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Earn-Out Milestone Liability

6 Months Ended

Jun. 30, 2021

Note 14. Earn-Out Milestone Liability

On March 28, 2019, the Company and EGWU, Inc, entered into an amendment to its purchase agreement (“Amended Asset Purchase Agreement”), whereby payment of the earnout milestone liability related to the Ovarian Cancer Indication of $12.4 million had been modified. The Company has the option to make the payment as follows:

a)	$7.0 million in cash within 10 business days of achieving the milestone; or
b)	$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, 2021, March 31, 2021, and December 31, 2020, the Company fair valued the earn-out milestone liability at $7.1 million, $7.2 million and $7.0 million, respectively, and recognized a non-cash benefit of $0.1 million for the three-months ended June 30, 2021 and a non-cash charge of $0.1 million for the six-months ended June 30, 2021. In assessing the earnout milestone liability at June 30, 2021 and March 31, 2021, the Company fair valued each of the two payment options per the Amended Asset Purchase Agreement and weighted them at 50% / 50% probability for the $7.0 million and the $12.4 million payments, respectively.

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% / 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, 2021:


Balance at January 1, 2021	$	(7,018,000	)
Non-cash loss from the change in fair value		(70,000	)
Balance at June 30, 2021	$	(7,088,000	)

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

Schedule of Risk Adjustment Assessment

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

June 30, 2021		80	%		9	%	0.42 to 1.42 years
March 31, 2021		80	%		9	%	0.29 to 1.29 years
December 31, 2020		80	%		9	%	0.54 to 1.54 years

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