The intangible asset acquired as a result of the Acquisition consists of in-process research and development ("IPRD") related to NOV004, the Company's bone targeting molecule designed to accelerate fracture repair. The value of the IPRD was determined using discounted probable future cash flows.

Significant assumptions used in determining the fair value of the IPR&D include revenue growth rates, risk adjusted discount rates, and clinical trial success rate.

All intangible assets acquired in a business combination that are used in research and development activities are capitalized as indefinite-lived intangible assets. During the period that those assets are considered indefinite lived, they are not amortized but are tested for impairment. Once the research and development efforts are completed, the asset will be amortized over its remaining useful life. If the research and development efforts are abandoned, the intangible asset will be expensed in that period.

As of December 31, 2022, management performed a quantitative impairment evaluation of IPR&D intangible asset. The quantitative evaluation included a discounted cash flow analysis to determine if the intangible asset had decreased in value. In order to determine the fair value of the intangible asset, the Company utilized an average of a discounted cash flow analysis and comparable public company analysis. The key assumptions associated with determining the estimated fair value include projected future revenue growth rates, after tax free cash flow, and the discount rate. The assumptions used in the discount rate calculation were based on a peer company metrics to determine the weighted average cost of capital. This quantitative analysis resulted in the intangible asset fair value being above its carrying value, resulting in no impairment.

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions, estimates and market factors. Estimating the fair value of the Company’s indefinite-lived intangible assets requires assumptions and estimates regarding the Company's future plans, as well as industry, economic, and regulatory conditions. These assumptions and estimates include projected future revenue growth rates, discount rates, relevant market multiples, royalty rates and other market factors. If current expectations of future growth rates, margins and cash flows are not met, or if market factors outside of the Company's control change significantly, then the reporting unit or indefinite-lived intangible assets might become impaired in the future, negatively impacting the Company's operating results and financial position.

The following table provides details of the carrying amount of the Company's indefinite-lived intangible asset (in thousands):


		As of December 31,
		2022
Unamortized intangible assets:
	In-process research and development	$	5,900

The excess of the fair value of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill.

The following table sets forth the change in the carrying amount of goodwill for the Company as of and for the year ended December 31, 2022:


Balance at December 31, 2021	$	—
May 19, 2022		825
Impairment charge		(825	)
Balance at December 31, 2022		—

As of September 30, 2022, management performed an impairment evaluation of goodwill after assessing qualitative

factors that indicated a possible impairment of goodwill. Under the qualitative assessment, management considers relevant events and circumstances including but not limited to macroeconomic conditions, industry and market considerations, overall company performance and events directly affecting the Company. It was noted during our assessment that the Company's market capitalization was significantly below its carrying value and a further quantitative analysis was conducted to determine to the extent, if any, the Company's carrying value exceeded its fair value as of September 30, 2022. The quantitative analysis used fair value based on market capitalization adjusted for control premium based on market comparable transactions. This quantitative analysis resulted in the Company's fair value being significantly below its carrying value, resulting in a non-cash goodwill impairment charge of $0.8 million being recorded during the year ended December 31, 2022.