Acquisitions (Tables)

6 Months Ended

Jun. 30, 2022

Business Combination and Asset Acquisition [Abstract]

Pursuant to the terms of the agreement, the Company acquired all outstanding equity of Denovium for estimated total consideration of $3.0 million, which consists of (in thousands):



Cash consideration	$	2,670
Equity consideration	368
Total purchase consideration	$	3,038

The following table summarizes the purchase price (in thousands):



Estimated cash payment to Totient stockholders	$	35,368	(i)
Estimated stock payment to Totient stockholders	13,891		(ii)
Estimated cash payment contingent on achieving specified milestone	12,000		(iii)
Total	$	61,259

(i)Pursuant to the merger agreement, the initial purchase price includes $40.0 million of cash adjusted for the agreed upon working capital value which includes the payment of Totient’s transaction and other expenses as well as payments to Totient stock option holders for the cancellation and extinguishment of Totient stock options.

(ii)Pursuant to the merger agreement, 2,212,208 shares of common stock issued in payment to Totient stockholders with 1,282,747 vesting immediately and therefore included in the purchase price consideration. The remaining 929,461 shares will vest ratably, every six months over 5 equal installments of a 2.5 years service period and will be expensed over the service period. These shares are subject to stock restriction agreements that require certain former key Totient executives to maintain a continued service relationship with Absci throughout the service period.

(iii)Represents the estimated fair value of the contingent consideration that is payable upon the achievement of the milestone of (i) Absci’s entering into one or more definitive commercialization agreements, or technology partnering or licensing agreements, or collaboration agreements, with third parties using, or related to, Totient’s technology, a target discovered or identified by using Totient’s technology, or a peptide, protein complex or amino acid sequence assembled using Totient’s technology, including any Totient product or enabled product, pursuant to which (a) Absci is entitled to receive at least $2.0 million in aggregate upfront cash or equity payments (provided, that the minimum upfront payment under any individual agreement shall be $1.0 million and (b) an option for a license or a license or similar right is granted to the third party; or (ii) first commercial sale of a Totient product or enabled product. The fair value estimate is based on a probability-weighted approach and will be updated as we obtain more information. The $12.0 million of contingent consideration originally measured was adjusted to reflect the increased probability of achievement. As of June 30, 2022 the fair value is $12.8 million and is included in accrued expenses on the condensed consolidated balance sheet as of June 30, 2022. Changes in the contingent consideration liability fair value are reflected within research and development expenses on the condensed consolidated statement of operations and comprehensive loss.

Schedule of Assets and Liabilities Acquired

The following table summarizes the allocation of the purchase consideration to the fair value of the assets acquired and liabilities assumed (in thousands):



Cash and cash equivalents	$	158
Accounts receivable	59
Other current assets	1
Intangible assets	2,507
Goodwill	1,055
TOTAL ASSETS	3,780
Accounts payable and accrued expenses	109
Deferred tax liability	633
TOTAL LIABILITIES	742
Fair value of net assets acquired and liabilities assumed	$	3,038

The following table summarizes the allocation of the estimated consideration to the identifiable assets and liabilities acquired by us as of June 4, 2021 (in thousands).



Current assets:
Cash and cash equivalents	$	1,751
Prepaid expenses and other current assets	189
Total current assets	1,940
Operating lease right-of-use assets	266
Property and equipment, net	118
Goodwill	20,280		(i)
Intangible assets	54,600		(ii)
Other long-term assets	23
TOTAL ASSETS	77,227
Current liabilities:
Accounts payable	78
Accrued expenses	6,588
Operating lease obligations	122
Total current liabilities	6,788
Operating lease obligations - net of current portion	144
Deferred tax, net	9,012
Other long-term liabilities	24
TOTAL LIABILITIES	15,968
Fair value of net assets acquired and liabilities assumed	$	61,259

(i)Goodwill represents the excess of the estimated purchase price over the estimated fair value of Totient’s identifiable assets acquired and liabilities assumed. Goodwill also reflects the requirement to record deferred tax balances for the difference between the assigned values and the tax bases of assets acquired and liabilities assumed in the business combination. Goodwill is not deductible for tax purposes.

(ii)The estimated fair value of and useful lives of the intangible assets acquired is as follows:

Schedule Estimated Fair Values of the Identified Intangible Assets

The following table reflects the fair values of the identified intangible assets of Denovium and their respective weighted-average estimated amortization periods.



	Estimated Fair Value (in thousands)		Estimated Amortization Period (years)
Denovium Engine	$	2,507	5
	$	2,507


	Estimated fair value (in thousands)(i)		Estimated useful lives (in years)(ii)
Monoclonal antibody library	$	46,300	20
Developed software platform and the related methods patents	8,300		15
Total	$	54,600

(i)The estimated fair values were categorized within Level 3 of the fair value hierarchy and were determined using an income-based approach, which was based on the present value of the future estimated after-tax cash flows attributable to each intangible asset. The significant assumptions inherent in the development of the values, from the perspective of a market participant, include the amount and timing of projected future cash flows (including revenue, regulatory success and profitability), and the discount rate selected to measure the risks inherent in the future cash flows, which was between 18%-23%. These fair values are based on the most recent estimate of the fair value available and will be updated as we obtain more information.

(ii)The estimate of the useful life was based on an analysis of the expected use of the asset by us, any legal, regulatory or contractual provisions that may limit the useful life, the effects of obsolescence, competition and other relevant economic factors, and consideration of the expected cash flows used to measure the fair value of the intangible asset.

Summary of Pro-forma Financial Information

The following table summarizes the pro forma financial information (in thousands):


	For the Three Months Ended June 30,			For the Six Months Ended June 30,
		2021			2021
Net loss applicable to common stockholders and unitholders		$	(47,035)		$	(61,116)