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Discontinued operations | 12 Months Ended
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Dec. 31, 2016
Discontinued operations [Abstract] |
Discontinued operations | 3. Discontinued operations On August 1, 2016, the Company completed the spin-off of Aptevo through the distribution of 100% of the outstanding shares of common stock of Aptevo to the Company's shareholders (the "Distribution"). The Distribution was made to the Company's shareholders of record as of the close of business on July 22, 2016 (the "Record Date"), who received one share of Aptevo common stock for every two shares of Emergent common stock held as of the Record Date. The Distribution was intended to qualify as a tax-free distribution for federal income tax purposes in the United States. In the aggregate, approximately 20.2 million shares of Aptevo common stock were distributed to the Company's shareholders of record as of the Record Date in the Distribution. After the Distribution, the Company no longer holds shares of Aptevo's common stock. In addition, on August 1, 2016, the Company entered into a non-negotiable, unsecured promissory note with Aptevo to provide an additional $20 million in funding, which the Company paid in January 2017. The historical balance sheet and statements of operations of Aptevo have been presented as discontinued operations in the consolidated financial statements and prior periods have been restated. Discontinued operations include results of Aptevo's business except for certain allocated corporate overhead costs and certain costs associated with transition services provided by the Company to Aptevo. These allocated costs remain part of continuing operations. Due to differences between the basis of presentation for discontinued operations and the basis of presentation as a stand-alone company, the financial results of Aptevo included within discontinued operations for the Company may not be indicative of actual financial results of Aptevo. In conjunction with the spin-off, the Company entered into a Separation and Distribution Agreement with Aptevo to effect the separation of Aptevo from the Company (the "Separation"). The Company also entered into various other agreements to provide a framework for its relationship with Aptevo after the Separation, including a manufacturing services agreement, transition services agreement, a tax matters agreement and an employee matters agreement. The Separation and Distribution Agreement with Aptevo sets forth, among other things, the assets that were transferred, the liabilities assumed, and the contracts that were assigned to each of Aptevo and the Company as part of the Separation of the Company into two companies, and provided for when and how these transfers, assumptions and assignments were to occur. Under the terms of the manufacturing services agreement, the Company agreed to provide contract manufacturing services for certain of Aptevo's products commencing on the date of the Distribution. The contract has a term of ten years. As of December 31, 2016, approximately $0.8 million of contract manufacturing services revenue is associated with the provision of services to Aptevo. Under the terms of the transition services agreement, the Company agreed to provide on an interim, transitional basis, various services, including, but not limited to, accounts payable administration, information technology services, regulatory and clinical support, general administrative services and other support services commencing on the date of the Distribution and terminating up to two years following the date of the Distribution. During the year ended December 31, 2016, approximately $1.1 million of transition services revenue has been recorded in contracts and grants. The tax matters agreement governs the respective rights, responsibilities and obligations of Aptevo and the Company with respect to taxes (including taxes arising in the ordinary course of business and taxes, if any, incurred as a result of any failure of the Distribution and certain related transactions to qualify as tax-free for U.S. federal income tax purposes), tax attributes, tax returns, tax proceedings and certain other tax matters. The employee matters agreement governs certain compensation and employee benefit obligations and allocates liabilities and responsibilities relating to employment matters, employee compensation and benefit plans and programs and other related matters, including the transfer or assignment of employees from the Company to Aptevo. The following table represents the carrying value of Aptevo's assets and liabilities distributed as part of the Separation on August 1, 2016:
(in thousands) |  | August 1, 2016 |
Assets: |  |  |
Cash and cash equivalents |  | $ | 45,000 |
Accounts receivable, net |  |  | 4,465 |
Inventories |  |  | 11,959 |
Note receivable |  |  | 20,000 |
Other current assets |  |  | 4,870 |
Current assets of discontinued operations |  |  | 86,294 |
Property, plant and equipment, net |  |  | 6,128 |
In-process research and development |  |  | 41,800 |
Intangible assets, net |  |  | 15,402 |
Goodwill |  |  | 13,902 |
Non-current assets of discontinued operations |  |  | 77,232 |
Total assets of discontinued operations |  | $ | 163,526 |
Liabilities: |  |  |  |
Accounts payable |  | $ | 6,285 |
Accrued expenses and other current liabilities |  |  | 64 |
Accrued compensation |  |  | 2,456 |
Contingent consideration |  |  | 191 |
Provisions for chargebacks |  |  | 2,341 |
Deferred revenue, current portion |  |  | 433 |
Current liabilities of discontinued operations |  |  | 11,770 |
Deferred revenue, net of current portion |  |  | 3,232 |
Other liabilities |  |  | 91 |
Non-current liabilities of discontinued operations |  |  | 3,323 |
Total liabilities of discontinued operations |  | $ | 15,093 |
The following table represents Aptevo's assets and liabilities presented as discontinued operations and classified as held-for-disposition as of December 31, 2015:
(in thousands) |  | December 31, 2015 |
Assets: |  |  |
Cash and cash equivalents |  | $ | 4,492 |
Accounts receivable, net |  |  | 6,861 |
Inventories |  |  | 16,049 |
Prepaid expenses and other current assets |  |  | 1,880 |
Current assets of discontinued operations |  |  | 29,282 |
Property, plant and equipment, net |  |  | 4,046 |
In-process research and development |  |  | 41,800 |
Intangible assets, net |  |  | 16,617 |
Goodwill |  |  | 13,902 |
Non-current assets of discontinued operations |  |  | 76,365 |
Total assets of discontinued operations |  | $ | 105,647 |
Liabilities: |  |  |  |
Accounts payable |  | $ | 8,134 |
Accrued expenses and other current liabilities |  |  | 22 |
Accrued compensation |  |  | 2,684 |
Contingent consideration, current portion |  |  | 306 |
Provisions for chargebacks |  |  | 2,238 |
Deferred revenue, current portion |  |  | 3,964 |
Current liabilities of discontinued operations |  |  | 17,348 |
Deferred revenue, net of current portion |  |  | 3,163 |
Other liabilities |  |  | 71 |
Non-current liabilities of discontinued operations |  |  | 3,234 |
Total liabilities of discontinued operations |  | $ | 20,582 |
The following table summarizes results from discontinued operations of Aptevo included in the consolidated statements of operations:
|  | Years ended December 31, |
(in thousands) |  | 2016 |  |  | 2015 |  |  | 2014 |
Revenues: |  |  |  |  |  |  |  |  |
Product sales |  | $ | 21,183 |  |  | $ | 27,947 |  |  | $ | 30,036 |
Collaborations |  |  | 187 |  |  |  | 5,511 |  |  |  | 15,636 |
Total revenues |  |  | 21,370 |  |  |  | 33,458 |  |  |  | 45,672 |
Operating expense: |  |  |  |  |  |  |  |  |  |  |  |
Cost of product sales |  |  | 11,556 |  |  |  | 16,809 |  |  |  | 16,449 |
Research and development |  |  | 18,024 |  |  |  | 34,811 |  |  |  | 46,108 |
Selling, general and administrative |  |  | 23,792 |  |  |  | 27,313 |  |  |  | 14,248 |
Loss from operations |  |  | (32,002 | ) |  |  | (45,475 | ) |  |  | (31,133 | )
Other income (expense), net: |  |  | (41 | ) |  |  | (472 | ) |  |  | - |
Loss from discontinued operations before benefit from income taxes |  |  | (32,043 | ) |  |  | (45,947 | ) |  |  | (31,133 | )
Benefit from income taxes |  |  | (21,295 | ) |  |  | (17,401 | ) |  |  | (13,608 | )
Net loss from discontinued operations |  | $ | (10,748 | ) |  | $ | (28,546 | ) |  | $ | (17,525 | )
The following table summarizes the cash flows of Aptevo included in the years ended December 31, 2016, 2015 and 2014 consolidated statements of cash flows:
|  | Years ended December 31, |
(in thousands) |  | 2016 |  |  | 2015 |  |  | 2014 |
Net cash (used in) provided by operating activities |  | $ | (10,299 | ) |  | $ | (12,716 | ) |  | $ | (14,683 | )
Net cash used in investing activities |  |  | (1,926 | ) |  |  | (1,518 | ) |  |  | (48,822 | )
Net cash provided by (used in) financing activities |  |  | 7,733 |  |  |  | 15,012 |  |  |  | 67,219 |
Net increase (decrease) in cash and cash equivalents |  | $ | (4,492 | ) |  | $ | 778 |  |  | $ | 3,714 |

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