NOTE 5. INTANGIBLE ASSETS

Intangible assets consist of in-process research and development (“IPR&D”) not subject to amortization, and patents and license agreements subject to amortization, which were capitalized as a part of an asset acquisition or business combination.

IPR&D represents projects that have not yet received regulatory approval and are required to be classified as indefinite assets until the successful completion or the abandonment of the associated R&D efforts. Accordingly, during the development period after the date of acquisition, these assets will not be amortized until approval is obtained in one or more jurisdictions which, individually or combined, are expected to generate a significant portion of the total revenue expected to be earned by an IPR&D project. At that time, the Company will determine the useful life of the asset, reclassify the asset out of IPR&D and begin amortization. If the associated R&D effort is abandoned the related IPR&D assets will likely be written off and the Company would record an impairment loss. Intangible assets not subject to amortization include IPR&D capitalized as part of a business combination from the acquisition of Roche Madison.

Intangible assets subject to amortization include patents and a license agreement capitalized as part of the Novartis RNAi asset acquisition and a business combination from the acquisition of Roche Madison. The license agreement associated with the Novartis RNAi asset acquisition is being amortized over the estimated life remaining at the time of acquisition which was 21 years, and the accumulated amortization of the asset is approximately $49,468. The license agreements associated with the acquisition of Roche Madison are being amortized over the estimated life remaining at the time of acquisition, which was 4 years, and the accumulated amortization of the assets is approximately $202,453. The patents associated with the Novartis RNAi asset acquisition are being amortized over the estimated life remaining at the time of acquisition which was 14 years, and the accumulated amortization of the assets is approximately $517,341. Amortization expense for the three and nine months ended June 30, 2015 was $438,770 and $607,801, respectively. Amortization expense for the three and nine months ended June 30, 2014 was $13,663 and $40,990, respectively. Amortization expense is expected to be approximately $438,771 for the remainder of fiscal year 2015, $1,714,313 in 2016, $1,700,429 in 2017, $1,700,429 in 2018, $1,700,429 in 2019, $1,700,429 in 2020, and $15,363,151 thereafter.

The following table provides details on the Company’s intangible asset balances:

	Intangible assets not subject to amortization			Intangible assets subject to amortization			Total Intangible assets
Balance at September 30, 2013	$	3,117,322		$	123,191		$	3,240,513
Impairment		(2,172,387	)		-			(2,172,387	)
Amortization		-			(54,653	)		(54,653	)
Balance at September 30, 2014	$	944,935		$	68,538		$	1,013,473
Acquisition of Novartis RNAi Assets		-			24,857,214			24,857,214
Amortization		-			(607,801	)		(607,801	)
Balance at June 30, 2015	$	944,935		$	24,317,951		$	25,262,886