494 Liabilities and stockholders' (deficit) equity: Current portion of long-term debt $ 5,355 $ 2,378 Accounts payable, accrued expenses and other current liabilities 9,605 6,101 Long-term debt, net 6,773 12,326 Operating lease liabilities, net 1,548 1,508 Development derivative liability 51,719 — Other long-term liabilities 559 203 Stockholders’ (deficit) equity (25,202 ) 59,978 Total liabilities and stockholders' (deficit) equity $ 50,357 $ 82,494 PhaseBio Pharmaceuticals, Inc. Statements of Operations (in thousands, except share and per share amounts) Quarter Ended December 31, Year Ended December 31, 2020 2019 2020 2019 Revenue: Grant revenue $ — $ 689 $ 320 $ 1,786 Revenue under collaborative agreement — 75 — 575 Total revenue — 764 320 2,361 Operating expenses: Research and development 22,367 8,381 72,088 30,911 General and administrative 3,611 3,663 13,088 11,186 Total operating expenses 25,978 12,044 85,176 42,097 Loss from operations (25,978 ) (11,280 ) (84,856 ) (39,736 ) Other (expense) income (4,397 ) (51 ) (13,709 ) 489 Net loss $ (30,375 ) $ (11,331 ) $ (98,565 ) $ (39,247 ) Net loss per common share, basic and diluted $ (1.03 ) $ (0.39 ) $ (3.39 ) $ (1.43 ) Weighted average common shares outstanding, basic and diluted 29,397,718 28,762,962 29,056,304 27,493,558