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Collaborative and Other Relationships | 9 Months Ended
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Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Collaborative and Other Relationships | Collaborative and Other Relationships Mitsubishi Tanabe Pharma Corporation On September 9, 2015, we announced an agreement with Mitsubishi Tanabe Pharma Corporation (MTPC) to exclusively license MT-1303, a late stage experimental medicine with potential in multiple autoimmune indications. MT-1303 is an oral compound that targets the sphingosine 1-phosphate (S1P) receptor. Under the terms of the agreement, we will receive worldwide rights to MT-1303, excluding Asia. We will be responsible for global commercialization and development costs except for costs related to the Asian territories, which are the responsibility of MTPC. The transaction is subject to customary closing conditions, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the United States, and is expected to close in the fourth quarter of 2015. Upon closing, we will pay MTPC an upfront payment of $60.0 million and in the future may pay up to approximately $484.0 million in milestone payments for multiple indications and territories, along with average royalties in the mid-teen to high-teen percentages of annual net sales. We will record the $60.0 million upfront payment as research and development expense in our condensed consolidated statements of income when the agreement closes. MTPC has the right to participate in our global clinical trials related to MT-1303 and has an option to co-promote non-MS indications in the U.S. Applied Genetic Technologies Corporation On July 2, 2015, we announced a collaboration and license agreement to develop gene-based therapies for multiple ophthalmic diseases with Applied Genetic Technologies Corporation (AGTC). The collaboration will focus on the development of a portfolio of AGTC’s therapeutic programs, including both a clinical stage candidate for X-linked Retinoschisis (XLRS) and a pre-clinical candidate for the treatment of X-Linked Retinitis Pigmentosa (XLRP). The agreement also includes options for early stage discovery programs in two ophthalmic diseases and one non-ophthalmic condition, as well as an equity investment in AGTC. During the third quarter of 2015, the collaboration became effective and we made an upfront payment of $124.0 million, which included a $30.0 million equity investment in AGTC, prepaid research and development expenditures of $58.4 million and total licensing and other fees of $35.6 million. The $58.4 million of prepaid research and development expenditures were recorded in investments and other assets in our condensed consolidated balance sheets and will be expensed as the services are provided. During the three months ended September 30, 2015, we recorded $56.8 million as research and development expense associated with AGTC in our condensed consolidated statements of income, including the $35.6 million total licensing and other fees, $8.7 million in research and development services, a $7.5 million premium on our equity investment and a $5.0 million clinical development milestones related to XLRS. AGTC is eligible to receive milestone payments aggregating in excess of $1.0 billion, which includes up to $472.5 million collectively for the two lead programs and up to up to $592.5 million across the discovery programs. AGTC is also eligible to receive royalties in the mid-single digit to mid-teen percentages of annual net sales. We were granted worldwide commercialization rights for the XLRS and XLRP programs. AGTC has an option to share development costs and profits after the initial clinical trial data are available, and an option to co-promote the second of these products to be approved in the U.S. AGTC will lead the clinical development programs of XLRS through product approval and of XLRP through the completion of first-in-human trials. We will support the clinical development costs, subject to certain conditions, following the first-in-human study for XLRS and IND-enabling studies for XLRP. Under the manufacturing license, we have received an exclusive license to use AGTC’s proprietary technology platform to make AAV vectors for up to six genes, three of which are in AGTC’s discretion, in exchange for payment of milestones and royalties. Swedish Orphan Biovitrum AB On July 16, 2015, Swedish Orphan Biovitrum AB (Sobi) exercised its option to assume development and commercialization of ALPROLIX in Europe, Russia, Turkey and certain markets in the Middle East and paid us $10.0 million, which will be held in escrow pending E.U. regulatory approval. We collaborate with Sobi to jointly develop and commercialize Factor VIII and Factor IX hemophilia products, including ELOCTATE and ALPROLIX. For more information about our agreement with Sobi, please read Note 20, Collaborative and Other Relationships to our consolidated financial statements included in our 2014 Form 10-K. Samsung Bioepis Joint Venture Agreement In February 2012, we entered into a joint venture agreement with Samsung BioLogics Co. Ltd. (Samsung Biologics), establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar pharmaceuticals. Samsung Biologics contributed 280.5 billion South Korean won (approximately $250.0 million) for an 85% stake in Samsung Bioepis and we contributed approximately 49.5 billion South Korean won (approximately $45.0 million) for the remaining 15% ownership interest. Under the joint venture agreement, we have no obligation to provide any additional funding and our ownership interest may be diluted due to financings in which we do not participate. As of September 30, 2015, our ownership interest is approximately 10%, which reflects our additional contribution of 6.3 billion South Korean won (approximately $5.7 million) in the first quarter of 2015 and the effect of additional equity financings in which we did not participate. We maintain an option to purchase additional stock in Samsung Bioepis that would allow us to increase our ownership percentage up to 49.9%. The exercise of this option is within our control and is based on paying for 49.9% of the total investment made by Samsung Biologics into Samsung Bioepis in excess of what we have already contributed under the agreement plus a rate that will represent their return on capital. As of September 30, 2015 and December 31, 2014, the carrying value of our investment in Samsung Bioepis totaled 0.0 billion and 9.1 billion South Korean won (approximately $0.0 million and $8.6 million), respectively, which is classified as a component of investments and other assets in our condensed consolidated balance sheets. Based on our level of influence over Samsung Bioepis, we account for this investment under the equity method of accounting and we recognize our share of the results of operations related to our investment in Samsung Bioepis one quarter in arrears when the results of the entity become available, which is reflected as equity in loss of investee, net of tax in our condensed consolidated statements of income. During the three and nine months ended September 30, 2015, we recognized a loss on our investment of $6.8 million and $12.5 million, respectively, as compared to $5.4 million and $14.9 million, respectively, in the prior year comparative periods. During the three months ended September 30, 2015, our share of losses exceeded the carrying value of our investment. We will suspend recognizing additional losses. Commercial Agreement On December 17, 2013, pursuant to our rights under the joint venture agreement with Samsung Biologics, we entered into an agreement with Samsung Bioepis to commercialize anti-tumor necrosis factor (TNF) biosimilar product candidates in Europe and, in the case of one anti-TNF biosimilar candidate, Japan. Under the terms of this agreement, we have paid $46.0 million, which has been recorded as a research and development expense in our condensed consolidated statements of income as the programs they relate to have not achieved regulatory approval. Samsung Bioepis is eligible to receive an additional $75.0 million in additional milestones related to regulatory approval of the product candidates. Upon commercialization, there will be a 50% profit share with Samsung Bioepis. Other Services Simultaneous with the formation of Samsung Bioepis, we also entered into a license agreement, a technical development services agreement and a manufacturing agreement with Samsung Bioepis. For the three and nine months ended September 30, 2015, we recognized $10.9 million and $47.0 million, respectively, in other revenues in relation to these services, as compared to $21.3 million and $57.8 million, respectively, in the prior year comparative periods. For additional information related to our other significant collaboration arrangements, please read Note 20, Collaborative and Other Relationships to our consolidated financial statements included in our 2014 Form 10-K.

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