neurological diseases. As part of the collaboration, Biogen Idec gained exclusive rights to the use of our
antisense technology to develop therapies for neurological diseases and has the option to license drugs resulting
from this collaboration. The exclusivity for neurological diseases will last through September 2019, and may be
extended for any drug development programs being pursued under the collaboration. We will usually be
responsible for drug discovery and early development of antisense drugs and Biogen Idec will have the option to
license antisense drugs after Phase 2 proof of concept. If Biogen Idec exercises its option for a drug, it will
assume all further global development, regulatory and commercialization responsibilities for that drug. Biogen
Idec will be responsible for all of the drug discovery and development activities for drugs using other modalities.
Under the terms of the agreement, we received an upfront payment of $100 million and are eligible to
receive milestone payments, license fees and royalty payments for all drugs developed through this collaboration,
with the specific amounts dependent upon the modality of the molecule advanced by Biogen Idec. If we have a
change of control during the first six years of the collaboration, we may be required to refund Biogen Idec a
portion of the $100 million upfront payment, with the amount of the potential refund decreasing ratably as we
progress through the initial six year term of the collaboration. We are amortizing the $100 million upfront
payment through September 2019. Because the amortization period for the upfront payment will never be less
than the initial six year term of the collaboration, the amount of revenue we recognize from the upfront payment
will never exceed the amount that Biogen Idec could potentially require us to refund.
For each antisense molecule that is chosen for drug discovery and development under this collaboration, we
are eligible to receive up to approximately $260 million in a license fee and substantive milestone payments. We
are eligible to receive up to approximately $60 million for the achievement of research and development
milestones, including amounts related to the cost of clinical trials, and up to $130 million for the achievement of
regulatory milestones. In addition, we are eligible to receive royalties up to the mid-teens on any product sales of
antisense drugs developed under this collaboration. If other modalities are chosen, such as small molecules or
monoclonal antibodies, we are eligible to receive up to $90 million in substantive milestone payments, including
up to $35 million for the achievement of research and development milestones and up to $55 million for the
achievement of regulatory milestones. In addition, we are eligible to receive single-digit royalties on any product
sales of drugs using non-antisense modalities developed under this collaboration. Through February 2015, we
have earned $25 million in milestone payments related to advancing three different targets under this
collaboration. We will earn the next milestone payment of up to $10 million if we choose another target to
advance under this collaboration.
Each of our agreements with Biogen Idec will continue until the earlier of the date all of Biogen Idec’s
options to obtain the exclusive licenses under the applicable agreement expire unexercised or, if Biogen Idec
exercises its option, until the expiration of all payment obligations under the applicable agreement. In addition,
each agreement, or any program under an agreement, may terminate early under the following situations:
•
Biogen Idec may terminate the agreement or any program at any time by providing written notice to
us;
•
Under specific circumstances, if we are acquired by a third party with a product that directly competes
with a compound being developed under the agreement, Biogen Idec may terminate the affected
program by providing written notice to us;
•
If, within a specified period of time, any required clearance of a transaction contemplated by an
agreement under the Hart-Scott-RodinoAntitrust Improvements Act of 1976, as amended, is not
received, then either we or Biogen Idec may terminate the affected program by providing written notice
to the other party; and
•
Either we or Biogen Idec may terminate any program by providing written notice to the other party
upon the other party’s uncured failure to perform a material obligation under the agreement with
respect to the affected program, or the entire agreement if the other party becomes insolvent.
During 2014, 2013 and 2012, we earned revenue of $123.2 million, $37.0 million and $8.5 million,
respectively, from our relationship with Biogen Idec, which represented 58 percent, 25 percent and eight percent,
respectively, of our total revenue for those periods. Our balance sheets at December 31, 2014 and 2013 included
deferred revenue of $118.1 million and $145.1 million, respectively, related to our relationship with Biogen Idec.
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