Quarterly report pursuant to Section 13 or 15(d)

Fair Value Disclosures

v3.23.2
Fair Value Disclosures
 6 Months Ended
Jun. 30, 2023
Fair Value Disclosures [Abstract]  
Fair Value Disclosures Fair Value Disclosures
Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction to a third party under current market conditions at the measurement date. U.S. GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of observability of inputs used in measuring fair value. In connection with historical acquisitions, additional consideration may be paid related to the achievement of certain milestones and such contingent consideration is required by U.S. GAAP to be presented at fair value. The following table provides information for liabilities measured at fair value on a recurring basis using Level 3 inputs:
June 30, 2023 December 31, 2022
Contingent Consideration:
Current $ 313,853  $ 322,385 
Non-current 3,670,252  3,309,175 
Total Contingent Consideration $ 3,984,105  $ 3,631,560 
The Company initially values contingent consideration related to business combinations using a probability-weighted calculation of potential payment scenarios discounted at rates reflective of the risks associated with the expected future cash flows for certain milestones. Key assumptions used to estimate the fair value of contingent consideration include projected financial information, market data and the probability and timing of achieving the specific milestones. After the initial valuation, the Company generally uses its best estimate to measure contingent consideration at each subsequent reporting period using the following unobservable Level 3 inputs:
Valuation Technique Unobservable Inputs June 30, 2023 December 31, 2022
Discounted cash flow Payment discount rate 12.8  % 14.7  %
Bayon Payment period 2023 - 2028 2023 - 2028
Panoptes Payment period 2024 - 2028 2024 - 2028
Jade Payment period 2026 2026
Bayon Probability of success for payment
17% - 67%
17% - 67%
Panoptes Probability of success for payment
17% - 36%
17% - 36%
Jade Probability of success for payment 56  % 56  %
Significant changes in these assumptions could result in a significantly higher or lower fair value. The contingent consideration reported in the above table is adjusted quarterly based upon the passage of time or the anticipated success or failure of achieving certain milestones. The change in fair value of contingent consideration of $0.4 million for the six months ended June 30, 2023, was primarily driven by a decreased
discount rate. The change in fair value of contingent consideration of $0.3 million for the six months ended June 30, 2022 was primarily driven by changes in estimated probabilities of success related to the orphan drug status designation of the Bayon drug candidate which occurred in March 2022. The change in fair value of contingent consideration is recorded within operating expenses on the accompanying condensed consolidated statements of operation and comprehensive loss.