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Collaborative and Other Relationships | 9 Months Ended
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Sep. 30, 2022
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 lead of lecanemab development and regulatory submissions globally with both companies co-commercializing and co-promoting the product, and Eisai having final decision-making authority. 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 or losses equally. In March 2022 we extended our supply agreement related to lecanemab from five years to ten years for the manufacture of lecanemab drug substance and drug product. In May 2022 Eisai completed the submission of a Biologics License Application (BLA) to the FDA for the accelerated approval of lecanemab. In July 2022 the FDA accepted the BLA and granted Priority Review with a Prescription Drug User Fee Act action date of January 6, 2023. The Lecanemab Collaboration also provided Eisai with an option to jointly develop and commercialize ADUHELM (aducanumab) (ADUHELM 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 (the ADUHELM Collaboration Agreement). 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) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Total development expense incurred by the collaboration related to the advancement of lecanemab and elenbecestat |  | $ | 109.3 |  |  | $ | 118.4 |  |  | $ | 264.9 |  |  | $ | 236.1 |
Biogen's share of lecanemab and elenbecestat development expense reflected in research and development expense in our condensed consolidated statements of income |  | 54.7 |  |  | 59.2 |  |  | 132.5 |  |  | 118.0 |
Total sales and marketing expense incurred by the Lecanemab Collaboration |  | 29.0 |  |  | 5.6 |  |  | 68.3 |  |  | 15.6 |
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 |  | 14.5 |  |  | 2.8 |  |  | 34.2 |  |  | 7.8 |
For additional information on our Lecanemab Collaboration, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K. ADUHELM Collaboration Agreement Under our initial ADUHELM Collaboration Agreement, we would lead the ongoing development of ADUHELM, and we and Eisai would co-promote ADUHELM with a region-based profit split. Beginning January 1, 2019, Eisai was reimbursing us for 45.0% of development costs incurred by the collaboration for the advancement of ADUHELM (ADUHELM development expense). 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, which was recorded in collaboration profit (loss) sharing in our condensed consolidated statements of income. In March 2022 we amended our ADUHELM Collaboration Agreement with Eisai. Effective March 2022, we have sole decision making and commercialization rights worldwide on ADUHELM and beginning January 1, 2023, Eisai will receive a tiered royalty based on net sales of ADUHELM, rather than sharing global profits and losses. Eisai's share of development, commercialization and manufacturing expense is limited to $335.0 million for the period from January 1, 2022 to December 31, 2022. As of September 30, 2022, Eisai's portion of these expenses was approximately $300.0 million. Once this limit is achieved, we will be responsible for all ADUHELM related development costs. After the tiered royalty model commences on January 1, 2023, Eisai will not participate in ADUHELM’s economics beyond these royalties. 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) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Total ADUHELM development expense |  | $ | 34.6 |  |  | $ | 43.7 |  |  | $ | 116.0 |  |  | $ | 132.8 |
Biogen's share of ADUHELM development expense reflected in research and development expense in our condensed consolidated statements of income |  | 19.0 |  |  | 24.0 |  |  | 63.8 |  |  | 73.0 |
Total ADUHELM sales and marketing expense incurred by the ADUHELM Collaboration Agreement |  | (8.0) |  |  | 154.3 |  |  | 127.8 |  |  | 391.7 |
Biogen's share of ADUHELM sales and marketing expense reflected in selling, general and administrative expense and collaboration profit (loss) sharing in our condensed consolidated statements of income |  | (3.9) |  |  | 83.3 |  |  | 68.1 |  |  | 211.2 |
Total ADUHELM collaboration third party milestones |  | — |  |  | — |  |  | — |  |  | 100.0 |
Biogen's share of reimbursement from Eisai of ADUHELM milestone payments reflected in collaboration profit (loss) sharing in our condensed consolidated statements of income |  | — |  |  | — |  |  | — |  |  | 45.0 |
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 (loss) sharing in our condensed consolidated statements of income. For the three and nine months ended September 30, 2022, we recognized a net reduction to our operating expense of $3.4 million and $214.0 million, respectively, to reflect Eisai's 45.0% share of net collaboration losses in the U.S., compared to $50.6 million and $90.7 million, respectively, in the prior year comparative periods. 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. During the first quarter of 2022 we recorded approximately $275.0 million of gross charges associated with inventory and purchase commitments in excess of forecasted demand related to ADUHELM. F or the nine months ended September 30, 2022, we have also recorded approximately $76.0 million of aggregate gross idle capacity charges related to ADUHELM. We have recognized approximately $177.0 million related to Eisai's 45.0% share of inventory and idle capacity charges in collaboration profit (loss) sharing within our condensed consolidated statements of income for the nine months ended September 30, 2022. Amounts receivable from Eisai related to the agreements discussed above were $110.6 million and $285.4 million as of September 30, 2022 and December 31, 2021, respectively. Amounts payable to Eisai related to the agreements discussed above were $81.7 million and $46.5 million as of September 30, 2022 and December 31, 2021, respectively. For additional information on the ADUHELM Collaboration Agreement, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K. 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. If marketing approval is obtained, 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) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Total UCB collaboration development expense |  | $ | 18.3 |  |  | $ | 16.5 |  |  | $ | 51.5 |  |  | $ | 49.5 |
Biogen's share of UCB development expense reflected in research and development expense in our condensed consolidated statements of income |  | 9.1 |  |  | 8.2 |  |  | 25.7 |  |  | 24.8 |
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. Under this collaboration, 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) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Total Sage collaboration development expense |  | $ | 40.9 |  |  | $ | 40.8 |  |  | $ | 130.4 |  |  | $ | 134.9 |
Biogen's share of Sage development expense reflected in research and development expense in our condensed consolidated statements of income |  | 20.5 |  |  | 20.4 |  |  | 65.2 |  |  | 67.3 |
Total Sage sales and marketing expense incurred by the collaboration |  | 28.5 |  |  | 7.4 |  |  | 69.9 |  |  | 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 |  | 14.2 |  |  | 3.7 |  |  | 34.9 |  |  | 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. Under this collaboration, both companies share responsibility and costs for global development based on specified percentages as well as profits and losses for commercialization in the U.S. and China. Outside the U.S. and China we are responsible for commercialization and may pay Denali potential tiered royalties. 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 ATV-enabled therapeutics for indications within specific neurodegenerative diseases, should Denali decide to seek a collaboration for such programs. In October 2022 we and Denali announced the initiation of the Phase 3 LIGHTHOUSE study for BIIB122 (DNL151), a small molecule inhibitor of LRRK2 for the potential treatment of Parkinson's disease. 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) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Total Denali collaboration development expense |  | $ | 19.9 |  |  | $ | 8.5 |  |  | $ | 58.0 |  |  | $ | 27.2 |
Biogen's share of Denali development expense reflected in research and development expense in our condensed consolidated statements of income |  | 11.4 |  |  | 5.1 |  |  | 33.5 |  |  | 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 to modulate the expression of key genes involved in neurological diseases. Under this collaboration, we may pay Sangamo tiered royalties on potential net sales of any products developed under this collaboration in the high single digit to sub-teen percentages. 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) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Total Sangamo collaboration development expense |  | $ | 5.5 |  |  | $ | 6.2 |  |  | $ | 16.4 |  |  | $ | 16.4 |
Biogen's share of Sangamo development expense reflected in research and development expense in our condensed consolidated statements of income |  | 3.1 |  |  | 1.9 |  |  | 10.2 |  |  | 9.5 |
InnoCare Pharma Limited In July 2021 we entered into a collaboration and license 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 in our condensed consolidated statements of income. We may also pay InnoCare up to approximately $812.5 million in potential development milestones and potential commercial payments should this collaboration achieve certain development, commercial milestones and sales thresholds. In addition, we may pay InnoCare tiered royalties on potential net sales of any products developed under this collaboration in the low to high teen percentages. 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, 2022, we recorded $14.0 million and $51.5 million, respectively, as research and development expense in our condensed consolidated statements of income related to other research and discovery related arrangements, compared to $7.7 million and $84.9 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 April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics. Under the terms of this transaction, we received approximately $1.0 billion in cash at closing and expect to receive approximately $1.3 billion in cash to be deferred over two payments of approximately $812.5 million due at the first anniversary and approximately $437.5 million due at the second anniversary of the closing of this transaction. As part of the transaction, we are also eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones. Our policy for contingent payments of this nature is to recognize them in the period that they become realizable, which is generally the same period in which they are earned. Prior to this sale, we recognized 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 became available, which was reflected as equity in (income) loss of investee, net of tax in our condensed consolidated statements of income. Upon investment, the equity method of accounting required 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 were being amortized over their economic life until the completion of the sale in April 2022, as discussed above. The total basis difference was approximately $675.0 million and related 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 were being amortized, net of tax, over their estimated useful lives of 15 years. For the nine months ended September 30, 2022, we recognized net income on our investment of $2.6 million, reflecting our share of Samsung Bioepis' operating profits, net of tax totaling $17.0 million, offset by amortization of basis differences totaling $14.4 million. This amount reflects our share of results prior to the sale of Samsung Bioepis as the results are recognized one quarter in arrears. Following the sale of Samsung Bioepis we no longer recognize gains or losses associated with Samsung Bioepis' results of operations and amortization related to basis differences. 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 profits, net of tax to taling $8.9 million and $39.5 million, respectively, offset by amortization of basis differences totaling $7.8 million and $22.3 million, respectively. As of December 31, 2021, the carrying value of our investment in Samsung Bioepis totaled 713.3 billion South Korean won ($599.9 million), which is classified as a component of investments and other assets in our condensed consolidated balance sheets. In connection with the sale of Samsung Bioepis, the carrying value of our investment was reduced to zero. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements. 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 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 of approximately 45.0%. 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 our condensed consolidated statements of income in 2019 and $37.0 million was recorded as intangible assets, net in our condensed consolidated balance sheets in 2019. During the third quarter of 2021 we accrued $15.0 million in milestone payments related to the approval of BYOOVIZ in the U.S., the E.U. and the United Kingdom (U.K.), that were capitalized within intangible assets, net in our condensed consolidated balance sheets. We may also pay Samsung Bioepis up to approximately $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 (loss) sharing in our condensed consolidated statements of income. For the three and nine months ended September 30, 2022, we recognized net profit-sharing expense of $48.7 million and $171.4 million, respectively, to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits, compared to a net profit-sharing expense of $71.8 million and $210.2 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 is reflected in revenue from collaborative and other relationships as a component of other revenue in our condensed consolidated statements of income. Amounts receivable from Samsung Bioepis related to the agreements discussed above were $1.8 million and $4.1 million as of September 30, 2022 and December 31, 2021, respectively. Amounts payable to Samsung Bioepis related to the agreements discussed abo ve were $53.8 million and $148.7 million as of September 30, 2022 and December 31, 2021, 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 2021 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 808 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=6931272&loc=SL5834143-161434 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 808 -SubTopic 10 -Section 50 -Paragraph 1 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=6931272&loc=SL5834143-161434 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 808 -URI http://asc.fasb.org/topic&trid=5833765 + Details
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