2. Acquisitions

On December 17, 2014, the Company acquired the EV-035 series of molecules from Evolva Holding SA ("Evolva") for approximately $1.5 million in cash along with contingent value right obligations to Evolva. The EV-035 series of molecules is a series of novel small molecule broad spectrum antibiotics of the 4-oxoquinolizine class and targets bacterial type IIa topoisomerase. The lead molecule in the series, GC-072, has demonstrated protection in vivo from lethal B. pseudomallei infection when administered orally. GC-072 is being developed as a potential oral and intravenous treatment for B. pseudomallei under a three-year, $15.0 million contract with the Defense Threat Reduction Agency ("DTRA") of the U.S. Department of Defense. B. pseudomallei is a gram-negative pathogen classified by the Centers for Disease Control and Prevention ("CDC") as a Category B bioterrorism agent and a priority threat capable of being easily weaponized and disseminated. The acquisition diversifies the Biodefense segment by adding a preclinical stage product candidate that is currently being funded through preclinical development, and has been accounted for as a business combination. The Company's provisional estimates of fair values are based on the information, which has no observable market (Level 3), that was available as of the acquisition date.

The contingent value rights to Evolva are based on the novation of the DTRA contract ($4.0 million) along with the achievement of certain development ($15.0 million) and regulatory filing ($50.0 million) milestones. In addition, the Company is required to make sales-based royalty payments of between 5% - 10% through December 2036, based on levels of annual net sales.

During the six months ended June 30, 2015, based on facts that existed at the date of acquisition, the Company obtained additional information and analysis and recast the initial fair value of the total purchase consideration transferred to Evolva.

(in thousands)	Preliminary Purchase Price		Measurement Period Adjustment			Recast Preliminary Purchase Price
Amount of cash paid to Evolva Holding SA	$	1,500	$	-		$	1,500
Fair value of contingent consideration		28,200		(6,571	)		21,629
Total purchase price	$	29,700	$	(6,571	)	$	23,129

In conjunction with the revision to the total purchase price, the Company has recast its estimates of the fair value of the in-process research and development ("IPR&D") asset attributed to the EV-035 series of molecules based on this same information and analysis. The table below summarizes the recast preliminary allocation of the purchase price based upon fair values of assets acquired.

(in thousands)	Preliminary Allocation		Measurement Period Adjustment			Recast Allocation
Acquired in-process research and development assets	$	27,700	$	(17,172	)	$	10,528
Goodwill		2,000		10,601			12,601
Total purchase price	$	29,700	$	(6,571	)	$	23,129

As of the date of this filing, the valuation of acquired intangible assets and other fair value adjustments are not complete as the Company is obtaining and analyzing additional information related to the valuation report for the acquired IPR&D asset and contingent consideration. As such, the purchase price allocation is subject to change.

The IPR&D asset acquired from Evolva consisted of the EV-035 series of molecules. Management determined that the estimated acquisition-date fair value of the IPR&D asset was $10.5 million. The estimated fair value was determined using the income approach, which discounts expected future cash flows to present value. The Company estimated the fair value using a present value discount rate of 12%. The Company believes this rate is comparable to the estimated internal rate of return for the acquisition and represents the rate that market participants would use to value this IPR&D asset. The projected cash flows for EV-035 were based on key assumptions including: estimates of revenues and operating profits considering its stage of development on the acquisition date; the time and resources needed to complete the development and approval of the product candidate; the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in developing a product candidate, such as obtaining marketing approval from the U.S. Food and Drug Administration ("FDA") and other regulatory agencies; and risks related to the viability of and potential for alternative treatments in any future target markets. IPR&D assets are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts.

The Company has recorded approximately $12.6 million in goodwill related to EV-035 series of molecules acquisition, representing the purchase price paid in excess of the fair value of the IPR&D assets acquired. None of the goodwill generated is expected to be deductible for tax purposes.

The Company has recast, in this filing, the historical December 31, 2014 balance sheet line items for in-process research and development, goodwill and contingent consideration.

(in thousands)	Balance as of December 31, 2014		EV-035 Purchase Price Adjustments			Adjusted Balance as of December 31, 2014
Assets:
In-process research and development	$	77,800	$	(17,172	)	$	60,628
Goodwill		41,984		10,601			52,585
Total assets	$	119,784	$	(6,571	)	$	113,213

Liabilities:
Contingent consideration, net of current portion	$	41,170	$	(6,571	)	$	34,599
Total liabilities	$	41,170	$	(6,571	)	$	34,599

In addition, the Company has reflected the impact of the above adjustments to the disclosures in Notes 3 and 6.