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Intangible Assets | 9 Months Ended
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Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract] |
Intangible Assets | Note 8. Intangible Assets In June 2014, the Company completed the acquisition of substantially all of the assets of EGEN, Inc., an Alabama corporation (“EGEN”), which changed its company name to EGWU, Inc. after the closing of the acquisition (the “EGEN Acquisition”). We acquired all of EGEN’s right, title and interest in and to substantially all of the assets of EGEN, including cash and cash equivalents, patents, trademarks and other intellectual property rights, clinical data, certain contracts, licenses and permits, equipment, furniture, office equipment, furnishings, supplies and other tangible personal property. In addition, CLSN Laboratories assumed certain specified liabilities of EGEN, including the liabilities arising out of the acquired contracts and other assets relating to periods after the closing date. Acquired In-process Research and Development Acquired IPR&D consists of EGEN’s drug technology platforms: TheraPlas and TheraSilence. The fair value of the IPR&D drug technology platforms was estimated to be $24.2 million as of the acquisition date. As of the closing of the acquisition, the IPR&D was considered indefinite lived intangible assets and will not be amortized. IPR&D has been reviewed for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable. As a result of the Company’s review for impairment, the IPR&D was impaired over the past 8 years by $10.8 million to its current stated value of $13.4 million. Starting in 2022, the Company will review its IPR&D annually in the fourth quarter of each year, and whenever events or changes in circumstances indicate that the carrying value of the assets might not be recoverable (see Note 2). The Company’s IPR&D consisted of three core elements, its RNA delivery system, its glioblastoma multiform cancer (“GBM”) product candidate and its ovarian cancer indication. The Company’s ovarian cancer indication, with an original value of $13.4 million, has not been impaired since its acquisition. At September 30, 2022, the Company evaluated the IPR&D for the ovarian cancer indication. As part of the valuation analysis, the fair value of the intangible assets was estimated by discounting forecasted risk adjusted cash flows at a rate that approximated the cost of capital of a market participant. Management’s forecast of future cash flows was based on the income approach. Significant estimates, all of which are considered Level 3 inputs, were used in the fair value methodology, including the Company’s forecast regarding its future operations and likeliness of obtaining approval to sell its products, as well as other market conditions. Changes in these estimates could change the forecasted cash flows attributed to the IPR&D which could have a significant impact on the fair value of these assets. Based on this valuation analysis, the Company concluded that it is not more than likely that the asset is impaired as of September 30, 2022. As such, no impairment charges for IPR&D related to the ovarian cancer indication were recorded during the three-month and nine-month periods ended September 30, 2022 and 2021. Covenants Not to Compete Pursuant to the EGEN Purchase Agreement, EGEN provided certain covenants (“Covenant Not To Compete”) to the Company whereby EGEN agreed, during the period ending on the seventh anniversary of the closing date of the acquisition on June 20, 2014, not to enter into any business, directly or indirectly, which competes with the business of the Company nor would it contact, solicit or approach any of the employees of the Company for purposes of offering employment. The Covenant Not to Compete which was valued at approximately $1.6 million at the date of the EGEN Acquisition has a definitive life and is amortized on a straight-line basis over its life of 7 years. The Company recognized amortization expense of $56,829 during each of the three-month and nine-month periods ended September 30, 2021. The carrying value of the Covenant Not to Compete was fully amortized as of June 30, 2021. Goodwill The purchase price exceeded the estimated fair value of the net assets acquired by approximately $2.0 million which was recorded as Goodwill. Goodwill represents the difference between the total purchase price for the net assets purchased from EGEN and the aggregate fair values of tangible and intangible assets acquired, less liabilities assumed. Goodwill is reviewed for impairment at least annually as of the Company’s third quarter ended September 30 or sooner if the Company believes indicators of impairment exist. Due to the continuing slowdown in investment in 2021 by public capital markets in the biotech industry and its impact on market capitalization rates in this sector, Goodwill was reviewed for impairment as of December 31, 2021. Based on this assessment, Company concluded that Goodwill was impaired. As of December 31, 2021, the Company wrote off the $2.0 million carrying value of this asset, thereby recognizing a non-cash charge of $2.0 million in the fourth quarter of 2021. Following is a summary of the net fair value of the assets acquired in the EGEN asset acquisition for the nine-month period ended September 30, 2022: Schedule of Fair Value of Assets Acquired
|  | IPR&D |
For the nine months ended September 30, 2022 |  |  |  |
Balance at January 1, 2022, net |  | $ | 13,366,234 |
Impairment |  |  | - |
Balance at September 30, 2022, net |  | $ | 13,366,234 |

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