Amgen 2012 Annual Report Download - page 112

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F-13
The consideration to acquire Micromet totaled $1,146 million in cash which was allocated to the acquisition date fair values
of assets acquired and liabilities assumed as follows (in millions):
Indefinite-lived intangible assets:
IPR&D $ 440
Contract assets 170
Finite-lived intangible assets — Developed technology 350
Goodwill 330
Cash and marketable securities 154
Deferred tax assets (liabilities), net (274)
Other assets (liabilities), net (24)
Total consideration $ 1,146
The estimated fair value of acquired IPR&D is related to blinatumomab, which is in phase 2 clinical development for the
treatment of acute lymphoblastic leukemia. The estimated fair value was determined using a probability-weighted income approach,
which discounts expected future cash flows to present value by using a discount rate that represents the estimated rate that market
participants would use to value this intangible asset. The projected cash flows from blinatumomab were based on certain
assumptions, including estimates of future revenues and expenses, the time and resources needed to complete development and
the probabilities of obtaining marketing approval from the FDA and other regulatory agencies.
Contract assets acquired represent the aggregate estimated fair values of receiving future milestone and royalty payments
associated with various outlicensing arrangements entered into by Micromet prior to our acquisition of the company. The fair
values of these contracts were determined by estimating the probability-weighted net cash flows associated with the agreements
that may be received from the other parties discounted to present value by using a discount rate that represents the estimated rate
that market participants would use to value these intangible assets. These contract assets are considered indefinite-lived intangible
assets and their assigned values will be expensed when the related revenues are earned or the associated R&D efforts are abandoned
by the licensees. During 2012, a non-key program under one of these outlicensing arrangements was terminated and resulted in
an impairment charge of $19 million which was included in Other operating expenses.
The developed technology acquired relates to Micromet's bi-specific T-cell engager technology platform which has produced
various product candidates that are currently being developed as cancer treatments by Micromet and others and may lead to the
development of additional product candidates. The fair value of this technology was determined by estimating the probability-
weighted net cash flows attributable to this technology discounted to present value by using a discount rate that represents the
estimated rate that market participants would use to value this intangible asset. The fair value of this technology is being amortized
on a straight-line basis over its estimated useful life of 10 years.
The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed
of $330 million was recorded as goodwill, which is not deductible for tax purposes. Goodwill is attributable primarily to expected
synergies and other benefits from combining Micromet with our oncology development and commercialization activities and the
deferred tax consequences of indefinite-lived and finite-lived intangible assets recorded for financial statement purposes.
BioVex Group, Inc.
On March 4, 2011, we acquired all of the outstanding stock of BioVex Group, Inc. (BioVex), a privately held biotechnology
company developing treatments for cancer and for the prevention of infectious disease, including talimogene laherparepvec, a
novel oncolytic vaccine in phase 3 clinical development for the treatment of malignant melanoma. The transaction, which was
accounted for as a business combination, provides us with an opportunity to expand our efforts to bring novel therapeutics to
market. Upon its acquisition, BioVex became a wholly owned subsidiary of Amgen, and its operations have been included in our
consolidated financial statements commencing on the acquisition date.
The aggregate acquisition date consideration to acquire BioVex consisted of (in millions):
Cash paid to former shareholders of BioVex $ 407
Fair value of contingent consideration obligations 190
Total consideration $ 597