5. Investment in Equity Securities

Pursuant to the out-licensing agreement entered into with DCx on May 1, 2025 (Note 4), the Company received a $1.6 million 9.99% equity interest in DCx as partial consideration for the transaction. The Company has determined that its equity interest in DCx does not give the Company a controlling financial interest nor significant influence over DCx. Accordingly, the Company has accounted for its equity interest in DCx, a non-publicly traded company, as a financial instrument without a readily determinable fair value. Such interest is recorded at cost on the Company's Condensed Consolidated Balance Sheet, reflecting fair value at closing of the transaction, less impairment, if any, adjusted for observable price changes, in accordance with ASC 321, Investments - Equity.

The initial $1.6 million fair value of the investment was determined using an option-pricing method back-solve approach to estimate DCx's enterprise value and derive an implied equity value for the Company's common share equity interest in DCx from the most recent round of financing completed by DCx, modeling the significant rights and preferences of DCx's preferred and common shares, including, among others, liquidation preferences and conversion rights, and applying market based assumptions for expected term, expected volatility and risk-free rate, as well as affecting a discount for lack of marketability.

The Company evaluates its investment in equity securities for impairment whenever events or changes in circumstances indicate that the carrying amount of such investment may be impaired. If a decline in value of the investment is determined to be other than