Financial Instruments and Fair Value Measurement
|6 Months Ended
Dec. 31, 2023
|Financial Instruments and Fair Value Measurement [Abstract]
|Financial Instruments and Fair Value Measurement
5. Financial Instruments and Fair Value Measurement
The carrying values of cash and cash equivalents, restricted cash, accounts receivable, accounts payable and term note payable in the Company’s condensed consolidated balance sheets approximated their fair values as of December 31, 2023 and June 30, 2023 due to their short-term nature. The carrying value of the promissory note receivable, the term note payable and finance lease obligation approximated to fair value as of December 31, 2023 and June 30, 2023 as the interest rates related to the financial instruments approximated market.
The Company accounts for its investments in debt securities at fair value. The following provides a description of the three levels of inputs that may be used to measure fair value under the standard, the types of investments that fall under each category, and the valuation methodologies used to measure these investments at fair value:
The Company’s fixed assets and amortizable intangible assets are measured at fair value on a nonrecurring basis; that is, these assets are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.
The Company initially marketed the CDMO business and during the second quarter of Fiscal 2023, changed its strategy to selling the stand-alone CDMO assets, including the Facility and Equipment. These assets were assessed for impairment and the analysis resulted in the expected future cash flows from the sale of the Facility and Equipment falling below its carrying value. The Company utilized a market approach, using independent third-party appraisals, including comparable assets, in addition to bids received from prospective buyers, to estimate the fair value of the Facility and Equipment. As a result, the carrying value of the Facility and Equipment was reduced to their estimated fair values of $16,350,000 and $2,100,000, respectively. In the second quarter of Fiscal 2023, impairment charges were recorded in discontinued operations of $6,300,000 and $11,300,000 for the Facility and Equipment, respectively. In the first quarter of Fiscal 2024, the Company entered into an Purchase and Sale Agreement for the sale of the Property for approximately $17.25 million, and an additional impairment of $0.3 million was recorded in the fourth quarter of Fiscal 2023 to reflect the agreed upon sales price less estimated costs to sell. The carrying amount of the CDMO fixed assets after impairment on June 30, 2023 was approximately $16.1 million. On November 7, 2023, the Company received written notice from Majestic Realty of its election to terminate the Purchase and Sale Agreement, dated as of September 15, 2023, between Majestic Realty and iBio CDMO LLC, pursuant to which iBio CDMO had agreed to sell to Majestic Realty the Property. Upon receiving the termination notice, the Company reassessed the CDMO fixed assets for impairment which included obtaining appraisal values as of November 9, 2023. The Company utilized a market approach, using an independent third-party appraisal, including comparable assets, in addition to bids received from prospective buyers, to estimate the fair value of the Facility and concluded that fair value of the assets approximated their carrying value and no further impairment was required at that time. The CDMO Equipment was sold during the third quarter of Fiscal 2023.
During the second quarter of Fiscal 2024, the Company made the decision to auction the Facility. The Company utilized a market approach, using an independent third-party appraisal, including comparable assets, to estimate the fair value of the Facility. An additional $3.1 million fixed asset impairment was recorded the second quarter of Fiscal 2024 in discontinued operations to write down the carrying value of the Facility to fair value.
The following table shows the fair value of the Company's fixed assets included in Current Assets Held For Sale measured at fair value on a non-recurring basis as of December 31, 2023 (amounts in thousands):
During the second quarter of Fiscal 2023, the Company re-evaluated its business strategy and reviewed its product portfolio. After such review, the Company identified intellectual property, patent and licenses that would no longer be utilized and therefore were fully impaired (Level 3). See Note 12 – Intangible Assets for additional information.