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49
Baricitinib
In December 2009, we entered into a worldwide license and collaboration agreement with Incyte Corporation
(Incyte) to acquire development and commercialization rights to its Janus tyrosine kinase (JAK) inhibitor
compound, now known as baricitinib, and certain follow-on compounds, for the treatment of inflammatory and
autoimmune diseases. Incyte has the right to receive tiered, double-digit royalty payments on future global
sales with rates ranging up to 20 percent if the product is successfully commercialized. The agreement
provides Incyte with options to co-develop these compounds on an indication-by-indication basis by funding
30 percent of the associated development costs from the initiation of a Phase IIb trial through regulatory
approval in exchange for increased tiered royalties ranging up to percentages in the high twenties. In 2010,
Incyte exercised its option to co-develop baricitinib in rheumatoid arthritis. The agreement also provides
Incyte with an option to co-promote in the U.S. and calls for payments associated with certain development,
success-based regulatory, and sales-based milestones. Upon initiation of Phase III trials for the treatment of
rheumatoid arthritis in the fourth quarter of 2012, we incurred a milestone-related expense of $50.0 million
which was recorded as research and development expense. As of December 31, 2013, Incyte is eligible to
receive up to $415.0 million of additional payments from us contingent upon certain development and
success-based regulatory milestones as well as an additional $150.0 million of potential sales-based
milestones.
Tanezumab
In October 2013, we entered into a collaboration agreement with Pfizer Inc. (Pfizer) to jointly develop and
globally commercialize tanezumab for the potential treatment of osteoarthritis pain, chronic low back pain and
cancer pain. Tanezumab is currently in Phase III development and is subject to a partial clinical hold by the
FDA pending submission of nonclinical data to the FDA. Under the agreement, the companies share equally
the ongoing development costs and, if successful, in gross margins and commercialization expenses.
Contingent upon the parties continuing in the collaboration after receipt of the FDA's response to the
submission of the nonclinical data, we will be obligated to pay an upfront fee of $200.0 million. This payment
would be immediately expensed. In addition to this fee, we may pay up to $350.0 million in success-based
regulatory milestones and up to $1.23 billion in a series of sales-based milestones, contingent upon the
commercial success of tanezumab. Both parties have the right to terminate the agreement under certain
circumstances.
Summary of Collaboration-Related Commission and Profit-Share Payments
The aggregate amount of commission and profit-share payments included in marketing, selling, and
administrative expense pursuant to the collaborations described above was $203.7 million, $188.5 million,
and $125.4 million for the years ended December 31, 2013, 2012, and 2011, respectively.
Note 5: Asset Impairment, Restructuring, and Other Special Charges
The components of the charges included in asset impairment, restructuring, and other special charges in our
consolidated statements of operations are described below.
2013 2012 2011
Severance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 90.6 $ 74.5 $ 251.8
Asset impairment and other special charges . . . . . . . . . . . . . . . . . 30.0 206.6 149.6
Asset impairment, restructuring, and other special charges . . . . . . $ 120.6 $ 281.1 $ 401.4
Severance costs listed above for all years relate to initiatives to reduce our cost structure and global
workforce.
For the year ended December 31, 2013, we incurred $30.0 million of asset impairment and other special
charges related primarily to costs associated with the anticipated closure of a packaging and distribution
facility in Germany.
For the year ended December 31, 2012, we incurred $206.6 million of asset impairment and other special
charges consisting of $122.6 million related to an intangible asset impairment for liprotamase (see Note 8) net
of the reduction of the related contingent consideration liability, $64.0 million related to the recognition of an