Goodwill and other intangible assets

12 Months Ended

Dec. 31, 2023

Goodwill and other intangible assets

Goodwill and other intangible assets

9.        Goodwill and other intangible assets

The Company performs an annual impairment test at the reporting unit level as of April 1st of each fiscal year or more frequently when an event occurs or circumstances change that indicate the carrying value may not be recoverable.

Pelican Goodwill and In-Process R&D

Goodwill of $2.2 million and in-process R&D of $5.9 million were recorded in connection with the acquisition of Pelican, as described in Note 6 and have been allocated to the Pelican reporting unit. During the fourth quarter of 2021, due to a sustained decline in the quoted market price of its common stock, the Company performed an interim impairment analysis using the income approach and in-process R&D with a total carrying value of $5.9 million was written down to its estimated fair value of $3.5 million and an impairment charge of $2.4 million during the fourth quarter of 2021 was recorded and goodwill in the amount of $1.5 million was fully impaired. During the third quarter of 2022, the Company elected to terminate any further development of PTX-35. As a result of the termination, the in-process R&D affiliated with PTX-35, in the amount of $3.5 million, has been fully impaired.

Elusys Therapeutics Goodwill and Intangible Assets

Goodwill of $3.3 million and an intangible asset of $9.7 million was recorded in connection with the acquisition of Elusys which has been allocated to the Elusys Therapeutics reporting unit. During the fourth quarter of 2022, due to a sustained decline in the quoted market price of its common stock, the Company performed an interim goodwill impairment analysis using the income approach. However, through its quantitative analysis, the Company determined the carrying value was not in excess of its estimated fair value and therefore no impairment charge was recorded at December 31, 2022. Elusys Therapeutics’ intangible asset relates to the ANTHIM® formulation and is amortized over its remaining patent life, approximately 80 months. The Company’s annual impairment analysis was performed on April 1, 2023 using the income approach that determined the carrying value remained not in excess of its estimated fair value and, therefore, no impairment charge was necessary. During the second quarter of 2023, the Company finalized the purchase price allocation for the Elusys acquisition and recorded a measurement period adjustment that increased goodwill by approximately $0.6 million to a balance of $3.9 million.

As of September 30, 2023, the Company’s activities with regard to the divesture of the Elusys Therapeutics business met the criteria to report within discontinued operations. The Company has reclassified its previously issued financial statements to segregate the discontinued operations as of the earliest period presented. The Company evaluated its intangible asset and goodwill for impairment under ASC 360, Property, Plant, and Equipmment and ASC 350, Intangibles—Goodwill and Other. As a result, goodwill was fully impaired by $3.9 million and intangible assets were partially impaired by $2.3 million. These impairments resulted in the carrying value of the assets of discontinued operations being less than the fair value and therefore no loss has been recognized upon reclassification of the disposal group to discontinued operations treatment. Refer to Note 2, “Discontinued Operations” of the Notes to Consolidated Financial Statements for additional information.

The following table provides the Company’s goodwill, IPRD, and intangible assets as of December 31, 2023 and 2022:

					Intangible
	Goodwill		IPRD		Assets
Balance at December 31, 2021	$	—	$	3,500,000	$	—
Impairment		—		(3,500,000)		—
Acquisition of Elusys Therapeutics		5,067,748		—		11,200,000
Measurement period adjustments		(1,765,789)		—		(1,500,000)
Amortization		—		—		(1,030,625)
Balance at December 31, 2022		3,301,959		—		8,669,375
Acquisition fair value adjustment		571,120		—		—
Impairment		(3,873,079)		—		(2,277,921)
Amortization of intangible asset		—		—		(1,091,250)
Reclassified to discontinued operations		—		—		(5,300,204)
Balance at December 31, 2023	$	—	$	—	$	—

The Company finalized the purchase price allocation for the Elusys acquisition in April 2023 and recorded a measurement period adjustment that increased goodwill by approximately $0.6 million, increased other assets by $1.0 million, increased the liability for uncertain tax positions by $1.0 million and increased the deferred tax liability by the $0.6 million (see Note 14).

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