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Hemophilia Spin Off Hemophilia Spin Off | 3 Months Ended
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Mar. 31, 2017
Discontinued Operations and Disposal Groups [Abstract] |
Hemophilia Spin Off | Hemophilia Spin-Off On February 1, 2017, we completed the spin-off of our hemophilia business, Bioverativ, as an independent, publicly traded company trading under the symbol "BIVV" on the Nasdaq Global Select Market. The spin-off was accomplished through the distribution of all the then outstanding shares of common stock of Bioverativ to Biogen shareholders, who received one share of Bioverativ common stock for every two shares of Biogen common stock. The separation and distribution was structured to be tax-free for shareholders for federal income tax purposes. Bioverativ assumed all of our rights and obligations under our collaboration agreement with Swedish Orphan Biovitrum AB and our collaboration and license agreement with Sangamo Biosciences Inc. In connection with the distribution, Biogen and Bioverativ entered into a separation agreement and various other agreements (including a transition services agreement, a tax matters agreement, a manufacturing and supply agreement, an employee matters agreement, an intellectual property matters agreement and certain other commercial agreements). These agreements govern the separation and distribution and the relationship between the two companies going forward. They also provide for the performance of services by each company for the benefit of the other for a period of time. In addition, under the terms of the separation agreement, Bioverativ is obligated to indemnify us for many liabilities that may exist relating to its business activities, whether incurred prior to or after the distribution, including any pending or future litigation. The services under these agreements generally commenced on February 1, 2017 (the distribution date) and are expected to terminate within 12 months of the distribution date, with the exception of the manufacturing and supply agreement which has an initial term of five years, with a five year extension at Bioverativ's sole discretion and a further five year extension with Bioverativ and our consent. In connection with the distribution we made a net cash contribution to Bioverativ, during the first quarter of 2017, totalling $302.7 million. The following table summarizes the assets and liabilities that were charged against equity as a result of the spin-off of our hemophilia business:
(In millions) |
Assets |
Cash | $ | 302.7 |
Accounts receivable | 144.7 |
Inventory | 116.1 |
Property, plant and equipment, net | 20.2 |
Intangible assets, net | 56.8 |
Goodwill | 314.1 |
Other, net | 53.7 |
Assets transferred, net | $ | 1,008.3 |
Liabilities |
Accrued expenses and other current liabilities | $ | 87.8 |
Other long-term liabilities | 67.7 |
Liabilities transferred, net | $ | 155.5 |
Under the manufacturing and supply agreement, we manufacture and supply certain products and materials to Bioverativ. During the first quarter of 2017, we recognized $3.1 million in revenues in relation to these services which is reflected as a component of other revenues in our condensed consolidated statements of income. We also recorded $2.9 million as cost of sales in relation to these services during the first quarter of 2017. Pursuant to the terms of our agreements with Bioverativ, upon completion of the spin-off, we have continued to distribute ALPROLIX and ELOCTATE on behalf of Bioverativ and expect to do so until Bioverativ obtains appropriate regulatory authorizations in certain countries, including the United States (U.S.) and Canada. Under this arrangement, we are distributing these products as an agent of Bioverativ and will also provide related cash management services in connection with sales transactions, including the collection of receivables and the remittance of applicable discounts and allowances. Our consolidated financial position and results of operations do not reflect recognition of activity or balances related to these transactions. Amounts earned under the non-manufacturing and supply related transaction service agreements are recorded as a reduction of costs and expenses in their respective expense line items, primarily in selling, general and administrative expenses, in our condensed consolidated statements of income. In the first quarter of 2017 these amounts were not significant. Hemophilia related product revenues reflected in our condensed consolidated statements of income for the three months ended March 31, 2017 and 2016 totaled $74.4 million and $182.7 million, respectively. Results for the three months ended March 31, 2017, only reflect hemophilia-related product revenues through January 31, 2017. Patents Prior to the spin-off of our hemophilia business, we were awarded various methods of treatment and composition of matter patents related to ELOCTATE and ALPROLIX. Upon completion of the spin-off, these patents were transferred to the patent portfolio of Bioverativ.

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