Acquisition and Acquisition-Related Items

3 Months Ended

Mar. 31, 2013

Acquisition and Acquisition-Related Items

3. Acquisition and Acquisition-Related Items

The Company accounted for the November 2012 termination and transition agreement and the stock purchase agreement with GSK as an equity purchase and an acquisition of assets in accordance with the provisions of the Business Combinations topic of the Codification. Under the provisions of the Business Combinations topic, the acquisition date for a business is the date on which the Company obtains control of the acquiree. The Company will obtain control of the Horizant business at the end of the transition period, or May 1, 2013. Accordingly on November 8, 2012, the transaction did not meet the definition of a business combination, and the Company accounted for the transaction as an acquisition of assets and recorded $13,557,000 for the right to the Horizant business. The value of the Horizant business, based on a discounted cash flow analysis, is the present value of the Company’s estimated future cash flows attributable to the Horizant business.