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Intangible Assets, net

6 Months Ended

Jun. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

4. Intangible Assets, net

As part of the Insight and Chronix acquisitions, which were accounted for as business combinations under ASC 805, completed on January 31, 2020, and April 15, 2021, respectively, the Company has acquired in process research and development (“IPR&D”) and customer relationships.

During the first quarter of 2023, due to changes in management and the economic condition of the Company, management shifted the Company’s business strategy to direct efforts on fewer studies and to transition from test that are laboratory developed tests (“LDT”) to research use only (“RUO”) sales. Due to the change in strategy, the Company’s long range plan forecasts were updated and anticipated future benefits derived from the Company’s assets. The change in strategy represent a significant indicator for change in value of the Company’s long lived assets.

The original IPR&D balance was reassessed based on the updated long range plan (“LRP”), using the multiple period excess earnings method (“MPEEM”) approach, the results of the valuation noted that the carrying value of the DetermaIO related IPR&D intangible assets was greater than the fair market value, whereas the CNI and VitaGraft related IPR&D intangible assets carrying value was lower than the fair market value. Accordingly, the Company recorded an impairment of approximately $5.0 million.

At June 30, 2023 and December 31, 2022, intangible assets, net, consisted of the following (in thousands):

	June 30, 2023			December 31, 2022
Intangible assets:
Acquired IPR&D - DetermaIO ⁽¹⁾	$	9,700		$	14,650
Acquired IPR&D - DetermaCNI and VitaGraft ⁽²⁾		46,800			46,800

Intangible assets subject to amortization:
Acquired intangible assets - customer relationship		440			440
Total intangible assets		56,940			61,890
Accumulated amortization - customer relationship⁽³⁾		(301	)		(257	)
Intangible assets, net	$	56,639		$	61,633

(1)	See Note 3 for information on the Insight Merger.
(2)	See Note 3 for information on the Chronix Merger.
(3)	Amortization of intangible assets is included in “Cost of revenues – amortization of acquired intangibles” on the condensed consolidated statements of operations because the intangible assets pertain directly to the revenues generated from the acquired intangibles.

Future amortization expense of intangible assets subject to amortization is expected to be the following (in thousands):

	Amortization
Year ending December 31,
2023	$	44
2024		88
2025		7
Total	$	139