Business Combination On July 24, 2017 , we closed the merger on the terms described in more detail in Note 1. In connection with the merger, Nivalis effected a 1:4 reverse stock split of its common stock. Upon the closing of the merger, (1) a wholly-owned subsidiary of Nivalis merged with and into Alpine, with Alpine (renamed as AIS Operating Co., Inc.) remaining as the surviving entity; and (2) Nivalis was renamed as Alpine Immune Sciences, Inc. Under the terms of the Merger Agreement, Nivalis issued shares of its common stock to Alpines stockholders, at an exchange rate of 0.4969 shares of Nivalis common stock, after taking into account the 1:4 reverse stock split, for each share of Alpines common stock and preferred stock outstanding immediately prior to the merger. The exchange rate was determined through arms-length negotiations between Nivalis and Alpine. Nivalis also assumed all of the stock options outstanding under Alpines Amended and Restated 2015 Stock Plan, as amended (the Alpine Plan), and stock warrants for Alpines capital stock outstanding immediately prior to the merger, with such stock options and warrants henceforth representing the right to purchase a number of shares of the Nivalis common stock equal to 0.4969 multiplied by the number of shares of Alpines common stock or preferred stock previously represented by such options and warrants. Nivalis also assumed the Alpine Plan. Immediately after the merger, there were 13,881,645 shares of common stock outstanding. Immediately after the merger, Alpines former stockholders, warrantholders, and optionholders owned, or held rights to acquire, approximately 74% of the fully-diluted common stock of Nivalis, which for these purposes is defined as the outstanding common stock of Nivalis, plus in the money options and warrants to purchase shares of Nivalis common stock, assuming all in the money options and warrants of Nivalis outstanding immediately prior to the merger are exercised on a cashless basis immediately prior to the closing of the merger, with Nivalis stockholders, optionholders, and warrantholders immediately prior to the merger owning, or holding rights to acquire, approximately 26% of the fully diluted common stock of Nivalis. The issuance of shares of Nivalis common stock to our pre-existing stockholders was registered with the SEC pursuant to the Registration Statement. Immediately prior to the merger, we issued and sold an aggregate of approximately $17.0 million of shares of our capital stock to certain existing stockholders. For accounting purposes, our historical financial statements were not adjusted to reflect the merger, other than adjustments to the capital structure to reflect the historical capital structure of Nivalis. No other adjustments to our historical assets and liabilities were made as a result of the merger. In addition to the operating assets and liabilities of Nivalis, we also acquired Nivalis tax attributes, which primarily consisted of net operating losses which begin to expire in 2032. Our ability to utilize the tax attributes of Nivalis may be limited under Section 382 of the U.S. Internal Revenue Service and as such, have been reserved. We recorded a deferred tax liability related to future tax benefits arising from in-process research and development ("IPR&amp;D") acquired in the Merger. The combined organization is focusing on the development and commercialization of our innovative immunotherapies. Following the merger, the increased cash resources and increased access to capital of the combined organization will help to support the clinical development of our products. Consideration Transferred The fair value of the consideration transferred was based on the most reliable measure, which was determined to be the market price of Nivalis shares of common stock as of the acquisition date. The fair value of the consideration transferred consisted of the following (in thousands except share and per share amounts): Outstanding Nivalis common stock 3,914,058 Per share fair value of Nivalis common stock $ 9.60 Outstanding Nivalis stock options 421,992 Weighted average per share fair value of Nivalis stock options $ 1.25 Total fair value of consideration (in 000's) $ 38,103 Pursuant to the Merger Agreement, unvested Nivalis stock options immediately vested as of the closing of the business combination and were adjusted to give effect to the recapitalization. Purchase Price Allocation As Alpine was the accounting acquirer in the merger, we allocated the purchase price to the acquired tangible and intangible assets and assumed liabilities of Nivalis based on their estimated fair values as of the acquisition date. The excess of the estimated fair values of net assets acquired over the acquisition consideration paid was recorded as a bargain purchase gain in the condensed consolidated statements of operations and comprehensive income (loss). The determination of the preliminary fair values of the assets acquired and liabilities assumed requires significant judgment, including third party valuation estimates relating to the value of the acquired IPR&amp;D. The allocation of the purchase consideration to the assets acquired and liabilities assumed in our financial statements was finalized as of December 31, 2017. The final allocation of the purchase consideration is as follows (in thousands): Fair Value Assets: Cash and cash equivalents $ 31,130 Marketable securities 12,952 Other receivables 79 IPR&amp;D 1,453 Total assets acquired 45,614 Liabilities: Accrued liabilities (401 ) Deferred tax liability (509 ) Total liabilities assumed (910 ) Bargain purchase gain (6,601 ) Total $ 38,103 We relied on significant Level 3 unobservable inputs to estimate the fair value of our acquired IPR&amp;D using managements estimate of future royalties and expected earnings of the assets after taking into account an estimate of future expenses necessary to bring the products to completion. These projected cash flows were then discounted to their present values using a discount rate of 17% , which was considered commensurate with the risks and stages of development of the IPR&amp;D. The bargain purchase gain resulted from expenses incurred by Nivalis between the time the purchase price was negotiated and the close of the transaction, and changes in the Nivalis stock price during that period as the exchange ratio was fixed when the purchase price was negotiated. We recognized acquisition-related costs of $21,000 and $1.3 million for the three and nine months ended September 30, 2017. These costs are included within general and administrative expense in our condensed consolidated statements operations and of comprehensive income (loss). Pro Forma Financial Information The following pro forma consolidated results of net loss for the nine months ended September 30, 2017 assume the business combination was completed as of January 1, 2017 (in thousands, except per share amounts): Nine Months Ended September 30, 2017 Pro forma revenues $ 1,603 Pro forma net loss (13,634 ) Pro forma basic and diluted net loss per share $ (0.98 ) For purposes of the pro forma disclosures above, the primary adjustments for the nine months ended September 30, 2017 include the elimination of acquisition-related costs and acceleration of stock compensation expense upon the change in control.