Intangible Asset, Net

9 Months Ended

Sep. 30, 2012

Intangible Asset, Net [Abstract]

INTANGIBLE ASSET, NET

6. INTANGIBLE ASSET, NET

Our intangible asset related to a settlement agreement entered into by and among us along with our former chief executive officer in his individual capacity, the Universite Montpellier II, or the University of Montpellier, Le Centre National de la Recherche Scientifique, or CNRS, the Board of Trustees of the University of Alabama on behalf of the University of Alabama at Birmingham, or UAB, the University of Alabama at Birmingham Research Foundation, or UABRF, and Emory University as described more fully in Note 9. The settlement agreement, entered into in July 2008 and effective as of June 1, 2008, included a full release of all claims, contractual or otherwise, by the parties.

Pursuant to the settlement agreement, we paid UABRF (on behalf of UAB and Emory University) a $4.0 million upfront payment and agreed to make additional payments to UABRF equal to 20% of all royalty payments received by us from Novartis based on worldwide sales of Tyzeka ^®/Sebivo^®, subject to minimum payment obligations aggregating $11.0 million. Prior to the execution of the termination agreement, we were amortizing the $15.0 million related to this settlement payment to UAB and related entities over the life of the settlement agreement, or August 2019. Under the termination agreement, we will no longer receive royalty or milestone payments from Novartis based upon worldwide product sales of Tyzeka ^®/Sebivo^® for the treatment of HBV. We concluded that the intangible asset was effectively abandoned on the effective date of the termination agreement since there are no future cash flows associated with its use and the intangible asset has no alternate use. As a result, we recorded an impairment charge of $8.0 million during the three months ended September 30, 2012.

The following table is a rollforward of our intangible asset as shown in our condensed consolidated balance sheets:

	September 30, 2012			December 31, 2011
	(In Thousands)
Beginning balance	$	8,708		$	9,843
Amortization expense		(663	)		(1,135	)
Intangible asset impairment		(8,045	)		—
Ending balance	$	—		$	8,708

As of September 30, 2012 and December 31, 2011, accumulated amortization was $15.0 million and $6.3 million, respectively.