GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2022

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

9. GOODWILL AND INTANGIBLE ASSETS

Goodwill

As a result of our 2013 merger with BioSante Pharmaceuticals, Inc. (“BioSante”), we recorded goodwill of $1.8 million. As a result of our acquisition of WellSpring Pharma Services Inc., we recorded additional goodwill of $1.7 million in 2018. From our acquisition of Novitium in 2021, we recorded goodwill of $24.6 million. We assess the recoverability of the carrying value of goodwill as of October 31^st of each year, and whenever events occur or circumstances change that would, more likely than not, reduce the fair value of our reporting unit below its carrying value. There have been no events or changes in circumstances that would have reduced the fair value of our reporting unit below its carrying value during the three and nine months ended September 30, 2022. No impairment losses were recognized during the three and nine months ended September 30, 2022 and 2021.

Intangible Assets

The components of net definite-lived intangible assets and net indefinite-lived intangible assets other than goodwill are as follows:

	September 30, 2022				December 31, 2021				Weighted Average
	Gross Carrying		Accumulated		Gross Carrying		Accumulated		Amortization
(in thousands)	Amount		Amortization		Amount		Amortization		Period
Definite-Lived Intangible Assets:
Acquired ANDA intangible assets	$	189,087	$	(69,824)	$	168,536	$	(54,079)	8.3	years
NDAs and product rights		242,372		(156,520)		242,372		(138,835)	9.9	years
Marketing and distribution rights		17,157		(13,069)		17,157		(12,347)	5.5	years
Non-compete agreement		624		(579)		624		(513)	7.0	years
Customer relationships		24,900		(3,261)		24,900		(593)	7.0	years
Indefinite-Lived Intangible Assets:
In process research and development		33,350		—		46,900		—	Indefinite
Total Intangible Assets, net	$	507,490	$	(243,253)	$	500,489	$	(206,367)	8.9	years

The definite-lived Abbreviated New Drug Applications (“ANDAs”), New Drug Applications (“NDAs”) and product rights, marketing and distribution rights, customer relationships, and non-compete agreement are stated at cost, net of amortization, and generally amortized over their remaining estimated useful lives, ranging from seven to 10 years, based on the straight-line method. In the case of certain NDA and product rights assets, we use an accelerated amortization method to better match the anticipated economic benefits expected to be provided. Our indefinite-lived intangible assets other than goodwill include in-process research and development (“IPR&D”) projects. IPR&D intangible assets represent the fair value of technology acquired in a business combination for which the technology projects are incomplete but have substance. When an IPR&D project is completed (generally upon receipt of regulatory approval), the asset is then accounted for as a definite-lived intangible asset. During the three months ended September 30, 2022, $13.6 million was reclassified from IPR&D to ANDA intangible assets upon completion of projects and launch of related products. During the quarter, we also added $7.2 million in ANDA intangible assets related to the July 21, 2022 transaction with Oakrum Pharma, LLC (Note 14). These assets will be amortized over a seven-year useful life.

Amortization expense was $12.5 million and $10.1 million for the three months ended September 30, 2022 and 2021, respectively. Amortization expense was $36.9 million and $29.8 million for the nine months ended September 30, 2022 and 2021, respectively.

We test for impairment of definite-lived intangible assets and indefinite-lived intangible assets when events or circumstances indicate that the carrying value of the assets may not be recoverable. No such triggering events were identified in the three months ended September 30, 2022. In the nine months ended September 30, 2022, we recognized a full impairment of a definite-lived ANDA asset with a remaining carrying value of $0.1 million. No such triggering events were identified during the three and nine months ended September 30, 2021 and therefore no impairment loss was recognized in the three and nine months ended September 30, 2021.

Expected future amortization expense is as follows:

(in thousands)
2022 (remainder of the year)	$	12,602
2023		51,792
2024		50,996
2025		48,893
2026		35,574
2027 and thereafter		64,380
Total	$	264,237

Expected amortization expense is an estimate. Actual amounts of amortization expense may differ due to timing of regulatory approvals related to IPR&D assets, additional intangible assets acquired, impairment of intangible assets, and other events.