Intangible assets and goodwill

Definite-lived intangibles

On April 20, 2017, the Company completed its previously announced acquisition of all rights to Emflaza pursuant to the Asset Purchase Agreement, dated March 15, 2017, and amended on April 20, 2017, by and between the Company and Marathon. The assets acquired by the Company in the Transaction include intellectual property rights related to Emflaza, inventories of Emflaza, and certain contractual rights related to Emflaza. In accordance with ASU No. 2017-01, the Company determined that substantially all of the fair value is concentrated in the Emflaza rights intangible asset and as such accounted for the transaction as an asset acquisition under ASC 805-50 and recorded an intangible asset of $148.4 million.

The Emflaza rights intangible asset is being amortized to cost of product sales over its expected useful life of approximately seven years on a straight line basis.

Marathon is entitled to receive contingent payments from the Company based on annual net sales of Emflaza beginning in 2018, up to a specified aggregate maximum amount over the expected commercial life of the asset. In accordance with the guidance for an asset acquisition, the Company will record the milestone payment when it becomes payable to Marathon and increase the cost basis for the Emflaza rights intangible asset.

For the three and nine month periods ended September 30, 2018, the Company recorded $4.5 million and $8.4 million of milestone payments, respectively, which were added to the cost basis for the Emflaza rights intangible asset and will be amortized prospectively on a straight-line basis over the remaining life of the asset. As of September 30, 2018, the $4.5 million milestone payment was recorded on the balance sheet within accrued expenses as a contingent payment payable to Marathon.

For the three and nine months ended September 30, 2018, the Company recognized amortization expense of $5.8 million and $16.8 million, respectively, related to the Emflaza rights intangible asset. The estimated future amortization of the Emflaza rights intangible asset is expected to be as follows:



	As of September 30, 2018
2018(1)	$	5,794
2019	23,172
2020	23,172
2021	23,172
2022 and thereafter	49,302
Total	$	124,612

(1) For the three months ended December 31, 2018.

Indefinite-lived intangibles

In connection with the acquisition of Agilis (Note 3), the Company acquired rights to PTC-AADC, for the treatment of AADC deficiency. AADC deficiency is a rare CNS disorder arising from reductions in the enzyme AADC that result from mutations in the dopa decarboxylase gene. The Agilis platform also includes a gene therapy asset targeting Friedreich ataxia, a rare and life-shortening neurodegenerative disease caused by a single defect in the FXN gene which causes reduced production of the frataxin protein. An investigational new drug ("IND") submission with the FDA for this program is expected in 2019. Additionally, the Agilis platform includes two other gene therapy programs targeting CNS disorders, including Angelman syndrome, a rare, genetic, neurological disorder characterized by severe developmental delays.

In accordance with the acquisition method of accounting, the Company allocated the acquisition cost for the Merger to the underlying assets acquired and liabilities assumed, based upon the estimated fair values of those assets and liabilities at the date of acquisition. The Company classified the fair value of the acquired IPR&D as indefinite lived intangible assets until the successful completion or abandonment of the associated research and development efforts. The preliminary value allocated to the indefinite lived intangible assets was $480 million.

Goodwill

As a result of the Merger on August 23, 2018, the Company recorded $100.3 million of goodwill. There were no changes to the recorded value of goodwill for the three and nine month periods ended September 30, 2018.

Collaboration and Licensing Agreement

On August 1, 2018, the Company entered into a Collaboration and License Agreement with Akcea for the commercialization of Tegsedi and Waylivra, and products containing those compounds in countries in Latin America and the Caribbean. Pursuant to the agreement, the Company paid Akcea an upfront licensing fee, which included an initial payment of $12.0 million. An additional $6.0 million is payable within 30 days after receipt of regulatory approval of Waylivra from the United States Food and Drug Administration or the European Medicines Agency, whichever occurs earlier. The Company evaluated the agreement under the guidance in ASC 730 and concluded that the acquired rights to commercialize the products had no alternative future use as of the date of the Merger. Accordingly, the $12.0 million was charged to research and development expense in the consolidated statements of operations for the three and nine month periods ended September 30, 2018. The Company plans to a file a request for marketing authorizations for Tegsedi with ANVISA in the first half of 2019. Waylivra is currently under regulatory review in the EU.