Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

4. Intangible Assets and Goodwill

Acquisition of Shire’s MRT Program

In December 2016, the Company entered into an asset purchase agreement (as amended in June 2018) with Shire Human Genetic Therapies, Inc. (“Shire”), a subsidiary of Takeda Pharmaceutical Company Ltd., pursuant to which Shire sold equipment to and assigned to the Company all of its rights to certain patent rights, permits, real property leases, contracts, regulatory documentation, books and records, and materials related to Shire’s mRNA therapy platform (the “MRT Program”), including its cystic fibrosis transmembrane conductance regulator program.

Intangible Assets, Net

The acquisition of Shire’s MRT Program was accounted for in accordance with the acquisition method of accounting for business combinations. The total purchase consideration transferred was allocated to the tangible and identifiable intangible assets acquired based on their estimated fair values. The tables below present the Company’s definite-lived intangible assets that are subject to amortization and indefinite-lived intangible assets:

			June 30, 2021
	Estimated Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
			(In thousands)
Definite-lived intangible assets:
MRT		6 years	$	45,992	$	(13,776	)	$	32,216
Indefinite-lived intangible assets:
IPR&D—CF		Indefinite		42,291		—			42,291
Total intangible assets, net			$	88,283	$	(13,776	)	$	74,507
			December 31, 2020
	Estimated Life		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
			(In thousands)
Definite-lived intangible assets:
MRT		6 years	$	45,992	$	(9,156	)	$	36,836
Indefinite-lived intangible assets:
IPR&D—CF		Indefinite		42,291		—			42,291
Total intangible assets, net			$	88,283	$	(9,156	)	$	79,127

Identifiable intangible assets acquired in the acquisition of Shire’s MRT Program consisted of in-process research and development (“IPR&D”), which included ongoing projects that could further the Company’s preclinical and clinical development activities related to CF and other potential rare diseases. As of the date of acquisition, the IPR&D was determined to be indefinite-lived.

Upon commencement of the Original Sanofi Agreement, the IPR&D—MRT intangible asset was reclassified from indefinite-lived to definite-lived intangible assets and the Company began amortization of this intangible asset. Amortization will be recorded over the intangible asset’s estimated life based on an economic consumption model. The Company recorded amortization expense of $2.6 million and $3.6 million during the three months ended June 30, 2021 and 2020, respectively, and $4.6 million and $4.3 million during the six months ended June 30, 2021 and 2020, respectively, related to the definite-lived MRT intangible asset. The estimated amortization expense for the remainder of the useful life is $11.8 million, $11.2 million, $11.1 million and $2.7 million for the years ending December 31, 2021, 2022, 2023 and 2024, respectively.

Indefinite-lived IPR&D is not subject to amortization, but is tested annually for impairment or more frequently if there are indicators of impairment. The Company tests its indefinite-lived IPR&D annually for impairment on October 1st. During the six months ended June 30, 2021 and 2020, the Company did not recognize any impairment charges related to indefinite-lived IPR&D.

Goodwill

The excess of the fair value of the consideration transferred over the fair value of identifiable assets acquired in the acquisition of Shire’s MRT Program was allocated to goodwill in the amount of $21.4 million. There have been no changes to the carrying amount of goodwill during the six months ended June 30, 2021. Goodwill is not subject to amortization, but is tested annually for impairment or more frequently if there are indicators of impairment. During the six months ended June 30, 2021 and 2020, the Company did not recognize any impairment charges related to goodwill.