PONVORY® Product Line
Notes to Special Purpose Abbreviated Financial Statements
(In thousands)
Note 1. Background
Actelion Pharmaceuticals Ltd. (Actelion) is a wholly owned subsidiary of Johnson & Johnson (the Parent and, together
with its subsidiaries, the Company).
Actelion has agreed to divest the U.S. and Canadian rights associated with PONVORY® (ponesimod) (collectively the Product Line), which is a daily, oral prescription medicine approved by the U.S. Food and Drug Administration (FDA) and Health Canada to
treat adults with relapsing forms of multiple sclerosis (RMS), which includes clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease.
On December 7, 2023, Actelion executed an asset purchase agreement (the Agreement) with Vanda Pharmaceuticals Inc., a Delaware Corporation,
(Vanda or Buyer) to sell the U.S. and Canadian rights of PONVORY® (ponesimod) for a total purchase price of $100 million. The Agreement includes the transfer of
patents, trademarks and intellectual property associated with PONVORY®. In connection with the Agreement, Actelion and the Buyer have agreed to enter into a transition agreement.
Note 2. Basis of Presentation
These Special Purpose
Abbreviated Financial Statements as of and for the fiscal years ended January 1, 2023 and January 2, 2022 (the Financial Statements) are derived from the historical accounting records of the Company and only present the assets
acquired and the revenues and direct expenses, including certain allocated direct expenses, of the Product Line. It is impracticable to prepare complete financial statements related to the Product Line as it was not a separate legal entity of the
Company and was never operated as a standalone business, division, segment or subsidiary. The Company has never prepared full stand-alone or full carve-out financial statements for the Product Line and has
never maintained distinct and separate accounts necessary to prepare such financial statements. These Financial Statements are based upon the Agreement and relief under SEC Rule 3-05(e), Financial
statements of businesses acquired or to be acquired, as the acquisition by Vanda meets the qualifying conditions established by the Securities and Exchange Commission to provide abbreviated financial statements in lieu of full financial
statements of the acquired business.
The Financial Statements have been prepared to reflect the assets acquired by the Buyer in accordance with the
Agreement and include costs directly associated with producing revenues, including a reasonable allocation of direct expenses, and exclude expenses (Omitted Expenses) not directly involved in revenue producing activities, such as
corporate overhead unrelated to the operational activities, interest and income tax. Therefore, these Financial Statements are not intended to be a complete presentation of the financial position, results of operations or cash flows of the Product
Line in conformity with accounting principles generally accepted in the United States of America. As the Product Line has historically been managed as part of the operations of the Company and has not been operated as a stand-alone entity,
information about the Product Line operating, investing, and financing cash flows is not available. As such, statements of cash flows are not presented in the Financial Statements.
The operations of the Product Line rely, to varying degrees, on the Company for marketing, sales order processing, billing, collection, procurement, customer
service, manufacturing, warehousing and distribution, information technology, insurance, human resources, accounting, regulatory, treasury, legal support, and other administrative services, and these expenses have been allocated in these Financial
Statements. The Financial Statements are not indicative of the financial condition or results of operations of the Product Line on a go-forward and stand-alone basis because of the exclusion of Omitted
Expenses and reliance of the Product Line on Actelion, the Parent and certain of their affiliates.
The Financial Statements include an intangible asset
which represents the U.S. and Canadian rights of PONVORY® (ponesimod). The intangible asset was acquired through the Parents acquisition of Actelion in 2017 at which time the intangible
asset was classified as Purchased In-process Research and Development (IPR&D). Upon FDA approval of PONVORY® on March 19, 2021, and
commercialization shortly thereafter, the intangible asset began amortizing over its estimated useful life.
The operations of the Product Line are
included in the consolidated federal income tax return of the Parent, to the extent appropriate, and are included in the foreign, state and local returns of certain other affiliates of the Parent. A provision for income taxes has not been presented
in these Financial Statements as the Product Line has not operated as a stand-alone entity and no allocation of income tax provision or benefit has been made to the Product Line.
In accordance with the accounting guidance related to the presentation of financial statements, management evaluates whether there are conditions or events,
considered in the aggregate that may impact the Product Lines ability to continue as a going concern for the next twelve months from the date the financial statements are available to be issued. The Financial Statements have been prepared
assuming that the Product Line will continue as a going concern, and do not include any adjustments relating to the carrying amounts and classification of assets that may be necessary should the Product Line be unable to continue as a going concern.
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