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Collaborative and Other Relationships | 3 Months Ended
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Mar. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Collaborative and Other Relationships | Collaborative and Other Relationships AbbVie Inc. We have a collaboration agreement with AbbVie Inc. (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. In March 2018 we and AbbVie announced the voluntary withdrawal of ZINBRYTA for relapsing MS, as discussed below. Under this agreement, we and AbbVie conducted ZINBRYTA co-promotion activities in the U.S., E.U. and Canadian territories (Collaboration Territory) where development and commercialization costs and profits were shared equally. Outside of the Collaboration Territory, we were solely responsible for development and commercialization of ZINBRYTA and paid a tiered royalty to AbbVie as a percentage of net sales in the low to high teens. Article 20 Procedure and Voluntary Withdrawal of ZINBRYTA In July 2017 the European Medicines Agency (EMA) announced a review (referred to as an Article 20 Procedure) of the use of ZINBRYTA following the report of a case of fatal fulminant liver failure, as well as four cases of serious liver injury, and recommended restrictions on its use. In January 2018 the European Commission (EC) adopted a final and legally-binding decision restricting ZINBRYTA's 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. For additional information on the Article 20 Procedure of ZINBRYTA please read Note 20, Collaborative and Other Relationships, to our consolidated financial statements included in our 2017 Form 10-K. The EMA subsequently started a second review following cases of serious inflammatory brain disorders including encephalitis and meningoencephalitis. In parallel, we and AbbVie began discussions with the EMA, and in March 2018 announced the voluntary worldwide withdrawal of ZINBRYTA for relapsing MS as we and AbbVie believe that characterizing the complex and evolving benefit/risk profile of ZINBRYTA will not be possible going forward given the limited number of patients being treated. Subsequent to the voluntary worldwide withdrawal of ZINBRYTA, the EMA recommended the immediate suspension of ZINBRYTA's marketing authorization and a recall of ZINBRYTA from pharmacies and hospitals in the E.U. As a result of our voluntary withdrawal of ZINBRYTA, we recognized $2.4 million in inventory charges and $12.8 million in losses related to the termination of research and development contracts and clinical trials related to our voluntary worldwide withdrawal of ZINBRYTA in our condensed consolidated statements of income, net of an expected AbbVie reimbursement, in the first quarter of 2018. Co-promotion Profits and Losses In the U.S. for the three months ended March 31, 2018, we recognized a net reduction in revenues of $4.9 million to reflect our share of an overall net loss within the collaboration, as compared to $5.9 million in the prior year comparative period. These results include the collaboration's estimate of future returns of product in the U.S. In the E.U. and Canada, for the three months ended March 31, 2018, we recognized net income of $1.3 million to reflect AbbVie's 50% sharing of the net collaboration losses in the E.U. and Canada. These results include the collaboration's estimate of future returns of product in the E.U. and Canada. For the three months ended March 31, 2017, our recognition of income to reflect AbbVie's 50% sharing of the net collaboration losses in the E.U. and Canada was not significant. For additional information on our collaboration arrangement with AbbVie, please read Note 20, Collaborative and Other Relationships, to our consolidated financial statements included in our 2017 Form 10-K. Eisai Co., Ltd. BAN2401 and E2609 Collaboration We have a collaboration agreement with Eisai to jointly develop and commercialize E2609, a BACE inhibitor, and BAN2401, a monoclonal antibody that targets amyloid beta aggregates, two Eisai product candidates for the treatment of AD. Eisai serves as the global operational and regulatory lead for both compounds with all costs, including research, development and sales and marketing expenses shared equally by us and Eisai; and, if applicable, following marketing approval in major markets, such as the U.S., the E.U. and Japan, we and Eisai will co-promote BAN2401 and E2609 and share profits equally. In smaller markets, Eisai will distribute these products and pay us a royalty. During the three months ended March 31, 2018, $26.1 million was reflected in research and development expense in our condensed consolidated statements of income related to the advancement of our E2609 and BAN2401 programs, as compared to $20.8 million in the prior year comparative period. Aducanumab Collaboration Agreement We also have the Aducanumab Collaboration Agreement with Eisai for the joint development and commercialization of aducanumab. Under the Aducanumab Collaboration Agreement, we will continue to lead the on-going 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. During the three months ended March 31, 2018, $63.6 million was reflected in research and development expense in our condensed consolidated statements of income related to the advancement of our aducanumab program, as compared to $53.3 million in the prior year comparative period. We and Eisai also 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. For additional information on our collaboration arrangements with Eisai, please read Note 20, Collaborative and Other Relationships, to our consolidated financial statements included in our 2017 Form 10-K. 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. As of March 31, 2018, our ownership interest was 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 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. Should we exercise this option, our ownership percentage would increase to 49.9%. We recognize our share of the results of operations related to our investment in Samsung Bioepis one quarter in arrears when the results of the entity become available, which is reflected as equity in loss of investee, net of tax in our condensed consolidated statements of income. During 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 We began to recognize revenues on sales of BENEPALI and FLIXABI in the E.U. in the first and third quarters of 2016, respectively. We reflect revenues on sales of BENEPALI and FLIXABI to third parties in product revenues, net in our condensed consolidated statements of income and record the related cost of revenues and sales and marketing expenses in our condensed consolidated statements of income to their respective line items when these costs are incurred. In August 2017 the EC granted a marketing authorization in the E.U. for IMRALDI, an adalimumab biosimilar referencing HUMIRA. In April 2018 we and Samsung Bioepis announced an agreement with AbbVie for the commercialization of IMRALDI. Under the terms of the agreement, AbbVie will grant patent licenses for the use and sale of IMRALDI in Europe, on a country-by-country basis, and we and Samsung Bioepis will make royalty payments to AbbVie. We expect to launch IMRALDI in Europe in October 2018. We share 50% of the profit or loss related to our commercial agreement with Samsung Bioepis, which is recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income. For the three months ended March 31, 2018, we recognized net expense of $43.8 million to reflect Samsung Bioepis's 50% sharing of the net collaboration profits, as compared to $20.8 million in the prior year comparative period. Other Services Simultaneous with the formation of Samsung Bioepis, we also entered into a license agreement, a technical development services agreement and a manufacturing agreement with Samsung Bioepis. For the three months ended March 31, 2018, we recognized $17.9 million in revenues in relation to these services, which is reflected as a component of other revenues in our condensed consolidated statements of income, as compared to $2.2 million in the prior year comparative period. For additional information on to these and our other significant collaboration arrangements, please read Note 20, Collaborative and Other Relationships, to our consolidated financial statements included in our 2017 Form 10-K.

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- Definition The entire disclosure for collaborative arrangements in which the entity is a participant, including a) information about the nature and purpose of such arrangements; b) its rights and obligations thereunder; c) the accounting policy for collaborative arrangements; and d) the income statement classification and amounts attributable to transactions arising from the collaborative arrangement between participants. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 808 -URI http://asc.fasb.org/topic&trid=5833765 + Details
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