Absci CorpABSI
Absci Corp Goodwill & Intangibles Disclosure
Goodwill and intangibles, net
As of December 31, 2024 and 2023, there was no goodwill balance recorded on the consolidated balance sheets.
During the year ended December 31, 2023, the Company performed an interim qualitative impairment assessment of goodwill and concluded that the duration and extent of the sustained decline in the Company’s stock price and resulting market capitalization below cash and short-term investments for a period of time within the three months ended June 30, 2023 were indicators of impairment that triggered a quantitative assessment.
The Company performed a quantitative impairment evaluation of goodwill as of June 30, 2023 utilizing both income and market approaches. The income approach utilized the estimated discounted cash flows for the single reporting unit while the market approach utilized comparable company information. The fair value of equity was derived using a discount rate commensurate with the related risk and an estimate of a control premium applied to the Company’s implied enterprise value. The discounted cash flow method requires significant judgments, including estimation of future cash flows, which is dependent on internally developed forecasts, estimation of the long-term rate of growth for the business, and determination of weighted average cost of capital. The models used to estimate the fair value of the single reporting unit are reflective of significant assumptions, including the following:
•Forecasted revenues from current and future programs;
•Probability of the Company’s partners electing licensing options for clinical development, clinical success, and obtaining regulatory approval;
•Forecasted research and development and general and administrative expenses to sustain forecasted program growth which are reflective of efficiencies gained as the business and platform evolve;
•A discount rate reflecting the Company’s weighted average cost of capital and specific entity risk; and
•A control premium based upon recently observed transactions in technology platform-based companies in the life science industry.
The estimates and assumptions used to determine fair value include determinations that are categorized as Level 3 in the fair value hierarchy due to use of internal projections and unobservable measurement inputs. The assumptions used in the Company’s impairment analysis are inherently subject to uncertainty and the Company notes that small changes in these assumptions could have a significant impact on the concluded value. In order to further validate the reasonableness of the fair value concluded for the reporting unit, a reconciliation to market capitalization was performed by estimating a reasonable implied control premium and other market factors. The control premium was estimated based upon control premiums observed in recent comparable market transactions. The Company reconciled the estimated fair value of the reporting unit utilizing the market capitalization based on the stock price as of June 30, 2023.
The Company concluded the fair value of the single reporting unit was less than its carrying value and that the Company’s recorded goodwill was fully impaired as of June 30, 2023. The Company recognized a non-cash, pre-tax goodwill impairment charge of $21.3 million during the three months ended June 30, 2023 reported as goodwill impairment on the consolidated statement of operations and comprehensive loss.
Intangible assets are as follows (in thousands):
| December 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| Gross Assets | Accumulated Amortization | Net | Gross Assets | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||
AI Engine | 2,507 | (1,977) | 530 | 2,507 | (1,477) | 1,030 | |||||||||||||||||||||||||||||
| Monoclonal antibody library | 46,300 | (8,270) | 38,030 | 46,300 | (5,955) | 40,345 | |||||||||||||||||||||||||||||
| Developed software platform and the related methods patents | 8,300 | (1,977) | 6,323 | 8,300 | (1,422) | 6,878 | |||||||||||||||||||||||||||||
| Intangible assets, net | $ | 57,107 | $ | (12,224) | $ | 44,883 | $ | 57,107 | $ | (8,854) | $ | 48,253 | |||||||||||||||||||||||
Amortization expense related to intangible assets was $3.4 million for the years ended December 31, 2024 and 2023 and is reflected within depreciation and amortization expense on the consolidated statements of operations and comprehensive loss.
Future amortization expense for the Company’s intangible assets as of December 31, 2024 is estimated as follows (in thousands):
| Years Ending December 31: | ||||||||
| 2025 | $ | 3,370 | ||||||
| 2026 | 2,897 | |||||||
| 2027 | 2,868 | |||||||
| 2028 | 2,868 | |||||||
| 2029 | 2,868 | |||||||
About Goodwill & Intangibles Disclosures
Goodwill and intangible asset disclosures reveal the premium paid in acquisitions and how management assesses whether that premium retains its value. Since goodwill is no longer amortized under US GAAP, the annual impairment test is the only mechanism that adjusts carrying values downward — making the assumptions behind that test critically important for investors.
Key signals: a history of goodwill impairments suggests management consistently overpays for acquisitions. Watch the gap between reporting unit fair value and carrying amount — when fair value exceeds carrying amount by less than 10-20%, a small decline in business performance could trigger a write-down. For finite-lived intangibles, examine useful life assumptions across customer relationships, technology, and trade names; aggressive estimates inflate near-term earnings. Compare total intangibles-to-total-assets ratios against peers to assess acquisition dependency. Rising goodwill as a percentage of equity can signal balance sheet fragility.