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Intangible Assets and Goodwill | 9 Months Ended
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Sep. 30, 2014
Goodwill and Intangible Assets Disclosure [Abstract] |
Intangible Assets and Goodwill | Intangible Assets and Goodwill Intangible Assets Intangible assets, net of accumulated amortization, impairment charges and adjustments, are summarized as follows:
|  |  | As of September 30, 2014 |  | As of December 31, 2013
(In millions) | Estimated Life |  | Cost |  | Accumulated Amortization |  | Net |  | Cost |  | Accumulated Amortization |  | Net
Out-licensed patents | 13-23 years |  | $ | 543.3 |  |  | $ | (473.8 | ) |  | $ | 69.5 |  |  | $ | 578.0 |  |  | $ | (450.8 | ) |  | $ | 127.2 |
Developed technology | 15-23 years |  | 3,005.3 |  |  | (2,339.8 | ) |  | 665.5 |  |  | 3,005.3 |  |  | (2,165.4 | ) |  | 839.9 |
In-process research and development | Indefinite until commercialization |  | 314.1 |  |  | — |  |  | 314.1 |  |  | 327.4 |  |  | — |  |  | 327.4 |
Trademarks and tradenames | Indefinite |  | 64.0 |  |  | — |  |  | 64.0 |  |  | 64.0 |  |  | — |  |  | 64.0 |
Acquired and in-licensed rights and patents | 6-17 years |  | 3,274.4 |  |  | (257.7 | ) |  | 3,016.7 |  |  | 3,240.0 |  |  | (123.8 | ) |  | 3,116.2 |
Total intangible assets |  |  | $ | 7,201.1 |  |  | $ | (3,071.3 | ) |  | $ | 4,129.8 |  |  | $ | 7,214.7 |  |  | $ | (2,740.0 | ) |  | $ | 4,474.7 |
For the three and nine months ended September 30, 2014, amortization of acquired intangible assets totaled $122.4 million and $382.5 million, respectively, as compared to $100.0 million and $233.5 million, respectively, in the prior year comparative periods. For the three months ended September 30, 2014, compared to the same period in 2013, the change in amortization of acquired intangible assets was primarily driven by a $16.2 million impairment loss related to one of our in-process research and development (IPR&D) intangible assets as discussed further below. For the nine months ended September 30, 2014, compared to the same period in 2013, the change in amortization of acquired intangible assets was primarily driven by our acquisition of the TYSABRI rights from Elan Pharma International Ltd. (Elan), total impairment charges of $50.9 million related to one of our out-licensed patents and one of our IPR&D intangible assets and lower expected lifetime revenues of AVONEX as discussed further below. Out-licensed Patents Out-licensed patents to third-parties primarily relate to patents acquired in connection with the merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation in 2003. During the nine months ended September 30, 2014, we recorded a charge of $34.7 million related to the impairment of one of our out-licensed patents to reflect a change in its estimated fair value, due to a change in the underlying competitive market for that product, which occurred during the first quarter of 2014. The charge is included in amortization of acquired intangibles. The fair value of the intangible asset was based on discounted cash flow calculated using Level 3 fair value measurements and inputs including estimated revenues. Developed Technology Developed technology primarily relates to our AVONEX product, which was recorded in connection with the merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation in 2003. The net book value of this asset as of September 30, 2014 was $656.0 million. We amortize this intangible asset using the economic consumption method based on actual and expected revenues generated from the sales of our AVONEX product. In-process Research and Development (IPR&D) IPR&D represents the fair value assigned to research and development assets that we acquire that have not reached technological feasibility at the date of acquisition. Upon commercialization, we determine the estimated useful life. An analysis of anticipated lifetime revenues and anticipated development costs is performed annually during our long- range planning cycle, which was updated in the third quarter of 2014. This analysis is based upon certain assumptions that we evaluate on a periodic basis, including anticipated future product sales, the expected impact of changes in the amount of development costs and the probabilities of our programs succeeding, the introduction of new products by our competitors and changes in our commercial and pipeline product candidates. During the three months ended September 30, 2014, we updated the probabilities of success related to the early stage programs acquired through our recent acquisitions. The change in probability of success, combined with a delay in one of the projects, resulted in an impairment loss of $16.2 million in one of our IPR&D assets during the three months ended September 30, 2014. In addition, we have adjusted the value of our contingent consideration liabilities to reflect these lower probabilities of success in connection with these earlier stage programs resulting in net gains of $49.4 million in the three months ended September 30, 2014. The impairment charge was included in amortization of acquired intangible assets and the gains were recorded in (gain) loss on fair value remeasurement of contingent consideration. The fair values of the intangible assets and contingent consideration liabilities were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements and inputs including estimated revenues and probabilities of success. Acquired and In-licensed Rights and Patents Acquired and in-licensed rights and patents primarily relate to our acquisition of the TYSABRI rights from Elan. The net intangible asset capitalized related to this acquisition was $3,178.3 million. In the second quarter of 2013, we began amortizing this intangible asset over the estimated useful life using an economic consumption method based on actual and expected revenues generated from the sales of our TYSABRI product. The net book value of this asset as of September 30, 2014 was $2,957.4 million. For a more detailed description of this transaction, please read Note 2, Acquisitions to our consolidated financial statements included within our 2013 Form 10-K. The increase in acquired and in-licensed rights and patents during the nine months ended September 30, 2014, was primarily related to the $20.0 million contingent payment due to the former owners of Syntonix Pharmaceuticals, Inc., which became payable upon the approval of ALPROLIX in the U.S. by the U.S. Food and Drug Administration (FDA) in the first quarter of 2014. We have recorded an additional $7.8 million of acquired in-licensed rights and patents related to this consideration, along with a corresponding deferred tax liability of the same amount. Estimated Future Amortization of Intangible Assets Our amortization expense is based on the economic consumption of the intangible assets. Our most significant intangible assets are related to our AVONEX and TYSABRI products. Annually, during our long-range planning cycle, we perform an analysis of anticipated lifetime revenues of AVONEX and TYSABRI. This analysis is updated whenever events or changes in circumstances would significantly affect the anticipated lifetime revenues of either product. Our most recent long range planning cycle was updated in the third quarter of 2014. Our analysis included an increase in the expected future product revenues of TYSABRI, resulting in a decrease in amortization expense as compared to prior quarters. Our analysis also included a decrease in the expected future product revenues of AVONEX, resulting in an increase in amortization expense as compared to prior quarters. The results of our TYSABRI and AVONEX analyses were impacted by changes in the estimated impact of TECFIDERA, as well as other existing and potential oral and alternative MS formulations, including PLEGRIDY, that may compete with TYSABRI and AVONEX. Based upon this recent analysis, the estimated future amortization for acquired intangible assets for the balance of 2014 and the next five years is expected to be as follows:
(In millions) | As of September 30, 2014
2014 (remaining three months) | $ | 104.2 |
2015 | 345.2 |
2016 | 309.5 |
2017 | 285.5 |
2018 | 284.5 |
2019 | 273.3 |
Total | $ | 1,602.2 |
Goodwill The following table provides a roll forward of the changes in our goodwill balance:
(In millions) | As of September 30, 2014 |  | As of December 31, 2013
Goodwill, beginning of period | $ | 1,232.9 |  |  | $ | 1,201.3 |
Increase to goodwill | 308.3 |  |  | 35.7 |
Other | — |  |  | (4.1 | )
Goodwill, end of period | $ | 1,541.2 |  |  | $ | 1,232.9 |
The increase in goodwill during the nine months ended September 30, 2014 was related to $350.0 million in contingent payments (exclusive of $41.7 million in tax benefits) as we reached the $2.0 billion cumulative sales level related to FUMADERM and TECFIDERA (together, Fumapharm Products) during the second quarter of 2014 and the $3.0 billion cumulative sales level related to Fumapharm Products during the third quarter of 2014. For additional information related to future contingent payments, please read Note 19, Commitments and Contingencies to these condensed consolidated financial statements. As of September 30, 2014, we had no accumulated impairment losses related to goodwill.

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- Definition The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16323-109275 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13816-109267 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16265-109275 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=26713463&loc=d3e16373-109275 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=35741047&loc=d3e13854-109267 + Details
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