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Note 10 - Goodwill, In-process Research and Development and Intellectual Property

12 Months Ended

Dec. 31, 2020

Goodwill and Intangible Assets Disclosure [Text Block]

10. Goodwill, In-Process Research and Development and Intellectual Property

Goodwill

Goodwill of $93.8 million was recorded in connection with the Merger, as described in Note 1, goodwill of $38.3 million was recorded in connection with the Senhance Acquisition, as described in Note 3, and goodwill of $9.6 million was recorded in connection with the MST Acquisition, as described in Note 3. The carrying value of goodwill and the change in the balance for the year ended December 31, 2019 is as follows:

	Goodwill
	(In thousands)
Balance at December 31, 2018	$	80,131
Foreign currency translation impact		(1,162	)
Impairment		(78,969	)
Balance at December 31, 2019	$	—

The Company performed an annual impairment test of goodwill at December 31, or more frequently if events or changes in circumstances indicated that the carrying value of the Company’s one reporting unit may not be recoverable. During the third quarter of 2019, the Company's stock price declined significantly as a result of decreased sales. As of September 30, 2019, goodwill was deemed to be fully impaired, and the Company recorded an impairment charge of $79.0 million.

In-Process Research and Development

As described in Note 3, on October 31, 2018, the Company acquired the MST assets, technology and business from MST and recorded $10.6 million of IPR&D. The estimated fair value of the IPR&D was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 15% and cash flows that have been probability adjusted to reflect the risks of product integration, which the Company believes are appropriate and representative of market participant assumptions.

The Company performed an impairment test of its IPR&D at the end of the third quarter 2019 as recent events and changes in market conditions indicated that the asset might be impaired. The impairment test consisted of a comparison of the fair value of the IPR&D with its carrying amount. If the carrying amount of the IPR&D exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Significant judgment is applied when testing for impairment. This judgment includes developing cash flow projections, selecting appropriate discount rates, identifying relevant market comparables, and incorporating general economic and market conditions. During the third quarter of 2019, the Company concluded that the fair value determined by the market value approach was lower than the carrying value. As a result, the Company recognized a $7.9 million impairment charge to its IPR&D. The company performed its annual impairment assessment at December 31, 2019 and no additional impairment was required. As of December 31, 2020, all IPR&D asset development was completed and reclassified to intellectual property.

The carrying value of the Company’s IPR&D assets and the change in the balance for the years ended December 31, 2019 and 2020 is as follows:

	In-Process Research and Development
	(In thousands)
Balance at December 31, 2018	$	10,747
Impairment		(7,912	)
Foreign currency translation impact		(365	)
Balance at December 31, 2019		2,470
Impairment		—
Foreign currency translation impact		(45	)
Transfer of in-process research and development to intellectual property		(2,425	)
Balance at December 31, 2020	$	—

Intellectual Property

As described in Note 3, on September 21, 2015, the Company acquired all of the assets related to the Senhance System and recorded $17.1 million of IPR&D. The estimated fair value of the IPR&D was determined using a probability-weighted income approach, which discounts expected future cash flows to present value. The projected cash flows were based on certain key assumptions, including estimates of future revenue and expenses, taking into account the stage of development of the technology at the acquisition date and the time and resources needed to complete development. The Company used a discount rate of 45% and cash flows that have been probability adjusted to reflect the risks of product commercialization, which the Company believes are appropriate and representative of market participant assumptions. On October 13, 2017, upon regulatory approval and the ability to commercialize the products associated with the IPR&D assets, the assets were deemed definite-lived, reclassified to intellectual property and are now being amortized based on their estimated useful lives.

As described above, on March 13, 2020, upon regulatory approval and the ability to commercialize the products associated with the IPR&D assets in the United States, the remaining MST assets were deemed definite-lived, reclassified to intellectual property and are now being amortized based on their estimated useful lives.

The components of gross intellectual property, accumulated amortization, and net intellectual property as of December 31, 2020 and 2019 are as follows:

	December 31, 2020									December 31, 2019
	(In thousands)									(In thousands)
	Gross Carrying Amount		Accumulated Amortization			Foreign currency translation impact		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Foreign currency translation impact			Net Carrying Amount
Developed technology	$	68,838	$	(51,734	)	$	4,872	$	21,976	$	66,413	$	(36,918	)	$	(1,208	)	$	28,287
Technology and patents purchased		400		(168	)		59		291		400		(112	)		21			309
Total intellectual property	$	69,238	$	(51,902	)	$	4,931	$	22,267	$	66,813	$	(37,030	)	$	(1,187	)	$	28,596

The weighted average remaining useful life of the developed technology and technology and patents purchased was 2.2 years and 6.3 years, respectively as of December 31, 2020.

The estimated future amortization expense of intangible assets as of December 31, 2020 is as follows:

	Year ending December 31, 2020
	(In thousands)
2021	$	11,634
2022		8,833
2023		430
2024		430
2025		430
Thereafter		510
Total	$	22,267