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Collaborative and Other Relationships | 3 Months Ended
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Mar. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Collaborative and Other Relationships |
Note 16: | Collaborative and Other Relationships
Genentech, Inc. (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; RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of PPMS and RMS; LUNSUMIO (mosunetuzumab), which was granted accelerated approval in the U.S. during the fourth quarter of 2022 for the treatment of relapsed or refractory follicular lymphoma; glofitamab, an investigational bispecific antibody for the potential treatment of non-Hodgkin's lymphoma; and have the option to add other potential anti-CD20 therapies, pursuant to our collaboration arrangements with Genentech, a wholly-owned member of the Roche Group. For purposes of this footnote, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN. RITUXAN Genentech and its affiliates are responsible for the worldwide manufacture of RITUXAN as well as all development and commercialization activities as follows: •U.S.: We have co-exclusively licensed our rights to develop, commercialize and market RITUXAN in the U.S. •Canada: We have co-exclusively licensed our rights to develop, commercialize and market RITUXAN in Canada. GAZYVA The Roche Group and its sub-licensees maintain sole responsibility for the development, manufacture and commercialization of GAZYVA in the U.S. The level of gross sales of GAZYVA in the U.S. has impacted our percentage of the co-promotion profits for RITUXAN and LUNSUMIO, as summarized in the table below. OCREVUS Pursuant to the terms of our collaboration arrangements with Genentech, we receive a tiered royalty on U.S. net sales from 13.5% and increasing up to 24.0% if annual net sales exceed $900.0 million. There will be a 50.0% reduction to these royalties if a biosimilar to OCREVUS is approved in the U.S. In addition, we receive a gross 3.0% 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. The commercialization of OCREVUS does not impact the percentage of the co-promotion profits we receive for RITUXAN, LUNSUMIO 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 revenue is 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 revenue will be adjusted for in the period in which they become known, which is generally expected to be the following quarter. LUNSUMIO (mosunetuzumab) In January 2022 we exercised our option with Genentech to participate in the joint development and commercialization of LUNSUMIO. Under our collaboration with Genentech, we were responsible for 30.0% of development costs for LUNSUMIO prior to FDA approval and will be entitled to a tiered share of co-promotion operating profits and losses in the U.S., as summarized in the table below. In addition, we receive low single-digit royalties on sales of LUNSUMIO outside the U.S. In December 2022 LUNSUMIO was granted accelerated approval by the FDA for the treatment of relapsed or refractory follicular lymphoma. Prior to regulatory approval, we record our share of the expense incurred by the collaboration for the development of anti-CD20 products in research and development expense and pre-commercialization costs within selling, general and administrative expense in our condensed consolidated statements of income. After an anti-CD20 product is approved, we record our share of the development and sales and marketing expense related to that product as a reduction of our share of pre-tax profits in revenue from anti-CD20 therapeutic programs. Profit-sharing Formulas RITUXAN and LUNSUMIO Profit Share Our current pretax co-promotion profit-sharing formula for RITUXAN and LUNSUMIO in the U.S. provides for a 30.0% share on the first $50.0 million of combined co-promotion operating profits earned each calendar year. As a result of the FDA approval of LUNSUMIO our share of the combined annual co-promotion profits for RITUXAN and LUNSUMIO in excess of $50.0 million varies upon the following events, as summarized in the table below:
After LUNSUMIO Approval until the First Threshold Date | 37.5 | %
After First Threshold Date until the Second Threshold Date | 35.0 | %
After Second Threshold Date | 30.0 | %
First Threshold Date means the earlier of (i) the first day of the calendar quarter following the date U.S. gross sales of GAZYVA within any consecutive 12-month period have reached $500.0 million or (ii) the first date in any calendar year in which U.S. gross sales of LUNSUMIO have reached $150.0 million. Second Threshold Date means the later of (i) the first date the gross sales in any calendar year in which U.S. gross sales of LUNSUMIO reach $350.0 million and (ii) January 1 of the calendar year following the calendar year in which the First Threshold Date occurs. In March 2023 the First Threshold Date was achieved. As a result, beginning in April 2023 the pre-tax profit share for RITUXAN and LUNSUMIO will be 35.0%. GAZYVA Profit Share Our current pretax profit-sharing formula for GAZYVA provides for a 35.0% share on the first $50.0 million of operating profits earned each calendar year. Our share of annual co-promotion profits in excess of $50.0 million varies upon the following events, as summarized in the table below:
Until Second GAZYVA Threshold Date | 37.5 | %
After Second GAZYVA Threshold Date | 35.0 | %
Second GAZYVA Threshold Date means the first day of the calendar quarter following the date 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. In March 2023 the Second GAZYVA Threshold Date was achieved. As a result, beginning in April 2023 the pre-tax profit share for GAZYVA will be 35.0%. Eisai Co., Ltd. As of March 31, 2023, we accrued a $31.0 million payable to Eisai related to the termination of an agreement whereby Eisai co-promoted or distributed our MS products in certain Asia-Pacific markets and settings. The termination fee is included in selling, general and administrative expense in our condensed consolidated statements of income for the three months ended March 31, 2023. LEQEMBI (lecanemab) Collaboration We have a collaboration agreement with Eisai to jointly develop and commercialize LEQEMBI (lecanemab), an anti-amyloid antibody for the potential treatment of Alzheimer's disease (the LEQEMBI Collaboration). Eisai serves as the lead of LEQEMBI 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. Upon LEQEMBI marketing approval, we and Eisai will co-promote LEQEMBI and share profits and losses equally. We currently manufacture LEQEMBI drug substance and drug product and in March 2022 we extended our supply agreement with Eisai related to LEQEMBI from five years to ten years for the manufacture of LEQEMBI drug substance. In January 2023 the FDA granted accelerated approval of LEQEMBI, which became commercially available in the U.S. during the first quarter of 2023. Upon commercialization, we began recognizing commercial profits and losses related to the LEQEMBI Collaboration Agreement on a net basis. As we are not the principal on sales transactions related to LEQEMBI, our 50.0% share of the revenue and operating expense is recorded on a net basis in revenue from LEQEMBI Collaboration, which is a separate component of revenue within our condensed consolidated statements of income. For the three months ended March 31, 2023, we recognized a reduction to revenue of approximately $18.9 million, reflecting our net profit-share of the LEQEMBI Collaboration results in the U.S. This amount is included in revenue from LEQEMBI Collaboration within our condensed consolidated statements of income. During the first quarter of 2023, upon commercialization of LEQEMBI, we began recognizing our share of U.S. revenue, cost of sales and selling and marketing expense in revenue from LEQEMBI Collaboration within our condensed consolidated income statements. Our share of LEQEMBI development expense will continue to be recorded within research and development expense and, until commercial approval on a region by region basis, non-U.S. selling and marketing expense will continue to be recorded in selling, general and administrative expense within our condensed consolidated statements of income. A summary of development and sales and marketing expense related to the LEQEMBI Collaboration is as follows:
|  | For the Three Months Ended March 31, |  |
(In millions) |  | 2023 |  | 2022 |  |  |  |
Total development expense incurred by the collaboration related to the advancement of LEQEMBI |  | $ | 107.9 |  |  | $ | 77.0 |  |  |  |  |
Biogen's share of the LEQEMBI Collaboration development expense reflected in research and development expense in our condensed consolidated statements of income |  | 54.0 |  |  | 38.5 |  |  |  |  |
Total sales and marketing expense incurred by the LEQEMBI Collaboration(1) |  | 10.5 |  |  | 15.9 |  |  |  |  |
Biogen's share of the LEQEMBI Collaboration sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income(1) |  | 5.3 |  |  | 8.0 |  |  |  |  |
(1) Beginning in the first quarter of 2023 reimbursement to Eisai for our share of U.S. LEQEMBI selling, general and administrative expense is recognized in revenue from LEQEMBI Collaboration within our condensed consolidated statements of income. ADUHELM Collaboration Agreement The LEQEMBI 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). 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 in 2019, Eisai was reimbursing us for 45.0% of development and sales and marketing expense incurred by the collaboration for the advancement of ADUHELM. In March 2022 we amended our ADUHELM Collaboration Agreement with Eisai. As of the amendment date, we have sole decision making and commercialization rights worldwide on ADUHELM, and beginning January 1, 2023, Eisai receives only a tiered royalty based on net sales of ADUHELM, and no longer participates in sharing ADUHELM's global profits and losses. Eisai's share of development, commercialization and manufacturing expense was limited to $335.0 million for the period from January 1, 2022 to December 31, 2022, which was achieved as of December 31, 2022. Once this limit was achieved, we became responsible for all ADUHELM related costs. A summary of development expense and sales and marketing expense related to our initial ADUHELM Collaboration Agreement is as follows:
|  |  | For the Three Months Ended March 31, |  |
(In millions) |  |  |  | 2022 |  |  |  |
Total ADUHELM Collaboration development expense |  |  |  | $ | 44.2 |  |  |  |  |
Biogen's share of ADUHELM Collaboration development expense reflected in research and development expense in our condensed consolidated statements of income |  |  |  | 24.3 |  |  |  |  |
Total sales and marketing expense incurred by the ADUHELM Collaboration Agreement |  |  |  | 95.0 |  |  |  |  |
Biogen's share of ADUHELM Collaboration sales and marketing expense reflected in selling, general and administrative expense and collaboration profit sharing/(loss reimbursement) in our condensed consolidated statements of income |  |  |  | 50.9 |  |  |  |  |
ADUHELM C o-promotion Profits and Losses Under our initial ADUHELM Collaboration Agreement, we recognized revenue on sales of ADUHELM in the U.S. to third parties as a component of product revenue in our condensed consolidated statements of income. We also recorded the related cost of revenue and sales and marketing expense in our condensed consolidated statements of income as these costs were incurred. Payments made to and received from Eisai for its 45.0% share of the co-promotion profits or losses in the U.S. were recognized in collaboration profit sharing/(loss reimbursement) in our condensed consolidated statements of income. For the three months ended March 31, 2022, we recognized a net reduction to our operating expense of approximately $181.7 million to reflect Eisai's 45.0% share of net collaboration losses in the U.S. During the first quarter of 2022, as a result of the final NCD, we recorded approximately $275.0 million of charges associated with the write-off of inventory and purchase commitments in excess of forecasted demand related to ADUHELM. Additionally, for the three months ended March 31, 2022, we recorded approximately $45.0 million of aggregate gross idle capacity charges related to ADUHELM. These charges were recorded in cost of sales within our condensed consolidated statements of income. We recognized approximately $160.0 million related to Eisai's 45.0% share of these charges in collaboration profit sharing/(loss reimbursement) within our condensed consolidated statements of income for the three months ended March 31, 2022. Amounts receivable from Eisai related to the agreements discussed above were approximately $72.6 million and $88.0 million as of March 31, 2023 and December 31, 2022, respectively. Amounts payable to Eisai related to the agreements discussed above were $137.8 million and $81.2 million as of March 31, 2023 and December 31, 2022, respectively. For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K. UCB We have a collaboration agreement with UCB, effective November 2003, to jointly develop and commercialize dapirolizumab pegol, an anti-CD40L pegylated Fab, for the potential treatment of SLE 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, both companies will co-promote dapirolizumab pegol and share profits and losses equally. A summary of development expense related to the UCB collaboration agreement is as follows:
|  | For the Three Months Ended March 31, |  |
(In millions) |  | 2023 |  | 2022 |  |  |  |
Total UCB collaboration development expense |  | $ | 18.3 |  |  | $ | 17.6 |  |  |  |  |
Biogen's share of UCB collaboration development expense reflected in research and development expense in our condensed consolidated statements of income |  | 9.2 |  |  | 8.8 |  |  |  |  |
Sage Therapeutics, Inc. In November 2020 we entered into a global collaboration and license agreement with Sage to jointly develop and commercialize zuranolone for the potential treatment of MDD and PPD 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. We may pay Sage milestones totaling $225.0 million upon the first commercial sale of zuranolone, for the potential treatment of MDD and PPD, in the U.S. A summary of development and sales and marketing expense related to this collaboration is as follows:
|  | For the Three Months Ended March 31, |  |
(In millions) |  | 2023 |  | 2022 |  |  |  |
Total Sage collaboration development expense |  | $ | 34.8 |  |  | $ | 38.7 |  |  |  |  |
Biogen's share of Sage collaboration development expense reflected in research and development expense in our condensed consolidated statements of income |  | 17.4 |  |  | 19.4 |  |  |  |  |
Total Sage sales and marketing expense incurred by the collaboration |  | 38.2 |  |  | 18.4 |  |  |  |  |
Biogen's share of Sage collaboration sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income |  | 19.1 |  |  | 9.2 |  |  |  |  |
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 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 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 April 2023 we exercised our option with Denali to license the ATV-enabled anti-amyloid beta program. In connection with this exercise, we will assume responsibility for all development and commercial activities and associated expenses related to the program. In addition, we will make a one-time option exercise payment to Denali and, should certain milestones be achieved, may pay Denali additional development and commercial milestone payments and royalties based on future net sales. 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. A summary of development expense related to this collaboration is as follows:
|  | For the Three Months Ended March 31, |  |
(In millions) |  | 2023 |  | 2022 |  |  |  |
Total Denali collaboration development expense |  | $ | 16.6 |  |  | $ | 14.9 |  |  |  |  |
Biogen's share of Denali collaboration development expense reflected in research and development expense in our condensed consolidated statements of income |  | 10.0 |  |  | 8.9 |  |  |  |  |
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. In March 2023 we terminated our collaboration and license agreement with Sangamo. A summary of development expense related to this collaboration is as follows:
|  | For the Three Months Ended March 31, |  |
(In millions) |  | 2023 |  | 2022 |  |  |  |
Total Sangamo collaboration development expense |  | $ | 5.1 |  |  | $ | 8.3 |  |  |  |  |
Biogen's share of Sangamo collaboration development expense reflected in research and development expense in our condensed consolidated statements of income |  | 2.3 |  |  | 5.5 |  |  |  |  |
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 In July 2021 we entered into a collaboration and license agreement with InnoCare Pharma Limited for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS. This license and collaboration agreement was later terminated in February 2023. For the three months ended March 31, 2023, we recorded $0.2 million as research and development expense in our condensed consolidated statements of income related to other research and discovery related arrangements, compared to $19.5 million in the prior year comparative period. Samsung Bioepis Co., Ltd. 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 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 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/(loss reimbursement) in our condensed consolidated statements of income. For the three months ended March 31, 2023, we recognized net profit-sharing expense of $57.1 million to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits, compared to a net profit-sharing expense of $64.4 million in the prior year comparative period. Other Services Simultaneous with the formation of Samsung Bioepis, we also entered into a license 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 receive single digit royalties on biosimilar products developed and commercialized by Samsung Bioepis. Royalty revenue under the license agreement is recognized as a component of contract manufacturing, royalty and other revenue in our condensed consolidated statements of income. Amounts receivable from Samsung Bioepis related to the agreements discussed abo ve were $6.3 million a nd $2.0 million as of March 31, 2023 and December 31, 2022, respectively. Amounts payable to Samsung Bioepis related to the agreements discussed abo ve were $32.2 million and $40.5 million as of March 31, 2023 and December 31, 2022, respectively. For additional information on our collaboration arrangements with Samsung Bioepis and our other significant collaboration arrangements, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K.

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