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Intangible assets and goodwill

12 Months Ended

Dec. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

18. Intangible assets and goodwill

Definite-lived intangibles

Definite lived intangible assets consisted of the following at December 31, 2022 and 2021:


		Ending Balance at				Reclass from				Foreign		Ending Balance at
Definite lived		December 31,				Indefinite Lived to				currency		December 31,
intangibles assets, gross		2021		Additions		Definite Lived		Impairment		translation		2022
Emflaza	$	291,875	$	128,378	$	—	$	—	$	—	$	420,253
Waylivra		9,904		—		—		—		(588)		9,316
Tegsedi		4,060		3,240		—		—		(191)		7,109
Upstaza		—		—		89,550		—		—		89,550
Total definite lived intangibles, gross	$	305,839	$	131,618	$	89,550	$	—	$	(779)	$	526,228


		Ending Balance at				Foreign		Ending Balance at
Definite lived		December 31,				currency		December 31,
intangibles assets, accumulated amortization		2021		Amortization		translation		2022
Emflaza	$	(154,594)	$	(111,429)	$	—	$	(266,023)
Waylivra		(1,821)		(1,020)		90		(2,751)
Tegsedi		(1,083)		(685)		59		(1,709)
Upstaza		—		(3,420)		—		(3,420)
Total definite lived intangibles, accumulated amortization	$	(157,498)	$	(116,554)	$	149	$	(273,903)

Total definite lived intangibles, net							$	252,325

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 records the milestone payment when it becomes payable to Marathon and increase the cost basis for the Emflaza rights intangible asset. For the year ended December 31, 2022, milestone payments of $128.4 million were recorded, which included a $50.0 million sales-based milestone. These payments are being amortized over the remaining useful life of the Emflaza rights asset on a straight line basis. As of December 31, 2022, a milestone payable to Marathon of $32.8 million was recorded on the balance sheet within accounts payable and accrued expenses.

Akcea is also entitled to receive royalty payments subject to certain terms set forth in the Tegsedi-Waylivra Agreement related to sales of Waylivra and Tegsedi. In accordance with the guidance for an asset acquisition, the Company records royalty payments when they become payable to Akcea and increase the cost basis for the Waylivra and Tegsedi intangible assets, respectively. For the year ended December 31, 2022, royalty payments of $3.2 million were recorded for Tegsedi. As of December 31, 2022, a royalty payable of $0.5 million for Tegsedi was recorded on the balance sheet within accounts payable and accrued expenses.

For the years ended December 31, 2022, 2021, and 2020, the Company recognized amortization expense of $116.6 million, $54.8 million, and $36.9 million respectively, related to the Emflaza rights, Waylivra, Tegsedi, and Upstaza intangible assets.

The estimated future amortization of the Emflaza rights, Waylivra, Tegsedi, and Upstaza intangible assets is expected to be as follows:


	As of December 31, 2022
2023	$	142,324
2024		30,609
2025		9,352
2026		9,352
2027 and thereafter		60,688
Total	$	252,325

The weighted average remaining amortization period of the definite-lived intangibles as of December 31, 2022 is 4.9 years.

Indefinite-lived intangibles

Indefinite lived intangible assets consisted of the following at December 31, 2022 and 2021:


		Ending Balance at				Reclass from				Foreign		Ending Balance at
Indefinite lived		December 31,				Indefinite Lived to				currency		December 31,
intangibles assets		2021		Additions		Definite Lived		Impairment		translation		2022
Upstaza	$	358,700	$	—	$	(89,550)	$	(33,384)	$	—	$	235,766
PTC-FA		112,500		—		—		—		—		112,500
PTC-AS		105,300		—		—		—		—		105,300
Total indefinite lived intangibles	$	576,500	$	—	$	(89,550)	$	(33,384)	$	—	$	453,566

Total intangible assets, net											$	705,891

In connection with the acquisition of the Company’s gene therapy platform from Agilis, the Company acquired rights to Upstaza, 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 gene therapy platform also includes PTC-FA, an 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. Additionally, the gene therapy platform includes two other programs targeting CNS disorders, including PTC-AS for 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 Agilis 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 value allocated to the indefinite lived intangible assets was $576.5 million. With the approval of Upstaza by the European Commission in July 2022, $89.6 million was reclassified from indefinite lived intangible assets to definite lived intangible assets.

The Company performed an annual test for its indefinite-lived intangible assets as of October 1, 2022. In the fourth quarter of 2022, the Company recorded a partial impairment on the Upstaza indefinite lived intangible asset of $33.4 million, which is recorded as intangible asset impairment in the statement of operations. The impairment was related to a decrease in projected cash flows due to refinements in current market assumptions and the timing of patient treatments. To calculate the impairment amount, the Company utilized a discounted cash flow model under the income method, which primarily utilized Level 3 fair value inputs. The discount rate utilized in the discounted cash flow model was 15%, and the weighted average probability of success was 88%. As of December 31, 2022, the remaining balance of the Upstaza indefinite lived intangible asset is $235.8 million. No impairments were identified for the Company’s additional gene therapy portfolio pertaining to PTC-FA and PTC-AS.

Goodwill

As a result of the Agilis Merger on August 23, 2018, the Company recorded $82.3 million of goodwill. There have been no changes to the balance of goodwill since the date of the Agilis Merger. Accordingly, the goodwill balance as of December 31, 2022 and 2021 was $82.3 million. The Company performed an annual impairment test for goodwill as of October 1, 2022. The Company’s single reporting unit had a negative carrying value and thus the Company determined there was no impairment of goodwill.