Amgen 2015 Annual Report Download - page 91

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F-13
The fair values of assets acquired and liabilities assumed primarily included IPR&D of $400 million, goodwill of $108
million and deferred tax liabilities of $100 million. This valuation reflects delayed development pending competitor clinical trials
in this class. The estimated fair value of acquired IPR&D related to AMG 899 was determined using a probability-weighted income
approach, which discounts expected future cash flows to present value using a discount rate that represents the estimated rate that
market participants would use to value the assets. The projected cash flows 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 regulatory agencies. The excess of the acquisition date consideration over the fair values assigned to the
assets acquired and the liabilities assumed of $108 million was recorded as goodwill, which is not deductible for tax purposes.
Goodwill is attributable primarily to the expected synergies and other benefits that we believe will result from expanding our
cardiovascular portfolio with AMG 899; and the deferred tax consequences of acquired IPR&D recorded for financial statement
purposes.
The fair value estimates for the assets acquired and liabilities assumed were based upon preliminary calculations and valuations
and our estimates and assumptions are subject to change as we obtain additional information during the measurement period (up
to one year from the acquisition date). The primary areas of those preliminary estimates that are not yet finalized relate to IPR&D
and tax related items.
Pro forma results of operations for this acquisition have not been presented because this acquisition is not material to our
consolidated results of operations.
Onyx Pharmaceuticals
On October 1, 2013, we acquired all of the outstanding stock of Onyx Pharmaceuticals, Inc. (Onyx), a global
biopharmaceutical company engaged in the development and commercialization of innovative therapies for improving the lives
of people afflicted with cancer. Onyx has a multiple myeloma franchise, with Kyprolis® already approved in the United States,
and with oprozomib being evaluated in clinical trials for patients with hematologic malignancies. In addition, Onyx has three
partnered oncology assets: Nexavar® tablets (an Onyx and Bayer compound), Stivarga® tablets (a Bayer compound) and Ibrance®
(a Pfizer, Inc. (Pfizer) compound). This transaction, which was accounted for as a business combination, provides us with an
opportunity to expand our oncology franchise. Onyx’s operations have been included in our consolidated financial statements
commencing on the acquisition date.
The aggregate acquisition date consideration to acquire Onyx was paid in cash and consisted of (in millions):
Total consideration transferred $ 9,517
Compensation expense 197
Total consideration paid $ 9,714
The $9,517 million cash payment consisted of a $9,186 million cash payment to the outstanding common stockholders and
a $331 million cash payment to the Onyx equity award holders for services rendered prior to October 1, 2013 under the Onyx
equity award plans. The remaining $197 million of cash, which related to the accelerated vesting of the remaining Onyx equity
awards, was recognized as compensation expense during the three months ended December 31, 2013. This amount was included
primarily in Selling, general and administrative expense in the Consolidated Statement of Income.