Note 5 - Goodwill and Intangible Assets

Goodwill

In July 2014, the Company completed its merger with Assembly Pharmaceuticals (see Note 3). The fair value of consideration paid, common stock and assumed options, totaled $29,823,096, which, net of amounts allocated to assets and liabilities acquired at fair value, resulted in an allocation to goodwill (as adjusted) of $12,638,136. The Company only has one operating segment.

Goodwill is recorded as an indefinite-lived asset and is not amortized for financial reporting purposes but is tested for impairment on an annual basis or when indications of impairment exist. No goodwill impairment losses have been recognized. Goodwill is not deductible for income tax purposes since the tax basis is $0. The Company performed an impairment test of the carrying value of the Company’s goodwill at October 1, 2015 and December 31, 2015 and deemed there was no goodwill impairment.

The net book value of goodwill decreased by $99,214 from December 31, 2014 to December 31, 2015, as a result of the adjustment to purchase price accounting within the measurement period.

Intangible Assets

In July 2014, the Company completed its acquisition of Assembly Pharmaceuticals (see Notes 1 and 3). The Company acquired in-process research and development related to Assembly Pharmaceuticals’ technology which is an indefinite lived intangible asset. The Company performed its annual impairment test as of October 1, 2015 and deemed there was no impairment of long-lived assets during the year ended December 31, 2015.

No intangible assets existed prior to the Merger. The change in intangible assets from July 11, 2014 to December 31, 2015 is shown in the table below:

Merger on July 11, 2014	$	29,000,000
As of December 31, 2014	$	29,000,000
2015 activity		-
As of December 31, 2015	$	29,000,000