Goodwill and Intangible Assets

9 Months Ended

Sep. 28, 2018

Goodwill and Intangible Assets Disclosure [Abstract]



11.	Goodwill and Intangible Assets

The gross carrying amount and accumulated impairment of goodwill at the end of each period was as follows:



	September 28, 2018				December 29, 2017
	Gross Carrying Amount		Accumulated Impairment		Gross Carrying Amount		Accumulated Impairment
Specialty Brands	$	3,675.4	$	—	$	3,482.7	$	—

During the nine months ended September 28, 2018, the gross carrying value of goodwill within the Specialty Brands segment increased by $192.7 million. The increase was attributable to the Sucampo Acquisition, which yielded $244.7 million of goodwill, partially offset by $51.5 million of goodwill ascribed to the sale of a portion of the Company's Hemostasis business, inclusive of the PreveLeak and Recothrom products. The remaining change in goodwill was related to purchase accounting adjustments during the twelve month measurement period for previous acquisitions.

Stannsoporfin

On May 3, 2018, in a joint meeting, the FDA's Gastrointestinal Drugs Advisory Committee and Pediatric Advisory Committee (the "Advisory Committee") recommended that the risk benefit profile of the Company's stannsoporfin IPR&D product does not support approval for the treatment of newborns ≥35 weeks of gestational age with indicators of hemolysis who are at risk of developing hyperbilirubinemia (severe jaundice).

On August 9, 2018, the Company received a complete response letter from the FDA related to its new drug application ("NDA") for stannsoporfin. In the letter, the FDA provided guidance regarding areas of further evaluation for resubmitting the stannsoporfin NDA for the treatment of newborns ≥35 weeks of gestational age with indicators of hemolysis who are at risk of developing

hyperbilirubinemia. While the timing of the development program has shifted outward, the Company continues to have conversations with the FDA to determine the best path forward. The Company will continue to assess the impact of any changes to planned revenue or earnings on the fair value of the associated IPR&D asset of $113.5 million included within intangible assets, net on the unaudited condensed consolidated balance sheets as of September 28, 2018 and December 29, 2017. Refer to Note 18 for the associated impact on the Company's contingent consideration liability related to stannsoporfin.

VTS-270

VTS-270 is the Company’s development product to treat Niemann-Pick Type C, a complicated, ultra-rare neurodegenerative disease that typically presents in childhood and is ultimately fatal. The results of the Company’s recently completed registration trial for the product did not show a statistically significant separation from placebo. Neither the VTS-270 nor the placebo arm showed disease progression as would be expected for a neurodegenerative condition over 52 weeks of observation. The Company is in the process of evaluating this portion of the study in order to ensure the data was properly captured and of the highest quality. The FDA indicated to the Company at a Type A meeting in August 2018 that their view on the potential approvability will be based on the totality of data, not a single study or endpoint. Accordingly, the Company’s review of the data from the Phase 2b/3 trial, including the longer term open label portion, continues to proceed and is being assessed in combination with several other available data sources. A better understanding of the potential benefit of VTS-270 will emerge as the Company carefully considers the totality of data available and continues to work with the primary investigators and the FDA to determine the best path forward. The Company will continue to assess the impact of any changes to planned revenue or earnings on the fair value of the associated IPR&D asset of $274.5 million included within intangible assets, net on the unaudited condensed consolidated balance sheet as of September 28, 2018.

The Company annually tests the indefinite-lived intangible assets for impairment, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable by either a qualitative or income approach. Management relies on a number of qualitative factors when considering a potential impairment such as changes to planned revenue or earnings that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset.

The gross carrying amount and accumulated amortization of intangible assets at the end of each period was as follows:



	September 28, 2018				December 29, 2017
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable:
Completed technology	$	10,278.4	$	2,656.4	$	9,693.0	$	2,126.1
Customer relationships	28.7		14.0		29.5		12.2
Trademarks	75.3		13.4		75.5		10.8
Other	8.6		8.6		8.6		8.6
Total	$	10,391.0	$	2,692.4	$	9,806.6	$	2,157.7
Non-Amortizable:
Trademarks	$	35.0			$	35.0
In-process research and development	851.6				577.1
Total	$	886.6			$	612.1

Intangible asset amortization expense was as follows:



	Three Months Ended				Nine Months Ended
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017
Amortization expense	$	184.2	$	169.3	$	544.8	$	508.4

The estimated aggregate amortization expense on intangible assets owned by the Company is expected to be as follows:



Remainder of Fiscal 2018	$	184.2
Fiscal 2019	737.2
Fiscal 2020	736.9
Fiscal 2021	736.6
Fiscal 2022	609.6