13. Intangible Assets

Intangible Assets, Net

On June 8, 2018, Noden Pharma DAC (“Noden DAC”), a wholly-owned subsidiary of the Company, entered into a Settlement Agreement (the “Settlement Agreement”) with Anchen Pharmaceuticals, Inc. and its affiliates (“Anchen”) to resolve the patent litigation relating to infringement of U.S. Patent No. 8,617,595 (the “‘595 Patent”) based on their submission of an Abbreviated New Drug Application (“ANDA”) seeking authorization from the FDA to market a generic version of aliskiren, the active ingredient in Tekturna and Tekturna HCT. Under the Settlement Agreement, Anchen, the sole ANDA filer of which the Company is aware, agreed to not commercialize its generic version of aliskiren prior to March 1, 2019. Per the Settlement Agreement, Anchen may commercialize their formulation of aliskiren, but is not permitted to commercialize a copy of Tekturna.

Accordingly, management evaluated the ongoing value of the Noden DAC asset group based upon the probability of Anchen’s market entry of a generic version of aliskiren in the United States and the associated cash flows and conducted a test for impairment. Due to the increased probability of a generic version of aliskiren being launched in the United States, the Company revised its estimates of future cash flows and as a result of this analysis, determined that the sum of undiscounted cash flows was not greater than the carrying value of the assets. Therefore, the Company performed a discounted cash flow analysis to estimate the fair value of the asset group in accordance with ASC Topic 360, Impairment or Disposal of Long-lived Assets. The cash flows used in this analysis are those expected to be generated by market participants, discounted to reflect an appropriate amount of risk, which was determined to be 21%. The Company concluded that the Noden DAC acquired product rights and customer relationship long-lived assets, with a carrying amount of $192.5 million, were no longer recoverable and wrote them down to their estimated fair value of $40.1 million, resulting in an impairment charge of $152.3 million in the second quarter of 2018. This write-down is included in “Impairment of intangible assets” in the Consolidated Statement of Operations and the Consolidated Statement of Cash Flows for the year ended December 31, 2018. The remaining Noden DAC intangible asset balance, included in the Pharmaceutical segment, will be amortized on a straight-line basis over the remaining useful life of eight years.

On March 4, 2019, the Company announced the U.S. commercial launch of an authorized generic of Tekturna, with the same drug formulation as Tekturna. The Company performed an impairment assessment of the Noden asset group at this time by estimating the undiscounted future cash flows with respect to the asset against its carrying value and concluded a further impairment was not required.

Future events, such as FDA approval of a third-party generic version of aliskiren or publicly announced plans of a launch of a generic version of aliskiren, may be further indicators of impairment which may require the Company to perform additional impairment testing.

The components of intangible assets as of December 31, 2018 and 2017 were as follows:



	December 31, 2018							December 31, 2017
(in thousands)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Acquired products rights ⁽¹⁾	$	36,143	$	(2,258	)	$	33,885	$	216,690	$	(32,503	)	$	184,187
Customer relationships ^{(1) (2)}	8,028		(782		)	7,246		26,080		(3,729		)	22,351
Acquired technology ^{(2) (3)}	11,011		(1,203		)	9,808		9,200		(409		)	8,791
Acquired trademarks ⁽²⁾	570		(190		)	380		570		(76		)	494
	$	55,752	$	(4,433	)	$	51,319	$	252,540	$	(36,717	)	$	215,823

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⁽¹⁾ The Company acquired certain intangible assets as part of the Noden Transaction. They are being amortized on a straight-line basis over a weighted-average period of eight years.

⁽²⁾ The Company acquired certain intangible assets as part of the LENSAR transaction. The intangible assets are being amortized on a straight-line basis over a weighted-average period of 15 years. The intangible assets for customer relationships are being amortized using a double-declining method of amortization as such method better represents the economic benefits to be obtained. For a further discussion of the LENSAR transaction, see Note 23, Business Combinations.

⁽³⁾ The Company acquired certain intangible assets as part of the foreclosure on certain of Direct Flow Medical assets, as described further in Note 9, Notes and Other Long-Term Receivables. They are being amortized on a straight-line basis over a weighted-average period of 10 years.

Amortization expense for the years ended December 31, 2018, 2017 and 2016 was $15.8 million, $24.7 million and $12.0 million, respectively.

Based on the intangible assets recorded at December 31, 2018, and assuming no subsequent additions to or impairment of the underlying assets, the remaining estimated amortization expense is expected to be as follows (in thousands):



Fiscal Year	Amount
2019	$	6,275
2020	6,240
2021	6,209
2022	6,104
2023	6,040
Thereafter	20,451
Total remaining estimated amortization expense	$	51,319