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Collaborative and Other Relationships | 12 Months Ended
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Dec. 31, 2017
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 that 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 receivable 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 have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, CLL and other conditions, GAZYVA for the treatment of CLL and follicular lymphoma, OCREVUS for the treatment of primary progressive MS (PPMS) and relapsing MS (RMS) and other potential anti-CD20 therapies under a collaboration agreement with Genentech, a wholly-owned member of the Roche Group. 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 our 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. GAZYVA We recognize our share of the development and commercialization expenses of GAZYVA as a reduction of our share of pre-tax profits in revenues from anti-CD20 therapeutic programs. Commercialization of GAZYVA impacts our percentage of the co-promotion profits for RITUXAN, as summarized in the table below. OCREVUS In March 2017 the FDA approved OCREVUS, a humanized anti-CD20 monoclonal antibody, for the treatment of RMS and PPMS. Under our agreement with Genentech, we will receive a tiered royalty on U.S. net sales from 13.5% and increasing up to 24% if annual net sales exceed $900.0 million. There will be a 50% reduction to these royalties if a biosimilar to OCREVUS is approved in the U.S. In addition, we will receive a 3% royalty on net sales of OCREVUS outside the U.S., with the royalty period lasting 11 years from the first commercial sale of OCREVUS on a country-by-country basis. OCREVUS was approved for the treatment of RMS and PPMS in Australia, Switzerland and the E.U. in July 2017, September 2017 and January 2018, respectively. The commercialization of OCREVUS does not impact the percentage of the co-promotion profits we receive for RITUXAN or GAZYVA. Genentech is solely responsible for development and commercialization of OCREVUS and funding future costs. Genentech cannot develop OCREVUS in CLL, non-Hodgkin's lymphoma or rheumatoid arthritis. OCREVUS royalty revenues were based on our estimates from third party and market research data of OCREVUS sales occurring during the corresponding period. Differences between actual and estimated royalty revenues will be adjusted for in the period in which they become known, which is expected to be the following quarter. 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 (i) 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 (ii) 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. Our share of RITUXAN pre-tax profits in the U.S. decreased to 39% from 40% in February 2016 when GAZYVA was approved by the FDA as a new treatment for follicular lymphoma and was further decreased to 37.5% in the third quarter of 2017 as gross sales of GAZYVA in the U.S. for the preceding 12 month period exceeded $150.0 million. In addition, should the FDA approve an anti-CD20 product other than OCREVUS 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 37.5% based on certain events. In June 2017 the FDA approved RITUXAN HYCELA for subcutaneous injection for the treatment of adults with previously untreated and relapsed or refractory follicular lymphoma, previously untreated diffuse large B-cell lymphoma and CLL. This new treatment includes the same monoclonal antibody as intravenous RITUXAN in combination with hyaluronidase human, an enzyme that helps to deliver rituximab under the skin. 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 2017, 2016 and 2015 our share of operating profits on GAZYVA was 35%. In November 2017 the FDA approved GAZYVA in combination with chemotherapy, followed by GAZYVA alone, for people with previously untreated advanced follicular lymphoma. Revenues from Anti-CD20 Therapeutic Programs Revenues from anti-CD20 therapeutic programs are summarized as follows:
| For the Years Ended December 31,
(In millions) | 2017 |  | 2016 |  | 2015
Biogen's share of pre-tax profits in the U.S. for RITUXAN and GAZYVA, including the reimbursement of selling and development expenses | $ | 1,316.4 |  |  | $ | 1,249.5 |  |  | $ | 1,269.8 |
Other revenues from anti-CD20 therapeutic programs | 242.8 |  |  | 65.0 |  |  | 69.4 |
Total revenues from anti-CD20 therapeutic programs | $ | 1,559.2 |  |  | $ | 1,314.5 |  |  | $ | 1,339.2 |
In 2017 the 37.5% profit-sharing threshold was met during the third quarter and the 39% profit-sharing threshold was met during the first quarter. In 2016 the 39% profit-sharing threshold was met during the first quarter. In 2015, the 40% profit-sharing threshold was met during the first quarter. Biogen's share of pre-tax profits in the U.S. for RITUXAN and GAZYVA, including the reimbursement of selling and development expenses for 2017, as depicted in the table above, excludes certain expenses charged to the collaboration by Genentech that we believe remain the responsibility of Genentech and that we are not obligated to pay under the terms of the collaboration agreement. Accordingly, we did not recognize the effect of those expenses in the determination of our share of pre-tax collaboration profits and Genentech has withheld approximately $120 million from amounts due to us in relation to collaboration activity for 2017, representing Genentech’s estimate of our share of these expenses. We remain in discussions with Genentech about a resolution relating to these amounts. 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. 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 anti-CD20 therapeutic programs. AbbVie We have a collaboration agreement with AbbVie for the development and commercialization of ZINBRYTA, which was approved for the treatment of relapsing forms of MS in the U.S. in May 2016 and in the E.U. in July 2016. Under this agreement, we and AbbVie conduct ZINBRYTA co-promotion activities in the U.S., E.U. and Canadian territories (Collaboration Territory) where development and commercialization costs and profits are shared equally. Outside of the Collaboration Territory, we are solely responsible for development and commercialization of ZINBRYTA and will pay a tiered royalty to AbbVie as a percentage of net sales in the low to high teens. We are responsible for manufacturing and research and development activities in both the Collaboration Territory and outside the Collaboration Territory and record these activities within their respective lines in our consolidated statements of income, net of any reimbursement of research and development expenditures received from AbbVie. For the years ended December 31, 2017, 2016 and 2015, the collaboration incurred $39.9 million, $48.6 million and $113.8 million for research and development activities, respectively, for which we recognized $19.9 million, $24.3 million and $60.8 million, respectively, in our consolidated statements of income. Prior to regulatory approval, we also recognized $22.0 million of pre-commercialization expenses within our selling, general and administrative expense, which represented 50% of the collaboration's pre-commercialization costs for 2016. After ZINBRYTA was approved by the FDA and European Medicines Agency (EMA) in 2016, we began to recognize our share of the collaboration activities within the U.S., E.U. and Canadian territories as described below under "Co-promotion Profits and Losses." Article 20 Procedure of ZINBRYTA In July 2017 the EMA announced that it had provisionally restricted the use of ZINBRYTA to adult patients with highly active relapsing disease despite a full and adequate course of treatment with at least one disease modifying therapy (DMT) or with rapidly evolving severe relapsing MS who are unsuitable for treatment with other DMTs. These restrictions followed the initiation of an EMA review (referred to as an Article 20 Procedure) of ZINBRYTA following the report of a case of fatal fulminant liver failure, as well as four cases of serious liver injury. In October 2017, as part of this Article 20 Procedure of ZINBRYTA, the EMA Pharmacovigilance Risk Assessment Committee (PRAC) completed its assessment and recommended a further set of restrictions on the use of ZINBRYTA by MS patients. In November 2017 the Committee for Medicinal Products for Human Use (CHMP) adopted an opinion, confirming the PRAC's recommendations, for further restrictions to minimize the risk of serious liver injury with ZINBRYTA, including restriction of its use to adult patients with relapsing forms of MS who have had an inadequate response to at least two DMTs and for whom treatment with any other DMT is contraindicated or otherwise unsuitable. In January 2018 the EC adopted a final and legally-binding decision, which concluded the Article 20 Procedure, confirming the CHMP opinion. The recommendation of these restrictions by the CHMP resulted in the impairment of substantially all of our assets related to ZINBRYTA as we have determined that these amounts may not be recoverable. As a result, we recorded net impairment charges related to intangible assets, inventory, property, plant and equipment and prepaid tax assets, totaling approximately $190.8 million. Inventory related losses are subject to our profit share with AbbVie and are included above net of expected reimbursement. Offsetting these amounts was an unrecorded tax benefit related to certain ZINBRYTA related assets totaling approximately $93.8 million. Co-promotion Profits and Losses In the U.S., AbbVie recognizes revenues on sales to third parties and we recognize our 50% share of the co-promotion profits or losses as a component of total revenues in our consolidated statements of income. The collaboration began selling ZINBRYTA in the U.S. in the third quarter of 2016. For the years ended December 31, 2017 and 2016, we recognized a net reduction in revenue of $16.9 million and $21.9 million, respectively, to reflect our share of an overall net loss within the collaboration. The following table provides a summary of the U.S. collaboration and our share of the co-promotion losses on ZINBRYTA in the U.S.:
| For the Year Ended December 31,
(In millions) | 2017 |  | 2016
Product revenues, net | $ | 53.1 |  |  | $ | 6.1 |
Costs and expenses | 92.6 |  |  | 50.0 |
Co-promotion losses in the U.S. | $ | 39.5 |  |  | $ | 43.9 |
Biogen's share of co-promotion losses in the U.S. | $ | 16.9 |  |  | $ | 21.9 |
In the E.U. and Canada, we recognize revenues on sales to third parties in product revenues, net in our consolidated statements of income. We also record the related cost of revenues and sales and marketing expenses to their respective line items in our consolidated statements of income as these costs are incurred. We reimburse AbbVie for their 50% share of the co-promotion profits or losses in the E.U. and Canada. This reimbursement is recognized in collaboration profit (loss) sharing in our consolidated statements of income. We began to recognize product revenues on sales of ZINBRYTA in the E.U. in the third quarter of 2016. For the year ended December 31, 2017, we recognized net expense of $1.3 million to reflect AbbVie's 50% sharing of the net collaboration profits in the E.U. and Canada, as compared to net income recognized of $4.9 million to reflect AbbVie's 50% sharing of the net collaboration losses in the E.U. and Canada in the prior year. Acorda In June 2009 we entered into a collaboration and license agreement with Acorda Therapeutics, Inc. (Acorda) to develop and commercialize products containing fampridine, such as FAMPYRA, in markets outside the U.S. We are responsible for all regulatory activities and the future clinical development of related products in those markets. Under this agreement, we pay tiered royalties based on the level of ex-U.S. net sales and potential milestone payments based on the successful achievement of certain regulatory and commercial milestones, which would be capitalized as intangible assets upon achievement of the milestones and amortized utilizing an economic consumption model. 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. Royalty payments are recognized in cost of sales within our consolidated statements of income. In connection with the collaboration and license agreement, we 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. For the years ending December 31, 2017, 2016 and 2015, total cost of sales related to royalties and commercial supply of FAMPYRA reflected in our consolidated statements of income were $34.0 million, $31.5 million and $30.6 million, respectively. Ionis Pharmaceuticals, Inc. Product Collaborations SPINRAZA In January 2012 we entered into an exclusive worldwide option and collaboration agreement with Ionis to develop and commercialize SPINRAZA for the treatment of SMA. During 2014 we amended this agreement to adjust the amount of potential additional payments and terms of the exercise of our opt-in right to license SPINRAZA, which included providing for additional opt-in scenarios, based on the filing or acceptance of a New Drug Application (NDA) with the FDA or marketing authorization application with the EMA. Consistent with the initial agreement, Ionis remained responsible for conducting the pivotal/Phase 3 trials and we provided input on the clinical trial design and regulatory strategy for the development of SPINRAZA. SPINRAZA was approved for the treatment of SMA in the U.S., E.U. and Japan in December 2016, June 2017 and July 2017, respectively. For the years ended December 31, 2017 and 2016, we recognized product revenues totaling $883.7 million and $4.6 million, respectively, on our sales of SPINRAZA. Under our agreement with Ionis, we make royalty payments to Ionis on annual worldwide net sales of SPINRAZA using a tiered royalty rate between 11% and 15%, which are recognized in cost of sales within our consolidated statements of income. Royalty cost of sales related to sales of SPINRAZA for the years ended December 31, 2017 and 2016 totaled $112.4 million and $0.5 million, respectively. Upon entering into this agreement, we made an upfront payment of $29.0 million to Ionis. In addition, during 2017 we made milestone payments to Ionis totaling $150.0 million related to the marketing approvals discussed above, which were capitalized in intangible assets, net in our consolidated balance sheets. During the third quarter of 2016, upon the exercise of our option to develop and commercialize SPINRAZA, we also paid a $75.0 million license fee to Ionis, which was recognized as research and development expense in our consolidated statements of income. During 2017 no clinical trial payments were made to Ionis due to the completion of study activities. During 2016 and 2015, we made clinical trial payments of $35.3 million and $42.8 million, respectively, related to the advancement of the program, which were recorded in investments and other assets in our consolidated balance sheets as they represented prepaid research and development expenditures. As of December 31, 2017, these prepaid research and development amounts were fully expensed as the services were provided. For the years ending December 31, 2017, 2016 and 2015, $234.5 million, $257.8 million and $74.9 million, respectively, were reflected in total costs and expenses in our consolidated statements of income related to the advancement and commercialization of the program. Antisense Therapeutics In December 2012 we entered into an agreement with Ionis for the development and commercialization of up to three therapeutic targets. Under this agreement, Ionis is 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 a license fee of up to $70.0 million to Ionis and assume global development, regulatory and commercialization responsibilities. Ionis is eligible to 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. Upon entering into this agreement, we made an upfront payment of $30.0 million to Ionis and agreed to 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 recognized this $10.0 million developmental milestone upon the selection of BIIB080 (also known as IONIS-MAPT Rx), which is currently in Phase 1 development. Research Collaborations 2013 Long-term Strategic Research Agreement In September 2013 we entered into a six-year research collaboration agreement with Ionis under which both companies collaborate to perform discovery level research and subsequent development and commercialization activities of 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 this agreement. Once the research has reached a specific stage of development, we will make a determination whether antisense therapy is the preferred approach to developing a therapeutic candidate or whether another modality is preferred. If an antisense approach is selected, Ionis will continue development and identify a potential product candidate. If another modality is selected, we will assume responsibility for identifying a potential product candidate and assume development responsibility for development in that modality. Under this agreement, we made an upfront payment of $100.0 million to Ionis, of which $75.0 million was recorded as research and development expense representing the value of intellectual property purchased that had not reached technological feasibility. We recognized the remaining $25.0 million as prepaid research and discovery services, representing the value of the Ionis full time equivalent employee resources required by the collaboration to provide research and discovery services over the term of the collaboration. 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, 2017, 2016 and 2015, we triggered milestones of $12.0 million, $5.5 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. 2017 SMA Collaboration Agreement In December 2017 we entered into a new collaboration agreement with Ionis to identify new antisense oligonucleotide drug candidates for the treatment of SMA. Under this agreement, we will have the option to license therapies arising out of this collaboration and will be responsible for their development and commercialization of these therapies. Upon entering into this agreement, we made a $25.0 million upfront payment to Ionis and we may pay Ionis up to $260.0 million in additional development and regulatory milestone payments if new drugs advance to marketing approval. Upon commercialization, we may also pay Ionis up to $800.0 million in additional performance-based milestone payments and tiered royalties on potential net sales of such therapies. Eisai Co., Ltd. BAN2401 and E2609 Collaboration In March 2014 we entered into a collaboration agreement with Eisai (Eisai Collaboration Agreement) to jointly develop and commercialize two Eisai product candidates for the treatment of AD, BAN2401, a monoclonal antibody that targets amyloid-beta aggregates, and E2609, a BACE inhibitor. Under the Eisai Collaboration Agreement, Eisai serves as the global operational and regulatory lead for both compounds with all costs, including research, development, sales and marketing expenses shared equally by us and Eisai; and following marketing approval in major markets, such as the U.S., the E.U. and Japan, we and Eisai would co-promote BAN2401 and E2609 and share profits equally. In smaller markets, Eisai will distribute these products and pay us a royalty. In addition, the Eisai Collaboration Agreement provides both parties with certain rights and obligations in the event of a change in control of either party. The Eisai Collaboration Agreement also provided Eisai with an option to jointly develop and commercialize aducanumab (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, a separate collaboration agreement would be entered into with Eisai on terms and conditions that mirror the Eisai Collaboration Agreement. In October 2017 Eisai exercised its Aducanumab Option and we entered into a new collaboration agreement for the joint development and commercialization of aducanumab (Aducanumab Collaboration Agreement). Eisai has not yet exercised its Anti-Tau Option. Under the Aducanumab Collaboration Agreement, both companies will continue to jointly develop BAN2401 and E2609 in accordance with the Eisai Collaboration Agreement; however, we are no longer required to pay Eisai any milestone payments for products containing BAN2401 and we are no longer entitled to any potential development and commercial milestone payments from Eisai in relation to aducanumab. A summary of activity related to the Eisai Collaboration Agreement is as follows:
| For the Years Ended December 31,
(In millions) | 2017 |  | 2016 |  | 2015
Total development expense incurred by the collaboration in development of BAN2401 and E2609 | $ | 146.2 |  |  | $ | 95.1 |  |  | $ | 84.1 |
Biogen's share of BAN2401 and E2609 development expense reflected in our consolidated statements of income, excluding upfront and milestone payments | $ | 74.3 |  |  | $ | 50.5 |  |  | $ | 40.4 |
During the fourth quarter of 2016 we recognized a $50.0 million milestone payment related to the initiation of a Phase 3 trial for E2609, which is included in research and development expense in our consolidated statements of income. We could pay Eisai up to an additional $625.0 million under the Eisai Collaboration Agreement based on the future achievement of certain development, regulatory and commercial milestones. Aducanumab Collaboration Agreement Under the Aducanumab Collaboration Agreement, we will continue to lead the ongoing Phase 3 development of aducanumab and will remain responsible for 100% of development costs for aducanumab incurred in support of this agreement until April 2018. Eisai will then reimburse us for 15% of aducanumab development expenses for the period April 2018 through December 2018, and 45% thereafter. Upon commercialization, both companies will co-promote aducanumab with a region-based profit split. We will receive a 55% share of the potential profits (losses) in the U.S., a 68.5% share of the potential profits (losses) in the E.U. and a 20% share of the potential profits (losses) in Japan and Asia, excluding China and South Korea. The companies will continue to share equally in the potential profits (losses) in rest of world markets. We and Eisai also agreed to co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings and Eisai will distribute AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets, excluding China. During the year ended December 31, 2017, $263.4 million was reflected in research and development expense in our consolidated statements of income related to the advancement of our aducanumab program. 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. Bristol-Myers Squibb Company In June 2017 we completed an exclusive license agreement with Bristol-Myers Squibb Company (BMS) for BIIB092 (formerly known as BMS-986168), a Phase 2-ready experimental medicine with potential in AD and PSP. BIIB092 is an antibody targeting tau, the protein that forms the deposits, or tangles, in the brain associated with AD and other neurodegenerative tauopathies such as PSP. Under this agreement, we received worldwide rights to BIIB092 and are responsible for the full development and global commercialization of BIIB092 in AD and PSP. Upon entering into this agreement, we made an upfront payment of $300.0 million to BMS and we may pay BMS up to $410.0 million in additional milestone payments, and potential royalties. We also assumed all remaining obligations to the former shareholders of iPierian, Inc. (iPierian) related to BMS’s acquisition of iPierian in 2014. In June 2017 we recognized a $60.0 million developmental milestone payable to the former shareholders of iPierian upon dosing of the first patient in the Phase 2 PSP study for BIIB092 and we may pay the former shareholders of iPierian up to $490.0 million in remaining milestone payments, and potential royalties. Both the $300.0 million upfront payment and the $60.0 million developmental milestone payment were recognized as research and development expense in our consolidated statements of income for the year ended December 31, 2017. Alkermes In November 2017 we entered into an exclusive license and collaboration agreement with Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc (Alkermes), for BIIB098 (formerly known as ALKS 8700), an oral monomethyl fumarate prodrug in Phase 3 development for the treatment of relapsing forms of MS. Under this agreement, we received an exclusive, worldwide license to develop and commercialize BIIB098 and will pay Alkermes a mid-teens percentage royalty on potential worldwide net sales of BIIB098. Royalties payable on net sales of BIIB098 are subject to tiered minimum payment requirements for a period of five years following FDA approval. Alkermes is eligible to receive royalties in the mid-single digits to low-teen percentages of annual net sales upon successful development and commercialization of new product candidates other than BIIB098. Alkermes will maintain responsibility for regulatory interactions with the FDA through the potential approval of the NDA for BIIB098 for the treatment of MS. Upon entering into this agreement, we made a $28.0 million upfront payment to Alkermes representing our share of BIIB098 development costs already incurred in 2017. Beginning in 2018 we are responsible for all development expenses related to BIIB098. In December 2017 we also recognized a $50.0 million expense, which is expected to be paid to Alkermes in early 2018, enabling the continuation of the agreement to develop BIIB098. Both the $28.0 million upfront payment and $50.0 million continuation payment were recognized as research and development expense in our consolidated financial statements for the year ended December 31, 2017. We may also pay Alkermes up to approximately $150.0 million in additional future milestone payments upon certain regulatory achievements related to BIIB098 under this collaboration. For the year ended December 31, 2017, we recorded $80.3 million in research and development expense in our consolidated statements of income related to this collaboration. In connection with the license and collaboration agreement, we may also enter into a supply agreement with Alkermes for the commercial supply of BIIB098 and other products developed under the license and collaboration agreement. Applied Genetic Technologies Corporation In July 2015 we entered into a collaboration and license agreement to develop gene-based therapies for multiple ophthalmic diseases with Applied Genetic Technologies Corporation (AGTC). This collaboration is focused 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). This agreement also provides us with options for early stage discovery programs in two ophthalmic diseases and one non-ophthalmic condition, as well as an equity investment in AGTC. Under this agreement we received worldwide commercialization rights for the XLRS and XLRP programs. AGTC will lead the clinical development programs of XLRS through product approval and of XLRP through the completion of first-in-human trials and we will support the related clinical development costs, subject to certain conditions, following the first-in-human study for XLRS and IND-enabling studies for XLRP. AGTC has an option to share development costs and profits after the initial clinical trial data becomes available, and an option to co-promote the second of these products approved in the U.S. Upon entering into this agreement we made an upfront payment of $124.0 million to AGTC. AGTC is also eligible to receive development, regulatory and commercial milestone payments aggregating in excess of $1.1 billion, which includes up to $467.5 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 upon successful development and commercialization of new product candidates. The $124.0 million upfront payment reflected 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 $35.6 million in total licensing and other fees were recognized as a charge to research and development expense in our consolidated statements of income for the year ended December 31, 2015. The $30.0 million equity investment and the $58.4 million of prepaid research and development expenditures were recorded in investments and other assets in our consolidated balance sheets. These prepaid research and development amounts are being expensed as the services are provided, of which $11.1 million remains as a prepaid asset as of December 31, 2017. For the years ended December 31, 2017, 2016 and 2015 we recorded $27.5 million, $26.5 million and $54.5 million, respectively, which were reflected in research and development expense in our consolidated statements of income related to this collaboration. In connection with the collaboration and license agreement, we also received a manufacturing license under which we 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. University of Pennsylvania In May 2016 we entered into a collaboration and alliance with the University of Pennsylvania (UPenn) to advance gene therapy and gene editing technologies. The collaboration is primarily focused on the development of therapeutic approaches that target the eye, skeletal muscle and the central nervous system. The alliance is also focused on the research and validation of next-generation gene transfer technology using adeno-associated virus gene delivery vectors and exploring the expanded use of genome editing technology as a potential therapeutic platform. Upon entering into this agreement we made an upfront payment of $20.0 million to UPenn, which was recorded as research and development expense in our consolidated statements of income, and made prepaid research and development expenditures of $15.0 million, which was recorded in investments and other assets in our consolidated balance sheets. During 2017, we made additional prepaid research and development expenditures to UPenn of $29.1 million related to the advancement of these programs. These prepaid research and development amounts are being expensed as the services are provided, of which $12.7 million remains as a prepaid asset as of December 31, 2017. We also expect to fund an additional $18.4 million in additional research and development costs in seven preclinical research and development programs, as well as the exploration of genome-editing technology. If all of the collaborations programs are successful and we exercise all of our options under the UPenn collaboration and alliance, we may be required to make future payments of over $2.0 billion in research funding, options and milestone payments. UPenn is also eligible to receive royalties in the mid-single digit to mid-teens percentages of annual net sales upon successful development and commercialization of new product candidates. For the years ended December 31, 2017 and 2016, we recorded $33.0 million and $27.8 million, respectively, in research and development expense in our consolidated statements of income related to this collaboration. Other Research and Discovery Arrangements For the years ended December 31, 2017, 2016 and 2015, we entered into several research, discovery and other related arrangements that resulted in $10.0 million, $10.3 million and $9.7 million, respectively, recorded as research and development expense in our consolidated statements of income. These arrangements may include the potential for future milestone payments based on the achievement of certain clinical and commercial development payable over a period of several years. Samsung Bioepis Joint Venture Agreement In February 2012 we entered into a joint venture agreement with 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, 2017, our ownership interest is approximately 5%, which reflects 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 joint venture agreement plus a rate that will represent their return on capital. If we do not exercise this option by mid-2018, this option will expire and Samsung Biologics will have the right to purchase all of Samsung Bioepis’ shares then held by us. 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. 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 year ended December 31, 2015, we recognized a loss on our investment of $12.5 million. During 2015, as our share of losses exceeded the carrying value of our investment, we suspended recognizing additional losses and will continue to do so unless we commit to providing additional funding. Commercial Agreement In December 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, three anti-tumor necrosis factor (TNF) biosimilar product candidates in Europe and in the case of one anti-TNF biosimilar, Japan. Under this agreement, we have made total upfront and clinical development milestone payments of $46.0 million, all of which have been recorded as research and development expense in our consolidated statements of income as the programs they relate to had not achieved regulatory approval. We also agreed to make additional milestone payments of $25.0 million upon regulatory approval in the E.U. for each of the three anti-TNF biosimilar product candidates. During the years ended December 31, 2017 and 2016, we paid $25.0 million and $50.0 million, respectively, in milestone payments, which have been capitalized in intangible assets, net in our consolidated balance sheets as IMRALDI received regulatory approval in the E.U. in August 2017, BENEPALI received regulatory approval in the E.U. in January 2016 and FLIXABI received regulatory approval in the E.U. in May 2016. We began to recognize revenues on sales of BENEPALI in the E.U. in the first quarter of 2016 and FLIXABI in the E.U. in the third quarter of 2016. We reflect revenues on sales of BENEPALI and FLIXABI to third parties in product revenues, net in our consolidated statements of income and 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. We share 50% of the profit or loss related to our commercial agreement with Samsung Bioepis. This profit sharing with Samsung Bioepis is recognized in collaboration profit (loss) sharing in our consolidated statements of income. For the years ended December 31, 2017 and 2016, we recognized a net expense of $111.0 million and $15.1 million, respectively, to reflect Samsung Bioepis's 50% sharing of the net collaboration profits. 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. Under the license 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. Under 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 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, 2017, 2016 and 2015, we recognized $42.7 million, $20.2 million and $62.9 million, respectively, in revenues in relation to these services, which is reflected as a component of other revenues in our consolidated statements of income.

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