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INTANGIBLE ASSETS
 12 Months Ended
Dec. 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
INTANGIBLE ASSETS INTANGIBLE ASSETS
Ligand License Agreement
In 2013, the Company entered into a $2.5 million agreement with Ligand for a worldwide sublicense to develop, manufacture and commercialize a drug technology compound including sparsentan (the “Ligand License Agreement”). The cost of the Ligand License Agreement, which is presented net of amortization in the accompanying Consolidated Balance Sheet in intangible assets, net, is being amortized to research and development on a straight-line basis through September 30, 2023. As consideration for the license, we are required to make substantial payments upon the achievement of certain milestones, totaling up to $114.1 million. Through 2019, we have made milestone payments to Ligand of $7.2 million under the terms of the Ligand License Agreement. Should we commercialize sparsentan or any products containing related compounds, we will be obligated to pay to Ligand an escalating annual royalty between 15% and 17% of net sales of all such products.
In September 2015, the Ligand License Agreement was amended to facilitate sub-licensing in Asia-Pacific. As consideration for the amendment the Company paid $1.0 million.
In March 2018, the Ligand License Agreement was amended to update certain development milestones set forth in the Sublicense Agreement to comport with the current development timeline for sparsentan. As consideration, the Company paid Ligand $4.6 million, which replaced the amount that would have been due upon initiation of the first Phase 3 trial for sparsentan.
Manchester Pharmaceuticals LLC
In 2014, the Company acquired intangible assets with finite lives related to the Chenodal product rights, trade names, and customer relationships with the values of $67.8 million, $0.2 million, and $0.4 million, respectively. The useful lives related to the acquired product rights, trade names, and customer relationships are expected to be approximately 16, 1 and, 10 years, respectively. Amortization of product rights, trade names and customer relationships are being recorded in selling, general and administrative expense over their respective lives.
Thiola License Agreement
The Company entered into a license agreement with Mission Pharmacal in 2014, in which the Company obtained an exclusive, royalty-bearing license to market, sell and commercialize Thiola (tiopronin) in the United States and Canada, and a non-exclusive license to use know-how relating to Thiola to the extent necessary to market Thiola. The initial term of the license is 10 years and will automatically renew thereafter for periods of one year.
The Company paid Mission an up-front license fee of $3 million and will pay guaranteed minimum royalties during each calendar year the greater of $2 million or twenty percent (20%) of the Company’s net sales of Thiola through May 28, 2024.
In November 2017, the Company amended its agreement with Mission to extend the term of the current exclusive U.S. and Canada licensing agreement by an additional five years, to 2029. The royalty rate and guaranteed minimum payment were also extended through the new agreement term. Upon execution of the amendment, the Company capitalized an additional $5.9 million in intangible assets and recorded a guaranteed minimum liability for the same amount.
In November 2018, the Company amended its agreement with Mission to remove all territorial restrictions on our license. As consideration for the expanded territory the Company paid an up-front fee of $0.3 million and will pay guaranteed minimum royalties equaling the greater of $0.1 million or 20% of our Thiola net sales generated outside of the United States during each calendar year. Upon execution of the amendment, the Company capitalized an additional $1.0 million in intangible assets and recorded a guaranteed minimum liability of $0.7 million related to this amendment.
The present value of guaranteed minimum royalties payable using a discount rate of ranging from approximately 7% to 11% based on the Company’s then borrowing rate is $14.3 million and $15.2 million as of December 31, 2019 and 2018, respectively. As of December 31, 2019, the guaranteed minimum royalty current and long-term liability was approximately $2.1 million and $12.2 million, respectively, and is recorded as Other Liability in the Consolidated Balance Sheet. As of December 31, 2018, the guaranteed minimum royalty current and long-term liability was approximately $2.1 million and $13.1 million, respectively, and is recorded as Other Liability in the Consolidated Balance Sheet. The Company has capitalized $85.8 million related to the Thiola intangible asset which consists of the up-front license fee, professional fees, present value of the guaranteed minimum royalties and any additional payments through 2019 in excess of minimum royalties. In 2019 the Company added $15.8 million to the intangible asset related to the royalties in excess of the minimum.
There are 9.4 years remaining in the term of the license agreement.
Cholbam (Kolbam) Asset Purchase
On March 31, 2015, the Company completed its acquisition from Asklepion of all worldwide rights, titles and ownership of Cholbam, including all related contracts, data assets, intellectual property, regulatory assets and the PRV. The Company capitalized $75.9 million and $7.3 million for the U.S. and international economic interest, respectively.
L-UDCA
On June 20, 2016, the Company signed a definitive agreement to purchase the rights, titles, and ownership of L-UDCA from Asklepion. The purchase included $25.5 million for an intangible asset with a definite life related to product rights for the U.S. The useful life related to the acquired product rights is expected to be approximately 17 years once the NDA is approved by the FDA. During the first quarter of 2019, the Company elected to discontinue development of the L-UDCA program, resulting in the write off of the intangible asset of $25.5 million. See Note 5 for further discussion.
Amortizable intangible assets as of December 31, 2019 (in thousands):
 
Useful Life
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book Value
Chenodal Product Rights
16
$
67,849

 
$
(24,451
)
 
$
43,398

Thiola License
15
85,824

 
(20,417
)
 
65,407

Economic Interest - U.S. revenue Cholbam
10
75,900

 
(36,071
)
 
39,829

Economic Interest - International revenue Cholbam
10
7,544

 
(3,585
)
 
3,959

Ligand License
11
7,900

 
(3,555
)
 
4,345

Manchester Customer Relationships
10
403

 
(232
)
 
171

Manchester Trade Name
1
175

 
(175
)
 
—

Internal use software
5
207

 
(116
)
 
91

Total
 
$
245,802

 
$
(88,602
)
 
$
157,200

Amortizable intangible assets as of December 31, 2018 (in thousands):
 
Useful Life
Gross Carrying
Amount
 
Accumulated
Amortization
 
Net Book Value
Chenodal Product Rights
16
$
67,849

 
$
(20,213
)
 
$
47,636

Thiola License
15
70,009

 
(14,523
)
 
55,486

Economic Interest - U.S. revenue Cholbam
10
75,900

 
(28,487
)
 
47,413

Economic Interest - International revenue Cholbam
10
7,700

 
(2,890
)
 
4,810

Economic Interest - L-UDCA (acquired IPR&D)
Indefinite
25,500

 
—

 
25,500

Ligand License
11
7,900

 
(2,397
)
 
5,503

Manchester Customer Relationships
10
403

 
(192
)
 
211

Manchester Trade Name
1
175

 
(175
)
 
—

Internal use software
5
207

 
(75
)
 
132

Total
 
$
255,643

 
$
(68,952
)
 
$
186,691


The following table summarizes amortization expense for the twelve months ended December 31, 2019, 2018 and 2017 (in thousands):
 
2019
 
2018
 
2017
Research and development
$
1,158

 
$
976

 
$
327

Selling, general and administrative
18,549

 
17,052

 
17,004

Total amortization expense
$
19,707

 
$
18,028

 
$
17,331


As of December 31, 2019, amortization expense for the next five years is expected to be as follows (in thousands):
2020
$
20,773

2021
20,773

2022
20,739

2023
20,449

2024
19,543

Thereafter
54,923

Total
$
157,200