Investments in Variable Interest Entities

12 Months Ended

Dec. 31, 2011

Investments in Variable Interest Entities [Abstract]

Investments in Variable Interest Entities

19.    Investments in Variable Interest Entities

Consolidated Variable Interest Entities

Our consolidated financial statements include the financial results of variable interest entities in which we are the primary beneficiary.

Investments in Joint Ventures

On September 6, 2011, we completed the purchase of the noncontrolling interest in our joint venture investments in Biogen Dompé SRL and Biogen Dompé Switzerland GmbH, our respective sales affiliates in Italy and Switzerland, from our joint venture partners, Dompé Farmaceutici SpA and Dompé International SA, respectively. Prior to this transaction, our consolidated financial statements reflected 100% of the operations of these joint venture investments and we recorded net income (loss) attributable to noncontrolling interests in our consolidated statements of income based on the percentage of ownership interest retained by our joint venture partners as we retained the power to direct the activities which most significantly and directly impacted their economic performance. We have continued to consolidate the operations of these entities following our purchase of the noncontrolling interest; however, as of September 6, 2011, we no longer allocate 50% of the earnings of these affiliates to net income (loss) attributable to noncontrolling interests as Biogen Dompé SRL and Biogen Dompé Switzerland GmbH became wholly-owned subsidiaries of the Company.

Until we completed our purchase of the noncontrolling interests, the assets of these joint ventures were restricted, from the standpoint of Biogen Idec, in that they were not available for our general business use outside the context of each joint venture. The joint ventures’ most significant assets were accounts receivable from the ordinary course of business. The holders of the liabilities of each joint venture, including the credit line from Dompé Farmaceutici SpA to Biogen Dompé SRL, had no recourse to Biogen Idec. Balances outstanding under Biogen Dompé SRL’s credit line were repaid in connection with this transaction. In addition, Dompé Farmaceutici SpA purchased all of Biogen Dompé SRL’s outstanding receivables as of June 30, 2011, adjusted for cash received through September 5, 2011. For additional information related to this transaction, please read Note 2, Acquisitions to these consolidated financial statements.

Knopp

In August 2010, we entered into a license agreement with Knopp Neurosciences, Inc. (Knopp), a subsidiary of Knopp Holdings, LLC, for the development, manufacture and commercialization of dexpramipexole, an orally administered small molecule in clinical development for the treatment of amyotrophic lateral sclerosis (ALS). We are responsible for all development activities and, if successful, we will also be responsible for the manufacture and global commercialization of dexpramipexole. Under the terms of the license agreement we made a $26.4 million upfront payment and agreed to pay Knopp up to an additional $265.0 million in development and sales-based milestone payments, as well as royalties on future commercial sales. In addition, we also purchased 30.0% of the Class B common shares of Knopp for $60.0 million.

Due to the terms of the license agreement and our investment in Knopp, we determined that we are the primary beneficiary of Knopp as we have the power to direct the activities that most significantly impact Knopp’s economic performance. As such, we consolidate the results of Knopp. As the license agreement with Knopp only gives us access to the underlying intellectual property of dexpramipexole and we did not acquire any employees or other processes, we determined that this transaction was an acquisition of an asset rather than a business. Therefore, we recorded an IPR&D charge of approximately $205.0 million upon the initial consolidation of Knopp, which is included within our consolidated statement of income for 2010. The amount allocated to IPR&D represents the fair value of the intellectual property of Knopp, which as of the effective date of the agreement, had not reached technological feasibility and had no alternative future use. This charge was determined using internal models based on projected revenues and development costs and adjusted for industry-specific probabilities of success. We attributed approximately $145.0 million of the IPR&D charge to the noncontrolling interest.

In March 2011, we dosed the first patient in a registrational study for dexpramipexole. The achievement of this milestone resulted in a $10.0 million payment due to Knopp. As we consolidate Knopp, we recognized this payment as a charge to noncontrolling interests in the first quarter of 2011.

Although we have assumed responsibility for the development of dexpramipexole, we may also be required to reimburse certain Knopp expenses directly attributable to the license agreement. Any additional amounts incurred by Knopp that we reimburse will be reflected within total cost and expenses in our consolidated statements of income. Future development and sales-based milestone payments will also be reflected within our consolidated statements of income as a charge to noncontrolling interests, when such milestones are achieved.

A summary of activity related to this collaboration, excluding the initial accounting for the consolidation of Knopp, is as follows:

	For the Years Ended December 31,
(In millions)	2011		2010
Total upfront payments made to Knopp	$	—	$	26.4
Milestone payments made to Knopp	$	10.0	$	—
Total development expense incurred by the collaboration excluding upfront and milestone payments	$	44.8	$	5.0
Biogen Idec’s share of expense reflected within our consolidated statements of income	$	54.8	$	31.4
Collaboration expense attributed to noncontrolling interests, net of tax	$	8.6	$	—

A summary of activity related to this collaboration since inception, along with an estimate of additional future development expenses expected to be incurred by us, is as follows:

(In millions)	As of December 31, 2011
Total upfront and milestone payments made to Knopp	$	36.4
Total development expense incurred by Biogen Idec, excluding upfront and milestone payments	$	49.8
Estimate of additional amounts to be incurred by us in development of dexpramipexole	$	260.0

The assets and liabilities of Knopp are not significant to our financial position or results of operations. We have provided no financing to Knopp other than previously contractually required amounts disclosed above.

Neurimmune SubOne AG

In 2007, we entered into a collaboration agreement with Neurimmune SubOne AG (Neurimmune), a subsidiary of Neurimmune AG, for the development and commercialization of antibodies for the treatment of Alzheimer’s disease. Neurimmune conducts research to identify potential therapeutic antibodies and we are responsible for the development, manufacturing and commercialization of all products. Based upon our current development plans, we may pay Neurimmune up to $345.0 million in remaining milestone payments, as well as royalties on sales of any resulting commercial products.

We determined that we are the primary beneficiary of Neurimmune because we have the power through the collaboration to direct the activities that most significantly impact the entity’s economic performance and are required to fund 100% of the research and development costs incurred in support of the collaboration agreement.

Amounts that are incurred by Neurimmune for research and development expenses incurred in support of the collaboration that we reimburse are reflected in research and development expense in our consolidated statements of income. In April 2011, we submitted an Investigational New Drug application for BIIB037 (human anti-Amyloid ß mAb) a beta-amyloid removal therapy, which triggered a $15.0 million milestone payment due to Neurimmune. BIIB037 is being developed for the treatment of Alzheimer’s disease. As we consolidate Neurimmune, we recognized this payment as a charge to noncontrolling interests in the second quarter of 2011. Future milestone payments will be reflected within our consolidated statements of income as a charge to the noncontrolling interest, net of tax, when such milestones are achieved.

A summary of activity related to this collaboration is as follows:

	For the Years Ended December 31,
(In millions)	2011		2010		2009
Milestone payments made to Neurimmune	$	15.0	$	—	$	7.5
Total development expense incurred by the collaboration, excluding upfront and milestone payments	$	9.0	$	15.5	$	9.0
Biogen Idec’s share of expense reflected within our consolidated statements of income	$	24.0	$	15.5	$	16.5
Collaboration expense attributed to noncontrolling interests, net of tax	$	14.7	$	1.0	$	—

A summary of activity related to this collaboration since inception, along with an estimate of additional future development expenses expected to be incurred by us, is as follows:

(In millions)	As of December 31, 2011
Total upfront and milestone payments made to Neurimmune	$	35.0
Total development expense incurred by Biogen Idec, excluding upfront and milestone payments	$	40.0
Estimate of additional amounts to be incurred by us in development of the lead compound	$	800.0

The assets and liabilities of Neurimmune are not significant to our financial position or results of operations as it is a research and development organization. We have provided no financing to Neurimmune other than previously contractually required amounts.

In December 2010, we completed our acquisition of BIN from Neurimmune AG, a related party to this collaboration. For additional information related to this transaction, please read Note 2, Acquisitions to these consolidated financial statements.

Unconsolidated Variable Interest Entities

We have relationships with other variable interest entities which we do not consolidate as we lack the power to direct the activities that significantly impact the economic success of these entities. These relationships include investments in certain biotechnology companies and research collaboration agreements. For additional information related to our significant collaboration arrangements with unconsolidated variable interest entities, please read Note 20, Collaborations to these consolidated financial statements.

As of December 31, 2011, the total carrying value of our investments in biotechnology companies that we have determined to be variable interest entities is $14.6 million. Our maximum exposure to loss related to these variable interest entities is limited to the carrying value of our investments.

We have entered into research collaborations with certain variable interest entities where we are required to share or fund certain development activities. These development activities are included in research and development expense within our consolidated statements of income, as they are incurred. Depending on the collaborative arrangement, we may record funding receivables or payable balances with our partners, based on the nature of the cost-sharing mechanism and activity within the collaboration. As of December 31, 2011, we had no significant receivables or payables related to cost sharing arrangements with unconsolidated variable interest entities at December 31, 2011 and 2010, respectively.

We have provided no financing to these variable interest entities other than previously contractually required amounts.

Samsung Biosimilar Agreement

On December 5, 2011, we entered into an agreement with Samsung BioLogics Co. Ltd. (Samsung) to establish an entity to develop, manufacture and market biosimilar pharmaceuticals. Under the terms of the agreement, Samsung will contribute approximately $255.0 million for an 85 percent stake in the entity and Biogen Idec will contribute approximately $45.0 million for the remaining 15 percent ownership interest. Our investment will initially be limited to this initial contribution as we have no obligation to provide any additional funding; however, we maintain an option to purchase additional stock in the entity in order to increase our ownership percentage up to 49.9 percent. The exercise of this option is within our control.

Samsung will retain the contractual power to direct the activities of the entity which will most significantly and directly impact its economic performance. We will account for this investment under the equity method of accounting as we maintain the ability to exercise significant influence over the entity through a presence on the entity’s Board of Directors and our contractual relationship. Therefore, we will reflect our percentage of the entity’s income or loss within our consolidated statements of income.

Completion of the transaction is subject to customary closing conditions.