Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2011

Goodwill and Intangible Assets [Abstract]

NOTE 3: GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company’s goodwill balance as of June 30, 2011 and December 31, 2010 was $13.2 million and relates to the October 31, 2008 merger whereby the Company, which was then known as Critical Therapeutics, Inc. (“Critical Therapeutics”), merged (through a transitory subsidiary) with Cornerstone BioPharma Holdings, Inc., which was deemed to be the acquiring company for accounting purposes (the “Merger”). No amount of the goodwill balance at June 30, 2011 will be deductible for income tax purposes.

Product Rights

The following tables represent product rights, net, as of June 30, 2011 and December 31, 2010 (in thousands):


	June 30, 2011
							Weighted -
	Gross						Average
	Carrying		Accumulated		Net		Amortization
	Amount		Amortization		Amount		Period (yrs.)
CUROSURF	$	107,606	$	19,728	$	87,878		10.0
FACTIVE®		7,613		2,848		4,765		4.8
SPECTRACEF®		4,505		2,227		2,278		10.0
ZYFLO®		11,500		4,279		7,221		7.1
CRTX 067		500		—		500		n/a
Other		75		75		—		4.3

Total	$	131,799	$	29,157	$	102,642		9.5


	December 31, 2010
							Weighted -
	Gross						Average
	Carrying		Accumulated		Net		Amortization
	Amount		Amortization		Amount		Period (yrs.)
CUROSURF	$	107,606	$	14,347	$	93,259		10.0
FACTIVE		7,613		2,061		5,552		4.8
SPECTRACEF		4,505		2,017		2,488		10.0
ZYFLO		11,500		3,477		8,023		7.1
Products under development		3,000		—		3,000		n/a
Other		75		69		6		4.3

Total	$	134,299	$	21,971	$	112,328		9.5

During the three months ended June 30, 2011, the Company made the decision to not pursue several product development projects that no longer align with the Company’s strategic focus and wrote off $2.5 million of related capitalized product rights. This write-off is included in amortization expense in the accompanying consolidated statements of income for the three and six months ended June 30, 2011. No portion of the impairment charge will result in future cash expenditures.

The Company amortizes the product rights related to its currently marketed products over their estimated useful lives, which range from four to ten years. As of June 30, 2011, the Company had $500,000 of product rights related to its product candidate, CRTX 067, which it expects to launch in the future. The Company expects to begin amortization upon the commercial launch of this product, which is expected to be shortly after regulatory approval. The rights will be amortized over CRTX 067’s estimated useful life.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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