Intangible Assets and Goodwill
Intangible assets and goodwill, net of accumulated amortization, are as follows:
|
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | December 31, 2013 | | December 31, 2012 |
| Estimated
Life (months) | | Cost | | Accumulated
Amortization | | Net | | Cost | | Accumulated
Amortization | | Net |
Licenses | 72-96 | | $ | 28,507 |
| | $ | (18,719 | ) | | $ | 9,788 |
| | $ | 23,688 |
| | $ | (13,152 | ) | | $ | 10,536 |
|
Patents | 84 | | 10,517 |
| | (9,100 | ) | | 1,417 |
| | 10,517 |
| | (6,827 | ) | | 3,690 |
|
Purchased technology | 144 | | — |
| | — |
| | — |
| | 5,000 |
| | (798 | ) | | 4,202 |
|
Acquired IPR&D | Indefinite | | 598,514 |
| | — |
| | 598,514 |
| | 628,250 |
| | — |
| | 628,250 |
|
Total | | | $ | 637,538 |
| | $ | (27,819 | ) | | $ | 609,719 |
| | $ | 667,455 |
| | $ | (20,777 | ) | | $ | 646,678 |
|
Goodwill | Indefinite | | $ | 256,974 |
| | $ | (2,901 | ) | | $ | 254,073 |
| | $ | 256,546 |
| | $ | (2,901 | ) | | $ | 253,645 |
|
Amortization of our intangible assets was approximately $8,257, $5,660 and $5,087 for the years ended December 31, 2013, 2012 and 2011, respectively. Assuming no changes in the gross cost basis of intangible assets, the estimated amortization of intangible assets for the next five fiscal years is as follows:
|
| | | |
Year | |
2014 | $ | 11,160 |
|
2015 | 42 |
|
2016 | 3 |
|
2017 | — |
|
2018 | — |
|
As of December 31, 2013, we have recorded indefinite-lived intangible assets of $598,514 of purchased IPR&D from prior business acquisitions. As of December 31, 2013, except as noted below, there have been no significant changes that would impact the carrying value of IPR&D since the date of acquisition.
During the fourth quarter of 2013, we reviewed for impairment the value of an early stage, Phase I indefinite-lived intangible asset related to the Taligen acquisition. We initiated such review as part of our annual impairment testing and based our evaluation on preliminary scientific findings of a Phase I clinical trial which led us to reassess the development of this acquired asset. The fair value of this IPR&D asset was determined using the income approach, which used significant unobservable (Level 3) inputs. These unobservable inputs included, among other things, risk-adjusted forecast future cash flows to be generated by this asset, contributory asset charges for other assets employed in this IPR&D project and the determination of an appropriate discount rate based on a weighted average cost of capital of 21.5% to be applied in calculating the present value of future cash flows. Based on these factors, the estimated value that can be obtained from a market participant in an arm's length transaction of $3,464 was lower than the carrying amount. We also reviewed for impairment the value of purchased technology associated with the Taligen acquisition and determined the estimated value to be de minimis. As a result, we recognized an impairment charge of $33,521 to write-down these assets to fair value, which was recorded in operating expenses in our consolidated statement of operations for the year ended December 31, 2013.
During the third quarter of 2012, we reviewed for impairment the value of an early stage, preclinical indefinite-lived intangible asset related to the Taligen acquisition. We initiated such review based on our evaluation of negative scientific findings associated with our development of a different asset for the treatment of age-related macular degeneration, the likelihood of success for ophthalmic use and the value that can be obtained from a market participant in an arm's length transaction. These developments led us to deprioritize the development of this acquired asset. As a result, we recognized an impairment charge of $26,300 to write-down this asset to fair value, which was determined to be de minimis based on the value of the asset to a market participant in an arm's length transaction. The fair value of this IPR&D asset was determined using the income approach, which used significant unobservable (Level 3) inputs. These unobservable inputs included, among other things, risk-adjusted forecast future cash flows to be generated by this asset, contributory asset charges for other assets employed in this IPR&D project and the determination of an appropriate discount rate based on a weighted average cost of capital of 22.0% to be applied in calculating the present value of future cash flows. The impairment charge was recorded in operating expenses in our consolidated statement of operations for the year ended December 31, 2012.
The following table summarizes the changes in the carrying amount of goodwill:
|
| | | |
Balance at December 31, 2011 | $ | 79,639 |
|
Goodwill resulting from the Enobia acquisition | 174,006 |
|
Balance at December 31, 2012 | 253,645 |
|
Change in goodwill associated with prior acquisition | 428 |
|
Balance at December 31, 2013 | $ | 254,073 |
|
