Intangible assets, in-process research and development and goodwill

12 Months Ended

Dec. 31, 2016

Intangible assets and in-process research and development [Abstract]

Intangible assets, in-process research and development

8. Intangible assets, in-process research and development and goodwill

As of October 1, 2016, the Company performed a qualitative assessment of goodwill associated with the Therapeutics and Vaccines reporting unit, Contract Manufacturing reporting unit, and the Medical Devices reporting unit. The Company completed its annual impairment assessments for its IPR&D assets and goodwill as of October 1, 2015 and determined that the fair value of the Company's IPR&D assets and reporting units was significantly in excess of carrying value. As of October 1, 2015, the Company performed a qualitative assessment of goodwill associated with the Therapeutics and Vaccines reporting unit, Contract Manufacturing reporting unit, and the Medical Devices reporting unit.

Intangible assets consisted of the following:


(in thousands)	Total
Cost basis
Balance at December 31, 2015	$	57,099
Additions		-
Balance at December 31, 2016	$	57,099

Accumulated amortization
Balance at December 31, 2015	$	(16,341	)
Amortization		(6,893	)
Balance at December 31, 2016	$	(23,234	)

Net book value at December 31, 2016	$	33,865

For the years ended December 31, 2016, 2015 and 2014, the Company recorded amortization expense of $6.9 million, $7.4 million and $7.0 million, respectively, for intangible assets, which has been recorded in operating expenses, specifically selling, general and administrative and cost of product sales and contract manufacturing. As of December 31, 2016, the weighted average amortization period remaining for intangible assets is 75 months.

Future amortization expense as of December 31, 2016 is as follows:

(in thousands)
2017	$	6,217
2018		6,217
2019		5,738
2020		5,657
2021 and beyond		10,036
Total remaining amortization	$	33,865

The following table is a summary of changes in goodwill by reporting unit:

(in thousands)	Therapeutics and vaccines		Contract manufacturing		Medical devices		Total
Cost Basis
Balance at December 31, 2015	$	24,349	$	6,736	$	9,916	$	41,001
Additions		-		-		-		-
Balance at December 31, 2016	$	24,349	$	6,736	$	9,916	$	41,001

In September 2015, the Company received data for the leading molecule in the EV-035 series of molecules, GC-072, that indicated a potential toxicity issue. The Company considered this information an indicator of impairment of the related EV-035 series of molecules IPR&D asset, and completed an impairment assessment of this asset. Based on this assessment, the Company recorded a non-cash impairment charge of $9.8 million, which is included in the Company's statement of operations as research and development expense. The remaining carrying value of the EV-035 series of molecules IPR&D asset was $0.7 million as of December 31, 2015. This remaining amount was impaired during the year ended December 31, 2016 based upon delays in the development time line. The impairment assessment was performed using the income approach which discounts expected future cash flows to present value. The projected cash flows for the EV-035 series of molecules were based on key assumptions including: estimates of revenues and operating profits considering its stage of development, the time and resources needed to complete the development and approval of the product candidate, the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in developing a product candidate, such as obtaining marketing approval from the FDA and other regulatory agencies, and risks related to the viability of and potential for alternative treatments in any future target markets.

As a result of the impairment of the EV-035 series of molecules IPR&D asset, the Company also performed an interim goodwill qualitative impairment assessment of the Vaccines and Therapeutics reporting unit, which contained $22.0 million of the goodwill reported on the Company's consolidated balance sheets as of September 30, 2015. Based on the assessment, the Company concluded that the goodwill was not impaired.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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