Note 3 - Discontinued Operations
|9 Months Ended|
Sep. 30, 2018
|Notes to Financial Statements|
|Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]||
March 3, 2017,pursuant to an Asset Purchase Agreement dated
November 23, 2016 (the “Purchase Agreement”), the Company completed its previously announced sale to Cardinal Health
414of its assets used, held for use, or intended to be used in operating its business of developing, manufacturing and commercializing a product used for lymphatic mapping, lymph node biopsy, and the diagnosis of metastatic spread to lymph nodes for staging of cancer (the “Business”), including the Company’s radioactive diagnostic agent marketed under the Lymphoseek
®trademark for current approved indications by the U.S. Food and Drug Administration (“FDA”) and similar indications approved by the FDA in the future (the “Product”), in Canada, Mexico and the United States (the “Territory”) (giving effect to a License-Back Agreement and excluding certain assets specifically retained by the Company) (the “Asset Sale”). Such assets sold in the Asset Sale consist primarily of, without limitation, (i) intellectual property used in or reasonably necessary for the conduct of the Business, (ii) inventory of, and customer, distribution, and product manufacturing agreements related to, the Business, (iii) all product registrations related to the Product, including the new drug application approved by the FDA for the Product and all regulatory submissions in the United States that have been made with respect to the Product and all Health Canada regulatory submissions and, in each case, all files and records related thereto, (iv) all related clinical trials and clinical trial authorizations and all files and records related thereto, and (v) all rights, title and interest in and to the Product, as specified in the Purchase Agreement (the “Acquired Assets”).
In exchange for the Acquired Assets, Cardinal Health
414(i) made a cash payment to the Company at closing of approximately
$80.6million after adjustments based on inventory being transferred and an advance of
$3.0million of guaranteed earnout payments as part of the CRG settlement, (ii) assumed certain liabilities of the Company associated with the Product as specified in the Purchase Agreement, and (iii) agreed to make periodic earnout payments (to consist of contingent payments and milestone payments which, if paid, will be treated as additions to the purchase price) to the Company based on net sales derived from the purchased Product.
Upon closing of the Asset Sale, the Supply and Distribution Agreement dated
November 15, 2007,as amended, between Cardinal Health
414and the Company was terminated and, as a result, the provisions thereof are of
nofurther force or effect (other than any indemnification, payment, notification or data sharing obligations which survive the termination).
April 2, 2018,the Company entered into an Amendment to the Asset Purchase Agreement. Pursuant to the Amendment, Cardinal Health
414paid the Company approximately
$6.0million and agreed to pay the Company an amount equal to the unused portion of the letter of credit (
notto exceed approximately
$7.1million) promptly after the earlier of (i) the expiration of the letter of credit and (ii) the receipt by Cardinal Health
414of evidence of the return and cancellation of the letter of credit. In exchange, the obligation of Cardinal Health
414to make any further contingent payments has been eliminated. Cardinal Health
414is still obligated to make the milestone payments in accordance with the terms of the earnout provisions of the Purchase Agreement. On
April 9, 2018,CRG drew approximately
$7.1million on the letter of credit. This was in addition to the
$4.1million and the
$59.0million that Navidea had previously paid to CRG.
We recorded a net gain on the sale of the Business of
$86.9million for the
September 30, 2017,including
$16.5million in guaranteed consideration, which was discounted to the present value of future cash flows. The proceeds were offset by
$3.3million in estimated fair value of warrants issued to Cardinal Health
$2.0million in legal and other fees related to the sale,
$800,000in net balance sheet dispositions and write-offs, and
$6.4million in estimated taxes. We recorded an additional gain related to the Amendment to the Asset Purchase Agreement of
September 30, 2018,including
$54,000of additional consideration, offset by
$11,000in estimated taxes.
As a result of the Asset Sale, we reclassified certain assets and liabilities as assets and liabilities associated with discontinued operations. The following liabilities have been segregated and included in liabilities associated with discontinued operations, as appropriate, in the consolidated balance sheets:
In addition, we reclassified certain revenues and expenses related to the Business to discontinued operations for all periods presented, including interest expense related to the CRG and Platinum debt obligations as required by current accounting guidance. The following amounts have been segregated from continuing operations and included in discontinued operations in the consolidated statements of operations:
The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef