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Collaborative and Other Relationships | 12 Months Ended
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Dec. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Collaborative and Other Relationships | Collaborative and Other Relationships In connection with our business strategy, we have entered into various collaboration agreements which provide us with rights to develop, produce and market products using certain know-how, technology and patent rights maintained by our collaborative partners. Terms of the various collaboration agreements may require us to make milestone payments upon the achievement of certain product research and development objectives and pay royalties on future sales, if any, of commercial products resulting from the collaboration. Depending on the collaborative arrangement, we may record funding receivables or payable balances with our partners, based on the nature of the cost-sharing mechanism and activity within the collaboration. Our significant collaboration arrangements are discussed below. Genentech (Roche Group) We collaborate with Genentech on the development and commercialization of RITUXAN. In addition, in the U.S., we share operating profits and losses relating to GAZYVA with Genentech. The Roche Group and its sub-licensees maintain sole responsibility for the development, manufacturing and commercialization of GAZYVA in the U.S. Our collaboration agreement will continue in effect until we mutually agree to terminate the collaboration, except that if we undergo a change in control, as defined in the collaboration agreement, Genentech has the right to present an offer to buy the rights to RITUXAN and we must either accept Genentech’s offer or purchase Genentech’s rights on the same terms as its offer. Genentech will also be deemed concurrently to have purchased our rights to any other anti-CD20 products in development in exchange for a royalty and our rights to GAZYVA in exchange for the compensation described in the table below. Our collaboration with Genentech was created through a contractual arrangement and not through a joint venture or other legal entity. RITUXAN Genentech is responsible for the worldwide manufacturing of RITUXAN. Development and commercialization rights and responsibilities under this collaboration are divided as follows: U.S. We share with Genentech co-exclusive rights to develop, commercialize and market RITUXAN in the U.S. Canada We and Genentech have assigned our rights under our collaboration agreement with respect to Canada to the Roche Group. Outside the U.S. and Canada We have granted Genentech exclusive rights to develop, commercialize and market RITUXAN outside the U.S. and Canada. Under the terms of separate sublicense agreements between Genentech and the Roche Group, development and commercialization of RITUXAN outside the U.S. and Canada is the responsibility of the Roche Group and its sublicensees. We do not have any direct contractual arrangements with the Roche Group or it sublicensees. Under the terms of the collaboration agreement, the Roche Group pays us royalties between 10% and 12% on sales of RITUXAN outside the U.S. and Canada, with the royalty period lasting 11 years from the first commercial sale of RITUXAN on a country-by-country basis. The royalty periods for the substantial portion of the royalty-bearing sales in the rest of world markets expired during 2012 and 2013. We expect future revenue on sales of RITUXAN in the rest of world will be limited to our share of pre-tax co-promotion profits in Canada. GAZYVA Prior to FDA approval of GAZYVA, we recognized 35% of the development and commercialization expenses as research and development expense and selling, general and administrative expense, respectively, in our consolidated statements of income. After GAZYVA was approved by the FDA in the fourth quarter of 2013, we began to recognize our share of the development and commercialization expenses as a reduction of our share of pre-tax profits in revenues from unconsolidated joint business. Commercialization of GAZYVA will impact our percentage of the co-promotion profits for RITUXAN, as summarized in the table below. Ocrelizumab Genentech is solely responsible for development and commercialization of ocrelizumab, a humanized anti-CD20 monoclonal antibody currently in development for MS, and funding future costs. Genentech cannot develop ocrelizumab in CLL, NHL or RA. We will receive tiered royalties between 13.5% and 24% on U.S. net sales of ocrelizumab if approved for commercial sale by the FDA. There will be a 50% reduction to these royalties if a biosimilar to ocrelizumab is approved in the U.S. In addition, we will receive a 3% royalty on worldwide net sales of ocrelizumab outside the U.S., with the royalty period lasting 11 years from the first commercial sale of ocrelizumab on a country-by-country basis. Commercialization of ocrelizumab will not impact the percentage of the co-promotion profits we receive for RITUXAN or GAZYVA. Profit-sharing Formulas RITUXAN Profit Share Our current pretax co-promotion profit-sharing formula for RITUXAN provides for a 30% share on the first $50.0 million of co-promotion operating profits earned each calendar year. Our share of annual co-promotion profits in excess of $50.0 million varies, as summarized in the table below, upon the following events:
Until GAZYVA First Non-CLL FDA Approval | 40.0 | %
After GAZYVA First Non-CLL FDA Approval until First GAZYVA Threshold Date | 39.0 | %
After First GAZYVA Threshold Date until Second GAZYVA Threshold Date | 37.5 | %
After Second GAZYVA Threshold Date | 35.0 | %
First Non-CLL GAZYVA FDA Approval means the FDA’s first approval of GAZYVA in an indication other than CLL. First GAZYVA Threshold Date means the earlier of (1) the date of the First Non-CLL GAZYVA FDA approval if U.S. gross sales of GAZYVA for the preceding consecutive 12 month period were at least $150.0 million or (2) the first day of the calendar quarter after the date of the First Non-CLL GAZYVA FDA Approval that U.S. gross sales of GAZYVA within any consecutive 12 month period have reached $150.0 million. Second GAZYVA Threshold Date means the first day of the calendar quarter after U.S. gross sales of GAZYVA within any consecutive 12 month period have reached $500.0 million. The Second GAZYVA Threshold Date can be achieved regardless of whether GAZYVA has been approved in a non-CLL indication. We expect our share of RITUXAN pre-tax profits in the U.S. to decrease to 39% from 40% if GAZYVA is approved by the FDA in RITUXAN-refractory indolent non-Hodgkin’s lymphoma. In addition, should the FDA approve an anti-CD20 product other than ocrelizumab or GAZYVA that is acquired or developed by Genentech and subject to the collaboration agreement, our share of the co-promotion operating profits would be between 30% and 38% based on certain events. GAZYVA Profit Share Our current pretax profit-sharing formula for GAZYVA provides for a 35% share on the first $50.0 million of operating profits earned each calendar year. Our share of annual profits in excess of $50.0 million varies, as summarized in the table below, upon the following events:
Until First GAZYVA Threshold Date | 39.0 | %
After First GAZYVA Threshold Date until Second GAZYVA Threshold Date | 37.5 | %
After Second GAZYVA Threshold Date | 35.0 | %
In 2015, 2014, and 2013, our share of operating losses on GAZYVA was 35%. Unconsolidated Joint Business Revenues During the first quarter of 2013, we reduced our share of RITUXAN revenues from unconsolidated joint business by approximately $49.7 million, of which revenue on sales in the rest of world for RITUXAN was reduced by $41.2 million and pre-tax profits in the U.S. were reduced by $8.5 million, to reflect our share of the royalties and interest awarded to Hoechst in its arbitration with Genentech. Revenues from unconsolidated joint business are summarized as follows:
| For the Years Ended December 31,
(In millions) | 2015 |  | 2014 |  | 2013
Biogen's share of pre-tax profits in the U.S. for RITUXAN and GAZYVA, including the reimbursement of selling and development expenses (1) | $ | 1,269.8 |  |  | $ | 1,117.1 |  |  | $ | 1,087.3 |
Revenue on sales in the rest of world for RITUXAN | 69.4 |  |  | 78.3 |  |  | 38.7 |
Total unconsolidated joint business revenues | $ | 1,339.2 |  |  | $ | 1,195.4 |  |  | $ | 1,126.0 |
(1) GAZYVA sales began in the fourth quarter of 2013. In 2015, 2014, and 2013, the 40% profit-sharing threshold was met during the first quarter. Prior to regulatory approval, we record our share of the expenses incurred by the collaboration for the development of anti-CD20 products in research and development expense in our consolidated statements of income. We incurred $25.7 million in development expense for 2013. After an anti-CD20 product is approved, we record our share of the development expenses related to that product as a reduction of our share of pre-tax profits in revenues from unconsolidated joint business. Elan On April 2, 2013, we acquired full ownership of all remaining rights to TYSABRI from Elan that we did not already own or control. Upon the closing of the transaction, our collaboration agreement with Elan was terminated. For additional information related to this transaction, please read Note 2, Acquisitions to these consolidated financial statements. We previously collaborated with Elan on the development, manufacture and commercialization of TYSABRI. Under the terms of our collaboration agreement, we manufactured TYSABRI and collaborated with Elan on the product’s marketing, commercial distribution and ongoing development activities. The agreement was designed to effect an equal sharing of profits and losses generated by the activities of our collaboration. Under the agreement, however, once sales of TYSABRI exceeded specific thresholds, Elan was required to make milestone payments to us in order to continue sharing equally in the collaboration’s results. In the U.S., we previously sold TYSABRI to Elan who then sold the product to third-party distributors. Our sales price to Elan in the U.S. was set prior to the beginning of each quarterly period to effect an approximate equal sharing of the gross profit between Elan and us. We recognized revenue for sales in the U.S. of TYSABRI upon Elan’s shipment of the product to the third-party distributors, at which time all revenue recognition criteria had been met. We incurred manufacturing and distribution costs, research and development expenses, commercial expenses, and general and administrative expenses related to TYSABRI. We recorded these expenses to their respective line items in our consolidated statements of income when they were incurred. Research and development and sales and marketing expenses were shared equally with Elan and the reimbursement of these expenses was recorded as reductions of the respective expense categories. During 2013, we recorded $11.7 million as a reduction of research and development expense resulting from reimbursements from Elan. In addition, for 2013, we recorded $20.6 million as a reduction of selling, general and administrative expense resulting from reimbursements from Elan. In the rest of world, we previously were responsible for distributing TYSABRI to customers and were primarily responsible for all operating activities. Generally, we recognized revenue for sales of TYSABRI in the rest of world at the time of product delivery to our customers. We made payments to Elan which effected an equal sharing of rest of world collaboration operating profits. These payments also included the reimbursement we paid to Elan for half of the third-party royalties that Elan paid on behalf of the collaboration relating to rest of world sales. These amounts were reflected in the collaboration profit sharing line in our consolidated statements of income. For 2013, $85.4 million was reflected in the collaboration profit sharing line for our collaboration with Elan. Acorda In 2009, we entered into a collaboration and license agreement with Acorda Therapeutics, Inc. (Acorda) to develop and commercialize products containing fampridine in markets outside the U.S. We also have responsibility for regulatory activities and the future clinical development of related products in those markets. Under the terms of the collaboration and license agreement, we pay Acorda tiered royalties based on the level of ex-U.S. net sales. We may pay up to $375.0 million of additional milestone payments to Acorda, based on the successful achievement of certain regulatory and commercial milestones. The next expected milestone would be $15.0 million, due if ex-U.S. net sales reach $100.0 million over a period of four consecutive quarters. We will capitalize these additional milestones as intangible assets upon achievement of the milestone which will then be amortized utilizing an economic consumption model and recognized as amortization of acquired intangible assets. Royalty payments are recognized as a cost of goods sold. In connection with the collaboration and license agreement, we have also entered into a supply agreement with Acorda for the commercial supply of FAMPYRA. This agreement is a sublicense arrangement of an existing agreement between Acorda and Alkermes, who acquired Elan Drug Technologies, the original party to the license with Acorda. During the years ending December 31, 2015, 2014 and 2013, total cost of sales related to royalties and commercial supply of FAMPRYA reflected in our consolidated statement of income were $30.6 million, $29.2 million and $24.3 million, respectively. Swedish Orphan Biovitrum AB (publ) In January 2007, we acquired 100% of the stock of Syntonix. Syntonix had previously entered into a collaboration agreement with Swedish Orphan Biovitrum AB (publ) (Sobi) to jointly develop and commercialize Factor VIII and Factor IX hemophilia products, including ELOCTATE and ALPROLIX. In February 2010, we restructured the collaboration agreement and assumed full development responsibilities and costs, as well as manufacturing rights. In addition, the cross-royalty rates were reduced and commercial rights for certain territories were changed. As a result, we have commercial rights for North America (the Biogen North America Territory) and for rest of the world markets outside of, essentially, Europe, North Africa, Russia and certain countries in the Middle East (the Biogen Direct Territory). Subject to the exercise of an option right that Sobi controls, Sobi will have commercial rights in, essentially, Europe, North Africa, Russia and certain countries in the Middle East (the Sobi Territory). The collaboration agreement was amended and restated in April 2014. (References to the collaboration agreement refer to the amended and restated collaboration agreement). In November 2014, Sobi exercised its option to assume final development and commercialization activities in the Sobi Territory for ELOCTA (the trade name for ELOCTATE in the E.U.). In July 2015, Sobi exercised its option to assume final development and commercialization of ALPROLIX within the Sobi Territory. Upon each exercise of opt-in right under the terms of the collaboration agreement, Sobi made a $10.0 million payment in escrow. Upon EMA regulatory approval of each such product, Sobi will be liable to reimburse us 50% of the sum of all shared manufacturing and development expenses incurred by us from October 1, 2009 through the earlier of the date on which Sobi is registered as the marketing authorization holder for the applicable product or 90 days post-regulatory approval, as well as 100% of certain development expenses incurred exclusively for the benefit of the Sobi Territory (the Opt-In Consideration). This reimbursement will be recognized in proportion to collaboration revenues, over a ten year period, consistent with the initial patent terms of the products. ELOCTA was approved by the EC in November 2015. Through December 31, 2015, approximately $200 million in expenditures for ELOCTA, net of the $10.0 million escrow payment discussed above, are reimbursable by Sobi under the collaboration agreement due to its election to assume final development and commercialization of ELOCTA within the Sobi Territory. Approximately $175 million in expenditures for ALPROLIX may be reimbursable by Sobi under the collaboration agreement due to its election to assume final development and commercialization of ALPROLIX within the Sobi Territory. The escrow payment made with respect to ALPROLIX will be applied to the amount of the Opt-In Consideration to be reimbursed by Sobi upon EMA regulatory approval. To effect Sobi’s reimbursement to us for the Opt-In Consideration exceeding the escrow payment for the applicable product, the cross-royalty cash payment structure for direct sales in each company’s respective territories will be adjusted until the Opt-In Consideration is paid in full (the Reimbursement Period). The mechanism for reimbursement is outlined in the table below. Under the collaboration agreement, cash payments are as follows:
|  |  |  |  | Rates post Sobi Opt-In(3)
Royalty and Net Revenue Share Rates: | Method |  | Rate prior to 1st commercial sale in the Sobi Territory: |  | Base Rate following 1st commercial sale in the Sobi Territory: |  | Rate during the Reimbursement Period:
Sobi rate to Biogen on net sales in the Sobi Territory | Royalty |  | N/A |  | 10 or 12% |  | Base Rate plus 5%
Biogen rate to Sobi on net sales in the Biogen North America Territory | Royalty |  | 2% |  | 10 or 12% |  | Base Rate less 5%
Biogen rate to Sobi on net sales in the Biogen Direct Territory | Royalty |  | 2% |  | 15 or 17% |  | Base Rate less 5%
Biogen rate to Sobi on net revenue(1) from the Biogen Distributor Territory(2) | Net Revenue Share |  | 10% |  | 50% |  | Base Rate less 15%
(1) | Net revenue represents Biogen’s pre-tax receipts from third-party distributors, less expenses incurred by Biogen in the conduct of commercialization activities supporting the distributor activities.
(2) | The Biogen Distributor Territory represents Biogen territories where sales are derived utilizing a third-party distributor.
(3) | A credit will be issued to Sobi against its reimbursement of the Opt-in Consideration in an amount equal to the difference in the rate paid by Biogen to Sobi on sales in the Biogen territories for certain periods prior to the first commercial sale in the Sobi Territory versus the rate that otherwise would have been payable on such sales.
If the reimbursement of the Opt-in Consideration has not been achieved within six years of the first commercial sale of such product, we maintain the right to require Sobi to pay any remaining balances due to us within 90 days of the six year anniversary date of the first commercial sale. We expect to recognize the effect of the cash reimbursement as an adjustment to the Base Rate in the table above. Should Sobi terminate the collaboration agreement with respect to ALPROLIX, we will obtain full worldwide development and commercialization rights and we will be obligated to pay royalties to Sobi subject to separate terms, as defined in the collaboration agreement. In addition, if EMA approval for ALPROLIX is not granted within 18 months of the filing date, Sobi shall have the right to require that the escrow payment be refunded and revoke its option right for such product. AbbVie Biotherapeutics, Inc. We have a collaboration agreement with AbbVie Biotherapeutics, Inc., a subsidiary of AbbVie, Inc. (AbbVie) aimed at advancing the development and commercialization of ZINBRYTA in MS. Under the agreement, we and AbbVie will conduct ZINBRYTA co-promotion activities in the E.U., U.S. and Canada territories (Collaboration Territory), where development and commercialization costs and profits are shared equally. We are responsible for all manufacturing activities in the Collaboration Territory. In the U.S., AbbVie will recognize revenues on sales to third parties and we will recognize our 50% share of the co-promotion profits or losses as a component of total revenues in our consolidated statements of income. In the E.U. and Canada, we will reflect revenues on sales to third parties in product revenues, net in our consolidated statements of income. We will record the related cost of revenues and sales and marketing expenses to their respective line items in our consolidated statements of income when these costs are incurred. The reimbursement with AbbVie for the 50% sharing of the co-promotion profits or losses in the E.U. and Canada will be recognized in our total costs and expenses. Outside of the Collaboration Territory, we are solely responsible for development and commercialization where we will pay a tiered royalty to AbbVie on net sales in the low to high teens. We are the responsible party for manufacturing and research and development activities in both the Collaboration Territory and outside the Collaboration Territory and will record these activities to their respective lines in our consolidated statements of income, net of any reimbursement of research and development expenditures from AbbVie. During 2015, we made milestone payments of $16.0 million for the development of ZINBRYTA as a result of filing for regulatory approval in the U.S. and E.U. during the year. These payments were recorded as research and development expense in our consolidated statements of income. We may incur up to an additional $32.0 million of milestone payments related to the development of ZINBRYTA, of which $20.0 million is due upon regulatory approval in the U.S. and $12.0 million is due upon regulatory approval in the E.U. These future payments will be capitalized as an intangible asset in our consolidated balance sheets. A summary of activity related to this collaboration is as follows:
| For the Years Ended December 31,
(In millions) | 2015 |  | 2014 |  | 2013
Total development expense incurred by the collaboration | $ | 113.8 |  |  | $ | 117.8 |  |  | $ | 133.4 |
Biogen’s share of development expense reflected in our consolidated statements of income | $ | 60.8 |  |  | $ | 67.4 |  |  | $ | 71.0 |
Ionis Pharmaceuticals, Inc. Long-Term Strategic Research Collaboration In September 2013, we entered into a six year research collaboration with Ionis Pharmaceuticals, Inc. (Ionis), formerly known as Isis Pharmaceuticals Inc. under which both companies collaborate to perform discovery level research and then develop and commercialize antisense or other therapeutics for the treatment of neurological disorders. Under the collaboration, Ionis will perform research on a set of neurological targets identified within the agreement. Once the research has reached a specific stage of development, we will make the determination whether antisense is the preferred approach to develop a therapeutic candidate or whether another modality is preferred. If antisense is selected, Ionis will continue development and identify a product candidate. If another modality is used, we will assume the responsibility for identifying a product candidate and developing it. Under the terms of this agreement, we paid Ionis an upfront amount of $100.0 million. Of this payment, we recorded prepaid research and discovery services of approximately $25.0 million, representing the value of the Ionis full time equivalent employee resources which are required by the collaboration to provide research and discovery services to us over the next six years. The remaining $75.0 million of the upfront payment was recorded as research and development expense as it represented the purchase of intellectual property that had not reached technological feasibility. Ionis is also eligible to receive milestone payments, license fees and royalty payments for all product candidates developed through this collaboration, with the specific amount dependent upon the modality of the product candidate advanced by us. During the years ending December 31, 2015 and 2014, we triggered milestones of $20.0 million and $20.0 million, respectively, related to the advancement of IONIS-SOD1 Rx for the treatment of ALS and other neurological targets identified. For non-ALS antisense product candidates, Ionis will be responsible for global development through the completion of a Phase 2 trial and we will provide advice on the clinical trial design and regulatory strategy. For ALS antisense product candidates, we are responsible for global development, clinical trial design and regulatory strategy. We have an option to license a product candidate until completion of the Phase 2 trial. If we exercise our option, we will pay Ionis up to a $70.0 million license fee and assume global development, regulatory and commercialization responsibilities. Ionis could receive additional milestone payments upon the achievement of certain regulatory milestones of up to $130.0 million, plus additional amounts related to the cost of clinical trials conducted by Ionis under the collaboration, and royalties on future sales if we successfully develop the product candidate after option exercise. For product candidates using a different modality, we will be responsible for global development through all stages and will pay Ionis up to $90.0 million upon the achievement of certain regulatory milestones and royalties on future sales if we successfully develop the product candidate. Product Collaborations In December, June and January 2012, we entered into three separate exclusive, worldwide option and collaboration agreements with Ionis under which both companies will develop and commercialize antisense therapeutics for up to three gene targets, Ionis’ product candidates for the treatment of myotonic dystrophy type 1 (DM1), and the antisense investigational candidate nusinersen (ISIS-SMN Rx) for the treatment of spinal muscular atrophy (SMA), respectively. Antisense Therapeutics Under the terms of the December 2012 agreement relating to the development and commercialization of up to three gene targets we provided Ionis with an upfront payment of $30.0 million and will make potential additional payments, prior to licensing, of up to $10.0 million based on the development of the selected product candidate as well as a mark-up of the cost estimate of the Phase 1 and Phase 2 trials. During 2015, we triggered a $10.0 million milestone payment. Ionis will be responsible for global development of any product candidate through the completion of a Phase 2 trial and we will provide advice on the clinical trial design and regulatory strategy. We have an option to license the product candidate until completion of the Phase 2 trial. If we exercise our option, we will pay Ionis up to a $70.0 million license fee and assume global development, regulatory and commercialization responsibilities. Ionis could receive up to another $130.0 million in milestone payments upon the achievement of certain regulatory milestones as well as royalties on future sales if we successfully develop the product candidate after option exercise. IONIS-DMPK Rx Under the terms of the June 2012 agreement for the DM1 candidate, we provided Ionis with an upfront payment of $12.0 million and agreed to make potential additional payments, prior to licensing, of up to $59.0 million based on the development of the selected product candidate. During 2015, we amended the agreement to adjust the amount of potential additional payments by an additional $4.2 million due to changes in the clinical trial design. During 2015, 2014 and 2013, we triggered milestones of $2.8 million, $14.0 million and $10.0 million, respectively, related to the selection and advancement of IONIS-DMPK Rx to treat DM1. Ionis will be responsible for global development of any product candidate through the completion of a Phase 2 trial and we will provide advice on the clinical trial design and regulatory strategy. We also have an option to license the product candidate until completion of the Phase 2 trial. If we exercise our option, we will pay Ionis up to a $70.0 million license fee and assume global development, regulatory and commercialization responsibilities. Ionis could receive up to another $130.0 million in milestone payments upon the achievement of certain regulatory milestones as well as royalties on future sales if we successfully develop the product candidate after option exercise. During the years ending December 31, 2015, 2014 and 2013, $9.0 million, $10.9 million and $11.2 million, respectively, were reflected in research and development expense in our consolidated statements of income. Nusinersen Under the terms of the January 2012 agreement for the antisense investigational drug candidate, nusinersen, we paid Ionis $29.0 million as an upfront payment. During 2014, we amended the agreement to adjust the amount of potential additional payments and terms of the exercise of our opt-in right to license nusinersen. Consistent with the initial agreement, Ionis remains responsible for conducting the pivotal/Phase 3 trials. We are providing input on the clinical trial design and regulatory strategy for the development of nusinersen. During 2015 and 2014, we triggered clinical trial payments of $42.8 million and $57.3 million related to the advancement of the program. We are recognizing these payments as research and development expenses as the trial costs are incurred. During 2015, we amended the agreement and may pay up to an additional $92.0 million due to changes in the clinical trial design. We may exercise our opt-in right upon completion of and data review of the first successful Phase 2/3 trial or completion of both Phase 2/3 trials. An amendment in December 2014 provided for additional opt-in scenarios, based on the filing or the acceptance of a new drug application or marketing authorization application with the FDA or EMA. Under the amended collaboration agreement, we may pay Ionis up to approximately $325.0 million in a license fee and payments, including $100.0 million in payments associated with the clinical development of nusinersen prior to licensing, a license fee and $150.0 million in milestone payments upon the achievement of certain regulatory milestones as well as royalties on future sales of nusinersen if we successfully develop nusinersen after option exercise. During the years ending December 31, 2015, 2014 and 2013, $74.9 million, $27.7 million and $13.6 million, respectively, were reflected in research and development expense in our consolidated statements of income. Eisai Co., Ltd. BAN2401 and E2609 Collaboration On March 4, 2014, we entered into a collaboration agreement with Eisai Co., Ltd. (Eisai) to jointly develop and commercialize two Eisai product candidates for the treatment of Alzheimer’s disease, BAN2401, a monoclonal antibody that targets amyloid-beta aggregates, and E2609, a BACE inhibitor, (Eisai Collaboration Agreement). Under the Eisai Collaboration Agreement, Eisai serves as the global operational and regulatory lead for both compounds and all costs, including research, development, sales and marketing expenses, will be shared equally by us and Eisai. Following marketing approval in major markets, such as the U.S., the E.U. and Japan, we will co-promote BAN2401 and E2609 with Eisai and share profits equally. In smaller markets, Eisai will distribute these products and pay us a royalty. The Eisai Collaboration Agreement also provides the parties with certain rights and obligations in the event of a change in control of either party. The Eisai Collaboration Agreement also provides Eisai an option to jointly develop and commercialize aducanumab, our anti-amyloid beta antibody candidate for Alzheimer’s disease (Aducanumab Option) and an option to jointly develop and commercialize one of our anti-tau monoclonal antibodies (Anti-Tau Option). Upon exercise of each of the Aducanumab Option and the Anti-Tau Option, we will execute a separate collaboration agreement with Eisai on terms and conditions that mirror the Eisai Collaboration Agreement. Aducanumab Option Eisai may exercise the Aducanumab Option after either (i) completion of both the current Phase 1b clinical trial for aducanumab and the current Phase 2 clinical trial for BAN2401 (Post-Phase 2 Aducanumab Option), or (ii) completion of the Phase 3 clinical trial for aducanumab (Post-Phase 3 Aducanumab Option) under certain conditions. The consideration we will receive if Eisai exercises the Post-Phase 2 Aducanumab Option depends on the development status of BAN2401. If BAN2401 is then determined to advance to Phase 3, we will be entitled to receive a single payment from Eisai upon regulatory approval of aducanumab and we will no longer be required to pay Eisai any milestone payments for products containing BAN2401 under the Eisai Collaboration Agreement. If the development of BAN2401 has instead been terminated, we will receive development and commercial milestone payments from Eisai (Post-Phase 2 Aducanumab Milestone Payments). If Eisai does not exercise its Post-Phase 2 Aducanumab Option, we may elect to terminate the Eisai Collaboration Agreement with respect to BAN2401 but, under certain conditions, will have the option to reinstate the Eisai Collaboration Agreement after completion of a BAN2401 Phase 3 clinical trial. If Eisai exercises its Post-Phase 3 Aducanumab Option, Eisai will be required to pay us all Phase 3 development and commercialization costs plus a mark-up and an amount equal to any unpaid Post-Phase 2 Aducanumab Milestone Payments that would have been payable if Eisai had exercised its Post-Phase 2 Aducanumab Option. Anti-Tau Option Eisai may exercise the Anti-Tau Option after completion of the Phase 1 clinical trial of such anti-tau monoclonal antibody. If Eisai exercises its Anti-Tau Option, we will receive an upfront payment from Eisai and will be entitled to additional development and commercial milestone payments. Upon the effective date of the Eisai Collaboration Agreement, we paid Eisai $100.0 million and recorded $17.7 million, reflecting the fair value of the options granted under the Eisai Collaboration Agreement, both of which were classified as research and development expense in our consolidated statements of income. During the second quarter of 2014, Eisai exercised its option under the Eisai Collaboration Agreement to expand the joint development and commercialization activities to include Japan. Upon such exercise, we paid Eisai an additional $35.0 million, and recorded $21.6 million as research and development expense in our consolidated statements of income, which represented the difference between the payment made upon exercise of the option and the fair value of that option recorded as research and development expense upon closing of the agreement in the first quarter of 2014. We could pay Eisai up to an additional $1.0 billion under the Eisai Collaboration Agreement based on the future achievement of certain development, regulatory and commercial milestones. In addition to our arrangements with Eisai, Neurimmune is entitled to milestone and royalty payments related to the development and commercialization of aducanumab and certain anti-tau antibodies. For additional information regarding our agreement with Neurimmune, please see Note 18, Investments in Variable Interest Entities to these consolidated financial statements. A summary of activity related to this collaboration is as follows:
| For the Years Ended December 31,
(In millions) | 2015 |  | 2014 |  | 2013
Total development expense incurred by the collaboration | $ | 84.1 |  |  | $ | 57.5 |  |  | $ | — |
Biogen’s share of development expense, excluding upfront and milestone payments, reflected in our consolidated statements of income | $ | 40.4 |  |  | $ | 29.1 |  |  | $ | — |
Sangamo BioSciences, Inc. On February 22, 2014, we completed an exclusive worldwide research, development and commercialization collaboration and license agreement with Sangamo BioSciences, Inc. (Sangamo) under which both companies will develop and commercialize product candidates for the treatment of two inherited blood disorders, sickle cell disease and beta-thalassemia. The collaboration is currently in the research stage of development. Under the terms of the agreement, we paid Sangamo an upfront payment of $20.0 million in cash, with additional payments of up to approximately $300.0 million based on the achievement of certain development, regulatory and commercial milestones, plus royalties based on sales. We recorded the $20.0 million upfront payment as research and development expense. Under this arrangement, Sangamo will be responsible for identifying a product candidate for the treatment of beta-thalassemia and advancing that candidate through a completed Phase 1 human clinical trial, at which point we would assume responsibility for development. We will jointly develop a sickle cell disease candidate through the potential filing of an investigative new drug application, after which we would assume clinical responsibilities. We will lead the global development and commercialization efforts and Sangamo will have the option to assume co-promotion responsibilities in the U.S. During the years ending December 31, 2015 and 2014, $13.6 million and $28.9 million, respectively, of expense was reflected in our consolidated statements of income. 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, 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 consolidated balance sheets and will be expensed as the services are provided. During 2015, we recorded $54.5 million as research and development expense associated with AGTC in our consolidated statements of income, including the $35.6 million total licensing and other fees, $6.5 million in research and development services, a $7.5 million premium on our equity investment and a $5.0 million clinical development milestone related to XLRS. AGTC is eligible to receive development, regulatory and commercial milestone payments aggregating in excess of $1.1 billion, which includes up to $472.5 million collectively for the two lead programs and 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. Mitsubishi Tanabe Pharma Corporation On September 9, 2015, we announced an agreement with Mitsubishi Tanabe Pharma Corporation (MTPC) to exclusively license amiselimod (MT-1303), a late stage experimental medicine with potential in multiple autoimmune indications. Amiselimod is an oral compound that targets the sphingosine 1-phosphate receptor. Under the terms of the agreement, we will receive worldwide rights to amiselimod, 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. During the fourth quarter of 2015, the agreement became effective and we made an upfront payment of $60.0 million, which was recorded as research and development expense in our consolidated statements of income. In the future we may pay up to approximately $484.0 million in milestone payments for multiple indications and territories, along with average royalties in the mid- to high-teen percentages of annual net sales. MTPC has the right to participate in our global clinical trials related to amiselimod and has an option to co-promote non-MS indications in the U.S. Other Research and Discovery Arrangements During the years ended December 31, 2015 and 2014, we entered into several research, discovery and other related arrangements that resulted in $9.7 million and $40.0 million, respectively, recorded as research and development expense in our consolidated statements of income. These additional arrangements include the potential for future milestone payments based on clinical and commercial development over a period of several years. Samsung Bioepis 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 December 31, 2015, our ownership interest is approximately 9%, 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. Samsung Biologics has the power to direct the activities of Samsung Bioepis which will most significantly and directly impact its economic performance. We account for this investment under the equity method of accounting as we maintain the ability to exercise significant influence over Samsung Bioepis through a presence on the entity’s Board of Directors and our contractual relationship. Under the equity method, we recorded our original investment at cost and subsequently adjust the carrying value of our investment for our share of equity in the entity’s income or losses according to our percentage of ownership. During 2015, our share of losses exceed the carrying value of our investment. We suspended recognizing additional losses and will continue to do so unless we commit to providing additional funding. As of December 31, 2014, the carrying value of our investment in Samsung Bioepis totaled 9.1 billion South Korean won (approximately $8.6 million), which was classified as a component of investments and other assets in our consolidated balance sheets. 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 consolidated statements of income. During the years ended December 31, 2015, 2014 and 2013, we recognized a loss on our investment of $12.5 million, $15.1 million and $17.2 million, respectively. 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, over a 10-year term, anti-tumor necrosis factor (TNF) biosimilar product candidates in Europe and in the case of one anti-TNF biosimilar, 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 consolidated statements of income as the programs they relate to had not achieved regulatory approval. Samsung Bioepis is eligible to receive an additional $75.0 million in additional milestones, including $25.0 million upon the regulatory approval of each anti-TNF biosimilar product candidate in the E.U. In January 2016, the EC approved the MAA for BENEPALI for marketing in the E.U. Upon commercialization, we will reflect revenues on sales to third parties in product revenues, net in our consolidated statements of income. We will record the related cost of revenues and sales and marketing expenses in our consolidated statements of income to their respective line items when these costs are incurred. A 50% profit share with Samsung Bioepis will be recognized in costs and expenses. License Agreement Simultaneous with the formation of Samsung Bioepis, we entered into a license agreement with Samsung Bioepis. Under the terms of the agreement, we granted Samsung Bioepis an exclusive license to use, develop, manufacture, and commercialize biosimilar products created by Samsung Bioepis using Biogen product-specific technology. In exchange, we will receive single digit royalties on all biosimilar products developed and commercialized by Samsung Bioepis. Other Services In addition, we entered into a technical development services agreement and a manufacturing agreement with Samsung Bioepis. Under the terms of the technical development services agreement, we provide Samsung Bioepis technical development and technology transfer services, which include, but are not limited to, cell culture development, purification process development, formulation development, and analytical development. Under the terms of our manufacturing agreement, we manufacture clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis pursuant to contractual terms. Under limited circumstances, we may also supply Samsung Bioepis with quantities of drug product of biosimilar products for use in clinical trials through arrangements with third-party contract manufacturers. For the years ended December 31, 2015, 2014 and 2013, we recognized $62.9 million, $58.5 million and $43.1 million, respectively, in revenues in relation to these services, which is reflected as a component of other revenues in our consolidated statement of income.

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