Goodwill and Intangible Assets

12 Months Ended

Dec. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]


13.			Intangible Assets

Intangible Assets

The gross carrying amount and accumulated amortization of intangible assets were comprised of the following at the end of each period:


	Successor				Predecessor
	December 30, 2022				December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Amortizable:
Completed technology	$	3,041.2	$	318.7	$	10,404.0	$	5,160.4
License agreements	—		—		120.1		82.1
Trademarks	—		—		77.7		26.9


Total	$	3,041.2	$	318.7	$	10,601.8	$	5,269.4
Non-Amortizable:
Trademarks	$	—			$	35.0
In-process research and development	121.3				81.0
Total	$	121.3			$	116.0

The Company recorded impairment charges related to its Specialty Brands segment totaling $154.9 million and $63.5 million during fiscal 2021 (Predecessor) and fiscal 2020 (Predecessor), respectively. The valuation method used to approximate fair value in each of these periods was based on the estimated discounted cash flows for the respective asset. The fiscal 2021 (Predecessor) impairment charge included a partial impairment of $90.4 million related to Amitiza as the undiscounted cash flows were less than its net book value, and a full impairment of $64.5 million related to MNK-6105 and MNK-6106 as the Company decided it would no longer pursue further development of this IPR&D asset. The fiscal 2020 impairment charge was related to the Ofirmev product and was primarily driven by a change in the estimate of the asset's useful life resulting in its undiscounted cash flow being less than its net book value.

As part of fresh-start accounting, as of the Effective Date, the Company wrote-off the existing intangible assets and accumulated amortization of the Predecessor and recorded $3,152.2 million to reflect the fair value of intangible assets of the Successor (see also Note 3). Such adjustment included $100.0 million in relation to the Company's PRV that was awarded under an FDA program intended to encourage the development of certain product applications for therapies used to treat or prevent material threat medical countermeasures. On June 30, 2022, subsequent to the Effective Date, the Company completed the sale of its PRV for $100.0 million and received net proceeds of $65.0 million as the buyer remitted the remaining $35.0 million to the General Unsecured Claims Trustee pursuant to the terms of (i) the Plan, and (ii) that certain General Unsecured Claims Trust Agreement entered into in connection with the Plan.

Intangible assets of the Successor as of the Effective Date consisted of the following:


	Carrying Amount		Amortization Method	Amortization Period (in years)	Discount Rate	Segment
Amortizable completed technology:
Acthar Gel	$	1,069.0	Sum of the years digits	13.5	14.2%	Specialty Brands
Therakos	913.8		Sum of the years digits	10.0	14.0	Specialty Brands
Amitiza	84.5		Sum of the years digits	3.0	14.0	Specialty Brands
INOmax	652.9		Sum of the years digits	9.0	14.0	Specialty Brands
StrataGraft	56.8		Straight-line	11.0	14.0	Specialty Brands
Generics	71.4		Straight-line	5.0	13.3	Specialty Generics
APAP	70.5		Straight-line	20.5	13.0	Specialty Generics
	2,918.9

Non-Amortizable in-process research and development:
Terlivaz (1)	104.8		Straight-line	7.0	15.0	Specialty Brands
Generics IPR&D	128.5		Not applicable	Not applicable	14.0	Specialty Generics
	233.3
	$	3,152.2

(1)Subsequent to the Effective Date, Terlivaz was approved by the FDA and was transferred to amortizable, finite-lived completed technology. See further discussion below.

Amitiza

Beginning January 1, 2022 (Predecessor), the Company changed its amortization method used for the Amitiza intangible asset from the straight-line method to the sum of the years digits method, an accelerated method of amortization, to more accurately reflect the consumption of economic benefits over the remaining useful life of the asset. This change in amortization method resulted in additional amortization expense of $21.7 million, which impacted basic loss per share by $0.26 for the period January 1, 2022 through June 16, 2022 (Predecessor).

Terlivaz

On September 14, 2022, the Company announced that the FDA had approved Terlivaz for injection. Upon FDA approval, the Company transferred the total $104.8 million of asset value from non-amortizable indefinite-lived acquired IPR&D rights to amortizable, finite-lived completed technology and began amortization of the asset in tandem with the first commercial shipment of the product during the fourth quarter of fiscal 2022. The FDA approval gave rise to a $17.5 million milestone payable and a corresponding intangible asset was recorded, which is amortized over the useful life of the related asset that began with the first commercial shipment of the product during the fourth quarter of fiscal 2022.

Intangible asset amortization expense

Intangible asset amortization expense was as follows:


	Successor		Predecessor
	Period from June 17, 2022 through December 30, 2022		Period from January 1, 2022 through June 16, 2022		Year Ended December 31, 2021		Year Ended December 25, 2020
Amortization expense	$	318.7	$	281.8	$	581.1	$	771.2

The estimated aggregate amortization expense on intangible assets owned by the Company and being amortized as of December 30, 2022 (Successor), is expected to be as follows:


Fiscal 2023	$	509.3
Fiscal 2024	446.1
Fiscal 2025	385.1
Fiscal 2026	337.5
Fiscal 2027	284.4