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Earn-out Milestone Liability

6 Months Ended

Jun. 30, 2020

Note 13. Earn-out Milestone Liability

Pursuant to the Amended Asset Purchase Agreement entered by and between Company and EGWU, Inc in March 2019, payment of the earnout milestone liability related to the Ovarian Cancer Indication of $12.4 million was modified. The Company has the option to make a $7.0 million payment within 10 business days of achieving the milestone; or make a payment of $12.4 million in cash, common stock of the Company, or a combination of either, within one year of achieving the milestone.

As of June 30, 2020, March 31, 2020, and December 31, 2019, the Company fair valued the earn-out milestone liability at $6.0 million, $5.8 million and $5.7 million, respectively and recognized a non-cash charge of $0.2 and $0.3 million for the three-month and six-month periods ended June 30, 2020, respectively. In assessing the earnout milestone liability at June 30, 2020 and March 31, 2020, the Company fair valued each of the two payment options per the Amended Asset Purchase Agreement and weighted them at 80% and 20% probability for the $7.0 million and the $12.4 million payments, respectively.

As of June 30, 2019, March 31, 2019, and December 31, 2018, the Company fair valued the earn-out milestone liability at $13.1 million, $5.8 million and $8.9 million, respectively and recognized a non-cash charge of $0.1 million and a non-cash benefit of $3.0 million during the three-month and six-month periods ended June 30, 2019, respectively. In assessing the earnout milestone liability at June 30, 2019 and March 31, 2019, the Company fair valued each of the two payment options per the Amended Asset Purchase Agreement and weighted them at 80% and 20% probability for the $7.0 million and the $12.4 million payments, respectively.

The following is a summary of the changes in the earn-out milestone liability for the six-month period ended June 30, 2020:

Balance at January 1, 2020	$	(5,717,709	)
Non-cash loss from the change in fair value		(297,570	)
Balance at June 30, 2020	$	(6,015,279	)

The following is a schedule of the Company’s risk-adjustment assessment of each milestone:

Date	Risk-adjustment Assessment of Achieving each Milestone			Discount Rate			Estimated Time to Achieve

June 30, 2020		80	%		9	%	0.54 to 1.54 years
March 31, 2020		80	%		9	%	1.04 to 2.04 years
December 31, 2019		80	%		9	%	1.12 to 2.12 years

June 30, 2019		80	%		9	%	0.75 to 1.75 years
March 31, 2019		80	%		9	%	1.00 to 2.00 years
December 31, 2018		80	%		9	%	1.25 years