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We have equity investments inprivately- andpublicly-held biotechnology companies thatwe have received as part of a
technology license or collaboration agreement. We account for our equity investments in publicly-held companies at fair value and
recordunrealizedgains and losses related to temporary increases anddecreases in the stockof these publicly-held companies as a
separate component of comprehensive loss. We account for our equity investments in privately-held companies under the costmethod
of accountingbecausewe own less than 20percent and donot have significant influence over their operations. The costmethod
investmentswe hold are in smaller satellite companies and realizationof our equityposition in those companies is uncertain. In those
circumstanceswe record a full valuation allowance. Indetermining if andwhen a decrease inmarket value belowour cost inour
equitypositions is temporaryor other-than-temporary, we examine historical trends in the stock price, the financial conditionof the
company, near termprospects of the company andour current need for cash. Ifwe determine that a decline in value in either a public
or private investment is other-than-temporary, we recognize an impairment loss in the period inwhich the other-than-temporary
decline occurs.
During2013,we recognized a $2.4millionnet gainon investments primarily consistingprimarilyof the $1.1milliongainwe
realizedwhenwe sold the stockwe held inSareptaTherapeutics, Inc., the $490,000 gainwe realizedwhenwe sold a portionof the
stockwe hold in iCoTherapeutics Inc., and the $844,000payment we received fromPfizer, Inc. related to its acquisitionof Excaliard
Pharmaceuticals, Inc. During 2012we recognized a $1.5million net gainon investments primarily consistingof the $1.3million
paymentwe received fromPfizer, Inc. related to its acquisitionof Excaliard. See further discussion about our investment inExcaliard
inNote 7
, CollaborativeArrangements andLicensingAgreements,
in theNotes to theConsolidatedFinancial Statements.
In addition, in the fourthquarter of 2012, we recorded an$18.4million gain because of the increase inRegulus’ valuation
resulting from its IPO. We have reflected this gain in a separate line onourConsolidatedStatements ofOperations called “Gainon
investment inRegulus Therapeutics Inc.” See further discussion about our investment inRegulus inNote 2
, Investment inRegulus
Therapeutics Inc.,
in theNotes to theConsolidatedFinancial Statements.
Valuationof Long-LivedAssets
We evaluate long-lived assets, which include property, plant and equipment, patent costs, and exclusive licenses acquired
from thirdparties, for impairment on at least a quarterlybasis andwhenever events or changes in circumstances indicate thatwemay
not be able to recover the carrying amount of such assets. During this process, we reviewour property and equipment listings, pending
domestic and international patent applications, domestic and international issuedpatents, and licenseswe have acquired fromother
parties to determine if any impairment is present.We consider the following factors:
Evidence of decreases inmarket value;
Changes in the extent ormanner inwhichwe use an asset;
Adverse changes in legal factors or in the business climate that would affect the value of an asset;
An adverse actionor assessment by a regulator;
An accumulation of costs significantly in excess of amounts originally expected to acquire or construct an asset;
Current periodoperatingor cash flow loss combinedwith a historyof operatingor cash flow losses associatedwith an
asset used for the purpose of producing revenue; and
Challenges or potential challenges toour existingpatents, the likelihood that theUnitedStates Patent andTrademark
Office, or foreign equivalent, will issue an application and the scope of our issuedpatents.
We recorded a charge of $6.4million, $825,000 and$1.9million for the years endedDecember 31, 2013, 2012 and2011,
respectively, primarily related to thewrite-downof intangible assets to their estimated net realizable values. In 2013, we conducted a
careful restructuringof our patent portfolio to focus our resources onpatents andnewpatent applications that drive value for our
company. As a result, ourwrite-downsweremore significant than in prior years. We expect write-downs in future years tobe similar
to years prior to2013.
