Business Acquisition

3 Months Ended

Mar. 31, 2021

Business Combinations [Abstract]

Business Acquisition

Business Acquisition

On January 4, 2021, the Company acquired Kleo Pharmaceuticals, Inc. (“Kleo”). Kleo is a development-stage biopharmaceutical company focused on advancing the field of immunotherapy by developing small molecules that emulate biologics. The transaction was accounted for as the acquisition of a business using the acquisition method of accounting.

The total fair value of the consideration transferred was $20,043 which consisted of the issuance of a total of 115,836 common shares of the Company to Kleo stockholders and contingent consideration in the form of a contingent value right to receive one dollar in cash for each Kleo share if certain specified Kleo biopharmaceutical products or product candidates receive the approval of the U.S. Food and Drug Administration prior to the expiration of 30 months following the effective time of the transaction. The maximum amount payable pursuant to the contingent value right is approximately $17,300, and the fair value of the contingent value right is $1,457 as of the acquisition date. The transaction also provides for approximately $950 of cash holdbacks to provide for potential indemnification claims and other reserves

Any holdback amounts remaining after the holdback periods will be released to the Kleo stockholders in the form of cash consideration.

Prior to the consummation of the transaction, the Company owned approximately 41.9% of the outstanding shares of Kleo and accounted for it as an equity method investment. As part of the transaction, the Company acquired the remainder of the shares of Kleo, and post-transaction the Company owns 100% of the outstanding shares of Kleo. The carrying value of the Company’s investment in Kleo was $1,176 immediately prior to the acquisition date. The Company determined the fair value of the existing interest was $6,437, and recognized a gain from our equity method investment of $5,261 on the condensed consolidated statement of operations and comprehensive loss as a result of remeasuring to fair value the existing equity interest in Kleo.

In connection with the transaction, we recorded: net working capital of $573; property, plant and equipment of $1,257; intangible assets consisting of in progress research and development assets of $18,400 which include an oncology therapeutic candidate entering Phase I clinical trials, and a COVID-19 therapeutic candidate in the planning stage for clinical development; debt assumed of $1,577; and goodwill of $1,390.

Kleo’s employees, other than its President and Chief Financial Officer, were retained as part of the transaction.In connection with the transaction agreement, the Company prepared and filed a registration statement permitting Kleo stockholders to offer and sell the common shares of the Company issued in the transaction.