8. Business combination and BELBUCA acquisition: On December 7, 2016, the Company and Endo entered into the Termination Agreement to terminate Endos licensing rights for BELBUCA. The transaction closed on January 6, 2017. At the closing date, the Company purchased from Endo the following net assets (the net assets): (i) current BELBUCA product inventory and work-in-progress, (ii) material manufacturing contracts related to BELBUCA, (iii) BELBUCA-related domain names and trademarks (including the BELBUCA trademark), (iv) BELBUCA -related manufacturing equipment, and (v) all pre-approval regulatory submissions, including any INDs and NDAs, regulatory approvals and post-approval regulatory submissions concerning BELBUCA. In addition to the Purchase Price, pursuant to the terms of the Termination Agreement, the Company also paid to Endo a fee in the amount of $5 million in consideration for (i) Endos agreement not to compete for a period of two years from the closing date of the termination agreement and (ii) Endos waiver of its right to sell product for twelve months following the closing of the termination agreement. At the closing date, the Company accepted transfer of the net assets and assumed and agreed to discharge when due all applicable liabilities assumed by the Company, which consisted of post-closing obligations for liabilities and payments associated with the net assets, the assumed contracts related to the net assets and applicable taxes (with the obligation for pre-closing and other certain liabilities resulting from the acts or omissions of Endo being retained by Endo). The Purchase Price, together with all other payments (including a non-compete covenant payment) due to Endo under the Termination Agreement, was payable to Endo in cash in four quarterly installments on the last calendar day of each quarter in 2017. The BELBUCA acquisition was accounted for as a business combination in accordance with ASC No. 805, Business Combinations which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values. Determining the fair value of certain acquired assets and liabilities is subjective in nature and often involves the use of significant estimates and assumptions, including, but not limited to, the selection of appropriate valuation methodology, projected revenue, expenses and cash flows, weighted average cost of capital, discount rates, and estimates of terminal values. The Company believes the estimates used are reasonable and the significant effects of the BELBUCA acquisition are properly reflected. The following table summarizes the consideration paid to acquire BELBUCA and the estimated values of assets acquired and liabilities assumed in the accompanying consolidated balance sheet based on their fair values on January 6, 2017 (the date of the Endo Closing): Asset purchase price: Deferred cash consideration to Endo $ 7,536 Total asset purchase price $ 7,536 Estimated fair value of assets acquired: BELBUCA product inventory and work-in process $ 5,412 BELBUCA-related manufacturing equipment 432 License and distribution rights intangible assets 45,000 Deferred tax liability (15,972 ) Amount attributable to assets acquired $ 34,872 Bargain purchase gain $ (27,336 ) Inventories acquired included raw materials, work-in-progress and finished goods. The fair value of the acquired finished goods inventory was estimated by adjusting the anticipated selling price costs to sell and an appropriate profit on selling activities. For work-in-process, in addition to those inputs used to estimate the fair value of finished goods, the cost and estimated profit on completing the manufacturing are also included. The fair value of the raw materials represent cost to acquire the materials from suppliers. The fair value of the equipment was determined by consideration of replacement cost and equipment condition and was assigned a useful life of seven years. The fair value of the license and distribution rights intangible assets as amortized in the accompanying consolidated balance sheets were estimated primarily using the income method, which starts with a forecast of all expected future cash flows. Some of the more significant assumptions inherent in the development of intangible asset values, from the perspective of a market participant, include: the amount and timing of projected future cash flows (including net revenue, cost of sales, commercial expenses, research and development costs and working capital requirements) as well as estimated contributory asset charges; the discount rate selected to measure the risks inherent in the future cash flows; and the assessment of the assets life cycle and the competitive trends impacting the asset, among other factors. The license and distribution rights intangible assets will be amortized over ten years, which approximates the current, remaining patent life of the BELBUCA -related intellectual property. As a result of the business combination, the Company recognized a deferred tax liability of $16.0 million. This deferred tax liability was netted against its deferred tax assets as of December 31, 2017. Because a full valuation allowance has been provided against the Companys deferred tax assets as it is considered more likely than not that they will not be utilized, the Company released a corresponding amount of its valuation allowance during the year ended December 31, 2017 and recognized a $16.0 million tax benefit in the accompanying consolidated statement of operations. Pro forma impact of acquisition of BELBUCA The following pro forma combined results of operations are provided for the year ended December 31, 2016, as though the BELBUCA acquisition had been completed as of January 1, 2016. These supplemental pro forma results of operations are provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined company for the period presented or that may be achieved by the combined company in the future. The pro forma results of operations do not include any cost savings or other synergies that resulted, or may result, from the BELBUCA acquisition or any estimated costs that will be incurred to integrate the BELBUCA product line, nor do they reflect the bargain purchase gain recognized. Future results may vary significantly from the results in this pro forma information because of future events and transactions, as well as other factors. (in thousands, except per share data) December 31, 2016 (unaudited) Revenue $ 25,010 Net loss $ (201,769 ) Pro forma net loss per common share Basic $ (3.76 ) Diluted $ (3.76 ) The Companys historical financial information was adjusted to give effect to the pro forma events that were directly attributable to the BELBUCA acquisition and factually supportable. The unaudited pro forma consolidated results include historical revenues and expenses of assets acquired in the acquisition with the following adjustments:  Adjustment to recognize incremental amortization expense based on the fair value of intangibles acquired;  Adjustment to recognize incremental depreciation expense for equipment acquired in the acquisition.