Balance Sheet Details

6 Months Ended

Jun. 30, 2024

Balance Sheet Details [Abstract]

Balance Sheet Details

Note 4 — Balance Sheet Details

Inventories

Inventories, which primarily relate to Proclarix product as of June 30, 2024 and ENTADFI product as of December 31, 2023, consisted of the following:

	June 30, 2024		December 31, 2023
Raw materials	$	91,971	$	139,208
Work-in-process		—		194,805
Finished goods		68,301		30,039
Total	$	160,272	$	364,052

The Company recorded an impairment on the ENTADFI inventory in the amount of approximately $0.4 million during the three and six months ended June 30, 2024 (see Note 5). No such impairment was recorded during the three and six months ended June 30, 2023.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following as of June 30, 2024, and December 31, 2023:

	June 30, 2024		December 31, 2023
Prepaid insurance	$	525,848	$	122,004
Prepaid regulatory fees		—		312,551
Prepaid research and development		74,881		89,195
Prepaid professional fees		—		70,708
Unbilled accounts receivable		55,630		—
Prepaid other		116,963		175,695
Total	$	773,322	$	770,153

Intangible Assets

Intangible assets, which were recorded during the year ended December 31, 2023 in connection with the ENTADFI and Proteomedix acquisitions (see Note 5), is comprised of customer relationships, product rights for developed technology, and a trade name, and consisted of the following as of June 30, 2024, and December 31, 2023:

	Balance at December 31, 2023		Impairment			Foreign Currency Translation			Balance at June 30, 2024
Gross basis:
Trade name	$	9,312,739	$	—		$	(595,266	)	$	8,717,473
Product rights for developed technology		14,182,157		(3,296,644	)		(695,796	)		10,189,717
Customer relationships		1,952,803		—			(124,822	)		1,827,981
Total intangible assets, gross	$	25,447,699	$	(3,296,644	)	$	(1,415,884	)	$	20,735,171

	Balance at December 31, 2023			Amortization			Foreign Currency Translation		Balance at June 30, 2024
Accumulated amortization:
Product rights for developed technology	$	(31,213	)	$	(337,111	)	$	8,579	$	(359,745	)
Customer relationships		(5,599	)		(60,476	)		1,539		(64,536	)
Total intangible assets, accumulated amortization	$	(36,812	)	$	(397,587	)	$	10,118	$	(424,281	)
Intangible assets, net	$	25,410,887							$	20,310,890

The finite lived intangible assets held by the Company, which includes customer relationships and product rights for developed technology, are being amortized over their estimated useful lives of 15 years. Amortization expense related to intangible assets was approximately $196,000 and $398,000 for the three and six months ended June 30, 2024, respectively. Of the total amortization expense, approximately $30,000 and $61,000 was recorded as selling, general, and administrative expenses for the three and six months ended June 30, 2024, respectively, and approximately $166,000 and $337,000 was recorded as cost of revenue, for the three and six months ended June 30, 2024, respectively, in the accompanying condensed consolidated statements of operations and comprehensive loss.

During the three months ended March 31, 2024, the Company became aware of a new competitor that received approval by the FDA for a combined finasteride-tadalafil capsule, which is a direct competitor product to ENTADFI. This was determined to be a triggering event that could result in a decrease in future expected cash flows, and thus indicated the carrying amount of the ENTADFI asset group may not be fully recoverable. The Company performed an undiscounted cash flow analysis over the ENTADFI asset group and determined that the carrying value of the asset group is not recoverable. The Company then estimated the fair value of the asset group to measure the impairment loss for the period. Significant assumptions used to determine this non-recurring fair value measurement included projected sales driven by market share and product sales price estimates, associated expenses, growth rates, the discount rate used to measure the fair value of the net cash flows associated with this asset group, as well as Management’s estimates of an expected sales price for the asset group, and the probability of each potential strategic alternative taking place.

During the three months ended June 30, 2024, the Company reevaluated the probability of each potential strategic alternative occurring, and determined that the change in probabilities is a triggering event that could result in a decrease in future expected cash flows, and thus indicated the carrying amount of the ENTADFI asset group may not be fully recoverable. The Company further determined that the asset group was fully impaired at June 30, 2024, and recorded a corresponding impairment charge during the three months ended June 30, 2024.

The Company recorded an impairment charge of $1.2 million during the three months ended June 30, 2024, of which $1.0 million and $0.2 million was allocated to the product rights intangible asset and prepaids and other assets, respectively. The Company recorded an impairment charge of $3.5 million during the six months ended June 30, 2024, which was allocated on a pro rata basis across the assets within the asset group. For the six months ended June 30, 2024, approximately $3.3 million and approximately $0.2 million was allocated to the product rights intangible asset and prepaids and other assets, respectively. After recording the impairment charges, the assets in the ENTADFI asset group have no remaining carrying value as of June 30, 2024.

Future annual amortization expense related to the Company’s finite lived intangible assets is as follows as of June 30, 2024:

Years ending December 31,
2024	$	400,590
2025		801,180
2026		801,180
2027		801,180
2028		801,180
Thereafter		7,988,107
Total	$	11,593,417

As of June 30, 2024, the weighted-average remaining amortization period for intangible assets was approximately 14.47 years.

Trade names, which do not have legal, regulatory, contractual, competitive, economic, or other factors that limit the useful lives are considered indefinite lived assets and are not amortized but are tested for impairment on an annual basis or whenever events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. The Company tested its trade name for impairment during the three months ended June 30, 2024, as a result of certain triggering events discussed below. The Company determined that there was no impairment of its trade name as of June 30, 2024. As of June 30, 2024 and December 31, 2023, $8.7 million and $9.3 million, respectively, of intangible assets relate to a trade name that has been identified as having an indefinite life.

Goodwill

Goodwill was recorded during the year ended December 31, 2023, in connection with the Proteomedix acquisition (see Note 5). Historically, the Company was organized in two reporting units, Proteomedix and ENTADFI. The goodwill arising from the Proteomedix acquisition was assigned solely to the Proteomedix reporting unit. The Company reevaluated its reporting units during the three months ended June 30, 2024, and determined that as of April 30, 2024, ENTADFI no longer qualified as a separate reporting unit. As a result, since that date, the Company’s goodwill is assigned to a single reporting unit. Accordingly, the Company performed a quantitative analysis immediately prior to the change in reporting units, and immediately after the change in reporting units, to identify and measure the amount of impairment loss to be recognized, if any. To perform its quantitative tests, the Company compared the fair value of the reporting unit to its carrying value, and determined that the fair value of the reporting unit was less than its carrying value.

Similarly, during the three months ended March 31, 2024, the Company’s stock price and market capitalization declined, and the Company determined that this was an indicator of a potential impairment of its goodwill, and accordingly, as of March 31, 2024, the Company performed a quantitative analysis to identify and measure the amount of impairment loss to be recognized, if any. To perform its quantitative test, the Company compared the fair value of the Proteomedix reporting unit to its carrying value, and determined that the fair value of the reporting unit was less than its carrying value.

The Company measured the amount of the impairment charges as the excess of the carrying value over the fair value of the reporting unit, and recorded a corresponding impairment charge to its goodwill of approximately $10.3 million and $15.5 million during the three and six months ended June 30, 2024, respectively. 

The fair value estimate of the reporting units was derived from a combination of an income approach and a market approach, and a reconciliation to the Company’s market capitalization. Under the income approach, the Company estimated the fair value of the reporting unit based on the present value of estimated future cash flows, which the Company considers to be a Level 3 unobservable input in the fair value hierarchy. The Company prepared cash flow projections based on management’s estimates of future revenue and operating costs, taking into consideration the historical performance and the current macroeconomic, industry, and market conditions. The Company based the discount rate on the weighted-average cost of capital considering Company-specific characteristics and changes in the reporting unit’s projected cash flows. Under the market approach, the Company estimated the fair value of the reporting unit based on revenue market multiples derived from comparable companies with similar characteristics as the reporting unit, as well as an estimated control premium.

Goodwill consisted of the following as of June 30, 2024 and December 31, 2023: 

Balance as of December 31, 2023	$	55,676,142
Impairment loss		(15,453,000	)
Foreign currency translation		(3,720,810	)
Balance as of June 30, 2024	$	36,502,332

Accrued Expenses

Accrued expenses consisted of the following as of June 30, 2024 and December 31, 2023:

	June 30, 2024		December 31, 2023
Accrued compensation	$	206,722	$	487,579
Accrued research and development		378,532		616,707
Accrued professional fees		212,565		550,415
Other accrued expenses		358,180		265,849
Accrued implementation fees		—		93,787
Accrued franchise taxes		100,000		60,530
Accrued interest – related party		87,123		—
Accrued interest		95,750		—
Accrued deferred offering costs		—		125,000
Total	$	1,438,872	$	2,199,867