Amgen 2012 Annual Report Download - page 122

F-23
expense were $35 million, $84 million and $87 million for the years ended December 31, 2012, 2011 and 2010, respectively. Both
the profit share expenses and the cost recoveries are included in Selling, general and administrative expense in the Consolidated
Statements of Income.
Glaxo Group Limited
We are in a collaboration with Glaxo Group Limited (Glaxo), a wholly owned subsidiary of GlaxoSmithKline plc, for the
commercialization of denosumab for osteoporosis indications in Europe, Australia, New Zealand and Mexico (the Primary
Territories). We have retained the rights to commercialize denosumab for all indications in the United States and Canada and for
oncology indications in the Primary Territories. Under a related agreement, Glaxo will commercialize denosumab for all indications
in countries, excluding Japan, where we did not have a commercial presence at the commencement of the agreement, including
China, Brazil, India, Taiwan and South Korea (the Expansion Territories). In the Expansion Territories, Glaxo is responsible for
all development and commercialization costs and will purchase denosumab from us to meet demand. We have the option of
expanding our role in the commercialization of denosumab in the Primary Territories and certain of the Expansion Territories.
In the Primary Territories, we share equally in the commercialization profits and losses related to the collaboration after
accounting for expenses, including an amount payable to us in recognition of our discovery and development of denosumab. Glaxo
is also responsible for bearing a portion of the cost of certain specified development activities in the Primary Territories.
The collaboration agreement with Glaxo for the Primary Territories will expire in 2022 and the related agreement for the
Expansion Territories will expire in 2024, unless either agreement is terminated earlier in accordance with its terms.
As the principal participant in the Primary Territories, Amgen records related product sales to third parties net of estimated
returns, rebates and other deductions. During the years ended December 31, 2012, 2011 and 2010, product sales in the Primary
Territories for osteoporosis indications were $139 million, $62 million and $5 million, respectively. In the Expansion Territories,
we record product sales to Glaxo. During the years ended December 31, 2012, 2011 and 2010, product sales of denosumab to
Glaxo for the Expansion Territories were not material.
During the years ended December 31, 2012, 2011 and 2010, the net cost recoveries from Glaxo were $10 million, $30 million
and $46 million, respectively, and are included in Selling, general and administrative expense in the Consolidated Statements of
Income. In addition, during 2010, we received payments from Glaxo aggregating $75 million for the achievement of certain
commercial milestones, which were recognized as Other revenues in our Consolidated Statement of Income.
AstraZeneca Plc.
We are in a collaboration with AstraZeneca Plc. (AstraZeneca) to jointly develop and commercialize certain monoclonal
antibodies from Amgen's clinical inflammation portfolio, including brodalumab, AMG 139, AMG 157, AMG 181 and AMG 557.
The agreement covers the worldwide development and commercialization, except for certain Asian countries for brodalumab and
Japan for AMG 557, that are licensed to other third parties.
Under the terms of the agreement, approximately 65% of related development costs for the 2012-2014 periods will be
funded by AstraZeneca, thereafter, the companies will share costs equally. If approved for sale, Amgen would receive a low-single-
digit royalty rate for brodalumab and a mid-single-digit royalty rate for the rest of the portfolio, after which the worldwide
commercialization profits and losses related to the collaboration products would be shared equally. In 2012, we received a payment
of $50 million, in connection with the transfer of technology rights, which was recognized in Other revenues in the Consolidated
Statement of Income. During the year ended December 31, 2012, cost recoveries recognized for development costs were $28
million, which are included in Research and development expense in the Consolidated Statement of Income.
The collaboration agreement will continue in effect unless terminated in accordance with its terms.
Takeda Pharmaceutical Company Limited
In 2008, we entered into an arrangement with Takeda Pharmaceutical Company Limited (Takeda), that provided Takeda
both: (i) the exclusive rights to develop and commercialize for the Japanese market up to 12 molecules from our portfolio across
a range of therapeutic areas, including oncology and inflammation (collectively the “Japanese market products”) and (ii) the right
to collaborate with us on the worldwide (outside Japan) development and commercialization of our product candidate, motesanib.
The Japanese market products include Vectibix® and certain product candidates. In connection with this 2008 arrangement, we
received upfront payments of $300 million that were deferred and were being recognized as Other revenues in our Consolidated
Statements of Income over the estimated period of continuing involvement of approximately 20 years. Additionally, during 2010,