Goodwill, In-Process Research and Development and Intellectual Property

3 Months Ended

Mar. 31, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill, In-Process Research and Development and Intellectual Property

Goodwill

Goodwill of $93.8 million was recorded in connection with a September 2013 merger transaction, 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 Company performs an annual impairment test of goodwill at December 31, or more frequently if events or changes in circumstances indicate 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. See Note 2.

On March 13, 2020, upon receipt of regulatory clearance to commercialize the products associated with the IPR&D assets in the United States, the assets were deemed definite-lived, transferred to developed technology and are amortized based on their estimated useful lives.

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



	In-Process Research and Development
	(In thousands) (unaudited)
Balance at December 31, 2019	$	2,470
Foreign currency translation impact	(45		)
Transfer to developed technology	(2,425		)
Balance at March 31, 2020	$	—

Intellectual Property

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



	March 31, 2020										December 31, 2019
	(In thousands) (unaudited)										(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	$	(38,802	)	$	(2,389	)	$	27,647	$	66,413	$	(36,918	)	$	(1,208	)	$	28,287
Technology and patents purchased	400		(121		)	13			292		400		(112		)	21			309
Total intellectual property	$	69,238	$	(38,923	)	$	(2,376	)	$	27,939	$	66,813	$	(37,030	)	$	(1,187	)	$	28,596

The weighted average remaining useful life of the developed technology and technology and patents purchased was 2.9 years and 7.1 years, respectively as of March 31, 2020.