Acquisitions - (Tables) - Cobalt Biomedicine Inc

12 Months Ended

Dec. 31, 2021

Business Acquisition [Line Items]

Schedule of Purchase Consideration

The Company accounted for the Cobalt acquisition as a business combination using the acquisition method of accounting. Under this method, the assets acquired and liabilities assumed are measured at their fair values as of the acquisition date. The elements of the purchase consideration are as follows (in thousands):

Series A-2 convertible preferred stock issued(1)	$	97,178
First milestone - restricted Series A-2 convertible preferred stock(2)		38,769
Success payment(3)		2,428
Fair value of contingent consideration(4)		51,248
Other		66
Total consideration	$	189,689

(1) The purchase consideration included 24.3 million shares of the Company’s Series A-2 convertible preferred stock. The value of the stock issued was $4.00 per share, equivalent to the purchase price per share of the Series A-2 convertible preferred stock financing that occurred in February 2019.

(2) The Company concluded the value of the first milestone, to be paid in restricted shares of Series A-2 convertible preferred stock, met the definition of being indexed to common stock. The restricted Series A-2 convertible preferred shares were recorded in convertible preferred stock valued at $38.8 million based on the estimated probability and timing of the milestone achievement on the date of acquisition and are not subject to remeasurement upon achievement of the milestone. In July 2019, the first milestone was achieved, and the Company issued a total of 12.1 million shares of its Series A-2 convertible preferred stock.

(3) The fair value of the success payment was determined using a Monte Carlo simulation methodology, which models the estimated fair value of the liability based on several key assumptions including the term of the success payment, expected volatility, risk-free interest rate, estimated number and timing of valuation measurement dates on the basis of which payment may be triggered, and the estimated future value of the Company implied by the estimated future per share value of the Company’s Series B convertible preferred stock at issuance.

(4) The fair value of the contingent consideration was determined by calculating the probability-weighted value of the milestone payments based on the assessment of the likelihood and estimated timing that certain milestones would be achieved and using estimated discount rates ranging from 15.3% to 17.6%. The discount rate captures the credit risk associated with the payment of the contingent consideration when earned and due.

Components of Purchase Price Allocation

The allocation of the purchase price is based on the estimated fair value of the assets acquired and liabilities assumed as of the date of acquisition. The components of the purchase price allocation are as follows (in thousands):

Net working capital	$	(3,275	)
Property and equipment		689
Net liabilities assumed		(2,586	)
Deferred tax liability		(7,547	)
Acquired in-process research and development		59,195
Goodwill		140,627
Total consideration	$	189,689

Schedule of Various Thresholds for Market Capitalizations Resulting Potential Success Payment and Additional Potential Contingent Consideration

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