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Identified Intangible Assets and Goodwill
12 Months Ended
Dec. 31, 2012
Identified Intangible Assets and Goodwill [Abstract]  
Identified Intangible Assets and Goodwill
6.           Identifiable Intangible Assets and Goodwill
 
In 2011, the Company recorded a non-cash impairment loss of $26.0 million related to the impairment of in-process research and development and goodwill.  The impairment resulted from the fact that in August 2011, subsequent to our phase 2 trials and prior to starting a phase 3 trial, the Company announced that the FDA placed a clinical hold on its phase 3 clinical trials for ARIKACE in CF patients with Pseudomonas lung infections and in patients with NTM lung infections. A clinical hold is a notification issued by the FDA to the sponsor to delay a proposed clinical trial or suspend an ongoing clinical trial. The clinical holds were subsequently lifted in the first half of 2012.
 
The Company's management determined the clinical hold was an indicator of possible impairment of in-process research and development and goodwill assets due to the associated additional costs, and, therefore, interim impairment testing was performed as of September 30,2011. Using the income approach the impairment analysis compared the fair value of the in-process research and development intangible assets with their respective carrying amounts.  This approach calculates fair value by estimating future cash flows attributable to the assets and then discounting these cash flows to a present value using a risk-adjusted discount rate. A market based valuation approach was not considered given a lack of revenues and profits for the Company. This approach requires significant management judgment with respect to unobservable inputs such as future volume, revenue and expense growth rates, changes in working capital use, appropriate discount rates and other assumptions and estimates. The estimates and assumptions used are consistent with the Company's business plans. Additionally, the carrying value of the business exceeded its fair value, and accordingly we performed the second step of the impairment test by comparing the carrying value of goodwill to its implied fair value.   The impairment review resulted in impairment losses for both assets. Non-cash charges of $19.7 million and $6.3 million were recognized for the decline in the fair value of in-process research and development and goodwill assets, respectively, as of September 30,2011.  The non-cash charge of $26.0 million was recorded as an impairment loss and classified as an operating expense in the Consolidated Statements of Comprehensive Loss. 

We believe there are no indicators of impairment of the Company's in-process research and development intangible assets as of December 31,2012.