Note 12 - Earn-out Milestone Liability

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Earn-out Milestone Liability Disclosure [Text Block]

12.

EARN-OUT MILESTONE LIABILITY

The total aggregate purchase price for the EGEN Acquisition included potential future Earn-out Payments contingent upon achievement of certain milestones. The difference between the aggregate

$30.4

million in future Earn-out Payments and the

$13.9

million included in the fair value of the acquisition consideration at

June

20,

2014

was based on the Company's risk-adjusted assessment of each milestone

(10%

to

67%)

and utilizing a discount rate based on the estimated time to achieve the milestone

(1.5

to

2.5

years). The earn-out milestone liability will be fair valued at the end of each quarter and any change in their value will be recognized in the financial statements.

At

December

31,

2016,

the Company fair valued the earn-out milestone liability at

$13.2

million and recognized a non-cash gain of

$0.7

million during

2016

as a result of the change in the fair value of earn-out milestone liability of

$13.9

million at

December

31,

2015.

Included in the non-cash gain during

2016,

was the reduction of the liability by

$0.7

million during the

fourth

quarter of

2016

related to the write down of

one

of the in-process research and development assets (see Note

5)

as the Company believes there is no probability of the payout of the related earn-out milestone liabilities. The fair value of the remaining earn-out milestone liabilities at

December

31,

2016

was based on the Company's risk-adjusted assessment of each milestone

(50%

to

80%)

utilizing a discount rate based on the estimated time to achieve the milestone

(2.0

to

2.5

years). At

December

31,

2015,

the Company fair valued the earn-out milestone liability at

$13.9

million and recognized a non-cash loss of

$257,702

during

2015

as a result of the change in the fair value of earn-out milestone liability from

$13.7

million at

June

30,

2015.

The fair value of the earn-out milestone liability at

December

31,

2015

was based on the Company's risk-adjusted assessment of each milestone

(10%

to

67%)

and utilizing a discount rate based on the estimated time to achieve the milestone

(1.2

to

6.5

years).

The following is a summary of the changes in the earn-out milestone liability for

2015

and

2016:

Balance at January 1, 2015	$	13,663,710
Non-cash loss from the adjustment for the change in fair value included in 2015 net loss		257,702
Balance at December 31, 2015	$	13,921,412
Non-cash gain from the adjustment for the change in fair value included in 2016 net loss		(733,186	)
Balance at December 31, 2016	$	13,188,226