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Intangible Assets, Net
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Jun. 30, 2013
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| Intangible Assets, Net | H. Intangible Assets, Net
On June 6, 2013, we acquired the MuGard Rights from Access and recorded $17.2 million to finite-lived intangible assets based on the estimated fair value of the MuGard Rights as of the Acquisition Date. Such valuations require significant estimates and assumptions including but not limited to: estimating future cash flows from product sales and developing appropriate discount and probability rates. We believe the fair values assigned to the MuGard Rights are based on reasonable assumptions, however, we cannot provide assurance that the underlying assumptions used to forecast the cash flows will materialize as we estimated and thus, our actual results may vary significantly from the estimated results.
We will amortize the MuGard Rights using an economic consumption model over ten years, which represents our best estimate of the period over which we expect the majority of the asset’s cash flows to be derived. We believe this is the best approximation of the period over which we will derive the majority of value of the MuGard Rights. We recorded an insignificant amount of amortization related to the MuGard Rights in cost of product sales in our condensed consolidated statements of operations for each of the three and six months ended June 30, 2013.
Intangible assets are reviewed for impairment at least annually and whenever facts or circumstances suggest that the carrying value of these assets may not be recoverable. Our policy is to identify and record impairment losses, if necessary, on intangible assets when events and circumstances indicate that the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets.
We expect future annual amortization expense related to our intangible asset to be as follows (in thousands):
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