3. Goodwill and Intangible Assets

The Company closed the Lesinurad Transaction on June 2, 2016 (the “Acquisition Date”) with AstraZeneca pursuant to which the Company received an exclusive license to develop, manufacture and commercialize in the U.S. products containing lesinurad as an active ingredient, including ZURAMPIC and DUZALLO. In connection with the Lesinurad License, the Company is required to perform certain post-marketing activities required by the FDA. These post-marketing requirements for lesinurad are estimated to be less than $100.0 million over up to ten years from the Acquisition Date.

The Company concluded that the Lesinurad Transaction included inputs and processes that have the ability to create outputs and accordingly accounted for the transaction as a business combination in accordance with ASC 805. As such, the assets acquired and liabilities assumed have been recorded at fair value, with the remaining purchase price recorded as goodwill.

The purchase price consisted of the up-front payment to AstraZeneca of $100.0 million, which was made in June 2016, and the fair value of contingent consideration of approximately $67.9 million. In addition to the up-front payment, the Company will also pay a tiered royalty to AstraZeneca in the single-digits as a percentage of net sales of the Products in the U.S., as well as commercial and other milestones of up to $165.0 million over the duration of the Lesinurad License. During the year ended December 31, 2017, the Company paid a $15.0 million milestone to AstraZeneca related to the approval of DUZALLO by the FDA.

The final allocation of the purchase price for the Lesinurad Transaction as of the Acquisition Date, including the contingent consideration, is summarized in the following tables (in thousands):


As of the Acquisition Date:
Cash portion of consideration	$	100,000
Contingent consideration		67,885
Total purchase consideration	$	167,885


As of the Acquisition Date:
Developed technology — ZURAMPIC	$	22,000
IPR&D — DUZALLO		145,100
Goodwill		785
Net assets acquired	$	167,885

In August 2017, DUZALLO was approved by the FDA for commercialization in the U.S. As a result, the Company reclassified the IPR&D – DUZALLO asset from indefinite-lived to finite-lived as development activities were completed. The amount allocated to the finite-lived intangible asset, developed technology – DUZALLO, totaled approximately $145.1 million. Developed technology – DUZALLO is being amortized on a straight-line basis to amortization of acquired intangible assets within the Company’s condensed consolidated statement of operations over its estimated useful life of approximately 12 years, the period of estimated future cash flows from the approval date. The Company believes that the straight-line method of amortization represents the pattern in which the economic benefits of the asset are consumed. As of June 30, 2018, the Company recognized accumulated amortization of approximately $10.6 million with respect to the developed technology – DUZALLO intangible asset.

The Company considers the developed technology – ZURAMPIC intangible asset acquired to be developed technology, as it was approved by the FDA for commercialization as of the Acquisition Date. The developed technology – ZURAMPIC intangible asset is finite lived. The amount allocated to the developed technology – ZURAMPIC intangible asset is being amortized on a straight-line basis to amortization of acquired intangible assets within the Company’s condensed consolidated statements of operations over its estimated useful life of approximately 13 years, the period of estimated future cash flows from the Acquisition Date. The Company believes that the straight-line method of amortization represents the pattern in which the economic benefits of the intangible asset are consumed. As of June 30, 2018, the Company recognized accumulated amortization of approximately $3.5 million with respect to the developed technology – ZURAMPIC intangible asset.

The estimated future amortization of developed technology – ZURAMPIC and developed technology – DUZALLO intangible assets are expected to be as follows (in thousands):


	As of June 30, 2018
2018(1)	$	6,953
2019		13,905
2020		13,905
2021		13,905
2022 and thereafter		104,285
Total	$	152,953

(1)

For the six months ending December 31, 2018.

The Company tests its goodwill for impairment annually as of October 1st, or more frequently if events or changes in circumstances indicate an impairment may have occurred. Additionally, the Company evaluates its finite-lived intangible assets for impairment whenever events or changes in circumstances indicate the reduction in the fair value below their respective carrying amounts. In connection with each impairment assessment in which indicators of impairment have been identified, the Company compares the fair value of the asset or asset group as of the date of the assessment with the carrying value of the asset or asset group on the Company's condensed consolidated balance sheet. The value of the Company’s finite-lived intangible assets are based on the future expected net cash flows related to the Lesinurad Products, which include significant assumptions around future net sales and the respective investment to support these products. The Company believes that the following factors, among others, could trigger an impairment review: significant underperformance relative to historical or projected future operating results; significant changes in the manner of the Company’s use of the acquired assets or the strategy for the Company’s overall business; approval of competitive products; significant negative industry or economic trends, the Company’s ability to establish, maintain and/or expand the sales, marketing, distribution and market-access capabilities, or enter into and maintain agreements necessary for commercialization with payers and third-party providers on acceptable terms. If the estimates and assumptions about these products change significantly, including with respect to their commercial performance, the finite-lived intangible assets may become impaired and the Company may be required to recognize a material write-down in the period in which the impairment occurs. As of June 30, 2018, there was no impairment of goodwill or intangible assets (Note 14).