BUSINESS COMBINATIONS AND ACQUISITIONS

9 Months Ended

Sep. 30, 2014

Business Combinations [Abstract]

BUSINESS COMBINATIONS AND ACQUISITIONS

BUSINESS COMBINATIONS AND ACQUISITIONS

On October 24, 2013, we completed our acquisition of Optimer, then a publicly-held biopharmaceutical company, upon which Optimer became our wholly-owned subsidiary. The transaction provided us with an existing commercialized product, DIFICID. Under the terms of the merger agreement, we purchased 100% of the issued and outstanding shares of Optimer common stock for: (i) $10.75 per share in cash, plus (ii) one transferable contingent value right (CVR) per share, which entitles the holder to receive an additional cash payment of up to $5.00 per CVR upon achievement of certain sales milestones for a maximum, undiscounted potential CVR payout of $253.9 million. The CVRs are listed on the NASDAQ Global Select Market under the symbol "CBSTZ," and this contingent consideration is recorded as a liability and measured at fair value based upon the market price of the CVR on the day of valuation. See Note D., "Fair Value Measurements," for additional information.

On September 11, 2013, we completed our acquisition of Trius, then a publicly-held biopharmaceutical company, upon which Trius became our wholly-owned subsidiary. The transaction provided us with SIVEXTRO, which at that time was a late-stage product candidate. The FDA approved SIVEXTRO in the U.S. on June 20, 2014, and we commercially launched SIVEXTRO in the U.S. at the end of the second quarter of 2014. Under the terms of the merger agreement, we purchased 100% of the issued and outstanding shares of Trius common stock for: (i) $13.50 per share in cash, plus (ii) one non-transferable CVR per share, which entitles the holder to receive an additional cash payment of up to $2.00 per CVR upon achievement of certain sales milestones for a maximum, undiscounted potential CVR payout of $108.4 million. The CVRs may not be sold, assigned, transferred, pledged, encumbered or disposed of, subject to limited exceptions. Contingent consideration is recorded as a liability and measured at fair value based upon significant unobservable inputs. See Note D., "Fair Value Measurements," for additional information.

The acquisition-date fair value of the consideration transferred for the Optimer and Trius acquisitions was as follows:

	Total Acquisition-Date Fair Value
	Optimer		Trius
	(in thousands)
Cash transferred	$	569,452	$	695,710
Contingent consideration	115,634		4,603
Total consideration transferred	$	685,086	$	700,313

The transactions were accounted for as business combinations under the acquisition method of accounting. Accordingly, the tangible and identifiable intangible assets acquired and liabilities assumed were recorded at fair value as of the acquisition dates, with the difference between the acquisition-date fair value of the consideration transferred recorded as goodwill.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the respective dates of acquisition, as adjusted for measurement period adjustments recorded during the three months ended September 30, 2014:

	Optimer			Trius
	October 24, 2013			September 11, 2013
	(in thousands)
Cash	$	31,466		$	22,697
Investments	42,067			39,513
Inventory	32,000			—
IPR&D	—			659,000
DIFICID intangible asset	561,000			—
Contract intangible asset	36,000			—
Deferred tax assets	116,422			93,179
Goodwill	108,360			159,440
Other assets acquired	15,942			5,522
Total assets acquired	943,257			979,351
Deferred tax liabilities	(224,062		)	(248,679		)
Other liabilities assumed	(34,109		)	(30,359		)
Total liabilities assumed	(258,171		)	(279,038		)
Total net assets acquired	$	685,086		$	700,313

The purchase price allocations were prepared on a preliminary basis and, in the case of Optimer, are subject to change as additional information becomes available concerning the fair value and tax basis of the assets acquired and liabilities assumed. During the three months ended September 30, 2014, we recorded immaterial measurement period adjustments to both the Trius and Optimer purchase price allocations, and as of September 30, 2014, the measurement period for Trius has closed. Any measurement period adjustments to the Optimer purchase price allocation will be made as soon as practicable but no later than one year from the respective date of acquisition.

Goodwill is not expected to be deductible for income tax purposes. Goodwill is recorded as an indefinite-lived asset and is not amortized but tested for impairment on an annual basis or when indications of impairment exist.