Corlieve transaction	12 Months Ended
Dec. 31, 2022
Corlieve transaction
Corlieve transaction	3. Corlieve transaction At the Acquisition Date, the Company acquired Corlieve. Following Corlieve’s formation in November 2019, Corlieve obtained exclusive licenses to certain patents from two French research institutions that continue to collaborate with the Company. Corlieve also obtained an exclusive license from Regenxbio Inc. (“Regenxbio”) to use AAV9 to deliver any sequence that affects the expression of the Glutamate inotropic receptor kainate type subunit 2 (“GRIK2”) gene sequence in humans. Corlieve and Regenxbio simultaneously entered into a collaboration plan related to agreed joint preclinical research and development activities. At the Acquisition Date, Corlieve and its Swiss subsidiary, Corlieve Therapeutics AG, employed seven employees. Corlieve’s result for the full year 2021 was a $7.3 million loss of which $4.1 million was included in the Company’s consolidated results. The Company evaluated the Corlieve transaction as to whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Based on the fair values of the gross assets acquired, the Company determined the screen test was not met. The Company further analyzed whether or not the acquired inputs and processes that have the ability to create outputs would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets. Identifiable assets and liabilities of Corlieve, including identifiable intangible assets, were recorded at their fair values as of the Acquisition Date, when the Company obtained control. The excess of the fair value of the consideration transferred over the fair value of the net assets acquired was recorded as goodwill. Consideration On the Acquisition Date, the Company acquired 97.7% of the outstanding ordinary shares of Corlieve in return for EUR 44.9 million ($53.3 million as of the Acquisition Date). The Company financed the Corlieve Transaction from its cash on hand. The Company acquired the remaining outstanding ordinary shares in February, July and September 2022 for a total of EUR 1.8 million ($1.9 million). In addition to the payments to acquire 100% of the outstanding ordinary shares, Corlieve’s former shareholders are eligible to receive up to EUR 40.0 million ($42.8 million as of December 31, 2022) upon achievement of certain development milestones through Phase I/II and EUR 160.0 million ($171.3 million as of December 31, 2022) upon achievement of certain milestones associated with Phase III development and obtaining approval to commercialize Corlieve’s target candidate for the treatment of temporal lobe epilepsy (“AMT-260” or “TLE”) in the United States of America and the European Union. The Company may elect to pay up to 25% of such milestone payments through the issuance of the Company’s ordinary shares. As of the Acquisition Date, the Company recorded EUR 20.2 million ($24.0 million) as a contingent liability (presented as “Non-current liability”) for the fair value of these milestone payments. Identified intangible assets The Company identified various licenses that combined with the results of the research and development activities conducted in relation to AMT-260 since incorporation of Corlieve in 2019 constitute an IPR&D Intangible Asset. The Company determined the fair value of the IPR&D Intangible Asset using a present value model based on expected cash flows. Estimating the amounts and timing of cash flows required to complete the development of AMT-260 as well as net sales, cost of goods sold, and sales and marketing costs involved considerable judgment and uncertainty. The expected cash flows are materially impacted by the probability of successfully completing the various stages of development (i.e., dosing of first patient in clinical trial, advancing into late-stage clinical development and obtaining approval to commercialize a product candidate) as well as the weighted average cost of capital of 10.4% used to discount the expected cash flows. Based on all such information and its judgment the Company estimated the fair value of the IPR&D Intangible Asset at EUR 53.6 million ($63.6 million) as of the Acquisition Date. Deferred tax liability, net Corlieve’s deferred tax assets at the time of acquisition amounted to EUR 1.5 million ($1.7 million). Recognition of the IPR&D Intangible Asset gave rise to a deferred tax liability of EUR 13.4 million ($15.9 million) at the enacted French corporate income tax rate of 25.0%. The Company consequently recorded a net deferred tax liability of EUR 11.9 million ($14.2 million as of the Acquisition Date). Changes in the net deferred tax liability after the Acquisition Date will be recorded in income tax expense in the consolidated statements of operations. Goodwill Goodwill represents the excess of total consideration over the estimated fair value of net assets acquired. The Company recorded EUR 23.9 million ($28.4 million) of goodwill in the consolidated balance sheet as of the Acquisition Date. The goodwill primarily relates to the recognition of a deferred tax liability recognized in association with the IPR&D Intangible asset of EUR 13.4 million ($15.9 million as of Acquisition Date) as well as the fair market value of the experienced workforce and potential synergies from the acquisition. The Company allocated the goodwill to its reporting unit. The Company does not expect any portion of this goodwill to be deductible for income tax purposes. Debt As of the Acquisition Date, Corlieve held a loan with outstanding amount equal to EUR 1.0 million ($1.2 million), which loan was repaid in its entirety in September 2021. As of the Acquisition Date, Corlieve also held a loan with outstanding amount equal to EUR 0.4 million ($0.4 million), which was repaid in its entirety in December 2021. Other As of the Acquisition Date, the Company also acquired other assets and assumed other liabilities, which included among others, EUR 2.9 million ($3.4 million) of current assets, which consisted of EUR 2.8 million ($3.3 million) of cash, and EUR 1.1 million ($1.3 million) of current liabilities.

Corlieve transaction

12 Months Ended

Dec. 31, 2022

3. Corlieve transaction

At the Acquisition Date, the Company acquired Corlieve. Following Corlieve’s formation in November 2019, Corlieve obtained exclusive licenses to certain patents from two French research institutions that continue to collaborate with the Company. Corlieve also obtained an exclusive license from Regenxbio Inc. (“Regenxbio”) to use AAV9 to deliver any sequence that affects the expression of the Glutamate inotropic receptor kainate type subunit 2 (“GRIK2”) gene sequence in humans. Corlieve and Regenxbio simultaneously entered into a collaboration plan related to agreed joint preclinical research and development activities. At the Acquisition Date, Corlieve and its Swiss subsidiary, Corlieve Therapeutics AG, employed seven employees. Corlieve’s result for the full year 2021 was a $7.3 million loss of which $4.1 million was included in the Company’s consolidated results.

The Company evaluated the Corlieve transaction as to whether or not the transaction should be accounted for as a business combination or asset acquisition by first applying a screen test to determine if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets. Based on the fair values of the gross assets acquired, the Company determined the screen test was not met. The Company further analyzed whether or not the acquired inputs and processes that have the ability to create outputs would meet the definition of a business. Significant judgment is required in the application of the screen test to determine whether an acquisition is a business combination or an acquisition of assets.

Identifiable assets and liabilities of Corlieve, including identifiable intangible assets, were recorded at their fair values as of the Acquisition Date, when the Company obtained control. The excess of the fair value of the consideration transferred over the fair value of the net assets acquired was recorded as goodwill.

Consideration

On the Acquisition Date, the Company acquired 97.7% of the outstanding ordinary shares of Corlieve in return for EUR 44.9 million ($53.3 million as of the Acquisition Date). The Company financed the Corlieve Transaction from its cash on hand. The Company acquired the remaining outstanding ordinary shares in February, July and September 2022 for a total of EUR 1.8 million ($1.9 million).

In addition to the payments to acquire 100% of the outstanding ordinary shares, Corlieve’s former shareholders are eligible to receive up to EUR 40.0 million ($42.8 million as of December 31, 2022) upon achievement of certain development milestones through Phase I/II and EUR 160.0 million ($171.3 million as of December 31, 2022) upon achievement of certain milestones associated with Phase III development and obtaining approval to commercialize Corlieve’s target candidate for the treatment of temporal lobe epilepsy (“AMT-260” or “TLE”) in the United States of America and the European Union. The Company may elect to pay up to 25% of such milestone payments through the issuance of the Company’s ordinary shares.

As of the Acquisition Date, the Company recorded EUR 20.2 million ($24.0 million) as a contingent liability (presented as “Non-current liability”) for the fair value of these milestone payments.

Identified intangible assets

The Company identified various licenses that combined with the results of the research and development activities conducted in relation to AMT-260 since incorporation of Corlieve in 2019 constitute an IPR&D Intangible Asset.

The Company determined the fair value of the IPR&D Intangible Asset using a present value model based on expected cash flows. Estimating the amounts and timing of cash flows required to complete the development of AMT-260 as well as net sales, cost of goods sold, and sales and marketing costs involved considerable judgment and uncertainty. The expected cash flows are materially impacted by the probability of successfully completing the various stages of development (i.e., dosing of first patient in clinical trial, advancing into late-stage clinical development and obtaining approval to commercialize a product candidate) as well as the weighted average cost of capital of 10.4% used to discount the expected cash flows. Based on all such information and its judgment the Company estimated the fair value of the IPR&D Intangible Asset at EUR 53.6 million ($63.6 million) as of the Acquisition Date.

Deferred tax liability, net

Corlieve’s deferred tax assets at the time of acquisition amounted to EUR 1.5 million ($1.7 million). Recognition of the IPR&D Intangible Asset gave rise to a deferred tax liability of EUR 13.4 million ($15.9 million) at the enacted French corporate income tax rate of 25.0%. The Company consequently recorded a net deferred tax liability of EUR 11.9 million ($14.2 million as of the Acquisition Date). Changes in the net deferred tax liability after the Acquisition Date will be recorded in income tax expense in the consolidated statements of operations.

Goodwill

Goodwill represents the excess of total consideration over the estimated fair value of net assets acquired. The Company recorded EUR 23.9 million ($28.4 million) of goodwill in the consolidated balance sheet as of the Acquisition Date. The goodwill primarily relates to the recognition of a deferred tax liability recognized in association with the IPR&D Intangible asset of EUR 13.4 million ($15.9 million as of Acquisition Date) as well as the fair market value of the experienced workforce and potential synergies from the acquisition. The Company allocated the goodwill to its reporting unit. The Company does not expect any portion of this goodwill to be deductible for income tax purposes.

Debt

As of the Acquisition Date, Corlieve held a loan with outstanding amount equal to EUR 1.0 million ($1.2 million), which loan was repaid in its entirety in September 2021. As of the Acquisition Date, Corlieve also held a loan with outstanding amount equal to EUR 0.4 million ($0.4 million), which was repaid in its entirety in December 2021.

Other

As of the Acquisition Date, the Company also acquired other assets and assumed other liabilities, which included among others, EUR 2.9 million ($3.4 million) of current assets, which consisted of EUR 2.8 million ($3.3 million) of cash, and EUR 1.1 million ($1.3 million) of current liabilities.