MERGER AND ACQUISITION

12 Months Ended

Dec. 31, 2022

Business Combination and Asset Acquisition [Abstract]

MERGER AND ACQUISITION

MERGER AND ACQUISITION

Lobesity Acquisition

On July 19, 2021, the Company closed an asset purchase agreement (the “Lobesity Asset Purchase Agreement”) with Lobesity LLC (“Lobesity”) pursuant to which the Company acquired global development rights to a proprietary and highly specific humanized monoclonal antibody that targets glucose-dependent insulinotropic polypeptide, as well as related intellectual property (the “Lobesity Acquisition”). The consideration for the Lobesity Acquisition at closing consisted of $2.3 million in cash and 120,861 shares of unregistered common stock plus the right to contingent payments including certain potential worldwide regulatory and clinical milestone payments totaling $45.5 million for a single indication (with the total amount payable, if multiple indications are developed, not to exceed $58.0 million), global sales-related milestone payments totaling up to $50.0 million, and, subject to certain adjustments, a mid-single digit royalty on worldwide net sales.

To satisfy the Company’s post-closing rights to indemnification under the Asset Purchase Agreement, 30,216 of the shares issued to Lobesity were subject to holdback restrictions for 18 months following closing of the transaction. The Company’s right to indemnification will be satisfied through the recovery of these shares or paid in cash by Lobesity.

Accounting Treatment

The Lobesity Acquisition was accounted for as an asset acquisition under ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The net tangible and intangible assets acquired, and liabilities assumed in connection with the transaction were recorded at their estimated fair values on the date of acquisition. The excess of purchase price over fair value of identified assets acquired and liabilities assumed was expensed as in-process research and development.

During the year ended December 31, 2021, the Company acquired the Lobesity asset for $2.3 million cash and shares of the Company’s common stock valued at approximately $2.6 million. In addition, the Company paid approximately $0.2 million in transaction costs associated with the Lobesity Acquisition. There was no contingent consideration recorded at the time of the Lobesity Acquisition because the related development, regulatory and sales milestones were not deemed probable.