ISIS-STAT3-2.5
Rx
license in June 2013. We are recognizing the remaining $19.5 million of the $31 million over
the estimated period of our performance. Assuming a constant selling price for the other elements in the
arrangement, if there was an assumed 10 percent increase or decrease in the estimated selling price of the
ISIS-STAT3-2.5
Rx
license, we determined that the revenue we would have allocated to the ISIS-STAT3-2.5
Rx
license would change by approximately seven percent, or $0.8 million, from the amount we recorded.
Typically, we must estimate our period of performance when the agreements we enter into do not clearly
define such information. Our collaborative agreements typically include a research and/or development project
plan outlining the activities the agreement requires each party to perform during the collaboration. We estimate
the period of time over which we will complete the activities for which we are responsible and use that period of
time as our period of performance for purposes of revenue recognition and amortize revenue over such period.
We have made estimates of our continuing obligations under numerous agreements and in certain instances the
timing of satisfying these obligations may change as the development plans for our drugs progress. Accordingly,
our estimates may change in the future. If our estimates and judgments change over the course of these
agreements, it may affect the timing and amount of revenue that we recognize in future periods.
From time to time, we may enter into separate agreements at or near the same time with the same customer.
We evaluate such agreements to determine whether they should be accounted for individually as distinct
arrangements or whether the separate agreements are, in substance, a single multiple element arrangement. We
evaluate whether the negotiations are conducted jointly as part of a single negotiation, whether the deliverables
are interrelated or interdependent, whether fees in one arrangement are tied to performance in another
arrangement, and whether elements in one arrangement are essential to another arrangement. Our evaluation
involves significant judgment to determine whether a group of agreements might be so closely related that they
are, in effect, part of a single arrangement. For example, since early 2012 we have entered into four collaboration
agreements with Biogen Idec:
•
In January 2012, we entered into a collaboration agreement with Biogen Idec to develop and
commercialize ISIS-SMN
Rx
for SMA. As part of the collaboration, we received a $29 million upfront
payment and we are responsible for global development of ISIS-SMN
Rx
through completion of Phase
2/3 clinical trials.
•
In June 2012, we entered into a second and separate collaboration agreement with Biogen Idec to
develop and commercialize a novel antisense drug targeting DMPK, or dystrophia myotonica-protein
kinase. As part of the collaboration, we received a $12 million upfront payment and we are responsible
for global development of the drug through the completion of a Phase 2 clinical trial.
•
In December 2012, we entered into a third and separate collaboration agreement with Biogen Idec to
discover and develop antisense drugs against three targets to treat neurological or neuromuscular
disorders. As part of the collaboration, we received a $30 million upfront payment and we are
responsible for the discovery of a lead antisense drug for each of three targets.
•
In September 2013, we entered into a fourth and separate collaboration agreement with Biogen Idec to
leverage antisense technology to advance the treatment of neurological diseases. We granted Biogen
Idec exclusive rights to the use of our antisense technology to develop therapies for neurological
diseases as part of this broad collaboration. We received a $100 million upfront payment and we are
responsible for discovery and early development through the completion of a Phase 2 clinical trial for
each antisense drug identified during the six year term of this collaboration, while Biogen Idec is
responsible for the creation and development of small molecule treatments and biologics.
All four of these collaboration agreements give Biogen Idec the option to license one or more drugs
resulting from the specific collaboration. If Biogen Idec exercises an option, it will pay us a license fee and will
assume future development, regulatory and commercialization responsibilities for the licensed drug. We are also
eligible to receive milestone payments associated with the research and/or development of the drugs prior to
licensing, milestone payments if Biogen Idec achieves pre-specified regulatory milestones, and royalties on any
product sales of drugs resulting from these collaborations.
We evaluated all four of the Biogen Idec agreements to determine whether we should account for them as
separate agreements. We determined that we should account for the agreements separately because we conducted
the negotiations independently of one another, each agreement focuses on different drugs, there are no
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