Note 3 - Business Combination

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Business Combination Disclosure [Text Block]

NOTE

3.

  Business Combination

On

February 

13,

2018,

the Company acquired Aviragen in a reverse merger (see Note 

1

). On the date of the Merger, Aviragen had in-process research and development as it was conducting a Phase

2

trial, it had previously developed drugs that were licensed to others who brought them to market and it had a workforce that was considered to have the necessary skills, knowledge, and experience to perform a process that, when applied to the in-process research and development, was critical to the ability to convert it into outputs. Based on this evaluation, the Company determined that the Merger should be accounted for as a business combination.

Since the date of the Merger, the results of Aviragen's operations have been included in the consolidated financial statements. As a result of the acquisition, the Company eliminated the majority of its debt and acquired a significant cash balance in exchange for equity securities.

The total purchase price for Aviragen is summarized as follows (in thousands):

Common stock	$	31,789
Total	$	31,789

In connection with the Aviragen acquisition, the Company allocated the total purchase consideration to the net assets and liabilities acquired, including identifiable intangible assets, based on their respective fair values at the acquisition date.

The following table summarizes the preliminary allocation of the purchase price to the fair value of the respective assets and liabilities acquired, adjustments made since the acquisition date and the final allocation as of

December 31, 2018 (

in thousands):

	As of February 13, 2018			2018 Adjustments			As of December 31, 2018
Cash and cash equivalents	$	25,525		$	—		$	25,525
Accounts receivable		14,666			—			14,666
Prepaid expenses		446			(10	)		436
Property and equipment		170			—			170
Intangible assets:
Developed technology (1)		22,400			(300	)		22,100
In-process research and development (2)		1,600			—			1,600
Total assets		64,807			(310	)		64,497
Accounts payable		(3,379	)		75			(3,304	)
Other current liabilities		(6,351	)		(393	)		(6,744	)
Liability related to sale of future royalties		(16,300	)		400			(15,900	)
Net assets acquired		38,777			(228	)		38,549
Purchase price		(31,789	)		—			(31,789	)
Bargain purchase gain (3)	$	6,988		$	(228	)	$	6,760

( 1 ) Developed technology comprises Inavir and Relenza, both influenza vaccines on which the Company is, or was, receiving royalty revenue, which, based on valuations prepared by an independent third party based on estimated discounted cash flows based on probability-weighted future development expenditures and revenue streams provided by the Company's management, are being, or has been, amortized on a straight-line basis over the estimated periods of future royalties at the time of the acquisition of 11.75 and 1.3 years, respectively.

( 2 ) In-process research and development (see Note 5 ) related to teslexivir, or BTA074, a direct-acting antiviral that, at the time of the Merger, was being actively developed as a treatment for genital warts. The valuation was prepared by an independent third party based on estimated discounted cash flows based on probability-weighted future development expenditures and revenue streams provided by the Company's management.

( 3 ) The bargain purchase gain represents the excess of the fair value of tangible and identified intangible assets acquired, less liabilities assumed, over the purchase price.