The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Overview
We are a blank check company incorporated in the Cayman Islands on August 13,
2020, formed for the purpose of effecting a merger, amalgamation, share
exchange, asset acquisition, share purchase, reorganization or other similar
business combination with one or more businesses. We intend to effectuate our
initial business combination using cash derived from the proceeds of the Initial
Public Offering and the sale of the Private Placement Shares, our shares, debt
or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete an initial
business combination will be successful.
Recent Developments
Our sponsor is an affiliate of Cormorant Asset Management, LP ("Cormorant"), a
leading life sciences focused investment firm with over $2 billion in assets
under management as of December 31, 2021. Our registration statement for the
Initial Public Offering was declared effective on October 19, 2020.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Shares, although substantially all of the net proceeds are intended to
be applied generally toward consummating an initial business combination.
If the Company is unable to complete a business combination within 24 months
from the closing of the Initial Public Offering, or October 22, 2022 (the
"Combination Period"), we will (i) cease all operations except for the purpose
of winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem the Public Shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the Trust
Account, including interest earned on the funds held in the Trust Account and
not previously released to us (less taxes payable and up to $100,000 of interest
to pay dissolution expenses), divided by the number of then outstanding Public
Shares, which redemption will completely extinguish Public Shareholders' rights
as shareholders (including the right to receive further liquidation
distributions, if any) and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of our remaining shareholders and our
board of directors, liquidate and dissolve, subject, in the case of clauses (ii)
and (iii), to our obligations under Cayman Islands law to provide for claims of
creditors and in all cases subject to the other requirements of applicable law.
Proposed Business Combination
On October 4, 2021, the Company announced that it entered into the Business
Combination Agreement. Following the Closing of the Business Combination, (i)
the existing equity holders of MoonLake will retain their equity interests in
MoonLake (except as noted in the Company's Form 8-K filed on October 4, 2021)
and will receive a number of non-economic voting shares in Helix determined by
multiplying the number of MoonLake Common Shares held by them immediately prior
to the Closing by the Exchange Ratio; (ii) the BVF Shareholders will assign all
of their MoonLake common shares to Helix and Helix will issue to the BVF
Shareholders an aggregate number of Helix Class A ordinary shares equal to the
product of such number of assigned MoonLake common shares and the Exchange
Ratio; and (iii) Helix will receive a controlling equity interest in MoonLake in
exchange for making the Cash Contribution (as defined in the Business
Combination Agreement). The Exchange Ratio is the quotient obtained by dividing
(a) 360,000,000 by (b) the fully diluted shares of MoonLake prior to the Closing
by (c) 10. Substantially all of the assets and business of MoonLake and Helix
will be held by MoonLake as the operating company following the Closing.
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For more information about the Business Combination Agreement and the Business
Combination, see our Definitive Proxy Statement. Unless specifically stated,
this Annual Report does not give effect to the Business Combination and does not
contain the risks associated with the Business Combination. Such risks and
effects relating to the Business Combination are included in the Definitive
Proxy Statement.
The Business Combination is expected to close occur in the first half of 2022,
following the receipt of required approval by the stockholders of the Company,
required regulatory approvals and the fulfilment or waiver of other conditions
set forth in the Business Combination Agreement.
Results of Operations
We have neither engaged in any operations (other than searching for an initial
business combination after our Initial Public Offering) nor generated any
operating revenues to date. Our only activities from inception through December
31, 2021 were organizational activities, those necessary to prepare for the
Initial Public Offering, and, subsequent to the Initial Public Offering,
identifying MoonLake as the target company for the Business Combination. We do
not expect to generate any operating revenues until after the completion of the
Business Combination with MoonLake or an alternate initial business combination.
We expect to generate non-operating income in the form of interest income on
investments held in trust after the Initial Public Offering. We expect that we
will incur increased expenses as a result of being a public company (for legal,
financial reporting, accounting and auditing compliance), as well as for due
diligence expenses in connection with searching for, and completing, an initial
business combination.
For the year ended December 31, 2021, we had a net loss of $4,542,654, which
consisted of general and administrative expenses of $4,570,345 offset by
interest earned on investments held in Trust Account of $27,691.
For the period from August 13, 2020 (inception) through December 31, 2020, we
had a net loss of $90,838, which consisted of formation and operating costs of
$105,755, offset by interest earned on investments held in Trust Account of
$14,917.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, our only source of
liquidity was an initial purchase of ordinary shares by the Sponsor and loans
from our Sponsor.
On October 22, 2020, we consummated the Initial Public Offering of 11,500,000
Public Shares, which included the full exercise by the underwriters of their
over-allotment option in the amount of 1,500,000 Public Shares, at a price of
$10.00 per Share, generating gross proceeds of $115,000,000. Simultaneously with
the closing of the Initial Public Offering, we consummated the sale of 430,000
Private Placement Shares to the Sponsor at a price of $10.00 per Private
Placement Share generating gross proceeds of $4,300,000.
Following the Initial Public Offering, the full exercise of their over-allotment
option and the sale of the Private Placement Shares, a total of $115,000,000 was
placed in the Trust Account, and we had $1,646,100 of cash held outside of the
Trust Account, after payment of costs related to the Initial Public Offering,
and available for working capital purposes. We incurred $6,750,447 in
transaction costs, including $2,300,000 of underwriting fees, $4,025,000 of
deferred underwriting fees and $425,447 of other offering costs.
For the year ended December 31, 2021, cash used in operating activities was
$611,071. Net loss of $4,542,654 was affected by interest earned on investments
held in the Trust Account of $27,691 and changes in operating assets and
liabilities, which used $3,959,274 of cash for general and administrative
expenses.
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For the period from August 13, 2020 (inception) through December 31, 2020, cash
used in operating activities was $316,692. Net loss of $90,838 was affected by
the formation cost paid by Sponsor in exchange for issuance of founder shares of
$5,000, interest earned on investments held in the Trust Account of $14,917, and
changes in operating assets and liabilities, which used $215,937 of cash for
operating activities.
As of December 31, 2021, we had investments held in the Trust Account of
$115,042,608. We intend to use substantially all of the funds held in the Trust
Account, including any amounts representing interest earned on the Trust
Account, which interest shall be net of taxes payable and excluding deferred
underwriting commissions, to complete our Business Combination. We may withdraw
interest from the Trust Account to pay taxes, if any. Through December 31, 2021,
we did not withdraw any interest earned on the Trust Account to pay our taxes.
To the extent that our share capital or debt is used, in whole or in part, as
consideration to complete a Business Combination, the remaining proceeds held in
the Trust Account will be used as working capital to finance the operations of
the target business or businesses, make other acquisitions and pursue our growth
strategies.
At December 31, 2021, we held $666,790 of cash outside of the Trust Account. We
intend to use the funds held outside the Trust Account primarily to complete the
Business Combination with MoonLake. If we do not complete the Business
Combination with MoonLake and seek an alternate business combination target, we
will use such funds to identify and evaluate target businesses, perform business
due diligence on prospective target businesses, travel to and from the offices,
plants or similar locations of prospective target businesses or their
representatives or owners, review corporate documents and material agreements of
prospective target businesses, structure, negotiate and complete a Business
Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsor or an affiliate of our
Sponsor or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required. If we complete the Business Combination or an
alternate initial business combination, we may repay such loaned amounts out of
the proceeds of the Trust Account released to us. In the event that the Business
Combination or an alternate initial business combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts, but no proceeds from our Trust Account would be used for
such repayment. Up to $1,500,000 of such loans may be convertible into shares,
at a price of $10.00 per share, at the option of the lender. The shares would be
identical to the Private Placement Shares. As of December 31, 2021, there were
no amounts outstanding under any working capital loans.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of completing the Business Combination with MoonLake, or with
identifying an alternate target business, undertaking in-depth due diligence and
negotiating an alternate initial business combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate
our business prior to our initial Business Combination. Moreover, we may need to
obtain additional financing either to complete the Business Combination or
because we become obligated to redeem a significant number of our Public Shares
upon completion of the Business Combination, in which case we may issue
additional securities or incur debt in connection with the Business Combination.
Going Concern
We have until October 22, 2022 to consummate a Business Combination. It is
uncertain that we will be able to consummate a Business Combination by this
time. If a Business Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution. Management has determined that
the mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises substantial doubt about our ability to
continue as a going concern. No adjustments have been made to the carrying
amounts of assets or liabilities should we be required to liquidate after
October 22, 2022.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities other than an agreement to pay the Sponsor
a monthly fee of $10,000 for office space, administrative services and remote
support services provided to the Company. We began incurring these fees on
October 22, 2020 and will continue to incur these fees monthly until the earlier
of the completion of a Business Combination and the Company's liquidation.
The underwriters are entitled to a deferred fee of $0.35 per Share, or
$4,025,000 in the aggregate. The deferred fee will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
we complete a Business Combination, subject to the terms of the underwriting
agreement.
On July 22, 2021, Helix retained SVB Leerink as its financial advisor in
connection with the proposed Business Combination, and SVB Leerink commenced its
review of MoonLake and the proposed transaction. On the same date, Helix also
retained Jefferies as lead capital markets advisor and lead placement agent,
Cowen and Company, LLC ("Cowen") as co-lead placement agent, and SVB Leerink as
financial advisor and co-lead placement agent for the PIPE financing. Under the
placement agent engagement letters between Helix and each of Jefferies, Cowen,
and SVB Leerink, each of Jefferies, Cowen, and SVB Leerink are entitled to a
placement agent fee based on the amount of gross proceeds of the PIPE, payable
upon the consummation of the PIPE.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have not identified any critical accounting policies.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Class A Ordinary shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable ordinary shares (including ordinary shares
that features redemption rights that is either within the control of the holder
or subject to redemption upon the occurrence of uncertain events not solely
within our control) is classified as temporary equity. At all other times,
ordinary shares are classified as shareholders' equity. Our Class A ordinary
shares feature certain redemption rights that are considered to be outside of
our control and subject to occurrence of uncertain future events. Accordingly,
Class A ordinary shares subject to possible redemption is presented as temporary
equity, outside of the shareholders' equity section of our balance sheets.
Net Income (Loss) per Ordinary Share
We calculate earnings per share to allocate net income (loss) evenly to Class A
and Class B ordinary shares. This presentation contemplates a Business
Combination as the most likely outcome, in which case, both classes of common
stock share pro rata in the income (loss) of the Company.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, "Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. The Company is currently assessing the impact, if any,
that ASU 2020-06 would have on its financial position, results of operations or
cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.
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