Note 3 - Intangible Assets

Our gross intangible assets consisted primarily of costs we capitalized related to the acquisition of license rights to PCS499 from CoNCERT Pharmaceuticals. Inc. (“CoNCERT”) for shares of our common stock that had an issue date fair value of $8.0 million, $1,782 in transaction costs and $3,037,147 associated with the initial recognition of an offsetting deferred tax liability related to the acquired temporary difference for an asset purchased that is not a business combination and has a tax basis of $1,782 in accordance with ASC 740-10-25-51 Income Taxes. In accordance with ASC Topic 730, Research and Development, we capitalized the costs of acquiring the exclusive license rights to PCS499 from CoNCERT, as the exclusive license rights represented intangible assets to be used in research and development activities that management believed had future alternative uses.

Intangible assets at December 31, 2022 and 2021 consisted of the following:

 Summary of Intangible Assets

Amortization expense was $788,495 and $790,488 for the years ended December 31, 2022 and 2021, respectively and is included within research and development expense in the accompanying consolidated statements of operations.

We review amounts previously capitalized for impairment whenever events or changes in circumstances indicate to us that the carrying value of the assets might not be recoverable. In May 2021, we enrolled our first patient in our Phase 2B trial for the treatment of ulcerative NL with PCS499. Although we initiated a number of recruitment programs to increase the enrollment of patients in this study, we were only able to recruit four patients by December 31, 2022. We have experienced extremely slow enrollment in the study given the extreme rarity of the condition (rarer than reported in the literature), the impact of COVID-19, and the reluctance of patients to be in a clinical study. We will complete the study for those currently enrolled, but in February 2023, we suspended further enrollment in the PCS499 trial for uNL, effectively terminating the trial. At December 31, 2022, as a result of our decision to halt future enrollment and terminate our PCS499 clinical trial for uNL, we recognized an impairment for remaining book value of the intangible asset of $7.3 million, thereby reducing the value of our intangible asset to zero. Our assessment was based on the uncertainty of determining whether we will be able to out-license PCS499 or enter into a partnering/collaborating arrangement for its future development. We believe the rarity of the disease, along with other factors, makes enrollment not feasible for us due to time and cost constraints. We are evaluating our options to monetize this asset.