Investment in Enalare Therapeutics Inc.

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

On August 8, 2022, we and Enalare Therapeutics Inc. (“Enalare”) entered into a Securities Purchase Agreement ("SPA"). In connection with the SPA we have invested a total of $25.0 million, representing a 17% equity stake in Enalare as of June 30, 2023, and may invest an additional $30 million, subject to the completion of certain development milestones. Concurrently with the execution of the SPA, we also entered into a Security Purchase Option Agreement ("SPOA"), pursuant to which we were granted an option to acquire all of the remaining outstanding shares of Enalare other than those that we already own, subject to the terms and conditions of the agreement. The term of the Purchase Option (the "Option Period") commenced on August 8, 2022 and will end upon the earlier of (x) 90 days following the FDA communication of proceed to clinical for a Phase 3 clinical study for a Product Candidate or (y) June 30, 2027. Enalare shall not initiate Phase 3 pivotal studies prior to the end of the Option Period and we shall have reasonable access to all relevant data and documents following the Phase 3 Milestone (as defined in the Option Agreement).

As of June 30, 2023, we had an equity investment in the amount of $17.0 million and an asset related to the acquisition right in the amount of $8.1 million. In the six months ended June 30, 2023, we settled the forward liability and invested another $12.5 million as part of the contractual obligation. We used a probability factor to value the asset related to the acquired acquisition rights based on management's best estimate, including the probability of completion of certain development milestones. The equity stake was accounted for as a non-RDFV investment and had a gain on settlement of the forward liability

of $0.1 million which was recorded in Other expense on our condensed consolidated statements of operations in the period ended June 30, 2023. The equity investment and the acquisition right was reported at fair value as of June 30, 2023.

Summarized financial information of our investment and equity ownership in Enalare for the six months ending June 30, 2023 is presented below:


	Beginning balance as of December 31, 2022		Fair Value Adjustment		Additions / Adjustments during period		Ending balance as of June 30, 2023
Non-RDFV Investment (Other assets)	$	8,438	$	—	$	8,514	$	16,952
Acquisition Rights (Other assets)	8,125		—		—		8,125
Forward Liability (Accrued expenses and other liabilities)	(4,063)		77		3,986		—
Total, net	$	12,500	$	77	$	12,500	$	25,077