In September 2020, the Company entered into a stock purchase agreement to acquire 100% of the outstanding equity in Oscine Corp. (Oscine) for a purchase price of $8.5 million, of which $7.6 million was an upfront cash payment and $0.9 million was set aside to satisfy certain general representations and warranties as set forth in the stock purchase agreement (Oscine Holdback Amount).

The primary asset acquired in the acquisition was in-process research and development (IPR&D) technology related to Oscine’s glial progenitor ex vivo cell engineering programs focused on brain disorders. The Company evaluated the acquisition and determined the screen test, as permitted under ASC 805, Business Combinations, was met as the $8.5 million purchase price represented consideration for a single identifiable asset related to the technology. The Company concluded the asset acquired did not meet the definition of a business, and the asset had no alternative future use. The transaction was accounted for as an asset acquisition, and the purchase price of $8.5 million was recorded in research and development expense for the three and nine months ended September 30, 2020.

The Oscine Holdback Amount will be held until December 2021, which is 15 months following the consummation of the acquisition, at which time the remainder of the balance, after payment of any claims, will be released. In addition, the Company is required to make up to an aggregate of $225.8 million in future milestone payments upon the achievement of certain development and commercial milestones.

In February 2019, the Company acquired 100% of the outstanding equity in Cobalt Biomedicine, Inc. (Cobalt), a privately-held early-stage biotechnology company that was developing a platform technology using its fusogen technology to specifically and consistently deliver various biological payloads to cells.

Pursuant to the terms and conditions in the Cobalt acquisition agreement, the Company has an obligation to pay contingent consideration (Cobalt Contingent Consideration) of up to an aggregate of $500.0 million to certain former Cobalt stockholders upon the achievement of certain pre-specified development milestones. Additionally, the Company is obligated to pay a success payment (Cobalt Success Payment) of up to $500.0 million, payable in cash or stock, at the Company’s discretion. The Cobalt Success Payment is payable if, at pre-determined valuation measurement dates, including the Company’s IPO and periodically thereafter, the Company’s market capitalization equals or exceeds $8.1 billion, and the Company is advancing a program based on the fusogen technology in a clinical trial pursuant to an investigational new drug application (IND), or has filed for, or received approval for, a biologics license application (BLA) or new drug application (NDA). The Cobalt Success Payment can be achieved over a maximum of 20 years from the date of the Cobalt acquisition, but this period could be shorter upon the occurrence of certain events. As of September 30, 2021, a Cobalt Success Payment had not been triggered.

In addition to an IPO, a valuation measurement date would be triggered upon a change of control of the Company if at least one Company product based on the fusogen technology is the subject of an active research program at the time of such change of control. If there is a change of control and the Company’s market capitalization is below $8.1 billion as of the date of the change of control, the amount of the potential Cobalt Success Payment will decrease, and the amount of potential Cobalt Contingent Consideration will increase.

The following table sets forth various thresholds for the Company’s market capitalizations as of the date of a change of control and the resulting potential Cobalt Success Payment and additional potential Cobalt Contingent Consideration:

Sana market capitalization upon a change of control and resulting impact to Cobalt Success Payment and additional potential Cobalt Contingent Consideration	Cobalt Success Payment		Additional potential Cobalt Contingent Consideration
	(in millions)
Equal to or exceeds $8.1 billion	$	500	$	-
Equal to or exceeds $7.4 billion, but less than $8.1 billion		150		350
Equal to or exceeds $6.8 billion, but less than $7.4 billion		100		400
Less than $6.8 billion		-		500

The Cobalt Success Payment and Cobalt Contingent Consideration liabilities are carried at fair value, with changes in fair value recognized in the condensed consolidated statements of operations in research and development related success payments and contingent consideration. As of September 30, 2021 and December 31, 2020, the estimated fair value of the Cobalt Success Payment liability was $111.6 million and $64.7 million, respectively, and was recorded in long-term liabilities in the condensed consolidated balance sheets. In connection with the change in the estimated fair value of the Cobalt Success Payment, the Company recognized expenses of $21.8 million and $1.3 million for the three months ended September 30, 2021 and 2020, respectively, and expenses of $46.9 million and $35.2 million for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, the estimated fair value of the Cobalt Contingent Consideration was $132.0 million, of which $43.5 million was recorded in short-term liabilities and $88.5 million was recorded in long-term liabilities in the condensed consolidated balance sheet. As of December 31, 2020, the estimated fair value of the Cobalt Contingent Consideration was $121.9 million and was recorded in long-term liabilities in the condensed consolidated balance sheet. In connection with the change in the estimated fair value of the Cobalt Contingent Consideration, we recognized a gain of $8.5 million and an expense of $2.3 million for the three months ended September 30, 2021 and 2020, respectively, and expenses of $10.1 million and $16.7 million for the nine months ended September 30, 2021 and 2020, respectively.