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Acquisitions and Divestiture | 12 Months Ended
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Dec. 31, 2021
Business Combination and Asset Acquisition [Abstract] |
Acquisitions and Divestiture | Acquisitions and Divestiture In January 2021, February 2020 and 2019, we completed the acquisitions of Prevail Therapeutics Inc. (Prevail), Dermira, Inc. (Dermira) and Loxo Oncology, Inc. (Loxo), respectively. These transactions, as further discussed in this note below in Acquisitions of Businesses, were accounted for as business combinations under the acquisition method of accounting. Under this method, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated financial statements. The determination of estimated fair value required management to make significant estimates and assumptions. The excess of the purchase price over the fair value of the acquired net assets, where applicable, has been recorded as goodwill. The results of operations of these acquisitions have been included in our consolidated financial statements from the date of acquisition. We also acquired assets in development in 2021, 2020, and 2019, which are further discussed in this note below in Asset Acquisitions. Upon each acquisition, the cost allocated to acquired IPR&D was immediately expensed because the compound acquired had no alternative future use. For the years ended December 31, 2021, 2020, and 2019, we recorded acquired IPR&D charges of $874.9 million, $660.4 million, and $239.6 million, respectively. Acquisitions of Businesses Prevail Acquisition Overview of Transaction In January 2021, we acquired all shares of Prevail for a purchase price that included $22.50 per share in cash (or an aggregate of $747.4 million, net of cash acquired) plus one non-tradable contingent value right (CVR) per share. The CVR entitles Prevail stockholders up to an additional $4.00 per share in cash (or an aggregate of approximately $160 million) payable, subject to certain terms and conditions, upon the first regulatory approval of a Prevail product in one of the following countries: U.S., Japan, United Kingdom, Germany, France, Italy or Spain. To achieve the full value of the CVR, such regulatory approval must occur by December 31, 2024. If such regulatory approval occurs after December 31, 2024, the value of the CVR will be reduced by approximately 8.3 cents per month until December 1, 2028, at which point the CVR will expire without payment. Under the terms of the agreement, we acquired potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases. The acquisition establishes a new modality for drug discovery and development, extending our research efforts through the creation of a gene therapy program that is being anchored by Prevail's portfolio of assets. The lead gene therapies in clinical development that we acquired were PR001 for patients with Parkinson's disease with GBA1 mutations and neuronopathic Gaucher disease and PR006 for patients with frontotemporal dementia with GRN mutations. Both PR001 and PR006 were granted Fast Track designation from the U.S. Food and Drug Administration (FDA). Assets Acquired and Liabilities Assumed The following table summarizes the amounts recognized for assets acquired and liabilities assumed in the acquisition of Prevail as of the acquisition date:
Estimated Fair Value at January 22, 2021 |
Cash | $ | 90.5 |
Acquired IPR&D(1) | 824.0
Goodwill(2) | 126.8
Deferred tax liabilities | (106.0) |
Other assets and liabilities, net | (31.5) |
Acquisition date fair value of consideration transferred | 903.8
Less: |
Cash acquired | (90.5) |
Fair value of CVR liability(3) | (65.9) |
Cash paid, net of cash acquired | $ | 747.4 |
(1) Acquired IPR&D intangibles primarily relate to PR001. (2) The goodwill recognized from this acquisition is not deductible for tax purposes. (3) See Note 7 for a discussion on the estimation of the CVR liability. We are unable to provide the results of operations for the year ended December 31, 2021 attributable to Prevail as those operations were substantially integrated into our legacy business. Pro forma information has not been included as this acquisition did not have a material impact on our consolidated statements of operations for the years ended December 31, 2021 and 2020. Dermira Acquisition Overview of Transaction In February 2020, we acquired all shares of Dermira for a purchase price of approximately $849.3 million, net of cash acquired. Under terms of the agreement, we acquired lebrikizumab, a novel, investigational, monoclonal antibody being evaluated for the treatment of moderate-to-severe atopic dermatitis. Lebrikizumab was granted Fast Track designation from the FDA. We also acquired Qbrexza® (glycopyrronium) cloth, a medicated cloth approved by the FDA for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating). During the year ended December 31, 2021, we sold the rights to Qbrexza. See Note 5 for additional information. Assets Acquired and Liabilities Assumed The fair values recognized related to the assets acquired and liabilities assumed in this acquisition included goodwill of $86.8 million, other intangibles of $1.20 billion primarily related to lebrikizumab, deferred income tax liabilities of $49.5 million, and long-term debt of $375.5 million. After the acquisition, we repaid $276.2 million of long-term debt assumed as part of our acquisition of Dermira. Revenue attributable to assets acquired in the Dermira acquisition did not have a material impact on our consolidated statement of operations for the year ended December 31, 2020. We are unable to provide the results of operations for the year ended December 31, 2020 attributable to Dermira as those operations were substantially integrated into our legacy business. Pro forma information has not been included because this acquisition did not have a material impact on our consolidated statements of operations for the years ended December 31, 2020 and 2019. Loxo Acquisition Overview of Transaction In February 2019, we acquired all shares of Loxo for a purchase price of $6.92 billion, net of cash acquired. The accelerated vesting of Loxo employee equity awards was recognized as transaction expense included in asset impairment, restructuring, and other special charges during the year ended December 31, 2019 (see Note 5). Under the terms of the agreement, we acquired a pipeline of investigational medicines, including selpercatinib (LOXO-292), an oral RET inhibitor, and LOXO-305, an oral BTK inhibitor. In the second quarter of 2020, the FDA approved selpercatinib (Retevmo®) under its Accelerated Approval regulations and continued approval may be contingent upon verification and description of clinical benefit in confirmatory trials. At the time of approval, we reclassified our $4.60 billion intangible asset for selpercatinib (Retevmo) from indefinite-lived intangible assets to finite-lived intangible assets and began amortizing straight line over its estimated useful life. Assets Acquired and Liabilities Assumed The following table summarizes the amounts recognized for assets acquired and liabilities assumed in the acquisition of Loxo as of the acquisition date:
Estimated Fair Value at February 15, 2019
Acquired IPR&D(1) | $ | 4,670.0 |
Finite-lived intangibles(2) | 980.0 |
Deferred income taxes | (1,032.8) |
Other assets and liabilities - net | (26.4) |
Total identifiable net assets | 4,590.8 |
Goodwill(3) | 2,326.9 |
Total consideration transferred - net of cash acquired | $ | 6,917.7 |
(1) $4.60 billion of the acquired IPR&D relates to selpercatinib (LOXO-292). (2) Contract-based intangibles for Vitrakvi and a Phase I molecule which were amortized to cost of sales on a straight-line basis over their estimated useful lives and were expected to have a weighted average useful life of approximately 12 years from the acquisition date. In the fourth quarter of 2021 we impaired the intangible for the Phase I molecule. See Note 5 for additional information. (3) The goodwill recognized from this acquisition is attributable primarily to future unidentified projects and products and the assembled workforce for Loxo and is not deductible for tax purposes. Asset Acquisitions The following table and narrative summarize our asset acquisitions during 2021, 2020, and 2019.
Counterparty | Compound(s),Therapy, or Asset | Acquisition Month |  | Phase of Development(1) |  | Acquired IPR&D Expense |  |
Precision Biosciences, Inc. | Potential in vivo therapies for genetic disorders | January 2021 |  | Pre-clinical |  | $ | 107.8 |  |  |
Merus N.V. | CD3-engaging T-cell re-directing bispecific antibodies for the potential treatment of cancer | January 2021 |  | Pre-clinical |  | 46.5 |  |  |
Asahi Kasei Pharma Corporation | AK1780, an orally bioavailable P2X7 receptor antagonist for the potential treatment of chronic pain conditions | January 2021 |  | Phase I |  | 20.0 |  |  |
Rigel Pharmaceuticals, Inc. | R552, a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor, for the potential treatment of autoimmune and inflammatory diseases | March 2021 |  | Phase I |  | 125.0 |  |  |
MiNA Therapeutics Limited | Pre-clinical targets that could lead to potential new medicines | May 2021 |  | Pre-clinical |  | 25.0 |  |  |
Protomer Technologies Inc. | Glucose-sensing insulin program | July 2021 |  | Pre-clinical |  | 57.3 |  |  |
Counterparty | Compound(s),Therapy, or Asset | Acquisition Month |  | Phase of Development(1) |  | Acquired IPR&D Expense |  |
Kumquat Biosciences Inc. | Pre-clinical small molecules that stimulate tumor-specific immune responses | July 2021 |  | Pre-clinical |  | 55.0 |  |  |
Lycia Therapeutics, Inc. | Several potential modalities across a spectrum of therapeutic areas and diseases | August 2021 |  | Pre-clinical |  | 35.0 |  |  |
ProQR Therapeutics N.V. | Pre-clinical targets that could lead to potential new medicines for genetic disorders in the liver and nervous system | September 2021 |  | Pre-clinical |  | 26.7 |  |  |
QILU Regor Therapeutics Inc. | Pre-clinical targets that could lead to potential new medicines for metabolic disorders | December 2021 |  | Pre-clinical |  | 30.0 |  |  |
Foghorn Therapeutics Inc. | Pre-clinical targets that could lead to potential new oncology medicines | December 2021 |  | Pre-clinical |  | 316.6 |  |  |
Entos Pharmaceuticals Inc. | Pre-clinical targets that could lead to potential new nucleic acid-based therapies targeting the central and peripheral nervous system | December 2021 |  | Pre-clinical |  | 30.0 |  |  |
Sitryx Therapeutics Limited | Pre-clinical targets that could lead to potential new medicines for autoimmune diseases | March 2020 |  | Pre-clinical |  | 52.3 |  |  |
AbCellera Biologics Inc. (AbCellera) | Neutralizing antibodies for the treatment and prevention of COVID-19 | March 2020(2) |  | Pre-clinical |  | 25.0 |  |  |
Shanghai Junshi Biosciences Co., Ltd. (Junshi Biosciences) | Neutralizing antibodies for the treatment and prevention of COVID-19 | May 2020 |  | Pre-clinical |  | 20.0 |  |  |
Petra Pharma Corporation (Petra) | Mutant-selective PI3K α inhibitor that could lead to potential new medicine | May 2020 |  | Pre-clinical |  | 174.8 |  |  |
Evox Therapeutics Limited | Pre-clinical targets for the potential treatment of neurological disorders | June 2020 |  | Pre-clinical |  | 22.0 |  |  |
Innovent Biologics, Inc. (Innovent) | Sintilimab injection, an anti-PD-1 monoclonal antibody immuno-oncology medicine, for geographies outside of China | October 2020 |  | Phase III |  | 200.0 |  |  |
Disarm Therapeutics, Inc. | Disease-modifying therapeutics program for patients with axonal degeneration | October 2020 |  | Pre-clinical |  | 126.3 |  |  |
Fochon Pharmaceuticals, Ltd. | Pre-clinical molecule targeting hematological malignancies | November 2020 |  | Pre-clinical |  | 40.0 |  |  |
Counterparty | Compound(s),Therapy, or Asset | Acquisition Month |  | Phase of Development(1) |  | Acquired IPR&D Expense |  |
AC Immune SA | Tau aggregation inhibitor small molecules for the potential treatment of Alzheimer's disease and other neurodegenerative diseases | January 2019 & September 2019(3) |  | Pre-clinical |  | 127.1 |  |  |
ImmuNext, Inc. | Novel immunometabolism target | March 2019 |  | Pre-clinical |  | 40.0 |  |  |
Avidity Biosciences, Inc. | Potential new medicines in immunology and other select indications | April 2019 |  | Pre-clinical |  | 25.0 |  |  |
Centrexion Therapeutics Corporation | CNTX-0290, a novel, small molecule somatostatin receptor type 4 agonist | July 2019 |  | Phase I |  | 47.5 |  |  |
(1) The phase of development presented is as of the date of the arrangement and represents the phase of development of the most advanced asset acquired, where applicable. (2) We recognized acquired IPR&D expense of $25.0 million in May 2020 upon closing of the transaction. (3) We recognized acquired IPR&D expenses of $96.9 million in January 2019 upon entering into a license agreement and $30.2 million in September 2019 upon entering into an amendment to the license agreement. In connection with these arrangements, our partners may be entitled to future royalties and/or commercial milestones based on sales should products be approved for commercialization and/or milestones based on the successful progress of compounds through the development process. Divestiture In October 2019, we completed a transaction in which we sold the rights in China for two legacy antibiotic medicines, as well as a manufacturing facility in Suzhou, China to Eddingpharm, a China-based specialty pharmaceutical company. In connection with the sale, we received net cash proceeds of $354.8 million and $40.3 million from Eddingpharm in 2019 and 2020, respectively. We accounted for the transaction as the sale of a business. We recognized a gain of $309.8 million in other—net, (income) expense in our consolidated statement of operations during the year ended December 31, 2019.
Acquisitions and Divestiture | Acquisitions and Divestiture In January 2021, February 2020 and 2019, we completed the acquisitions of Prevail Therapeutics Inc. (Prevail), Dermira, Inc. (Dermira) and Loxo Oncology, Inc. (Loxo), respectively. These transactions, as further discussed in this note below in Acquisitions of Businesses, were accounted for as business combinations under the acquisition method of accounting. Under this method, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated financial statements. The determination of estimated fair value required management to make significant estimates and assumptions. The excess of the purchase price over the fair value of the acquired net assets, where applicable, has been recorded as goodwill. The results of operations of these acquisitions have been included in our consolidated financial statements from the date of acquisition. We also acquired assets in development in 2021, 2020, and 2019, which are further discussed in this note below in Asset Acquisitions. Upon each acquisition, the cost allocated to acquired IPR&D was immediately expensed because the compound acquired had no alternative future use. For the years ended December 31, 2021, 2020, and 2019, we recorded acquired IPR&D charges of $874.9 million, $660.4 million, and $239.6 million, respectively. Acquisitions of Businesses Prevail Acquisition Overview of Transaction In January 2021, we acquired all shares of Prevail for a purchase price that included $22.50 per share in cash (or an aggregate of $747.4 million, net of cash acquired) plus one non-tradable contingent value right (CVR) per share. The CVR entitles Prevail stockholders up to an additional $4.00 per share in cash (or an aggregate of approximately $160 million) payable, subject to certain terms and conditions, upon the first regulatory approval of a Prevail product in one of the following countries: U.S., Japan, United Kingdom, Germany, France, Italy or Spain. To achieve the full value of the CVR, such regulatory approval must occur by December 31, 2024. If such regulatory approval occurs after December 31, 2024, the value of the CVR will be reduced by approximately 8.3 cents per month until December 1, 2028, at which point the CVR will expire without payment. Under the terms of the agreement, we acquired potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases. The acquisition establishes a new modality for drug discovery and development, extending our research efforts through the creation of a gene therapy program that is being anchored by Prevail's portfolio of assets. The lead gene therapies in clinical development that we acquired were PR001 for patients with Parkinson's disease with GBA1 mutations and neuronopathic Gaucher disease and PR006 for patients with frontotemporal dementia with GRN mutations. Both PR001 and PR006 were granted Fast Track designation from the U.S. Food and Drug Administration (FDA). Assets Acquired and Liabilities Assumed The following table summarizes the amounts recognized for assets acquired and liabilities assumed in the acquisition of Prevail as of the acquisition date:
Estimated Fair Value at January 22, 2021 |
Cash | $ | 90.5 |
Acquired IPR&D(1) | 824.0
Goodwill(2) | 126.8
Deferred tax liabilities | (106.0) |
Other assets and liabilities, net | (31.5) |
Acquisition date fair value of consideration transferred | 903.8
Less: |
Cash acquired | (90.5) |
Fair value of CVR liability(3) | (65.9) |
Cash paid, net of cash acquired | $ | 747.4 |
(1) Acquired IPR&D intangibles primarily relate to PR001. (2) The goodwill recognized from this acquisition is not deductible for tax purposes. (3) See Note 7 for a discussion on the estimation of the CVR liability. We are unable to provide the results of operations for the year ended December 31, 2021 attributable to Prevail as those operations were substantially integrated into our legacy business. Pro forma information has not been included as this acquisition did not have a material impact on our consolidated statements of operations for the years ended December 31, 2021 and 2020. Dermira Acquisition Overview of Transaction In February 2020, we acquired all shares of Dermira for a purchase price of approximately $849.3 million, net of cash acquired. Under terms of the agreement, we acquired lebrikizumab, a novel, investigational, monoclonal antibody being evaluated for the treatment of moderate-to-severe atopic dermatitis. Lebrikizumab was granted Fast Track designation from the FDA. We also acquired Qbrexza® (glycopyrronium) cloth, a medicated cloth approved by the FDA for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating). During the year ended December 31, 2021, we sold the rights to Qbrexza. See Note 5 for additional information. Assets Acquired and Liabilities Assumed The fair values recognized related to the assets acquired and liabilities assumed in this acquisition included goodwill of $86.8 million, other intangibles of $1.20 billion primarily related to lebrikizumab, deferred income tax liabilities of $49.5 million, and long-term debt of $375.5 million. After the acquisition, we repaid $276.2 million of long-term debt assumed as part of our acquisition of Dermira. Revenue attributable to assets acquired in the Dermira acquisition did not have a material impact on our consolidated statement of operations for the year ended December 31, 2020. We are unable to provide the results of operations for the year ended December 31, 2020 attributable to Dermira as those operations were substantially integrated into our legacy business. Pro forma information has not been included because this acquisition did not have a material impact on our consolidated statements of operations for the years ended December 31, 2020 and 2019. Loxo Acquisition Overview of Transaction In February 2019, we acquired all shares of Loxo for a purchase price of $6.92 billion, net of cash acquired. The accelerated vesting of Loxo employee equity awards was recognized as transaction expense included in asset impairment, restructuring, and other special charges during the year ended December 31, 2019 (see Note 5). Under the terms of the agreement, we acquired a pipeline of investigational medicines, including selpercatinib (LOXO-292), an oral RET inhibitor, and LOXO-305, an oral BTK inhibitor. In the second quarter of 2020, the FDA approved selpercatinib (Retevmo®) under its Accelerated Approval regulations and continued approval may be contingent upon verification and description of clinical benefit in confirmatory trials. At the time of approval, we reclassified our $4.60 billion intangible asset for selpercatinib (Retevmo) from indefinite-lived intangible assets to finite-lived intangible assets and began amortizing straight line over its estimated useful life. Assets Acquired and Liabilities Assumed The following table summarizes the amounts recognized for assets acquired and liabilities assumed in the acquisition of Loxo as of the acquisition date:
Estimated Fair Value at February 15, 2019
Acquired IPR&D(1) | $ | 4,670.0 |
Finite-lived intangibles(2) | 980.0 |
Deferred income taxes | (1,032.8) |
Other assets and liabilities - net | (26.4) |
Total identifiable net assets | 4,590.8 |
Goodwill(3) | 2,326.9 |
Total consideration transferred - net of cash acquired | $ | 6,917.7 |
(1) $4.60 billion of the acquired IPR&D relates to selpercatinib (LOXO-292). (2) Contract-based intangibles for Vitrakvi and a Phase I molecule which were amortized to cost of sales on a straight-line basis over their estimated useful lives and were expected to have a weighted average useful life of approximately 12 years from the acquisition date. In the fourth quarter of 2021 we impaired the intangible for the Phase I molecule. See Note 5 for additional information. (3) The goodwill recognized from this acquisition is attributable primarily to future unidentified projects and products and the assembled workforce for Loxo and is not deductible for tax purposes. Asset Acquisitions The following table and narrative summarize our asset acquisitions during 2021, 2020, and 2019.
Counterparty | Compound(s),Therapy, or Asset | Acquisition Month |  | Phase of Development(1) |  | Acquired IPR&D Expense |  |
Precision Biosciences, Inc. | Potential in vivo therapies for genetic disorders | January 2021 |  | Pre-clinical |  | $ | 107.8 |  |  |
Merus N.V. | CD3-engaging T-cell re-directing bispecific antibodies for the potential treatment of cancer | January 2021 |  | Pre-clinical |  | 46.5 |  |  |
Asahi Kasei Pharma Corporation | AK1780, an orally bioavailable P2X7 receptor antagonist for the potential treatment of chronic pain conditions | January 2021 |  | Phase I |  | 20.0 |  |  |
Rigel Pharmaceuticals, Inc. | R552, a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor, for the potential treatment of autoimmune and inflammatory diseases | March 2021 |  | Phase I |  | 125.0 |  |  |
MiNA Therapeutics Limited | Pre-clinical targets that could lead to potential new medicines | May 2021 |  | Pre-clinical |  | 25.0 |  |  |
Protomer Technologies Inc. | Glucose-sensing insulin program | July 2021 |  | Pre-clinical |  | 57.3 |  |  |
Counterparty | Compound(s),Therapy, or Asset | Acquisition Month |  | Phase of Development(1) |  | Acquired IPR&D Expense |  |
Kumquat Biosciences Inc. | Pre-clinical small molecules that stimulate tumor-specific immune responses | July 2021 |  | Pre-clinical |  | 55.0 |  |  |
Lycia Therapeutics, Inc. | Several potential modalities across a spectrum of therapeutic areas and diseases | August 2021 |  | Pre-clinical |  | 35.0 |  |  |
ProQR Therapeutics N.V. | Pre-clinical targets that could lead to potential new medicines for genetic disorders in the liver and nervous system | September 2021 |  | Pre-clinical |  | 26.7 |  |  |
QILU Regor Therapeutics Inc. | Pre-clinical targets that could lead to potential new medicines for metabolic disorders | December 2021 |  | Pre-clinical |  | 30.0 |  |  |
Foghorn Therapeutics Inc. | Pre-clinical targets that could lead to potential new oncology medicines | December 2021 |  | Pre-clinical |  | 316.6 |  |  |
Entos Pharmaceuticals Inc. | Pre-clinical targets that could lead to potential new nucleic acid-based therapies targeting the central and peripheral nervous system | December 2021 |  | Pre-clinical |  | 30.0 |  |  |
Sitryx Therapeutics Limited | Pre-clinical targets that could lead to potential new medicines for autoimmune diseases | March 2020 |  | Pre-clinical |  | 52.3 |  |  |
AbCellera Biologics Inc. (AbCellera) | Neutralizing antibodies for the treatment and prevention of COVID-19 | March 2020(2) |  | Pre-clinical |  | 25.0 |  |  |
Shanghai Junshi Biosciences Co., Ltd. (Junshi Biosciences) | Neutralizing antibodies for the treatment and prevention of COVID-19 | May 2020 |  | Pre-clinical |  | 20.0 |  |  |
Petra Pharma Corporation (Petra) | Mutant-selective PI3K α inhibitor that could lead to potential new medicine | May 2020 |  | Pre-clinical |  | 174.8 |  |  |
Evox Therapeutics Limited | Pre-clinical targets for the potential treatment of neurological disorders | June 2020 |  | Pre-clinical |  | 22.0 |  |  |
Innovent Biologics, Inc. (Innovent) | Sintilimab injection, an anti-PD-1 monoclonal antibody immuno-oncology medicine, for geographies outside of China | October 2020 |  | Phase III |  | 200.0 |  |  |
Disarm Therapeutics, Inc. | Disease-modifying therapeutics program for patients with axonal degeneration | October 2020 |  | Pre-clinical |  | 126.3 |  |  |
Fochon Pharmaceuticals, Ltd. | Pre-clinical molecule targeting hematological malignancies | November 2020 |  | Pre-clinical |  | 40.0 |  |  |
Counterparty | Compound(s),Therapy, or Asset | Acquisition Month |  | Phase of Development(1) |  | Acquired IPR&D Expense |  |
AC Immune SA | Tau aggregation inhibitor small molecules for the potential treatment of Alzheimer's disease and other neurodegenerative diseases | January 2019 & September 2019(3) |  | Pre-clinical |  | 127.1 |  |  |
ImmuNext, Inc. | Novel immunometabolism target | March 2019 |  | Pre-clinical |  | 40.0 |  |  |
Avidity Biosciences, Inc. | Potential new medicines in immunology and other select indications | April 2019 |  | Pre-clinical |  | 25.0 |  |  |
Centrexion Therapeutics Corporation | CNTX-0290, a novel, small molecule somatostatin receptor type 4 agonist | July 2019 |  | Phase I |  | 47.5 |  |  |
(1) The phase of development presented is as of the date of the arrangement and represents the phase of development of the most advanced asset acquired, where applicable. (2) We recognized acquired IPR&D expense of $25.0 million in May 2020 upon closing of the transaction. (3) We recognized acquired IPR&D expenses of $96.9 million in January 2019 upon entering into a license agreement and $30.2 million in September 2019 upon entering into an amendment to the license agreement. In connection with these arrangements, our partners may be entitled to future royalties and/or commercial milestones based on sales should products be approved for commercialization and/or milestones based on the successful progress of compounds through the development process. Divestiture In October 2019, we completed a transaction in which we sold the rights in China for two legacy antibiotic medicines, as well as a manufacturing facility in Suzhou, China to Eddingpharm, a China-based specialty pharmaceutical company. In connection with the sale, we received net cash proceeds of $354.8 million and $40.3 million from Eddingpharm in 2019 and 2020, respectively. We accounted for the transaction as the sale of a business. We recognized a gain of $309.8 million in other—net, (income) expense in our consolidated statement of operations during the year ended December 31, 2019.

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