The Company acquired Breethe, a Maryland corporation on April 24, 2020. Breethe is engaged in research and development of an ECMO system that we aim to complement and expand the Company’s product portfolio to more comprehensively serve the needs of patients whose lungs can no longer provide sufficient oxygenation, including patients suffering from cardiogenic shock, or respiratory failure. The Company acquired Breethe for $55.0 million in cash, with additional potential payouts up to a maximum of $55.0 million payable based on the achievement of certain technical, regulatory and commercial milestones.

The acquisition of Breethe was accounted for as a business combination. The purchase price for the acquisition has been allocated to the assets acquired and liabilities assumed based on their estimated fair values.

	Total Acquisition Date Fair Value (in thousands)
Cash and other considerations	$	57,850
Contingent consideration		13,300
Total consideration transferred	$	71,150

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed on the date of acquisition (in thousands):

Acquired assets:
Cash and cash equivalents	$	3,404
Property and equipment		744
Goodwill		44,485
In-process research and development		27,000
Other assets acquired		895
Total assets acquired		76,528
Liabilities assumed:
Accounts payable and other liabilities		1,562
Deferred tax liabilities		3,816

Net assets acquired	$	71,150

Goodwill is calculated as the difference between the acquisition-date fair value of the consideration transferred and the fair values of the assets acquired and liabilities assumed. The goodwill is not deductible for income tax purposes.

IPR&D from the acquisition of Breethe represents the estimated fair value of the Breethe ECMO technology which had not reached commercial technological feasibility nor had alternative future use at the time of the acquisition. During the third quarter of fiscal year 2021, upon receiving FDA 510(k) clearance of the OXY-1 System, in October 2020, the Company reclassified the IPR&D asset of $27 million from the acquisition of Breethe to a finite-lived developed technology intangible asset and began amortizing on a straight-line basis over an estimated useful life of 15 years (see Note 8). The Company believes the amount of purchased IPR&D assets represent fair value for these intangible assets as of the acquisition date.

Transaction costs such as legal, insurance and other costs related to the acquisition, aggregating approximately $0.9 million, have been expensed as incurred and are included in selling, general and administrative expenses in the Company’s condensed consolidated statements of operations.

The Company’s consolidated financial statements include the operating results of Breethe from the acquisition date. Separate post-acquisition operating results and pro forma results of operations for this acquisition have not been presented as the effect is not material to the Company’s financial results.