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Earn-out Milestone Liability

9 Months Ended

Sep. 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 September 30, 2020, June 30, 2020 and December 31, 2019, the Company fair valued the earn-out milestone liability at $7.1 million, $6.0 million, and $5.7 million, respectively, and recognized a non-cash charge of $1.1 and $1.4 million for the three-month and nine-month periods ended September 30, 2020, respectively. In assessing the earnout milestone liability at September 30, 2020, the Company fair valued each of the two payment options per the Amended Asset Purchase Agreement and weighted them at 50% and 50% probability for the $7.0 million and the $12.4 million payments, respectively, and at September 30, 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 September 30, 2019, June 30, 2019, and December 31, 2018, the Company fair valued the earn-out milestone liability at $5.8 million, $5.9 million and $8.9 million, respectively and recognized a non-cash benefit of $0.1 million and $3.1 million for the three and nine-month periods ended September 30, 2019, respectively. In assessing the earnout milestone liability at September 30, 2019 and June 30, 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 nine-month period ended September 30, 2020:

Balance at January 1, 2020	$	5,717,709
Non-cash loss from the change in fair value		1,397,291
Balance at September 30, 2020	$	7,115,000

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

September 30, 2020		80	%		9	%	0.38 to 1.38 years
June 30, 2020		80	%		9	%	0.54 to 1.54 years
December 31, 2019		80	%		9	%	1.12 to 2.12 years

September 30, 2019		80	%		9	%	0.92 to 1.92 years
June 30, 2019		80	%		9	%	0.75 to 1.75 years
December 31, 2018		80	%		9	%	1.25 years