Amgen 2007 Annual Report Download - page 155

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
upon discounted after-tax cash flows adjusted for the probabilities of successful development and commercializa-
tion. The amount allocated to IPR&D was immediately expensed in the Consolidated Statement of Income (see
Note 1, “Summary of significant accounting policies — Acquired in-process research and development”). The
results of Ilypsa’s operations have been included in the consolidated financial statements commencing July 18,
2007. Pro forma results of operations for the year ended December 31, 2007 assuming the acquisition of Ilypsa
had taken place at the beginning of 2007 would not differ significantly from the actual reported results.
Avidia, Inc.
On October 24, 2006, we completed the acquisition of Avidia, which was accounted for as a business combi-
nation. Avidia was a privately held company focused on the discovery and development of a new class of human
therapeutic known as Avimer™ proteins. Pursuant to the merger agreement, we paid cash of approximately $275
million, net of cash acquired and our existing equity stake in Avidia, and may be subject to pay additional
amounts upon the achievement of certain future events, as discussed further below. The purchase price, including
cash paid to the former shareholders, the fair value of stock options assumed and transaction costs, was allocated
to IPR&D of $130 million and other net assets acquired of $29 million, primarily intangible assets associated
with R&D technology rights, based on their estimated fair values at the acquisition date. The excess of the pur-
chase price over the fair values of assets and liabilities acquired of approximately $126 million was assigned to
goodwill. The estimated fair values of the IPR&D and the identifiable intangible asset were determined based
upon discounted after-tax cash flows adjusted for the probabilities of successful development and commercializa-
tion. The amount allocated to IPR&D was immediately expensed in the Consolidated Statement of Income (see
Note 1, “Summary of significant accounting policies — Acquired in-process research and development”). The
results of Avidia’s operations have been included in the consolidated financial statements commencing Oc-
tober 24, 2006. Pro forma results of operations for the year ended December 31, 2006 assuming the acquisition of
Avidia had taken place at the beginning of 2006 would not differ significantly from actual reported results.
We may be required to pay an additional $30 million to the former Avidia shareholders if on or before Oc-
tober 24, 2009 we complete the first dosing in humans of a once per week subcutaneous formulation of a
specified interleukin 6 inhibitor molecule developed using Avidia’s proprietary methodology. We also may be
required to make an additional payment to the former Avidia shareholders if on or before December 31, 2010 we
complete the first dosing of a registration-enabling clinical trial with any interleukin 6 inhibitor molecule devel-
oped using Avidia’s proprietary methodology. If the first such dosing is completed on or before December 31,
2009, the amount of the payment owed would be $30 million; if the first dosing is completed after December 31,
2009 but on or before December 31, 2010, the amount of the payment owed would be reduced to $5 million.
Abgenix, Inc.
On April 1, 2006, we acquired all of the outstanding common stock of Abgenix, a company with expertise
in the discovery and development of monoclonal antibodies. We paid cash consideration of $22.50 per share in
this transaction that was accounted for as a business combination. Additionally, we issued 1.9 million stock op-
tions in exchange for Abgenix stock options assumed in the acquisition, 1.4 million of which were vested at the
date of acquisition. The purchase price was as follows (in millions):
Cash paid for shares .......................................................... $2,103
Other, principally fair value of vested options assumed .............................. 96
Total .................................................................. $2,199
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