Veloce

6 Months Ended

Sep. 30, 2012

Veloce [Abstract]

VELOCE

4. VELOCE

On June 20, 2012 (the “Closing Date”), the Company completed its acquisition of Veloce pursuant to the terms of the Agreement and Plan of Merger, entered into as of May 17, 2009 (the “Initial Agreement”), as amended by Amendment No. 1 to Agreement and Plan of Merger, entered into as of November 8, 2010 (the “First Amendment”), and Amendment No. 2 to Agreement and Plan of Merger, entered into as of April 5, 2012 (the “Second Amendment” and, collectively with the Initial Agreement and the First Amendment, the “Merger Agreement”). The First Amendment was amended, restated and replaced in its entirety by the Second Amendment.

The terms of the Merger Agreement include the payment of initial consideration of up to $60.4 million, payable in shares of Company common stock and/or cash (at the Company’s election) to holders of Veloce common stock options that were vested on the Closing Date, to Veloce stockholders and holders of Veloce stock equivalents. Following the closing, the Company paid part of the consideration by issuing approximately 2.4 million shares of its common stock and paying approximately $12.7 million in cash, with the balance of the $60.4 million to be paid, using a similar ratio of Company shares and cash, over the next two to three years upon the satisfaction of additional vesting requirements. During the three and six months ended September 30, 2012, as part of the above arrangement, the company issued 0.2 million shares and 2.6 million shares respectively, and paid approximately $2.1 million and $14.8 million in cash, respectively.

For accounting purposes, the consideration payable for the acquisition of Veloce is considered compensatory and will be recognized as research and development expense. Recognition of these costs will occur when certain development and performance milestones become probable of achievement and earned. As of March 31, 2012, one significant performance and development milestone set forth under the Merger Agreement was considered probable of achievement and the Company therefore recorded the initial consideration of $60.4 million, which was recognized as research and development expense. During the three and six months ended September 30, 2012, the Company recognized an additional $2.3 million and $4.7 million, respectively, of research and development expense in connection with progress achieved against certain product development milestones included in the Second Amendment. No other product development milestones included in the Merger Agreement were considered probable of achievement as of September 30, 2012.

The Second Amendment further provides for potential payments of additional merger consideration contingent upon the achievement of certain post-closing product development milestones relating to Company products on which Veloce has worked. The additional payments would be payable in partial amounts upon the achievement of each such milestone. The Company currently expects aggregate additional payments to range from a minimum of $4.7 million to a maximum of $75 million, based on the Company’s current expectations relating to the achievement of such product development milestones. Any such additional payments may be payable in shares of Company common stock and/or cash (at the Company’s election).