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Intangible Assets and Goodwill
9 Months Ended
Sep. 30, 2013
Goodwill and Intangible Assets Disclosure [Abstract]  
Intangible Assets and Goodwill
Intangible Assets and Goodwill
Intangible Assets
Intangible assets, net of accumulated amortization, impairment charges and adjustments, are summarized as follows:
 
 
 
As of September 30, 2013
 
As of December 31, 2012
(In millions)
Estimated
Life
 
Cost
 
Accumulated
Amortization
 
Net
 
Cost
 
Accumulated
Amortization
 
Net
Out-licensed patents
13-23 years
 
$
578.0

 
$
(443.3
)
 
$
134.7

 
$
578.0

 
$
(421.0
)
 
$
157.0

AVONEX Core developed 
technology
15-23 years
 
3,005.3

 
(2,107.0
)
 
898.3

 
3,005.3

 
(1,965.7
)
 
1,039.6

In-process research and development
Up to 15 years upon
commercialization
 
327.4

 

 
327.4

 
330.1

 

 
330.1

Trademarks and 
tradenames
Indefinite
 
64.0

 

 
64.0

 
64.0

 

 
64.0

Acquired and in-licensed rights 
and patents
6-17 years
 
3,236.1

 
(80.3
)
 
3,155.8

 
53.7

 
(12.9
)
 
40.8

Total intangible assets
 
 
$
7,210.8

 
$
(2,630.6
)
 
$
4,580.2

 
$
4,031.1

 
$
(2,399.6
)
 
$
1,631.5


For the three and nine months ended September 30, 2013, amortization of acquired intangible assets totaled $100.0 million and $233.5 million, respectively, as compared to $53.0 million and $151.3 million, respectively, in the prior year comparative periods. The increase in amortization for the three and nine months ended September 30, 2013 was primarily driven by amortization recorded in relation to the intangible asset recorded upon our acquisition of TYSABRI rights and the amount of amortization recorded in relation to our AVONEX core technology asset. Amortization of acquired intangible assets for the nine months ended September 30, 2013 also includes a charge of $2.6 million related to a write down in carrying value of one of our in-process research and development assets to reflect a change in its estimated fair value.
AVONEX Core Developed Technology
Core developed technology primarily relates to our AVONEX product, which was recorded in connection with the merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation in 2003. The net book value of this asset as of September 30, 2013 was $887.9 million. We amortize this intangible asset using the economic consumption method based on revenue generated from our AVONEX product. An analysis of the anticipated lifetime revenue of AVONEX is performed annually during our long range planning cycle each year. This analysis serves as the basis for the calculation of economic consumption for the AVONEX core technology asset.
Acquired and In-licensed Rights and Patents
The increase in acquired and in-licensed rights and patents during the three and nine months ended September 30, 2013, as compared to the same periods in 2012, was primarily related to the $3,178.3 million intangible asset capitalized in connection with our acquisition of TYSABRI rights from Elan on April 2, 2013. In the second quarter of 2013, we began amortizing this intangible asset over the estimated useful life using an economic consumption method based on actual and expected revenue generated from the sales of our TYSABRI product. For a more detailed description of this transaction, please read Note 2, Acquisitions to these condensed consolidated financial statements.
Estimated Future Amortization of Intangible Assets
Our most recent long range planning cycle was completed in the third quarter of 2013, which reflected a decrease in the expected future product revenues of AVONEX and TYSABRI, resulting in an increase in amortization expense as compared to prior quarters. The results of our analysis were most significantly impacted by changes in the estimated impact of TECFIDERA, as well as other oral and alternative formulations including PLEGRIDY that may compete with AVONEX and TYSABRI. Based upon this more recent analysis, the estimated future amortization for acquired intangible assets is expected to be as follows:
(In millions)
As of September 30, 2013
2013 (remaining three months)
$
113.2

2014
418.9

2015
337.4

2016
323.4

2017
328.1

2018
330.7

Total
$
1,851.7


Goodwill
The following table provides a roll-forward of the changes in our goodwill balance:
(In millions)
As of
September 30,
2013
 
As of
December 31,
2012
Goodwill, beginning of period
$
1,201.3

 
$
1,146.3

Goodwill acquired during the period
13.5

 
48.2

Other
(4.1
)
 
6.8

Goodwill, end of period
$
1,210.7

 
$
1,201.3


The increase in goodwill during the nine months ended September 30, 2013 was primarily related to the $15.0 million contingent payment made to former shareholders of Fumapharm AG (net of $1.5 million tax benefit), which became payable upon the approval of TECFIDERA in the U.S. For additional information related to future contingent payments, please read Note 21, Commitments and Contingencies to these condensed consolidated financial statements.
For the nine months ended September 30, 2013, we adjusted goodwill to establish a deferred tax asset related to our Stromedix Inc. (Stromedix) transaction. For additional information related to our transaction with Stromedix, please read Note 2, Acquisitions to our consolidated financial statements included within our 2012 Form 10-K.
As of September 30, 2013, we had no accumulated impairment losses related to goodwill.