Note 5 - Goodwill and Acquired Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Text Block]

Goodwill and acquired intangible assets

The carrying amount of goodwill

reflected in the Company’s condensed consolidated balance sheets was

$4.0

million and

$3.8

million as of

June 30, 2017

and

December 31, 2016,

respectively.

Acquired intangible assets consisted of the following as of

June 30, 2017

and

December 31, 2016:

	As of June 30 , 2017
(in thousands)	Amortization period (years)				Gross carrying amount		Accumulated Amortization		Net carrying amount
Imugen in-process research and development			Indefinite		$	9,200	$	—	$	9,200
Imugen technology - clinical			15			5,100		340		4,760
Imugen customer relationships			10			2,700		270		2,430
Imugen t rademarks / trade names			16			1,900		118		1,782
Immunetics in-process research and development			Indefinite			6,970		—		6,970
Immunetics technology - clinical			15			883		42		841
Immunetics customer relationships		5	-	11		350		40		310
Immunetics trade name			5			160		23		137
Immunetics grants			2			50		18		32
Other		5	-	10		682		564		118
Total					$	27,995	$	1,415	$	26,580

	As of December 31, 201 6
(in thousands)	Amortization period (years)				Gross carrying amount		Accumulated Amortization		Net carrying amount
Imugen in-process research and development			Indefinite		$	9,200	$	—	$	9,200
Imugen technology - clinical			15			5,100		170		4,930
Imugen customer relationships			10			2,700		135		2,565
Imugen t rademarks / trade names			16			1,900		59		1,841
Immunetics in-process research and development			Indefinite			6,970		—		6,970
Immunetics technology - clinical			15			860		9		851
Immunetics customer relationships		5	-	11		400		11		389
Immunetics trade name			5			290		9		281
Immunetics grants			2			50		4		46
Other		5	-	10		632		518		114
Total					$	28,102	$	915	$	27,187

The weighted average amortization period of our finite-lived intangible assets is

years.

Amortization expense related to acquired intangible assets is estimated at

$1.0

million per year for the year ending

December 31, 2017

and

0.9

million per year for each of the years ending

December 31, 2018

through

December 31, 2021.

The acquired IPR&D assets include

$9.2

million for IPR&D acquired in conjunction with the Imugen acquisition and

$7.0

million for IPR&D acquired in conjunction with the Immunetics acquisition.

IPR&D acquired in a business combination is capitalized at fair value and is subject to impairment testing at least annually until the underlying project is completed. Once the project is completed, the carrying value of IPR&D is amortized over the estimated useful life of the asset. Post-acquisition research and development expenses related to the acquired IPR&D are expensed as incurred.

The acquisition of Immunetics was accounted for under the acquisition method of accounting and the purchase price allocation was provisionally prepared during the

fourth

quarter of

2016.

In the

second

quarter of

2017,

the Company finalized the accounting for the acquisition and recorded the following measurement period adjustments:

●

the fair value of the acquired inventory decreased by

$45,000

with corresponding increases to the clinical technology asset of

$22,500

and to goodwill of

$22,500

●

the fair value of the acquired customer relationships decreased by

$50,000

with a corresponding increase to goodwill

●

the fair value of

the Immunetics trade name decreased by

$130,000

with a corresponding increase to goodwill

The impact on the current-period

condensed consolidated statement of operations was a

$44,000

reduction in cost of product revenue, a

$26,000

reduction in sales and marketing expense and a

$58,000

increase in income tax expense.

- 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.

+ References + Details