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recognize in future periods. For example, in2013we adjusted the periodof performance onourGSK collaboration andour ISIS-
SMN
Rx
collaborationwithBiogen Idec. As a result of adding twonewdevelopment candidates, ISIS-GSK3
Rx
and ISIS-GSK4
Rx
,to
our collaborationwithGSK, our periodof performancewas extendedbeyondour initial estimate. Therefore, we extended the
amortizationperiod to correspond to the new extendedperiodof performance. Similarly, withour ISIS-SMN
Rx
collaboration, we
extended the amortizationperiod to correspond to the expansionof thePhase 3 study in infantswithSMA. Sincewe extended the
amortizationperiod for ourGSK collaboration andour ISIS-SMN
Rx
collaboration, the amortization from the upfront payments for
these collaborationswill be $2.6million less in2014 compared to2013.
From time to time, wemay enter into separate agreements at or near the same timewith the same customer. We evaluate
such agreements todeterminewhether they shouldbe accounted for individually as distinct arrangements orwhether the separate
agreements are, in substance, a singlemultiple element arrangement. We evaluatewhether the negotiations are conducted jointly as
part of a single negotiation, whether the deliverables are interrelatedor interdependent, whether fees inone arrangement are tied to
performance in another arrangement, andwhether elements in one arrangement are essential to another arrangement. Our evaluation
involves significant judgment todeterminewhether a groupof agreementsmight be so closely related that they are, in effect, part of a
single arrangement. For example, since early2012we have entered into four collaboration agreementswithBiogen Idec:
In January2012, we entered into a collaboration agreementwithBiogen Idec todevelop and commercialize ISIS-SMN
Rx
for
SMA. As part of the collaboration, we received a $29million upfront payment andwe are responsible for global
development of ISIS-SMN
Rx
through completionof Phase 2/3 clinical trials.
In June 2012, we entered into a second and separate collaboration agreementwithBiogen Idec todevelop and commercialize
a novel antisense drug targetingDMPK. As part of the collaboration, we received a $12million upfront payment andwe are
responsible for global development of the drug through the completion of a Phase 2 clinical trial.
InDecember 2012, we entered into a third and separate collaboration agreement withBiogen Idec to discover anddevelop
antisense drugs against three targets to treat neurological or neuromuscular disorders. As part of the collaboration, we
received a $30million upfront payment andwe are responsible for the discoveryof a lead antisense drug for eachof three
targets.
InSeptember 2013, we entered into a fourth and separate collaboration agreementwithBiogen Idec to leverage antisense
technology to advance the treatment of neurological diseases. We grantedBiogen Idec exclusive rights to the use of our
antisense technology todevelop therapies for neurological diseases as part of this broad collaboration.We received a $100
million upfront payment andwe are responsible for discovery and earlydevelopment through the completion of aPhase 2
clinical trial for each antisense drug identifiedduring the sixyear termof this collaboration, whileBiogen Idec is responsible
for the creation anddevelopment of smallmolecule treatments andbiologics.
All four of these collaboration agreements giveBiogen Idec the optionor options to license one ormore drugs resulting from
the specific collaboration. IfBiogen Idec exercises anoption, itwill payus a license fee andwill assume future development,
regulatory and commercialization responsibilities for the licenseddrug.We are also eligible to receivemilestone payments associated
with the research and/or development of the drugs prior to licensing,milestone payments if Biogen Idec achieves pre-specified
regulatorymilestones, and royalties on anyproduct sales of drugs resulting from these collaborations.
We evaluated all four of theBiogen Idec agreements to determinewhetherwe should account for them as separate
agreements. We determined that we should account for the agreements separatelybecausewe conducted the negotiations
independently of one another, each agreement focuses ondifferent drugs, there are no interrelated or interdependent deliverables, there
are no provisions in any of these agreements that are essential to the other agreement, and the payment terms and fees under each
agreement are independent of eachother. We also evaluated the deliverables in eachof these agreements todeterminewhether they
met the criteria tobe accounted for as separate units of accountingorwhether they shouldbe combinedwithother deliverables and
accounted for as a single unit of accounting. For all four of these agreements, we determined that the options did not have stand-alone
value becauseBiogen Idec cannot pursue the development or commercializationof the drugs resulting from these collaborations until
it exercises the respective option or options. As such, for each agreement we considered the deliverables tobe a single unit of
accounting andwe are recognizing the upfront payment for eachof the agreements over the respective estimated periodof our
performance.
Our collaborations often include contractualmilestones, which typically relate to the achievement of pre-specified
development, regulatory and commercialization events. These three categories ofmilestone events reflect the three stages of the life-
cycle of our drugs, whichwe describe inmore detail in the followingparagraph.
