As of the acquisition closing date, there were approximately 74.1 million CVRs. There will be additional issuance of up to 10.5 million. CVRs to holders of Strongbridge rollover options and assumed warrants upon exercise. Preliminary purchase price allocation In accordance with ASC 805, Xeris Pharma was determined to be the accounting acquirer in the Acquisition. The Company has applied the acquisition method of accounting that requires, among other things, that identifiable assets acquired and liabilities assumed generally be recognized on the balance sheet at fair value as of the acquisition date. In determining the fair value, the Company utilized various forms of the income, cost and market approaches depending on the asset or liability being fair valued. The estimation of fair value required significant judgment related to future net cash flows (including revenue, operating expenses, and working capital), discount rates reflecting the risk inherent in each cash flow stream, competitive trends, market comparables and other factors. Inputs were generally determined by taking into account historical data (supplemented by current and anticipated market conditions), trends and growth rates. The initial allocation of the purchase price was based on preliminary valuations and assumptions. During the fourth quarter of 2021, the Company did record $4.9 million of net deferred tax liabilities based on jurisdictional outcomes. Otherwise, there were no material measurement period adjustments. The table below presents the estimated fair value that was allocated to Strongbridge’s assets and liabilities based upon fair values as determined by the Company (in thousands): Fair Value Cash and cash equivalents $ 38,469 Trade accounts receivable 4,344 Inventory 1,862 Prepaid expenses and other current assets 4,683 Property and equipment 161 IPR&D 121,000 Other intangible asset 11,000 Other assets 860 Total identifiable assets acquired 182,379 Accounts payable (279) Other accrued liabilities (13,703) Accrued trade discounts and rebates (4,844) Supply agreement liability (12,000) Deferred tax liabilities (4,942) Other liabilities (413) Total liabilities assumed (36,181) Net identifiable assets acquired 146,198 Goodwill 22,859 Net assets acquired $ 169,057 The above allocation of the purchase price is provisional and is still subject to change within the measurement period (up to one year from the acquisition date) as a result of additional information obtained with regards to facts and circumstances that existed as of the acquisition date. The final allocation of the purchase price is expected to be completed as soon as practicable, but no later than one year from the date of the Transactions. The following is a description of the methods used to determine the fair values of significant assets and liabilities. In-process research and development ("IPR&D") and other intangible asset The IPR&D intangible asset represents the recording of the acquired IPR&D indefinite-lived intangible asset related to Recorlev. The other intangible asset represents the commercial product in the form of Keveyis. The fair value for the IPR&D and other intangible assets were based on assumptions developed by management and other information compiled by management including, but not limited to, discounted future expected cash flows. The fair value of intangibles relies heavily on projected future net cash flows including, but not limited to, key assumptions for revenue and operating expenses. The discount rates used for intangible assets are XERIS BIOPHARMA HOLDINGS, INC. Notes to Consolidated Financial Statements 103
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