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Business acquisition | 12 Months Ended
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Sep. 30, 2021
Business acquisition |
Business acquisition |
15. | Business acquisition
On June 14, 2021, the Company acquired all of the outstanding stock of iGenomX International Genomics Corporation (iGenomX). iGenomX offers multiplex library preparation tools for next-generation sequencing (NGS) workflows. The Company’s acquisition is expected to enhance its capabilities to support multiplex sequencing preparations across multiple markets and to accelerate the Company’s conversion of customers from static microarray platforms to genotyping by sequencing workflows. The acquisition date fair value of the consideration transferred for iGenomX was approximately $27.3 million consisting of a combination of cash totaling $0.5 million and 237,409 shares of the Company’s common stock valued at $26.8 million based on the Company’s closing stock price on June 14, 2021 and contingent consideration of up to 48,478 shares valued at $5.5 million based on the Company’s closing stock price on June 14, 2021 and indemnity holdback of up to 43,662 shares valued at $4.9 million based on the Company’s closing stock price on June 14, 2021. The contingent consideration is subject to the completion of certain transition milestones, which are expected to be entirely satisfied. The contingent consideration becomes payable between six and twelve months from the acquisition date and will be settled in shares of the Company’s common stock, subject to completion of the transition milestones. The Company maintains an indemnity holdback for the purposes of providing security against any adjustment to the amounts at closing. The indemnity holdback period extends for 18 months from the anniversary of the closing date. This acquisition has been accounted for using the acquisition method of accounting in accordance with the business combination guidance in FASB ASC 805. Under the acquisition accounting method, the total estimated purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on their relative fair values. The excess of the purchase price over the net tangible and intangible assets acquired and liabilities assumed has been recorded as goodwill. Management’s estimate of the fair values of the acquired intangible assets at June 14, 2021 is preliminary and subject to change and is based on established and accepted valuation techniques performed with the assistance of third-party valuation specialists. Additional information, which existed as of the acquisition date but is yet unknown to the Company, may become known to the Company during the remainder of the measurement period, which will not exceed twelve months from the acquisition date. Changes to amounts will be recorded as adjustments to the provisional amounts recognized as of the acquisition date and may result in a corresponding adjustment to goodwill in the period in which new information becomes available. The goodwill that arose from the acquisition consists of synergies expected from integrating iGenomX into the Company’s operations and customer base. The goodwill recognized is not expected to be deductible for income tax purposes. The goodwill acquired from the iGenomX transaction was assigned to the Company’s only reportable and operating segment business activity, which is manufacturing of synthetic DNA using its semiconductor-based silicon platform. The estimated fair value of the consideration as of the acquisition date was approximately $37.7 million. The following table summarizes the preliminary fair value amounts of the assets acquired and liabilities assumed as of the acquisition date, as well as the purchase consideration: ​
​ | ​ | ​ | ​
(in thousands) |  | June 14, 2021
Assets acquired | ​ | ​ | ​
Cash and cash equivalents | ​ | $ | 7
Accounts receivable | ​ |  | 37
Inventories | ​ |  | 14
Intangible assets | ​ |  | 18,410
Goodwill | ​ |  | 21,538
Liabilities assumed | ​ | ​ | ​
Accounts payable | ​ |  | 57
Accrued expenses | ​ |  | 44
Deferred tax liability | ​ |  | 2,252
Fair value of assets acquired and liabilities assumed | ​ | $ | 37,653
​ | ​ | ​ | ​
Consideration transferred | ​ | ​ | ​
Cash | ​ | $ | 490
Company common stock | ​ |  | 26,772
Contingent consideration | ​ |  | 5,467
Indemnity holdback | ​ |  | 4,924
Fair value of purchase consideration | ​ | $ | 37,653
​ The following table summarizes the preliminary estimate of the intangible assets as of the acquisition date: ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Estimated | ​ | ​ | ​
​ | ​ | Weighted | ​ | ​ | ​
​ | ​ | Average | ​ | ​ | ​
​ | ​ | Useful Lives | ​ | Estimated Fair
(in thousands, except for years) |  | in Years |  | Value
Developed technology |  | 17 | ​ | $ | 17,900
Customer relationships |  | 1.5 | ​ |  | 510
Estimated fair value of acquired intangible assets | ​ | ​ | ​ | $ | 18,410
​ The Company estimated the fair value of the developed technology intangible asset using a discounted cash flow model. Significant judgment was exercised in determining the fair value of the developed technology intangible assets acquired, which included estimates and assumptions related to the projected revenues (specifically volume of sales), discount rate, and technology obsolescence curve. The Company estimated the fair value of the customer relationships intangible asset using a cost approach. These fair value measurements were based on significant inputs not observable in the market and thus represent a Level 3 measurement. Key assumptions include the level and timing of expected future cash flows, conditions and demands specific to each intangible asset over its remaining useful life, and discount rates, the Company believes to be consistent with the inherent risks associated with each type of asset, which was approximately 8.5%. The fair value of these intangible assets is primarily affected by the projected revenues, gross margins, operating expenses, the technology obsolescence curve, and the anticipated timing of the projected income associated with each intangible asset coupled with the discount rates used to derive their estimated present values. The Company believes the level and timing of expected future cash flows appropriately reflects market participant assumptions. The Company has included the financial results of iGenomX in its consolidated financial statements from the date of acquisition, which were not material. The Company incurred transaction costs related to the acquisition of $0.8 million, which were recognized as an expense on the consolidated statements of operations and comprehensive loss for the year ended September 30, 2021. The estimated fair value of the contingent consideration and indemnity holdback decreased from $10.4 million as of June 14, 2021 to $9.9 million as of September 30, 2021. For the year ended September 30, 2021, the Company recognized a gain of $0.5 million as change in fair value of acquisition consideration in its consolidated statement of operations due to the change in fair value of such liabilities, as a result of the change in the Company’s stock price as of September 30, 2021. The post-combination effect from net deferred tax liability assumed from the iGenomX acquisition also caused a release of the Company’s income tax valuation allowance. The release resulted in an income tax benefit of $2.0 million. The following pro forma financial information presents the combined results of operations for the Company and iGenomX as if the iGenomX acquisition had occurred on October 1, 2019. The pro forma financial information has been prepared for comparative purposes only and does not purport to be indicative of the actual operating results that would have been recorded had the iGenomX acquisition actually taken place on October 1, 2019 and should not be taken as indicative of future consolidated operating results. Additionally, the pro forma financial results do not include any anticipated synergies or other expected benefits from the iGenomX acquisition. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year ended September 30,
(in thousands) |  | 2021 |  | 2020
Revenues | ​ | $ | 132,599 | ​ | $ | 90,650
Net loss attributable to common stockholders | ​ |  | (153,007) | ​ |  | (141,054)
​

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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