Goodwill and Other Intangible Assets (Notes) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Intangible Assets Intangible assets include the Company’s GALE-401 rights asset and in-process research and development (IPR&D) asset which were acquired in business combinations and recorded at their respective fair values as of the acquisition date. IPR&D is related to the NeuVax asset. Intangible assets related to GALE-401 rights and IPR&D are considered indefinite-lived intangible assets and are assessed for impairment annually or more frequently if impairment indicators exist. If the associated research and development effort is abandoned, the related assets will be written-off and the Company will record a noncash impairment loss on its consolidated statements of operations. For those compounds that reach commercialization, the IPR&D assets will be amortized over their estimated useful lives. The impairment test for indefinite-lived intangible assets is a one-step test, which compares the fair value of the intangible asset to its carrying value. If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to the excess. Based on accounting standards, it is required that these assets be assessed at least annually for impairment unless a triggering event occurs between annual assessments which would then require an assessment in the period which a triggering event occurred. The Company entered into the Merger Agreement on August 7, 2017 and the intangible assets were fair valued with the latest preliminary valuation as of October 26, 2017. The preliminary fair values of IPR&D and GALE-401 rights using the income approach. The preliminary interim valuation indicated that the carrying values for IPR&D and GALE-401 rights exceeded the respective carrying values and therefore, the Company recorded impairment losses were recorded to adjust the carrying values to approximate fair values. The impairment losses on GALE-401 rights and IPR&D are aggregated in the statement of operations in goodwill and intangible assets impairment loss. The following table presents amounts presents the gross amounts of intangible assets and the impairment losses recognized to arrive at the carrying values that approximate fair values as of September 30, 2017 (in thousands):
Goodwill represents the excess of purchase price over the fair value of net assets acquired by the Company in the acquisition of Apthera, Inc. in 2011 with their sole product candidate, NeuVax. Goodwill is not amortized, but assessed for impairment on an annual basis or more frequently if impairment indicators exist. The impairment model prescribes a simplified goodwill impairment test. Under the new guidance, goodwill impairment will be measured by the amount by which the carrying value of a reporting unit exceeds its fair value, without exceeding the carrying amount of goodwill allocated to that reporting unit. During the three and nine months ended September 30, 2017, the Company experienced a significant decline in our stock price, and our stock price continued to trend lower through September 30, 2017. Following the public announcement of the entry into the Merger Agreement on August 8, 2017, our stock price declined 27%. The Company determined that this event constituted substantive changes in circumstances that would more likely than not reduce the fair value of the Company's single reporting unit below its carrying amount. Accordingly, the Company tested its goodwill for impairment as of September 30, 2017. In determining, the fair value of the Company's sole reporting unit, the estimated fair value of our reporting unit was determined utilizing a market-based approach, as the primary input in this approach was a quoted market price in an active market. Based on our interim impairment analysis we determined that our carrying value as of September 30, 2017 exceeded the market capitalization of the Company due to the declining stock price. Based on our interim impairment analysis, we recorded a goodwill impairment charge of $0.5 million in the third quarter of 2017 to adjust goodwill to its implied fair value. After recording the goodwill impairment loss, the fair value of equity approximates the carrying value of equity. The impairment loss on goodwill was recorded to adjust the carrying value to approximate fair value. The impairment losses on GALE-401 rights and IPR&D are aggregated in the statement of operations in goodwill and intangible assets impairment loss. The following table presents amounts presents the gross amount of goodwill and the impairment losses recognized to arrive at the carrying values that approximate fair values as of September 30, 2017 (in thousands):
The following table presents the impairment losses that aggregate in the statement of operations in goodwill and intangible assets impairment loss for the three and nine months ended September 30, 2017 and 2016, respectively (in thousands):
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