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Sale of Hyperimmune Business
3 Months Ended
Mar. 31, 2018
Discontinued Operations And Disposal Groups [Abstract]  
Sale of Hyperimmune Business

Note 2. Sale of Hyperimmune Business

 

On August 31, 2017, Aptevo entered into a sale agreement with Saol International Limited (Saol) whereby Aptevo agreed to sell its Hyperimmune Business. The sale was completed on September 28, 2017.

 

At the closing of the sale, Saol paid an amount equal to $65.0 million, including $3.3 million which was deposited in an escrow account for the purposes of satisfying any indemnification claims brought by Saol pursuant to the LLC sale agreement. In addition, Aptevo may receive (1) an additional potential milestone payment totaling up to $7.5 million related to the achievement of certain gross profit milestones and (2) up to $2.0 million related to collection of certain accounts receivable after the closing.

 

The net gain on sale of the Hyperimmune Business totaling, $52.7 million, was calculated as the difference between the fair value of the consideration received for the Hyperimmune Business, the carrying value of the net assets transferred to Saol, less the transaction costs incurred and a working capital adjustment. The net gain on sale of the business may be adjusted in future periods by the contingent consideration based upon the achievement of certain gross profit milestones and collection of certain outstanding accounts receivable. In the first quarter of 2018, we recorded $0.1 million of these receivables, which is the amount recorded in other income from discontinued operations.

 

The following table represents the components attributable to the Hyperimmune Business presented as income from discontinued operations in the unaudited condensed consolidated statements of operations (in thousands):

 

 

 

For the Three Months Ended March 31,

 

 

 

2018

 

 

2017

 

Revenues:

 

 

 

Product sales

 

$

 

 

$

5,267

 

Total revenues

 

 

 

 

 

5,267

 

Costs and expenses:

 

 

 

 

 

 

 

 

Cost of product sales

 

 

 

 

 

2,215

 

Research and development

 

 

 

 

 

40

 

Selling, general and administrative

 

 

 

 

 

420

 

Income from operations

 

 

 

 

 

2,592

 

Other income

 

 

54

 

 

 

 

Income from discontinued operations, before income taxes

 

 

54

 

 

 

 

Income tax expense

 

 

 

 

 

(823

)

Income from discontinued operations

 

$

54

 

 

$

1,769

 

 

In the first quarter of 2018, we recorded $0.1 million due to the collection of certain accounts receivable transferred to Saol during the sale. Amortization for the Hyperimmune Business was $0.3 million for the three months ended March 31, 2017. There was no depreciation, capital expenditures or other significant operating or investing non-cash items for the three months ended March 31, 2018.