Intangible Assets and Goodwill

6 Months Ended

Jun. 30, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

The following table presents the Company’s intangible assets at June 30, 2022 and December 31, 2021 (in thousands):


	June 30, 2022
	Gross Carrying Value		Accumulated Amortization		Total
Intangible assets:
Developed product rights for Auryxia	$	213,603	$	(123,497)	$	90,106
Total	$	213,603	$	(123,497)	$	90,106


	December 31, 2021
	Gross Carrying Value		Accumulated Amortization		Total
Intangible assets:
Developed product rights for Auryxia	$	213,603	$	(105,476)	$	108,127
Total	$	213,603	$	(105,476)	$	108,127

The Company amortizes its definite-lived intangible assets using the straight-line method, which is considered the best estimate of economic benefit, over its estimated useful life of six years. The Company recorded $9.0 million in amortization expense related to the developed product rights for Auryxia during each of the three months ended June 30, 2022 and 2021, and $18.0 million during each of the six months ended June 30, 2022 and 2021.

Goodwill

The Company's goodwill results from the acquisition of Keryx in December 2018. Goodwill was $55.1 million as of June 30, 2022 and December 31, 2021. The Company operates in one operating segment which the Company considers to be the only reporting unit. Goodwill is evaluated for impairment at the reporting unit level on an annual basis as of October 1, and more frequently if indicators are present or changes in circumstances suggest that it is more likely than not that the fair value of the reporting unit is less than its carrying amount. Events that could indicate impairment and trigger an interim impairment assessment include, but are not limited to, an adverse change in current economic or market conditions, including a significant prolonged decline in market capitalization, a significant adverse change in legal factors, unexpected adverse business conditions, and an adverse action by a regulator. During the six months ended June 30, 2022, the Company evaluated business factors, including the receipt of a CRL from the FDA for vadadustat, the Company's market capitalization as impacted by a recent decline in the Company's stock price, and the impact of the Otsuka Termination Agreement on the Company's future cash flows to determine if there were events or changes in circumstance to indicate that the fair value of the reporting unit was less than its carrying value. The Company performed qualitative interim impairment assessments of the Company's goodwill balance as of each of the three months ended March 31, 2022 and June 30, 2022. The Company determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying value and, therefore, did not perform a further quantitative interim impairment test for any period.

The Company's qualitative assessments were based on the Company's estimates and assumptions, a number of which are dependent on external factors and actual results may differ materially from these estimates. In addition, the future occurrence of events including, but not limited to, an adverse change in current economic and market conditions, including a significant prolonged decline in market capitalization, a significant adverse change in legal factors, unexpected adverse business conditions and an adverse action or assessment by a regulator could indicate potential impairment and trigger an interim impairment assessment of goodwill, which could result in an impairment of goodwill. As a result of the significance of goodwill, the Company's results of operations and financial position in a future period could be negatively impacted should an impairment test be triggered that results in an impairment of goodwill.