XML 37 R16.htm IDEA: XBRL DOCUMENT v3.20.4
Collaborations
12 Months Ended
Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Collaborations Collaborations
A collaborative arrangement is a contractual arrangement that involves a joint operating activity. Such arrangements involve two or more parties that are both (i) active participants in the activity and (ii) exposed to significant risks and rewards dependent on the commercial success of the activity.
From time to time, we enter into collaborative arrangements for the R&D, manufacture and/or commercialization of products and/or product candidates. These collaborations generally provide for nonrefundable upfront license fees, development and commercial-performance milestone payments, cost sharing, royalty payments and/or profit sharing. Our collaboration arrangements are performed with no guarantee of either technological or commercial success, and each arrangement is unique in nature. See Note 1, Summary of significant accounting policies, for additional discussion of revenues recognized for these types of arrangements. Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line items in the Consolidated Statements of Income, net of any payments due to or reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay. Our significant arrangements are discussed below.
BeiGene, Ltd.
On January 2, 2020, we acquired a 20.5% stake in BeiGene, Ltd. (BeiGene), for approximately $2.8 billion in cash as part of a collaboration to expand our oncology presence in China. Under the collaboration, BeiGene commenced selling XGEVA® and will commercialize KYPROLIS® and BLINCYTO® (blinatumomab) in China, and Amgen will share profits and losses equally during the initial product-specific commercialization periods; thereafter, product rights may revert to Amgen, and Amgen will pay royalties to BeiGene on sales in China of such products for a specified period.
In addition, we will jointly develop a portion of our oncology portfolio with BeiGene sharing in global R&D costs by providing cash and development services up to $1.25 billion. Upon regulatory approval, BeiGene will assume commercialization rights in China for a specified period, and Amgen and BeiGene will share profits equally until certain of these product rights revert to Amgen. Upon return of the product rights, Amgen will pay royalties to BeiGene on sales in China for a specified period. For product sales outside of China, Amgen will also pay BeiGene royalties.
During the year ended December 31, 2020, net costs recovered from BeiGene for oncology product candidates were $225 million and were recorded as an offset to R&D expense in the Consolidated Statements of Income. Profit share payments and product sales between Amgen and BeiGene were not material for the year ended December 31, 2020. As of December 31, 2020, the amount owed from BeiGene for net costs recovered was $113 million, which is included in Other current assets in the Consolidated Balance Sheets. In connection with this collaboration, we acquired an ownership interest in BeiGene. See Note 9, Investments.
Novartis Pharma AG
We are in a collaboration with Novartis Pharma AG (Novartis) to jointly develop and commercialize Aimovig® (erenumab-aooe). In the United States, Amgen and Novartis jointly develop and collaborate on the commercialization of Aimovig®. Amgen, as the principal, recognizes product sales of Aimovig® in the United States, shares U.S. commercialization costs with Novartis and pays Novartis a significant royalty on net sales in the United States. Novartis holds global co-development rights and exclusive commercial rights outside the United States and Japan for Aimovig®. Novartis pays Amgen double-digit royalties on net sales of the product in the Novartis exclusive territories and funds a portion of global R&D expenses. In addition, Novartis will make a payment to Amgen of up to $100 million if certain commercial and expenditure thresholds are achieved with respect to Aimovig® in the United States. Amgen manufactures and supplies Aimovig® worldwide. The migraine collaboration will continue for the commercial life of the product unless terminated in accordance with its terms.
We are currently involved in litigation with Novartis over our collaboration agreements for the development and commercialization of Aimovig®. See Note 19, Contingencies and commitments.
During the years ended December 31, 2020 and 2019, net costs recovered from Novartis for migraine products were $192 million and $187 million, respectively, and were recorded primarily in SG&A expense in the Consolidated Statements of Income. During the year ended December 31, 2018, net costs paid to Novartis for migraine products were $44 million and were recorded primarily in SG&A expense in the Consolidated Statements of Income. During the years ended December 31, 2020, 2019, and 2018, royalties due to Novartis for Aimovig® were $139 million, $115 million and $43 million, respectively, and were recorded in Cost of sales in the Consolidated Statements of Income. During the years ended December 31, 2020, 2019 and 2018, royalties due from Novartis for Aimovig® were not material. As a result of certain regulatory and commercial events, we received milestone payments from Novartis of $295 million during the year ended December 31, 2018, which was recorded in Other revenues in the Consolidated Statements of Income.
Bayer HealthCare LLC
We are in a licensing arrangement with Bayer HealthCare LLC (Bayer) for Nexavar®. Nexavar® is currently marketed and sold in more than 100 countries around the world for the treatment of unresectable liver cancer and advanced kidney cancer. In the United States, Nexavar® is also approved for the treatment of patients with locally recurrent or metastatic, progressive, differentiated thyroid carcinoma refractory to radioactive iodine treatment.
In 2020, we amended the terms of our agreement with Bayer, which transferred all our operational responsibilities outside the United States to Bayer, including commercial and medical affairs activities. Prior to the amendment of the agreement, we shared equally in the profits outside the United States, excluding Japan. In lieu of this profit share, Bayer now pays us a royalty on sales of Nexavar® at a percentage rate in the low 30s. The rights to develop and market Nexavar® in Japan are reserved to Bayer. In the United States, Bayer pays us a royalty on sales of Nexavar® at a percentage rate in the high 30s.
The agreement with Bayer will terminate at the later of the date when patents expire that were issued in connection with product candidates discovered under the agreement or on the last day that we or Bayer market or sell products commercialized under the agreement anywhere in the world. Patents related to Nexavar® began to expire in 2020.
As a result of the 2020 amendment to the collaboration agreement, royalties due from Bayer for Nexavar® were $217 million and net profits were not material for the year ended December 31, 2020. During the years ended December 31, 2019 and 2018, royalties due from Bayer for Nexavar® were $79 million and $91 million, respectively. During the years ended December 31, 2019 and 2018, Amgen recorded Nexavar® net profits of $210 million and $164 million, respectively. Royalties and profit share due from Nexavar® were recorded in Other revenues in the Consolidated Statements of Income. Net R&D expenses related to the agreement were not material for the years ended December 31, 2020, 2019 and 2018.
Other
In addition to the collaborations discussed above, we have various other collaborations that are not individually significant to our business at this time. Pursuant to the terms of those agreements, we may be required to pay additional amounts or we may receive additional amounts upon the achievement of various development and commercial milestones, which in the aggregate could be significant. We may also incur or have reimbursed to us significant R&D costs if the related product candidate were to advance to late-stage clinical trials. In addition, if any products related to these collaborations are approved for sale, we may be required to pay significant royalties or we may receive significant royalties on future sales. The payment of these amounts, however, is contingent upon the occurrence of various future events, which have a high degree of uncertainty of occurrence.