In June 2022, the Company sold its equity interest in its partially owned-subsidiary, Cullinan Pearl Corp. ("Cullinan Pearl"), which had worldwide rights to zipalertinib, excluding Japan, mainland China, Hong Kong, Macau, and Taiwan, to Taiho Pharmaceutical Co., Ltd ("Taiho") for an upfront payment of $275.0 million, with an increase to the purchase price in the amount of $2.9 million for cash held by Cullinan Pearl that was transferred with the sale. As of June 30, 2022, $5.0 million of the upfront payment was held in escrow. The escrow amount was released to Cullinan in the third quarter of 2022 once the Company and Taiho determined that no post-sale net working capital adjustment was necessary. Pursuant to the share purchase agreement with Taiho, Cullinan is also eligible to receive an additional $130.0 million tied to epidermal growth factor receptor exon20 non-small-cell lung cancer regulatory milestones.

The Company concluded the transaction was a sale of non-financial assets, which were comprised mainly of intellectual property rights and related intangible assets, and that it transferred control of the non-financial assets at the closing of the sale. Cullinan recognized a gain on sale of Cullinan Pearl of $276.8 million within income from operations in its consolidated statement of operations and other comprehensive income (loss) for the three and six months ended June 30, 2022. The table below sets forth the book value of the Cullinan Pearl assets and liabilities sold along with the calculation of the gain on sale based on the cash consideration received.


	(in thousands)
Book value of assets sold
Cash	$	2,898
Prepaid expenses and other current assets		619
Amounts attributable to assets sold		3,517
Book value of liabilities sold
Accrued expenses and other current liabilities		2,404
Amounts attributable to liabilities sold		2,404
Total identifiable net assets sold		1,113
Upfront consideration, inclusive of escrow of $5,000 and cash transferred of $2,898		277,898
Gain on sale of Cullinan Pearl	$	276,785

During the six months ended June 30, 2022, Cullinan Pearl issued $2.2 million of convertible notes to an affiliate of Taiho. The Company repaid these convertible notes at the closing of the Cullinan Pearl sale.