Quarterly report pursuant to Section 13 or 15(d)

Intangible Assets

v3.10.0.1
Intangible Assets
9 Months Ended
Sep. 30, 2018
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets Disclosure [Text Block]
Note 6. Intangible Assets
 
Our intangible assets consist of licenses and patents relating to our bertilimumab and oncology programs and were determined by management to have useful lives ranging between seven and fifteen years. We amortize these intangible assets on a straight-line basis.
 
On June 15, 2017, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Meda Pharma SARL, a Mylan N.V. company (“Meda”), to repurchase assets relating to Ceplene (histamine dihydrochloride) including the right to commercialize Ceplene in Europe and to register and commercialize Ceplene in certain other countries, for a fixed consideration of $5.0 million payable in installments over a three-year period
and additional contingent payments of $3.0 million which consists of $1.5 million due in year 4 upon the initial achievement of $12.0 million in revenue and $1.5 million due in year 5 upon the initial achievement of $15.0 million in revenue. The assets acquired from Meda include rights to marketing authorizations, trademarks, patents, and other intellectual property related to Ceplene and its use
.
 
In addition, on June 15, 2017, substantially contemporaneous with the entry into the Asset Purchase Agreement, we entered into a Standby Financing Agreement (the “Standby Financing Agreement”) with Daniel Kazado (the “Standby Financer”) a member of our board of directors and a beneficial owner of our capital stock. See Note 13 for a further description of the Standby Financing Agreement. Currently, we are contemplating the sale or other disposition of our Ceplene assets, pursuant to which we intend to include the $5.0 million financial obligations contemplated by the Asset Purchase Agreement as part of such sale or other disposition on a basis and on terms that are acceptable to our board of directors and, if attainable, without recourse to us. We intend to maintain the regulatory status of Ceplene and our oncology assets while we pursue a strategic transaction, however, management and our board of directors will make decisions in the best interest of its shareholders as this process progresses.
 
We treated the acquisition as an asset acquisition in accordance with
ASC 805, “Business Combinations”
. We recorded the purchase price for the underlying patents as intangible assets and recorded the present value of the future payments due under the Asset Purchase Agreement of $4.2 million as a corresponding liability. The present value of future payments due under the Asset Purchase Agreement was determined by using our then current borrowing rate of 15% as the relevant discount rate for present value calculations. As of September 30, 2018, the amount due to Meda on a present value basis, classified as current and long-term notes payable is $3.7 million and $0.9 million, respectively. The estimated useful life of these intangible assets is seven years.
 
As of June 30, 2018, we evaluated our intangible assets for human antibodies and anti-ferritin antibodies because of events that occurred during the quarter, which indicate that the carrying amount may no longer be recoverable. Based on this evaluation (level 3 in the fair value hierarchy), these intangible assets have no value and were fully impaired. For the nine months ended September 30, 2018, we recorded impairment losses of $653,000 on certain intangible assets, as noted above.
 
The value of our amortizable intangible assets including gross asset value and carrying value is summarized below ($ in thousands):
 
 
 
Bertilimumab

iCo
 
 
NanomAbs

Yissum
 
 
Human

Antibodies

Kadouche
 
 
Anti-ferritin

Antibody

MabLife
 
 
Ceplene

Acquisition

Intangibles
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2017
 
$
1,419
 
 
$
383
 
 
$
381
 
 
$
318
 
 
$
3,976
 
 
$
6,477
 
Amortization
 
 
(126
)
 
 
(36
)
 
 
(23
)
 
 
(23
)
 
 
(461
)
 
 
(669
)
Impairment
 
 
-
 
 
 
-
 
 
 
(358
)
 
 
(295
)
 
 
-
 
 
 
(653
)
Balance, September 30, 2018
 
$
1,293
 
 
$
347
 
 
$
-
 
 
$
-
 
 
$
3,515
 
 
$
5,155
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross asset value
 
$
2,509
 
 
$
694
 
 
$
-
 
 
$
-
 
 
$
4,310
 
 
$
7,513
 
Accumulated Amortization
 
 
(1,216
)
 
 
(347
)
 
 
-
 
 
 
-
 
 
 
(795
)
 
 
(2,358
)
Balance, September 30, 2018
 
$
1,293
 
 
$
347
 
 
$
-
 
 
$
-
 
 
$
3,515
 
 
$
5,155
 
 
Amortization expense amounted to $208,000 and $669,000 for the three and nine months ended September 30, 2018, respectively. Amortization expense amounted to $256,000 and $409,000 for the three and nine months ended September 2017, respectively.
 
Estimated amortization expense for each of the five succeeding years, based upon intangible assets at September 30, 2018 is as follows ($ in thousands):
 
Period Ending September 30,
 
Amount
 
2019
 
$
829
 
2020
 
 
829
 
2021
 
 
829
 
2022
 
 
829
 
2023
 
 
829
 
Thereafter
 
 
1,010
 
Total
 
$
5,155