Intangible Assets and Goodwill

9 Months Ended

Sep. 30, 2011

Intangible Assets and Goodwill [Abstract]


7.	Intangible Assets and Goodwill

Intangible Assets

Intangible assets, net of accumulated amortization, impairment charges and adjustments, are summarized as follows:


			As of September 30, 2011							As of December 31, 2010
	Estimated				Accumulated							Accumulated
(In millions)	Life		Cost		Amortization			Net		Cost		Amortization			Net

Out-licensed patents		12 years	$	578.0	$	(381.1	)	$	196.9	$	578.0	$	(350.2	)	$	227.8
Core developed technology		15-23 years		3,005.3		(1,761.8	)		1,243.5		3,005.3		(1,636.9	)		1,368.4
In process research and development		Up to 15 years upon commercialization		110.9		—			110.9		110.9		—			110.9
Trademarks and tradenames		Indefinite		64.0		—			64.0		64.0		—			64.0
In-licensed rights and patents		Up to 14 years		47.1		(3.3	)		43.8		3.0		(1.3	)		1.7
Assembled workforce		4 years		2.1		(2.1	)		—		2.1		(2.1	)		—
Distribution rights		2 years		12.7		(12.7	)		—		12.7		(12.7	)		—

Total intangible assets			$	3,820.1	$	(2,161.0	)	$	1,659.1	$	3,776.0	$	(2,003.2	)	$	1,772.8

Total intangible assets was unchanged as of September 30, 2011 compared to December 31, 2010, excluding the impact of amortization and amounts recorded in connection with the licence agreements for FAMPYRA and the JC virus assay described below.

For the three and nine months ended September 30, 2011, amortization for acquired intangible assets totaled $49.3 million and $157.7 million, respectively, as compared to $53.5 million and $155.6 million, respectively, in the prior year comparative periods. Amortization for acquired intangible assets is expected to be in the range of approximately $150.0 million to $200.0 million annually through 2016.

AVONEX Core Technology Asset

Our most significant intangible asset is the core technology related to our AVONEX product. The net book value of this asset as of September 30, 2011 was $1,230.9 million. We believe the economic benefit of our core technology is consumed as revenue is generated from our AVONEX product, which we refer to as the economic consumption amortization model. An analysis of the anticipated lifetime revenue of AVONEX is performed annually during our long range planning cycle each year. This analysis serves as the basis for the calculation of economic consumption for the core technology asset.

We completed our most recent long range planning cycle in the third quarter of 2011. This analysis is based upon certain assumptions that we evaluate on a periodic basis, such as the anticipated product sales of AVONEX and expected impact of competitor products and our own pipeline product candidates, as well as the issuance of new patents or the extension of existing patents. Based upon this analysis, amortization of our core acquired intangible asset related to AVONEX is expected to be in the range of approximately $105.0 million to $155.0 million annually through 2016.

FAMPYRA

On July 20, 2011, the European Commission (EC) granted a conditional marketing authorization for FAMPYRA in the E.U., which triggered a $25.0 million milestone payment, which was paid to Acorda Therapeutics, Inc. (Acorda) in the third quarter of 2011. A conditional marketing authorization is renewable annually and is granted to a medicinal product with a positive benefit/risk assessment that fulfills an unmet medical need when the benefit to public health of immediate availability outweighs the risk inherent in the fact that additional data are still required.

Under our 2009 collaboration and license agreement with Acorda, we have commercialization rights for FAMPYRA and have responsibility for regulatory activities and future clinical development of FAMPYRA outside the U.S. and will pay Acorda royalties based on ex-U.S. net sales, and milestones based on new indications and ex-U.S. net sales. These milestones include the $25.0 million payment made for obtaining the conditional marketing authorization for FAMPYRA in the E.U. The next expected milestone would be $15.0 million, due when ex-U.S. net sales reach $100.0 million over four consecutive quarters. We will capitalize these milestones as they become payable as an intangible asset. Amortization will utilize an economic consumption model that will be based on a forecast of all of the probable payments we expect to make as contingent consideration, such as sales-based milestones, for entering into the license agreement. Royalty payments are recognized as a component of cost of goods sold. For additional information related to our collaboration with Acorda, please read Note 19, Collaborations to our consolidated financial statements included within our 2010 Form 10-K.

JC Virus Assay

In the first quarter of 2011, we licensed rights for the diagnostic and therapeutic application of recombinant virus-like particles, known as VP1 proteins, to detect antibodies of the JC virus (JCV) in serum or blood. Under the terms of this license, we expect to make payments totaling approximately $53.3 million through 2016. These payments include upfront and milestone payments as well as the greater of an annual maintenance fee or usage-based royalty payment. As of September 30, 2011, we recognized an intangible asset in the amount of $19.2 million, reflecting the total of upfront payments made and other time-based milestone payments. We will further capitalize additional payments due under this arrangement as an intangible asset as they become payable. Amortization will utilize an economic consumption model that will be based on a forecast of all of the probable payments we expect to make in relation to the total number of JCV assay tests performed through 2016.

Goodwill

Our goodwill balance remained unchanged as of September 30, 2011 compared to December 31, 2010. As of September 30, 2011, we had no accumulated impairment losses.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References+ Details