Business Combination

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

On September 27, 2022, we acquired all outstanding shares of ViaCyte, Inc. (“ViaCyte”), a privately held biotechnology company primarily focused on delivering novel stem cell-derived cell replacement therapies as a functional cure for type 1 diabetes, in exchange for $315.0 million. ViaCyte’s intellectual property and assembled workforce complement our ongoing programs and have the potential to produce therapies for patients with type 1 diabetes. We accounted for the transaction as a business combination, and allocated the purchase price to the following assets acquired and liabilities assumed:


	As of September 27, 2022
	(in millions)
Cash and cash equivalents	$	19.1
Goodwill	73.0
Intangible asset	216.6

Net other assets	6.3
Total purchase price	$	315.0

The “Goodwill” represents the difference between the fair value of the consideration transferred and the fair value of the assets acquired and liabilities assumed. The goodwill is attributable to (i) the technological expertise in cell therapy of ViaCyte’s assembled workforce, (ii) the potential synergies from combining ViaCyte’s technology with our clinical development capabilities and (iii) the potential future benefits for other therapeutic programs that the acquired technology could be used for, but did not meet the definition of an in-process research and development asset. None of the goodwill is expected to be deductible for income tax purposes.

The “Intangible asset” is an in-process research and development asset of $216.6 million related to ViaCyte’s technology and intellectual property associated with stem cell differentiation and manufacturing. The fair value of the intangible asset was determined through a discounted cash flow analysis using the relief from royalty method, which estimated the cost savings associated with owning an asset instead of paying a royalty to the previous owner. The relief from royalty method utilized Level 3 fair value inputs including (i) estimated future product sales, which were calculated using, among other assumptions, an estimated probability of obtaining marketing approval for the asset, (ii) estimated after-tax royalty savings expected from ownership of the asset, and (iii) an appropriate discount and tax rate.

As of September 30, 2022, our analysis of the fair value of certain assets acquired, including certain tax analyses, related to the ViaCyte business combination is preliminary and will be finalized during the measurement period of up to one year from the acquisition date. The financial results of ViaCyte did not have a material effect on our condensed consolidated statement of operations in the three and nine months ended September 30, 2022