Goodwill and Intangible Assets, Net

12 Months Ended

Dec. 31, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

8. Goodwill and Intangible Assets, Net

As part of the acquisition of Hermes on October 6, 2009 (the “Acquisition Date”), the Company recognized acquired IPR&D of $7.0 million related to several development programs: an antibody-targeted nanotherapeutic that contains a chemotherapy drug, a nanotherapeutic that contains a chemotherapy drug and other early-stage preclinical programs in the amounts of $2.8 million, $3.4 million and $0.8 million, respectively. The Company also acquired intangible assets of $3.2 million related to core nano-carrier technology. These values were determined at the time of acquisition by estimating the costs to develop the acquired IPR&D into commercially viable products, estimating the net cash flows from such projects and discounting the net cash flows back to their present values. The probability of success factors and discount rates used for each project considered the uncertainty surrounding the successful development of the acquired IPR&D.

During the fourth quarter of 2015, upon the approval of ONIVYDE by the FDA, the Company reclassified the acquired IPR&D asset related to the nanotherapeutic that contains a chemotherapy drug to definite-lived intangible assets and commenced amortization. This definite-lived ONIVYDE intangible asset is amortized on a straight-line basis through 2028. Amortization of the acquired IPR&D asset related to the antibody-targeted nanotherapeutic that contains a chemotherapy drug has not commenced as of December 31, 2015. The deprioritization and delay of the other early-stage preclinical programs during the year ended December 31, 2013 resulted in an impairment charge of $0.8 million recognized during the third quarter of 2013. The core nano-carrier technology intangible asset is being amortized on a straight-line basis over a period of ten years, which is management’s best estimate of the useful life of this technology. The weighted-average remaining amortization period for the Company’s intangible assets subject to amortization is approximately 10.6 years as of December 31, 2015.

Changes in the carrying value of the nano-carrier technology intangible asset, the ONIVYDE intangible asset, IPR&D and goodwill for the years ended December 31, 2015 and 2014 were as follows:


(in thousands)	Nano-carrier technology intangible asset			ONIVYDE intangible asset			IPR&D			Goodwill
Balance, December 31, 2013	$	1,845		$	—		$	6,200		$	3,605
Amortization		(320	)		—			—			—

Balance, December 31, 2014		1,525			—			6,200			3,605
Reclassification of IPR&D to definite-lived intangible assets		—			3,400			(3,400	)		—
Amortization		(320	)		(50	)		—			—

Balance, December 31, 2015	$	1,205		$	3,350		$	2,800		$	3,605

Amortization expense is expected to be as follows for the next five-year period:


Years Ended December 31,	(in thousands)
2016	$	578
2017		578
2018		578
2019		503
2020		258

- 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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