XML 22 R12.htm IDEA: XBRL DOCUMENT

Intangible Assets, Net

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

5. Intangible Assets, Net

As part of the Insight and Chronix acquisitions completed on January 31, 2020, and April 15, 2021, respectively, the Company has acquired IPR&D and customer relationships.

During the first quarter of 2023, due to changes in management and the economic condition of the Company, management shifted the Company’s business strategy to direct efforts on fewer studies and to transition from tests that are laboratory developed tests to research use only sales. Due to the change in strategy, the Company’s long range plan forecasts were updated and anticipated future benefits derived from the Company’s assets. The change in strategy represent a significant indicator for change in value of the Company’s long-lived assets. The original IPR&D balance was reassessed based on the updated long range plan, using the multi-period excess earnings method (“MPEEM”) approach, the results of the valuation noted that the carrying value of the DetermaIO related IPR&D intangible assets was greater than the fair market value, whereas the CNI and VitaGraft related IPR&D intangible assets carrying value was lower than the fair market value. Accordingly, the Company recorded an impairment of approximately $5.0 million.

The MPEEM valuation approach is a discounted cash flow valuation technique and was used to determine the Level 3 fair value of Insight’s IPR&D discussed above. The significant unobservable inputs used on March 31, 2023, included: (i) a discount period of 20.0 years, based on the expected life of patent, (ii) a royalty rate of 0.3%, (iii) a contributory asset rate of return of 30.0%, and (iv) a weighted average cost of capital rate of 30.0%. As market conditions change, the Company will re-evaluate assumptions used in the determination of fair value for IPR&D and is uncertain to the extent of the volatility in the unobservable inputs in the foreseeable future. Refer to Note 2, “Goodwill and Intangible Assets” for additional IPR&D information.

Intangible assets, net, consisted of the following:

	September 30, 2023			December 31, 2022
	(In thousands)
Intangible assets:
Acquired IPR&D - DetermaIO^{TM (1)}	$	9,700		$	14,650
Acquired IPR&D - DetermaCNI™ and VitaGraft™ ⁽²⁾		46,800			46,800

Intangible assets subject to amortization:
Acquired intangible assets - customer relationship		440			440
Total intangible assets		56,940			61,890
Accumulated amortization - customer relationship⁽³⁾		(323	)		(257	)
Intangible assets, net	$	56,617		$	61,633

⁽¹⁾	See Note 3 for information on the Insight Merger.
⁽²⁾	See Note 3 for information on the Chronix Merger.
⁽³⁾	Amortization of intangible assets is included in “Cost of revenues – amortization of acquired intangibles” on the consolidated statements of operations because the intangible assets pertain directly to the revenues generated from the acquired intangibles.

Intangible asset amortization expense amounted to $22,000 and $976,000 for the three months ended September 30, 2023 and 2022, respectively, and $66,000 and $2.9 million for the nine months ended September 30, 2023 and 2022, respectively.

Future amortization expense of intangible assets subject to amortization is expected to be the following:

	Amortization
	(In thousands)
Year ending December 31,
2023	$	22
2024		88
2025		7
Total	$	117