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IN-PROCESS RESEARCH AND DEVELOPMENT AND DEFERRED TAX LIABILITY

9 Months Ended

Dec. 31, 2022

In-process Research And Development And Deferred Tax Liability

IN-PROCESS RESEARCH AND DEVELOPMENT AND DEFERRED TAX LIABILITY

NOTE 10. IN-PROCESS RESEARCH AND DEVELOPMENT AND DEFERRED TAX LIABILITY

In-process research and development (“IPR&D”) consists of the following projects (in thousands):


Project #	Description	Value as of December 31, 2022		Value as of March 31, 2022
iOx:
PORT 2 (IMM60)	Melanoma & Lung Cancers	$	84,213	$	84,213
PORT 3 (IMM65)	Ovarian/Prostate Cancers		32,997		32,997
			117,210		117,210

Oncomer/Saugatuck	DNA Aptamers		178		178

Tarus:
PORT 6 & PORT 7	Adenosine Receptors		27,138		–
PORT 8	Adenosine Receptors		500		–
PORT 9	Adenosine Receptors		562		–
			28,200		–

In-process research and development		$	145,588	$	117,388

Deferred tax liability		$	28,409	$	30,198

Additionally, at the end of each reporting period, the Company is required to assess whether there is any indication that an asset may be impaired. As indicated above, the Company identified an external indicator of potential impairment as of December 31, 2022. Pursuant to IAS 36, the Company completed its review of underlying fundamentals, execution, advancement of assets and value creation activities and concluded that no provision for impairment was required during the three and nine months ended December 31, 2022.

Deferred tax liability represents iOx’s estimated tax on the difference between book and tax basis of the IPR&D, which is taxable in the U.K, and the effect of usable net operating loss carryforwards.

As of December 31, 2022 and March 31, 2022, iOx had a net deferred tax liability of approximately $25.5 million and approximately $28.4 million, respectively. On January 8, 2019, the Company originally recognized a $19.8 million deferred tax liability for the difference between the book and income tax basis of IPR&D acquired as part of the SalvaRx Acquisition. As the iOx IPR&D is in the U.K., the deferred tax was recorded at 17%, the prevailing tax rate applicable in the U.K. at the time. In fiscal 2022, the Company recorded $7.0 million increase in deferred income taxes to reflect a future change in the U.K. income tax rate and recognized $0.7 million of current year losses and $0.8 million of prior year losses. The Company also recognized a $1.1 million decrease in deferred tax liability in fiscal 2022 to reflect the effect of the change in exchange rates on the liability settleable in British pound sterling. For the nine months ended December 31, 2022, the Company recognized the reduction in deferred tax liability of $1.8 million to reflect the effect of the change in exchange rates on the liability in the period and recognized $0.8 million of current period losses, as well as the tax rate change effect of $0.3 million on the current period losses.