Integration and Acquisition Costs

For the three and nine months ended September 30, 2016, Shire recorded integration and acquisition costs of $284.5 million and $738.6 million, respectively, primarily due to the acquisition and integration of Baxalta and Dyax and related contract termination costs. The Baxalta integration is estimated to be completed by mid to late 2019 and the integration of Dyax is substantially complete as of September 30, 2016.

As part of the Company’s activities to integrate Baxalta, it terminated certain employees and announced plans to close certain offices. For the three and nine months ended September 30, 2016, the Company incurred costs relating to employee termination benefits of $120.0 million and $373.1 million, respectively, including severance and acceleration of stock compensation. The Baxalta integration activities are ongoing and the Company is continuing to evaluate the total costs expected to be incurred and the time-frame.

The following table summarizes the employee termination related reserve as of September 30, 2016 :



(in millions)	Severance and Employee Benefits
As of January 1, 2016	$	—
Amount charged to integration costs	202.3
Paid/utilized	(128.1		)
As of September 30, 2016	$	74.2

For the three months ended September 30, 2015, Shire recorded integration and acquisition costs of $89.9 million of which $30.7 million related to the acquisition and integration of NPS, Viropharma and charges related to the acquisition of Baxalta. Additionally, Shire recorded $59.2 million in charges related to the change in the fair value of contingent consideration liabilities in relation to the acquisition of Lumena Pharmaceuticals, Inc. (“Lumena”), following the agreement to settle all future contingent milestones payable to former Lumena shareholders through a one-time $90 million payment.

For the nine months ended September 30, 2015, Shire recorded a net credit to integration and acquisition costs of $46.8 million. The net credit principally comprises costs related to the acquisition and integration of NPS, Viropharma and preliminary work on the proposed combination with Baxalta totaling $149.7 million offset by a net credit relating to the change in the fair value of contingent consideration liabilities of $196.5 million. The change in fair value of contingent consideration liabilities relates to the acquisition of Lumena and Lotus Tissue Repair Inc. The Lumena contingent consideration decreased as the probability of success for the SHP625 asset (for the treatment of cholestatic liver diseases) decreased following the receipt of data from certain Phase 2 studies and the agreement in the third quarter of 2015 to settle all future contingent milestones payable to former Lumena shareholders. The contingent consideration from the Lotus Tissue Repair acquisition decreased as the probability of success for the SHP608 asset (for the treatment of Dystrophic Epidermolysis Bullosa (“DEB”)) decreased upon receiving certain preclinical toxicity findings.