Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2017

Goodwill and Other Intangible Assets [Abstract]

11. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill and other amortizable intangible assets at December 31, 2017 and 2016 are as follows (in thousands):



	Balance as of December 31, 2015		Amortization		Impairment		Balance as of December 31, 2016		Remaining Useful Life as of December 31, 2016
Ribasphere product rights	$	15,223	$	(15,223)	$	—	$	—	—
Goodwill	$	3,580	$	—	$	—	$	3,580	—



	Balance as of December 31, 2016		Amortization		Impairment		Balance as of December 31, 2017		Remaining Useful Life as of December 31, 2017
Ribasphere product rights	$	—	$	—	$	—	$	—	—
Goodwill	$	3,580	$	—	$	—	$	3,580	—

In September 2015, the Company reviewed the estimated useful life of the Ribasphere product rights and determined that the actual lives of the Ribasphere product rights intangible asset was shorter than the estimated useful lives used for amortization purposes in the Company’s financial statements due to the continued growth of competitor products that do not necessitate the use of Ribasphere as a complement in treating the hepatitis C infection. As a result, effective September 30, 2015, the Company changed its estimate of the useful life of its Ribasphere product rights intangible asset to 1.25 years to better reflect the estimated period during which the remaining asset will generate cash flows. The Company also determined that the carrying value of the Ribasphere product rights exceeded its fair value and recorded an impairment loss of $31.3 million in September 2015.

In October 2015, the Company determined that the proportional performance method of amortization was more appropriate than straight-line amortization. The amortization of the Ribasphere product rights intangible asset based on the consumption of the economic benefit (Ribasphere gross profit), became a reliably determinable method of amortization due to the remaining asset useful life being only 1.25 years and the ability to more accurately forecast the Ribasphere market. Accordingly, Kadmon amortized the remaining book value of the intangible asset utilizing the proportional performance method starting October 1, 2015 and ending December 31, 2016.

Amortization expense is included within selling, general and administrative expenses on the Company’s consolidated statements of operations. No amortization expense related to the intangible asset was recorded in the year ended December 31, 2017, as the Ribasphere product rights intangible asset was fully amortized as of December 31, 2016. The Company recorded amortization expense related to the intangible asset of $15.2 million and $27.4 million for the years ended December 31, 2016 and 2015, respectively. The accumulated amortization of the intangible asset was $(140.7) million and at both December 31, 2017 and 2016.

- 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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