Quarterly report pursuant to Section 13 or 15(d)

Goodwill and In-Process R&D

v3.19.3
Goodwill and In-Process R&D
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and In-Process R&D

7. Goodwill and In-Process R&D


Goodwill of $2.2 million and in-process R&D of $5.9 million were recorded in connection with the acquisition of Pelican, as described in Note 2. The Company performs an annual impairment test at the reporting unit level. However, during the three months ended September 30, 2019, the Company experienced a sustained decline in the quoted market price of the Company’s common stock and as a result the Company determined that as of September 30, 2019 it was more likely than not that the carrying value of these acquired intangibles exceeded their estimated fair value.  Accordingly, the Company performed an interim impairment analysis as of that date using the income approach. This analysis required significant judgments, including primarily the estimation of future development costs, the probability of success in various phases of its development programs, potential post-launch cash flows and a risk-adjusted weighted average cost of capital. Pursuant to ASU 2017-04, the Company recorded a goodwill impairment charge for the excess of the reporting unit’s carrying value over its fair value.  During the three and nine months ended September 30, 2019, goodwill with a total carrying value of $2.2 million was written down to its estimated fair value of $1.5 million and an impairment charge of $0.7 million was recorded. The Company determined that the fair value of the IPR&D was in excess of its carrying value as of September 30, 2019 and therefore no impairment was recorded for the IPR&D.