Development milestones in our partnerships may include the following types of events:
•
Designation of a development candidate. Following the designation of a development candidate,
IND-enabling animal studies for a new development candidate generally take 12 to 18 months to
complete;
•
Initiation of a Phase 1 clinical trial. Generally, Phase 1 clinical trials take one to two years to complete;
•
Initiation or completion of a Phase 2 clinical trial. Generally, Phase 2 clinical trials take one to three
years to complete;
•
Initiation or completion of a Phase 3 clinical trial. Generally, Phase 3 clinical trials take two to four
years to complete.
Regulatory milestones in our partnerships may include the following types of events:
•
Filing of regulatory applications for marketing approval such as a NDA in the United States or aMAA
in Europe. Generally, it takes six to twelve months to prepare and submit regulatory filings.
•
Marketing approval in a major market, such as the United States, Europe or Japan. Generally it takes
one to two years after an application is submitted to obtain approval from the applicable regulatory
agency.
Commercialization milestones in our partnerships may include the following types of events:
•
First commercial sale in a particular market, such as in the United States or Europe.
•
Product sales in excess of a pre-specified threshold, such as annual sales exceeding $1 billion. The
amount of time to achieve this type of milestone depends on several factors including but not limited to
the dollar amount of the threshold, the pricing of the product and the pace at which customers begin
using the product.
We assess whether a substantive milestone exists at the inception of our agreements. When a substantive
milestone is achieved, we recognize revenue related to the milestone payment immediately. For our existing
licensing and collaboration agreements in which we are involved in the discovery and/or development of the
related drug or provide the partner with access to new technologies we discover, we have determined that the
majority of future development, regulatory and commercialization milestones are substantive. For example, we
consider most of the milestones associated with our strategic alliance with Biogen Idec substantive because we
are using our antisense drug discovery platform to discover and develop new drugs against targets for
neurological diseases. Alternatively, we considered milestones associated with our strategic alliance withAlnylam
Pharmaceuticals, Inc. substantive because we providedAlnylam ongoing access to our technology to develop and
commercialize RNAi therapeutics. In evaluating if a milestone is substantive we consider whether:
•
Substantive uncertainty exists as to the achievement of the milestone event at the inception of the
arrangement;
•
The achievement of the milestone involves substantive effort and can only be achieved based in whole
or in part on our performance or the occurrence of a specific outcome resulting from our performance;
•
The amount of the milestone payment appears reasonable either in relation to the effort expended or to
the enhancement of the value of the delivered items;
•
There is no future performance required to earn the milestone; and
•
The consideration is reasonable relative to all deliverables and payment terms in the arrangement.
If any of these conditions are not met, we do not consider the milestone to be substantive and we defer
recognition of the milestone payment and recognize it as revenue over our estimated period of performance, if
any. We consider most milestone payments related to progression of a drug through the development and
regulatory stages of its life cycle to be substantive milestones because the level of effort and inherent risk
associated with these events is high. Further information about our collaborative arrangements can be found in
Note 7,
Collaborative Arrangements and Licensing Agreements
.
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