Patent License Agreement

12 Months Ended

Dec. 31, 2019

Finite-Lived Intangible Assets, Net [Abstract]

Patent License Agreement

Patent License Agreement

In January 2017, the Company entered into a license agreement with a biotechnology company for an exclusive, non-transferable right to use proprietary technology related to high-throughput screening and identification of mutations in targeted gene sequences. The payment terms of the license agreement included (i) a one-time upfront payment of €1.0 million; (ii) issuance of 141,774 shares of the Company’s Series D convertible preferred stock; (iii) a milestone payment of €1.0 million associated with the achievement of a specified milestone event; and (iv) future royalty payments at the minimum of €13.4 million in the aggregate based on annual net sales in which the licensed technology are used. The Company made a one-time upfront payment of $1.1 million in January 2017 and a milestone payment of $1.2 million in August 2017 upon achievement of the specified milestone event. The Series D convertible preferred stock issued under the license agreement had a fair value of $1.1 million on the date of issuance. The transaction was treated as an acquisition of an asset and the Company capitalized the upfront payment, milestone payments and fair value of Series D convertible preferred stock in addition to license fees of $6.3 million related to the future minimum royalty payments discounted to the present value. The Company recorded the obligation at the estimated present value of the future payments using a discount rate of 15%, the Company’s estimate of its effective borrowing rate for similar obligations.

As of December 31, 2019 and 2018, unamortized capitalized license fees plus one-time upfront and milestone payments totaled $6.9 million and $7.8 million, respectively, which will be amortized over the remaining useful life of 7.0 and 8.0 years, respectively. Amortization of capitalized license fees plus one-time upfront and milestone payments totaled $1.0 million and $0.9 million for the years ended December 31, 2019 and 2018, respectively.