We completed our Merger with Aduro on October 5, 2020 and we acquired 100 percent equity interest in Private Chinook by issuing 16.3 million shares of common stock. Based upon the terms of the merger agreement dated June 1, 2020 and amended August 17, 2020, Private Chinook was determined to be the acquiring company for accounting purposes, and the transaction was accounted for as a reverse acquisition under the acquisition method of accounting for business combinations in accordance with U.S. GAAP. Accordingly, the assets and liabilities of Aduro were recorded at estimated fair value as of the merger closing date.

At the effective time of the Merger, we issued shares of our common stock to Private Chinook stockholders, at an exchange rate of 0.292188 shares of Aduro common stock for each share of Private Chinook common stock outstanding immediately prior to the Merger, including shares sold in the Pre-Closing Financing and all shares of Series A redeemable convertible preferred stock which converted into Private Chinook’s shares of common stock on a one-for-one basis prior to closing of the Merger (the “Exchange Ratio”). We also assumed all the stock options outstanding under the Private Chinook 2019 Equity Incentive Plan. Unless otherwise noted herein, references to our common share and per-share amounts give retroactive effect to the Exchange Ratio.

In August 2020, Private Chinook entered into subscription agreements (the “Pre-Closing Financing”) with certain existing and new investors, pursuant to which we agreed to sell, and the investors agreed to purchase, an aggregate of $115.0 million of our common stock. On October 5, 2020, immediately prior to the closing of the Merger, investors purchased 9.6 million shares of common stock, at a price of $12.00 per share, in the Pre-Closing Financing.

At the effective time of the Merger, we also entered into an agreement pursuant to which Aduro’s common stockholders of record as of the close of business on October 2, 2020 received one CVR for each outstanding share of Aduro common stock held by such stockholder on such date (the “CVR Agreement”). Each CVR represents the contractual right to receive payments from us upon the receipt of consideration resulting from milestones and royalties from certain pre-existing agreements and the disposition or licensing of any of Aduro’s non-renal assets, net of deductions permitted under the CVR Agreement, including taxes and certain other expenses.

During the year ended December 31, 2021, we identified and recorded measurement period adjustments primarily for taxes, which impacted deferred tax liabilities, the fair value of the CVR liability, and other liabilities related to the Merger. The measurement period adjustments were the result of additional analyses performed and information identified during 2021 based on facts and circumstances that existed as of the Merger date.

The fair value of the consideration transferred was based on the most reliable measure, which was determined to be the market price of Aduro shares of common stock as of the acquisition date. The fair value of the consideration transferred consisted of the following (in thousands):

As Private Chinook was the accounting acquirer in the Merger, the purchase price was allocated to the acquired tangible and intangible assets and assumed liabilities of Aduro based on the estimated fair values as of the acquisition date. The excess of the acquisition consideration paid over the estimated fair values of net assets acquired was recorded as goodwill in our consolidated balance sheets. Our determination of the estimated fair values of the assets acquired and liabilities assumed included the consideration of third-party valuation estimates relating to the value of the acquired intangible assets, leasehold improvements, property and equipment, a favorable lease and the CVRs.

The following summarizes the estimated fair value of the assets acquired and the liabilities assumed at the acquisition date (in thousands):

	Fair Value at Acquisition Date		Measurement Period Adjustments			Adjusted Fair Value at Acquisition Date
Assets:
Cash and cash equivalents	$	73,159	$	—		$	73,159
Marketable securities		98,057		—			98,057
Accounts receivable		1,122		—			1,122
Prepaids and other current assets		1,757		—			1,757
Property and equipment, net		19,039		—			19,039
Operating lease right-of-use assets		53,704		—			53,704
Intangible assets		28,118		—			28,118
IPR&D		39,295		—			39,295
Goodwill		22,441		(22,324	)		117
Restricted cash		1,750		—			1,750
Other assets		295		—			295
Total assets acquired		338,737		(22,324	)		316,413
Liabilities:
Accounts payable		2,280		—			2,280
Accrued clinical trial and manufacturing expenses		1,632		—			1,632
Accrued compensation		6,854		—			6,854
Accrued and other current liabilities		6,092		(690	)		5,402
Deferred revenue, current		660		—			660
Operating lease liability, current		2,230		—			2,230
Existing contingent consideration		1,800		(450	)		1,350
Deferred tax liabilities		18,372		(17,735	)		637
Operating lease liabilities, non-current		36,474		—			36,474
Other non-current liabilities		1,442		(753	)		689
Total liabilities assumed		77,836		(19,628	)		58,208
Net Fair Value	$	260,901	$	(2,696	)	$	258,205

We determined that the historical values of Aduro’s current assets and current liabilities approximate fair value at the date of the acquisition based on the short-term nature of such items, except for as noted below.

Acquired property and equipment anticipated to be used was valued using a cost approach, where fair value was estimated as replacement cost less depreciation factors that represented the condition of the assets. Acquired property and equipment intended to be disposed of was valued at their estimated liquidation value.

The fair value of the acquired renal (“BION-1301”) IPR&D intangible asset of $32.4 million was determined using a probability-weighted discounted cash flow model prepared under the multi-period excess earnings method. The fair value of the acquired Merck license agreement intangible assets of $26.7 million and the related CVR liability of $8.1 million were valued under the income method using a probability-weighted discounted cash flow model and a Monte Carlo simulation model. We applied significant judgment in estimating the fair value of the acquired intangible assets and related contingent value rights, which involved the use of significant estimates and assumptions. Significant estimates and assumptions used in the valuation of the acquired BION-1301 IPR&D intangible asset related to future revenues and expenses, probabilities of technological and regulatory success and discount rate. Significant estimates and assumptions used in the valuation of the acquired Merck license agreement intangible assets and related contingent value rights related to future revenues and revenue volatility, probabilities of technological and regulatory success and discount rates. The fair value of the non-renal IPR&D intangible assets were determined using a probability-weighted discounted cash flow model, including assumptions regarding probabilities, timing and prices for the sale or out-license of these assets.

Favorable terms of an acquired lease were recorded as part of the operating lease ROU asset and was valued using a with-and-without income approach method.

Deferred revenue was valued based upon the estimated remaining costs to fulfill the legal performance obligation, plus a reasonable profit margin, which was expected to be satisfied within a year from the date of the Merger.

The existing contingent consideration liability related to the former shareholders of BioNovion Holdings BV was valued using a probability-weighted discounted cash flow assessment that considers probability and timing of future payments.

Goodwill is the excess of the consideration transferred over the fair values of assets acquired and liabilities assumed, which primarily reflects the future economic benefit arising from other assets acquired that could not be individually identified and separately recognized.