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Collaborative and Other Relationships | 9 Months Ended
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Sep. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Collaborative and Other Relationships | Eisai Co., Ltd. Lecanemab Collaboration We have a collaboration agreement with Eisai Co., Ltd. (Eisai) to jointly develop and commercialize lecanemab (BAN2401), an anti-amyloid antibody, and elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor, two Eisai product candidates for the potential treatment of Alzheimer's disease (the Lecanemab Collaboration). In September 2019 we and Eisai discontinued the global Phase 3 studies of elenbecestat in early Alzheimer's disease. Eisai serves as the global operational and regulatory lead for lecanemab and all costs, including research, development, sales and marketing expense, are shared equally between us and Eisai. If lecanemab receives marketing approval, we and Eisai will co-promote lecanemab and share profits equally. In addition, the Lecanemab Collaboration provides both parties with certain rights and obligations in the event of a change in control of either party. The Lecanemab Collaboration also provided Eisai with an option to jointly develop and commercialize ADUHELM (aducanumab) (ADUHELM Option), and an option to jointly develop and commercialize one of our anti-tau monoclonal antibodies (Anti-Tau Option). In October 2017 Eisai exercised its ADUHELM Option and we entered into a new collaboration agreement for the joint development and commercialization of ADUHELM (aducanumab) (the ADUHELM Collaboration Agreement). 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. Eisai has not yet exercised its Anti-Tau Option. A summary of development and sales and marketing expense related to the Lecanemab Collaboration is as follows:
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(In millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Total development expense incurred by the collaboration related to the advancement of lecanemab and elenbecestat |  | $ | 118.4 |  |  | $ | 75.7 |  |  | $ | 236.1 |  |  | $ | 153.2 |
Biogen's share of lecanemab and elenbecestat development expense reflected in research and development expense in our condensed consolidated statements of income |  | 59.2 |  |  | 37.9 |  |  | 118.0 |  |  | 76.6 |
Total sales and marketing expense incurred by the Lecanemab Collaboration |  | 5.6 |  |  | nm |  | 15.6 |  |  | 6.3 |
Biogen's share of lecanemab and elenbecestat sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income |  | 2.8 |  |  | nm |  | 7.8 |  |  | 3.2 |
nm - For the three months ended September 30, 2020, sales and marketing expense related to lecanemab and elenbecestat was immaterial. For additional information on our Lecanemab Collaboration, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2020 Form 10-K. ADUHELM Collaboration Agreement Under the ADUHELM Collaboration Agreement, we lead the ongoing development of ADUHELM, and we and Eisai will co-promote ADUHELM with a region-based profit split. Beginning January 1, 2019, Eisai is reimbursing us for 45.0% of development costs incurred by the collaboration for the advancement of ADUHELM (ADUHELM development expense). In March 2019, based on a pre-specified futility analysis, we discontinued the global Phase 3 trials, EMERGE and ENGAGE, designed to evaluate the efficacy and safety of ADUHELM in patients with early Alzheimer's disease. In the first quarter of 2019, as a result of the decision to discontinue the Phase 3 EMERGE and ENGAGE trials following the futility analysis, we accrued and subsequently paid approximately $45.0 million related to the termination of various clinical trials and research and development contracts net of the expected 45.0% Eisai reimbursement of development costs incurred under the ADUHELM Collaboration Agreement. In October 2019 we and Eisai announced that we planned to pursue regulatory approval for ADUHELM in the U.S. A new analysis of a larger dataset from these trials, conducted in scientific collaboration with the FDA, showed that the Phase 3 EMERGE trial met its pre-specified primary and secondary endpoints. In July 2020 we completed the submission of a Biologics License Application (BLA) for the approval of ADUHELM to the FDA and made a $75.0 million milestone payment to Neurimmune. We recognized net profit-sharing income of $33.8 million to reflect Eisai's 45.0% share of the $75.0 million milestone payment. In June 2021 ADUHELM was granted accelerated approval by the FDA for the treatment of Alzheimer's disease and had its first commercial sale. As a result of the launch of ADUHELM in the U.S., we made a $100.0 million milestone payment to Neurimmune. For the nine months ended September 30, 2021, we recognized net profit-sharing income of $45.0 million to reflect Eisai's 45.0% share of the $100.0 million milestone payment. Sales and marketing expense are shared in proportion to the same region-based profit split that is utilized to co-promote ADUHELM. A summary of development expense, sales and marketing expense and milestone payments related to the ADUHELM Collaboration Agreement is as follows:
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(In millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Total ADUHELM development expense |  | $ | 43.7 |  |  | $ | 37.5 |  |  | $ | 132.8 |  |  | $ | 92.5 |
Biogen's share of ADUHELM development expense reflected in research and development expense in our condensed consolidated statements of income |  | 24.0 |  |  | 20.6 |  |  | 73.0 |  |  | 50.9 |
Total ADUHELM sales and marketing expense incurred by the ADUHELM Collaboration Agreement |  | 154.3 |  |  | 90.9 |  |  | 391.7 |  |  | 158.8 |
Biogen's share of ADUHELM sales and marketing expense reflected in selling, general and administrative expense and collaboration profit sharing in our condensed consolidated statements of income |  | 83.3 |  |  | 51.3 |  |  | 211.2 |  |  | 88.8 |
Total ADUHELM collaboration third party milestones |  | — |  |  | — |  |  | 100.0 |  |  | 75.0 |
Biogen's share of reimbursement from Eisai of ADUHELM milestone payments reflected in collaboration profit sharing in our condensed consolidated statements of income |  | — |  |  | — |  |  | 45.0 |  |  | 33.8 |
C o-promotion Profits and Losses In the U.S. we recognize revenue on sales to third parties as a component of product revenue, net in our condensed consolidated statements of income. We also record the related cost of revenue and sales and marketing expense in our condensed consolidated statements of income as these costs are incurred. Payments made to and received from Eisai for its 45.0% share of the co-promotion profits or losses in the U.S. are recognized in collaboration profit sharing in our condensed consolidated statements of income. For the three and nine months ended September 30, 2021, we recognized net profit-sharing income of $50.6 million and $90.7 million, respectively, to reflect Eisai's 45.0% sharing of the net collaboration losses in the U.S. For additional information on the ADUHELM Collaboration Agreement, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2020 Form 10-K. In addition, we and Eisai co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings and Eisai distributes AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets, excluding China. UCB We have a collaboration agreement with UCB to jointly develop and commercialize dapirolizumab pegol, an anti-CD40L pegylated Fab, for the potential treatment of systemic lupus erythematosus and other future agreed indications. Either we or UCB may propose development of dapirolizumab pegol in additional indications. If the parties do not agree to add an indication as an agreed indication to the collaboration, we or UCB may, at the sole expense of the applicable party, pursue development in such excluded indication(s), subject to an opt-in right of the non-pursuing party after proof of clinical activity. All costs incurred for agreed indications, including research, development, sales and marketing expense, are shared equally between us and UCB. Upon marketing approval, we and UCB will co-promote dapirolizumab pegol and share profits equally. A summary of development expense related to the UCB collaboration agreement is as follows:
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(In millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Total UCB collaboration development expense |  | $ | 16.5 |  |  | $ | 10.2 |  |  | $ | 49.5 |  |  | $ | 35.7 |
Biogen's share of UCB development expense reflected in research and development expense in our condensed consolidated statements of income |  | 8.2 |  |  | 5.2 |  |  | 24.8 |  |  | 17.9 |
Sage Therapeutics, Inc. In November 2020 we entered into a global collaboration and license agreement with Sage to jointly develop and commercialize BIIB125 (zuranolone) for the potential treatment of major depressive disorder and postpartum depression and BIIB124 (SAGE-324) for the potential treatment of essential tremor with potential in other neurological conditions such as epilepsy. In connection with the closing of this transaction in December 2020 we purchased $650.0 million of Sage common stock, or approximately 6.2 million shares at approximately $104.14 per share, which are subject to transfer restrictions. We recorded an asset in investments and other assets in our condensed consolidated balance sheets to reflect the initial fair value of the Sage common stock acquired and a charge of approximately $209.0 million to research and development expense in our condensed consolidated statements of income to reflect the premium paid for the Sage common stock. We also made an upfront payment of $875.0 million that was recorded as research and development expense. We may also pay Sage development and commercial milestone payments that could total up to approximately $1.6 billion if all the specified milestones set forth in this collaboration are achieved. Both companies will share equal responsibility and costs for development as well as profits and losses for commercialization in the U.S. Outside of the U.S., we are responsible for development and commercialization, excluding Japan, Taiwan and South Korea, with respect to zuranolone and may pay Sage potential tiered royalties in the high teens to low twenties. A summary of development and sales and marketing expense related to this collaboration is as follows:
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(In millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Total Sage collaboration development expense |  | $ | 40.8 |  |  | $ | — |  |  | $ | 134.9 |  |  | $ | — |
Biogen's share of Sage development expense reflected in research and development expense in our condensed consolidated statements of income |  | 20.4 |  |  | — |  |  | 67.3 |  |  | — |
Total Sage sales and marketing expense incurred by the collaboration |  | 7.4 |  |  | — |  |  | 23.2 |  |  | — |
Biogen's share of Sage sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income |  | 3.7 |  |  | — |  |  | 11.6 |  |  | — |
Denali Therapeutics Inc. In August 2020 we entered into a collaboration and license agreement with Denali to co-develop and co-commercialize Denali's small molecule inhibitors of leucine-rich repeat kinase 2 (LRRK2) for Parkinson's disease. In addition to the LRRK2 program, we also have an exclusive option to license two preclinical programs from Denali’s Transport Vehicle platform, including its Antibody Transport Vehicle (ATV): ATV enabled anti-amyloid beta program and a second program utilizing its Transport Vehicle technology. Further, we have the right of first negotiation on two additional Transport Vehicle-enabled therapeutics, should Denali decide to seek a collaboration for such programs. As part of this collaboration we purchased approximately $465.0 million of Denali common stock in September 2020, or approximately 13 million shares at approximately $34.94 per share, which are subject to transfer restrictions. We recorded an asset in investments and other assets in our condensed consolidated balance sheets to reflect the initial fair value of the Denali common stock acquired and a charge of approximately $41.3 million to research and development expense in our condensed consolidated statements of income to reflect the premium paid for the Denali common stock. We also made an upfront payment of $560.0 million that was recorded as research and development expense. We may also pay Denali development and commercial milestone payments that could total up to approximately $1.1 billion if the milestones related to the LRRK2 program are achieved. Under this collaboration, both companies share responsibility and costs for global development based on specified percentages and we are responsible for commercialization and may pay Denali potential tiered royalties. A summary of development expense related to this collaboration is as follows:
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(In millions) |  | 2021 |  | 2020 |  | 2021 |  | 2020
Total Denali collaboration development expense |  | $ | 8.5 |  |  | $ | — |  |  | $ | 27.2 |  |  | $ | — |
Biogen's share of Denali development expense reflected in research and development expense in our condensed consolidated statements of income |  | 5.1 |  |  | — |  |  | 16.3 |  |  | — |
Sangamo Therapeutics, Inc. In February 2020 we entered into a collaboration and license agreement with Sangamo to develop and commercialize ST-501 for tauopathies, including Alzheimer's disease; ST-502 for synucleinopathies, including Parkinson’s disease; a third neuromuscular disease target; and up to nine additional neurological disease targets to be identified and selected within a five-year period. The companies are leveraging Sangamo’s proprietary zinc finger protein technology delivered via adeno-associated virus with the aim to modulate the expression of key genes involved in neurological diseases. In connection with the closing of this transaction in April 2020 we purchased $225.0 million of Sangamo common stock, or approximately 24 million shares at approximately $9.21 per share, of which approximately 12 million shares remain subject to transfer restrictions as of September 30, 2021. We recorded an asset in investments and other assets in our condensed consolidated balance sheets to reflect the initial fair value of the Sangamo common stock acquired and a charge of approximately $83.0 million to research and development expense in our condensed consolidated statements of income to reflect the premium paid for the Sangamo common stock. We also made an upfront payment of $125.0 million that was recorded as research and development expense. We may also pay Sangamo research, development, regulatory and commercial milestone payments that could total up to approximately $2.4 billion if we select all of the targets allowed under this collaboration and all the specified milestones set forth in this collaboration are achieved. Of this amount, up to $80.0 million relates to the selection of targets, $1.9 billion relates to the achievement of specified research, clinical development, regulatory and first commercial sale milestones and $380.0 million relates to the achievement of specified sales-based milestones if annual worldwide net sales of licensed products reach specified levels. In addition, we may pay Sangamo tiered royalties on potential net sales of any products developed under this collaboration in the high single digit to double digit sub-teen percentages. InnoCare Pharma Limited In July 2021 we entered into a license and collaboration agreement with InnoCare Pharma Limited (InnoCare) for orelabrutinib, an oral small molecule Bruton’s tyrosine kinase inhibitor for the potential treatment of MS. Orelabrutinib is currently being studied in a multi-country, placebo-controlled Phase 2 trial in relapsing-remitting MS. Under the terms of the collaboration, we have exclusive rights to orelabrutinib in the field of MS worldwide and certain autoimmune diseases outside of China (including Hong Kong, Macau and Taiwan), while InnoCare retains ex clusive worldwide rights to orelabrutinib in the field of oncology and certain autoimmune diseases in China (including Hong Kong, Macau and Taiwan). In connection with the closing of this transaction in August 2021, we made an upfront payment of $125.0 million that was recorded as research and development expense. We may also pay InnoCare up to approximately $812.5 million in potential development milestones and potential commercial payments should the collaboration achieve certain development, commercial milestones and sales thresholds. In addition, we may pay InnoCare tiered royalties in the low to high teens on potential future net sales of any product developed under this collaboration. Other Research and Discovery Arrangements 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. Other For the three and nine months ended September 30, 2021, we recorded $7.7 million and $84.9 million, respectively, as research and development expense in our condensed consolidated statements of income related to other research and discovery related arrangements, compared to $38.0 million and $47.6 million, respectively, in the prior year comparative periods. Samsung Bioepis Co., Ltd. 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 products. In June 2018 we exercised our option under our joint venture agreement to increase our ownership percentage in Samsung Bioepis from approximately 5.0% to approximately 49.9%. The share purchase transaction was completed in November 2018 and, upon closing, we paid 759.5 billion South Korean won ($676.6 million) to Samsung BioLogics. As of September 30, 2021, our ownership percentage remained at approximately 49.9%. We recognize our share of the results of operations related to our investment in Samsung Bioepis under the equity method of accounting one quarter in arrears when the results of the entity become available, which is reflected as equity in (income) 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 initial investment, we suspended recognizing additional losses. In the first quarter of 2019 we restarted recognizing our share of Samsung Bioepis' income (losses), and we began recognizing amortization on certain basis differences resulting from our November 2018 investment. Upon investment, the equity method of accounting requires us to identify and allocate differences between the fair value of our investment and the carrying value of our interest in the underlying net assets of the investee. These basis differences are amortized over their economic life. The total basis difference was approximately $675.0 million and relates to inventory, developed technology, IPR&D and deferred tax balances. The basis differences related to inventory were amortized, net of tax, over their estimated useful lives of 1.5 years, and the basis differences related to developed technology and IPR&D for marketed products will be amortized, net of tax, over their estimated useful lives of 15 years. Certain officers and affiliates of our joint venture partner, Samsung BioLogics, are currently subject to ongoing criminal proceedings that we continue to monitor. While these proceedings could impact the operations of Samsung Bioepis and its business, we have assessed the value of our investment in Samsung Bioepis and continue to believe that the fair value of the investment is in excess of its net book value. For the three and nine months ended September 30, 2021, we recognized net income on our investment of $1.1 million and $17.2 million, respectively, reflecting our share of Samsung Bioepis' operating results and amortization of basis differences, net of tax, compared to net losses on our investment of $13.1 million and $12.7 million, respectively, in the prior year comparative periods. Net income on our investment for the nine months ended September 30, 2021, reflects a $31.2 million benefit related to the release of a valuation allowance on deferred tax assets associated with Samsung Bioepis. The valuation allowance was released in the second quarter of 2021 based on a consideration of the positive and negative evidence, including the historic earnings of Samsung Bioepis. As of September 30, 2021 and December 31, 2020, the carrying value of our investment in Samsung Bioepis totaled 692.8 billion South Korean won ($586.1 million) and 673.8 billion South Korean won ($620.2 million), respectively, which is classified as a component of investments and other assets in our condensed consolidated balance sheets. 2019 Development and Commercialization Agreement In December 2019 we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilar products, BYOOVIZ (ranibizumab-nuna), a proposed ranibizumab biosimilar referencing LUCENTIS, and SB15, a proposed aflibercept biosimilar referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia. Samsung Bioepis will be responsible for development and will supply both products to us at a pre-specified gross margin. In connection with this transaction, we made an upfront payment of $100.0 million to Samsung Bioepis in January 2020, of which $63.0 million was recorded as research and development expense in 2019 and $37.0 million was recorded as an intangible asset in 2019. During the third quarter of 2020, we paid Samsung Bioepis a $15.0 million development milestone, which was included in research and development expense in our condensed consolidated statements of income. During the third quarter of 2021, we accrued $15.0 million in milestones related to the approval of BYOOVIZ in the U.S. and E.U. that were capitalized within intangible assets. We may pay Samsung Bioepis up to $180.0 million in additional development, regulatory and sales-based milestones. We also acquired an option to extend the term of our 2013 c ommercial agreement for BENEPALI, IMRALDI and FLIXABI by an additional five years, subject to payment of an option exercise fee of $60.0 million, and obtained an option to acquire exclusive rights to commercialize these products in China. 2013 Commercial Agreement We reflect revenue on sales of BENEPALI, IMRALDI and FLIXABI to third parties in product revenue, net in our condensed consolidated statements of income and record the related cost of revenue and sales and marketing expense in our condensed consolidated statements of income to their respective line items when these costs are incurred. We share 50.0% of the profit or loss related to our commercial agreement with Samsung Bioepis, which is recognized in collaboration profit sharing in our condensed consolidated statements of income. For the three and nine months ended September 30, 2021, we recognized net profit-sharing expense of $71.8 million and $210.2 million, respectively, to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits, compared to a net profit-sharing expense of $72.9 million and $200.1 million, respectively, in the prior year comparative periods. Other Services Simultaneous with the formation of Samsung Bioepis, we also entered into a technical development services agreement, a manufacturing agreement and a license agreement with Samsung Bioepis. Revenue related to these services are reflected in revenue from collaborative and other relationships as a component of other revenue in our condensed consolidated statements of income. Amounts payable to Samsung Bioepis related to the agreements discussed above were $125.7 million and $99.0 million as of September 30, 2021 and December 31, 2020, respectively. For additional information on our collaboration arrangements with Samsung Bioepis and our other significant collaboration arrangements, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2020 Form 10-K.

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