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 The leading web portal for pharmacy resources, news, education and careers March 21, 2019
Pharmacy Choice - Pharmaceutical News - ALKERMES PLC. - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations - March 21, 2019

Pharmacy News Article

 2/15/19 - ALKERMES PLC. - 10-K - Management's Discussion and Analysis of Financial Condition and Results of Operations
The following should be read in conjunction with our consolidated financial
statements and related notes beginning on page F1 of this Annual Report. The
following discussion contains forwardlooking statements. Actual results may
differ significantly from those projected in the forwardlooking statements. See
"Cautionary Note Concerning ForwardLooking Statements" on page 3 of this Annual
Report. Factors that might cause future results to differ materially from those
projected in the forwardlooking statements also include, but are not limited
to, those discussed in "Item 1A-Risk Factors" and elsewhere in this Annual
Report.

Overview


We earn revenue on net sales of VIVITROL, ARISTADA and ARISTADA INITIO, which
are proprietary products that we manufacture, market and sell in the U.S., and
manufacturing and/or royalty revenues on net sales of products commercialized by
our licensees. Our key marketed products are expected to generate significant
revenues for us in the near and mediumterm and we believe are singular or
competitively advantaged products in their classes. In 2018, these key marketed
products consisted of VIVITROL; ARISTADA and ARISTADA INITIO; INVEGA
SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA; RISPERDAL CONSTA; and AMPYRA/FAMPYRA.
Revenues from these key products accounted for 80% of our total revenues during
2018, as compared to 86% during 2017 and 2016.

In 2018, we incurred an operating loss of $99.1 million, as compared to $147.9
million in 2017. Revenues increased by 21% in 2018, as compared to 2017, which
was primarily due to revenue earned under our license and collaboration
agreement with Biogen for BIIB098 and increased sales of ARISTADA. This was
partially offset by a 14% increase in operating expenses, which were primarily
in support of the increase in sales of our proprietary products and continued
investment in our R&D pipeline and commercial organization. These items are
discussed in further detail within the Results of Operations section below.

Results of Operations

Manufacturing and Royalty Revenues


Manufacturing revenues for products that incorporate our technologies, except
for those from Janssen related to RISPERDAL CONSTA, are recognized over time as
products move through the manufacturing process, using an input method based on
costs as a measure of progress. Manufacturing revenue from RISPERDAL CONSTA is
recognized at the point in time the product has been fully manufactured.
Royalties are generally earned on our licensees' net sales of products that
incorporate our technologies and are recognized in the period the products are
sold by our licensees. The following table compares manufacturing and royalty
revenues earned in the years ended December 31, 2018, 2017 and 2016:



                                                                                          Change
                                            Year Ended December 31,               Favorable/(Unfavorable)
(In millions)                           2018          2017         2016        2018-2017          2017-2016
Manufacturing and royalty revenues:
INVEGA SUSTENNA/XEPLION & INVEGA
TRINZA/TREVICTA                       $   241.4     $  214.9     $  184.2     $       26.5       $       30.7
AMPYRA/FAMPYRA                            107.1        117.0        114.2             (9.9 )              2.8
RISPERDAL CONSTA                           71.1         84.9         87.2            (13.8 )             (2.3 )
Other                                     107.1         88.5        101.6             18.6              (13.1 )

Manufacturing and royalty revenues $ 526.7 $ 505.3 $ 487.2

  $       21.4       $       18.1




Under our INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA agreement with
Janssen, we earn royalties on endmarket net sales of INVEGA SUSTENNA/XEPLION
and INVEGA TRINZA/TREVICTA of 5% up to the first $250 million in calendaryear
sales, 7% on calendaryear sales of between $250 million and $500 million, and
9% on calendar-year sales exceeding $500 million. The royalty rate resets at the
beginning of each calendaryear to 5%. The increase in INVEGA SUSTENNA/XEPLION
and INVEGA TRINZA/TREVICTA royalty revenues in each period was due to an
increase in Janssen's endmarket net sales of INVEGA SUSTENNA/XEPLION and INVEGA
TRINZA/TREVICTA. Janssen's endmarket net sales of INVEGA SUSTENNA/XEPLION and
INVEGA TRINZA/TREVICTA were $2.9 billion, $2.6 billion and $2.2 billion during
the years ended December 31, 2018, 2017 and 2016, respectively. The adoption of
Topic 606 had no impact on the method in which we recognize royalty revenue from
sales of INVEGA SUSTENNA/XEPLION and INVEGA TRINZA/TREVICTA.

Under Topic 606, we recognize manufacturing revenue, equal to 7.5% of Janssen's
unit net sales price of RISPERDAL CONSTA, at the point in time when RISPERDAL
CONSTA has been fully manufactured, which is when the product is approved for
shipment. Prior to the adoption of Topic 606 we recognized manufacturing revenue
when RISPERDAL CONSTA was shipped to Janssen. We continue to record royalty
revenue, equal to 2.5% of end-market net sales, when the end-market sale of
RISPERDAL CONSTA occurs.

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The decrease in RISPERDAL CONSTA revenue in 2018, as compared to 2017, was due
to a 19% decrease in manufacturing revenue and a 9% decrease in royalty revenue.
The decrease in manufacturing revenues was due to a 19% decrease in the number
of units of RISPERDAL CONSTA manufactured for Janssen. The decrease in royalty
revenue was due to a decline in Janssen's end-market net sales of RISPERDAL
CONSTA. Janssen's endmarket net sales of RISPERDAL CONSTA were $737.0 million,
$805.0 million and $893.0 million during the years ended December 31, 2018, 2017
and 2016, respectively. The decrease in RISPERDAL CONSTA revenue in 2017, as
compared to 2016, was primarily due to a 10% decrease in royalty revenues due to
the decline in Janssen's end-market net sales of RISPERDAL CONSTA. RISPERDAL
CONSTA is covered by a patent until 2021 in the EU and 2023 in the U.S. For a
discussion of legal proceedings related to this patent, see Note 16, Commitments
and Contingent Liabilities in the "Notes to Consolidated Financial Statements"
and "Item 3-Legal Proceedings" in this Annual Report, and specifically the
section entitled "-We or our licensees may face claims against intellectual
property rights covering our products and competition from generic drug
manufacturers."

We expect revenues from our longacting, atypical antipsychotic franchise to
continue to grow as INVEGA SUSTENNA/XEPLION grows and INVEGA TRINZA/TREVICTA is
launched around the world. A number of companies, including us, are working to
develop products to treat schizophrenia and/or bipolar disorder that may compete
with INVEGA SUSTENNA/XEPLION, INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA.
Increased competition may lead to reduced unit sales of INVEGA SUSTENNA/XEPLION,
INVEGA TRINZA/TREVICTA and RISPERDAL CONSTA, as well as increasing pricing
pressure. The latest of the patents subject to our license agreement with
Janssen covering INVEGA SUSTENNA/XEPLION expires in 2030 in the U.S. and certain
other countries and in 2022 in the EU. The latest of the licensed patents
covering INVEGA TRINZA/TREVICTA expired in 2017 in the U.S. and will expire in
2022 in the EU. In addition, Janssen has other patents not subject to our
license agreement, including one that covers INVEGA SUSTENNA in the U.S. and
expires in 2031 and one that covers INVEGA TRINZA in the U.S. and expires in
2036.

In January 2018, Janssen Pharmaceuticals NV and Janssen Pharmaceuticals, Inc.
initiated a patent infringement lawsuit in the U.S. District Court for the
District of New Jersey against Teva, who filed an ANDA seeking approval to
market a generic version of INVEGA SUSTENNA before the expiration of U.S. Patent
No. 9,439,906. For further discussion of the legal proceedings related to the
patents covering INVEGA SUSTENNA, see Note 16, Commitments and Contingent
Liabilities in the "Notes to Consolidated Financial Statements" and "Part I,
Item 3-Legal Proceedings" in this Annual Report and for information about risks
relating to the INVEGA SUSTENNA Paragraph IV litigation, see "Part I, Item
1A-Risk Factors" in this Annual Report, and specifically the section entitled
"-We or our licensees may face claims against intellectual property rights
covering our products and competition from generic drug manufacturers."

With the adoption of Topic 606, we changed the way we record certain of our
manufacturing and royalty revenue for AMPYRA and FAMPYRA. For AMPYRA
manufactured under our license and supply agreements with Acorda, we now record
manufacturing and royalty revenue as the product is being manufactured, rather
than when it is shipped to Acorda. For FAMPYRA, we record manufacturing revenue
as the product is being manufactured, rather than when it is shipped to Biogen,
but continue to record royalty revenue when the end-market sale of FAMPYRA
occurs. See Note 3, Revenue from Contracts with Customers, in the "Notes to
Consolidated Financial Statements" in this Annual Report, for additional
information regarding the adoption of Topic 606.

The decrease in the amount of manufacturing and royalty revenue recognized for
AMPYRA and FAMPYRA in 2018, as compared to 2017, was due to a 13% decrease in
revenue from AMPYRA, partially offset by an 8% increase in revenue from FAMPYRA.
The decrease in AMPYRA revenues was primarily due to a 19% decrease in the
amount of AMPYRA shipped to Acorda, which was due to the entry of generic forms
of AMPYRA to the U.S. market in September 2018. For further discussion of the
legal proceedings related to the patents covering AMPYRA, see "Part II, Item
1-Legal Proceedings" and Note 16, Commitments and Contingent Liabilities in this
Annual Report, and for information about risks relating to such legal
proceedings see "Part I, Item 1A-Risk Factors" of this Annual Report and
specifically the section entitled "-We or our licensees may face claims against
intellectual property rights covering our products and competition from generic
drug manufacturers." We expect revenues from AMPYRA to continue to decline due
to the entry of generic forms of AMPYRA in the U.S. market. The increase in
revenue from FAMPYRA was primarily due to a 10% increase in manufacturing
revenues due to an increase in the price we received on FAMPYRA shipments to
Biogen. The legal proceedings related to the patents covering AMPYRA do not
involve the patents covering FAMPYRA, and the latest of the patents covering
FAMPYRA expires in 2025 in the EU.

The increase in AMPYRA/FAMPYRA revenues in 2017, as compared to 2016, was
primarily due to a 4% increase in manufacturing revenue, which was due to an 11%
increase in the amount of FAMPYRA shipped to Biogen, partially offset by an 8%
decrease in the amount of AMPYRA shipped to Acorda.

Included in other manufacturing and royalty revenue in the table above is $26.7
million of royalty revenue, representing our proportional share of the proceeds
Zealand Pharma A/S' ("Zealand") sale to Royalty Pharma of certain royalty
streams for products that utilize technology that we had previously licensed to
Zealand.

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Certain of our manufacturing and royalty revenues are earned in countries
outside of the U.S. and are denominated in currencies in which the product is
sold. See "Part II, Item 7A-Quantitative and Qualitative Disclosures about
Market Risk" of this Annual Report for information on currency exchange rate
risk related to our revenues.

Product Sales, Net


Our product sales, net consist of sales of VIVITROL, ARISTADA and ARISTADA
INITIO in the U.S., primarily to wholesalers, specialty distributors and
pharmacies. The following table presents the adjustments deducted from product
sales, gross to arrive at product sales, net for sales of VIVITROL, ARISTADA and
ARISTADA INITIO in the U.S. during the years ended December 31, 2018, 2017 and
2016:



                                            Year Ended December 31,
(In millions)                2018        % of Sales          2017        % of Sales          2016        % of Sales
Product sales, gross       $  846.5            100.0   %   $  657.7            100.0   %   $  444.6            100.0   %
Adjustments to product
sales, gross:
Medicaid rebates             (197.0 )          (23.3 ) %     (147.8 )          (22.5 ) %      (94.2 )          (21.2 ) %
Chargebacks                   (65.5 )           (7.7 ) %      (47.9 )           (7.3 ) %      (31.5 )           (7.1 ) %
Product discounts             (65.1 )           (7.7 ) %      (51.0 )           (7.8 ) %      (35.1 )           (7.9 ) %
Medicare Part D               (29.8 )           (3.5 ) %      (15.1 )           (2.3 ) %       (3.4 )           (0.8 ) %
Other                         (38.8 )           (4.6 ) %      (33.1 )           (5.0 ) %      (24.3 )           (5.5 ) %
Total adjustments            (396.2 )          (46.8 ) %     (294.9 )          (44.8 ) %     (188.5 )          (42.4 ) %
Product sales, net         $  450.3             53.2   %   $  362.8             55.2   %   $  256.1             57.6   %




Our product sales, net for VIVITROL and ARISTADA/ARISTADA INITIO in 2018 were
$302.6 million and $147.7 million, respectively, as compared to $269.3 million
and $93.5 million in 2017, respectively, and $209.0 million and $47.1 million in
2016, respectively.

The increase in product sales, gross in 2018, as compared to 2017, was due to a
16% increase in VIVITROL gross sales and a 69% increase in ARISTADA/ARISTADA
INITIO gross sales. The increase in VIVITROL gross sales was due to a 16%
increase in the number of units sold as there was no change to the selling price
of VIVITROL in 2018. The increase in sales of ARISTADA/ARISTADA INITIO was
primarily due to a 52% increase in the number of units sold and a 7% increase in
price from December 31, 2017 to December 31, 2018. The increase in product
sales, gross in 2017, as compared to 2016, was due to a 33% increase in VIVITROL
gross sales and a 129% increase in ARISTADA/ARISTADA INITIO gross sales. The
increase in VIVITROL gross sales was due to a 33% increase in the number of
units sold as there was no change to the selling price of VIVITROL in 2017. The
increase in sales of ARISTADA/ARISTADA INITIO was primarily due to a 113%
increase in the number of units sold and a 5% price increase, which was
effective in April 2017. ARISTADA 441 mg, 662 mg and 882 mg launched in the U.S.
in October 2015. ARISTADA 1064 mg, our two-month dosing option, launched in the
U.S. in June 2017 and ARISTADA INITIO, which is approved for the initiation or
re-initiation of ARISTADA for the treatment of schizophrenia, was approved by
the FDA in June 2018 and launched in July 2018.

The increase in Medicare Part D rebates as a percentage of sales in 2018, as
compared to 2017 was primarily due to increases in the amount of ARISTADA sold
under this program.

A number of companies, including us, are working to develop products to treat
addiction, including alcohol and opioid dependence that may compete with, and
negatively impact, future sales of VIVITROL. Increased competition and increased
pricing pressure may lead to reduced unit sales of VIVITROL. VIVITROL is covered
by a patent that will expire in the U.S. in 2029 and in Europe in 2021; and, as
such, we do not anticipate generic versions of this product to enter the market
in the near term. A number of companies, including us, currently market and/or
are working to develop products to treat schizophrenia that may compete with and
negatively impact future sales of ARISTADA and ARISTADA INITIO. Increased
competition and increased pricing pressure may lead to reduced unit sales of
ARISTADA and ARISTADA INITIO. ARISTADA is covered by a patent that will expire
in the U.S. in 2035; and, as such, we do not anticipate any generic versions of
this product to enter the market in the near term. We expect our product sales,
net will continue to grow as VIVITROL continues to penetrate the opioid and
alcohol dependence markets in the U.S., and as ARISTADA continues to gain market
share in the U.S.

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License Revenue

                                                                          Change
                            Year Ended December 31,               Favorable/(Unfavorable)
    (In millions)       2018            2017        2016      2018 - 2017        2017 - 2016
    License revenue   $    48.4       $    28.0     $   -     $       20.4       $       28.0




Amounts earned as license revenue relate to our license and collaboration
agreement with Biogen for BIIB098. The amount recognized in 2018 was triggered
by Biogen's decision to pay the $50.0 million option payment following Biogen's
review of preliminary gastrointestinal tolerability data from the ongoing
clinical development program for BIIB098, including certain data from our
long-term safety clinical trial and part A of the elective, randomized,
head-to-head phase 3 gastrointestinal tolerability clinical trial comparing
BIIB098 and dimethyl fumarate. In 2017, we recognized the upfront cash payment
of $28.0 million as license revenue under ASC Subtopic 605-25, Multiple Element
Arrangements ("ASC 605-25"). This is discussed in greater detail within the
Critical Accounting Estimates section below.

Research and Development Revenue


                                                                                            Change
                                          Year Ended December 31,           

Favorable/(Unfavorable)

(In millions)                        2018            2017          2016        2018 - 2017           2017 - 2016

Research and development revenue $ 68.9 $ 7.2 $ 2.3

$ 61.7 $ 4.9



The increase in R&D revenue in 2018, as compared to 2017, and in 2017, as
compared to 2016, was primarily due to revenue earned under our license and
collaboration agreement with Biogen for BIIB098, as discussed in further detail
within the Critical Accounting Estimates section below. Our R&D revenues earned
under our license and collaboration agreement with Biogen for BIIB098 were $65.4
million and $2.3 million in 2018 and 2017, respectively.

Costs and Expenses

Cost of Goods Manufactured and Sold


                                                                                          Change
                                            Year Ended December 31,         

Favorable/(Unfavorable)

(In millions)                           2018          2017         2016       2018 - 2017        2017 - 2016
Cost of goods manufactured and sold   $   176.4     $  154.7     $  132.1     $      (21.7 )     $      (22.6 )




The increase in cost of goods manufactured and sold in 2018, as compared to
2017, was primarily due to a 24% and 39% increase in cost of goods sold related
to VIVITROL and ARISTADA, respectively, which were driven by the increase in the
sales of these products. The increase in cost of goods manufactured and sold in
2017, as compared to 2016, was primarily due to the increase in cost of goods
sold related to VIVITROL and ARISTADA and an increase in cost of goods
manufactured related to RISPERDAL CONSTA. Cost of goods sold for VIVITROL and
ARISTADA increased by 33% and 83%, respectively, in 2017, as compared to 2016
driven by increases in sales. Cost of goods manufactured for RISPERDAL CONSTA
increased by 13% in 2017, as compared to 2016, which was primarily due to an
increase in the number of units shipped to Janssen.

Research and Development Expenses


For each of our R&D programs, we incur both external and internal expenses.
External R&D expenses include clinical and nonclinical activities performed by
CROs, consulting fees, laboratory services, purchases of drug product materials
and thirdparty manufacturing development costs. Internal R&D expenses include
employeerelated expenses, occupancy costs, depreciation and general overhead.
We track external R&D expenses for each of our development programs; however,
internal R&D expenses are not tracked by individual program as they benefit
multiple programs or our technologies in general.

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The following table sets forth our external R&D expenses for the years ended
December 31, 2018, 2017 and 2016 relating to our then-current individual Key
Development Programs and all other development programs, and our internal R&D
expenses by the nature of such expenses:



                                                                                            Change
                                              Year Ended December 31,               Favorable/(Unfavorable)
(In millions)                             2018          2017         2016       2018 - 2017        2017 - 2016
External R&D Expenses:
Key development programs:
ALKS 3831                               $    52.0     $   91.9     $   71.0     $       39.9       $      (20.9 )
BIIB098                                      43.1         47.4         26.9              4.3              (20.5 )
ALKS 5461                                    30.3         42.2         46.2             11.9                4.0
ALKS 4230                                    23.3          7.0          4.8            (16.3 )             (2.2 )

ARISTADA and ARISTADA line extensions 20.1 13.7 36.3

            (6.4 )             22.6
Other external R&D expenses                  49.7         38.4         58.7            (11.3 )             20.3
Total external R&D expenses                 218.5        240.6        243.9             22.1                3.3
Internal R&D expenses:
Employee-related                            163.9        132.2        110.1            (31.7 )            (22.1 )
Depreciation                                 11.9         10.5          7.9             (1.4 )             (2.6 )
Occupancy                                    11.0          9.6          9.0             (1.4 )             (0.6 )
Other                                        20.1         20.0         16.2             (0.1 )             (3.8 )
Total internal R&D expenses                 206.9        172.3        143.2            (34.6 )            (29.1 )

Research and development expenses $ 425.4 $ 412.9 $ 387.1

    $      (12.5 )     $      (25.8 )




These amounts are not necessarily predictive of future R&D expenses. In an
effort to allocate our spending most effectively, we continually evaluate our
products under development, based on the performance of such products in
preclinical and/or clinical trials, our expectations regarding the likelihood
of their regulatory approval and our view of their commercial viability, among
other factors.



The decrease in expenses related to ALKS 3831 in 2018, as compared to 2017, was
primarily due to the decrease in activity within the ENLIGHTEN-1 and ENLIGHTEN-2
pivotal trials, which were initiated in December 2015 and February 2016,
respectively, partially offset by an increase in activity within a phase 3 study
of ALKS 3831 in young adults, which was initiated in June 2017. The increase in
expenses related to ALKS 3831 in 2017, as compared to 2016, was primarily due to
the timing of activity within the ENLIGHTEN-1 and ENLIGHTEN-2 pivotal trials and
the initiation of the phase 3 study of ALKS 3831 in young adults.



The decrease in expenses related to BIIB098 in 2018, as compared to 2017, and in
increase in expenses in 2017, as compared to 2016, were primarily due to the
timing of activity within the two-year, multicenter, open-label phase 3 study
designed to assess the safety of BIIB098, which was initiated in December 2015.
In December 2018, we and Biogen announced that we submitted a NDA to the FDA
seeking marketing approval of BIIB098 for the treatment of relapsing forms of
MS. We also initiated an elective, randomized, head-to-head phase 3 study
designed to compare the gastrointestinal tolerability of BIIB098 and TECFIDERA
in patients with relapsing-remitting MS in March 2017.



The decrease in expenses related to ALKS 5461 in 2018, as compared to 2017, was
primarily due to a decrease in activity within the program as we completed
submission of our NDA to the FDA seeking marketing approval of ALKS 5461 for the
adjunctive treatment of MDD in January 2018. The decrease in expenses related to
ALKS 5461 in 2017, as compared to 2016, was primarily due to the completion of
the three core phase 3 studies related to the program. We announced topline
results of the FORWARD-3 and FORWARD-4 studies in January 2016 and topline
results from FORWARD-5 were announced in October 2016.



The increase in expenses related to ARISTADA and ARISTADA line extensions in
2018, as compared to 2017, was primarily due to an increase of activity related
to the phase 3b clinical study to evaluate the efficacy and safety of ARISTADA
and INVEGA SUSTENNA in patients experiencing an acute exacerbation of
schizophrenia. The decrease in expenses related to ARISTADA and ARISTADA line
extensions in 2017, as compared to 2016, was primarily due to the timing of the
phase 1 clinical study of extended dosing intervals of aripiprazole lauroxil in
patients with schizophrenia. ARISTADA 1064 mg, our two-month dosing option, was
approved by the FDA in June 2017. In October 2017, we submitted an NDA to the
FDA for ARISTADA INITIO, which was approved by the FDA in June 2018.



The increases in expenses related to ALKS 4230 in 2018, as compared to 2017, and
in 2017, as compared to 2016, were primarily related to the timing of the phase
1 study for ALKS 4230, as described in Key Development Programs above under the
heading "ALKS 4230" within "Part I, Item 1-Business" in this Annual Report.



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The increase in other external R&D expenses in 2018, as compared to 2017, was
due to activity related to our early-stage, pre-clinical development activity.
The decrease in other external R&D expenses in 2017, as compared to 2016, was
primarily due to a $10.0 million non-refundable, upfront payment we paid as
partial consideration of a grant to us of rights and licenses pursuant to a
collaboration and license option agreement with Synchronicity Pharma, Inc.
("Synchronicity"), formerly Reset Therapeutics, Inc. ("Reset"). The remainder of
the changes were due to activity related to our early-stage, pre-clinical
development activity. The increase in employee-related expenses in both periods
presented was primarily due to an increase in headcount. Our R&D-related
headcount increased by 17% in 2018, as compared to 2017, and 9% in 2017, as
compared to 2016.



For additional detail on the status of our key development programs, refer to Key Development Programs within "Part I, Item 1-Business" in this Annual Report.

Selling, General and Administrative Expenses

                                                                                        Change
                                         Year Ended December 31,                Favorable/(Unfavorable)
(In millions)                        2018          2017         2016        2018 - 2017         2017 - 2016
Selling, general and
administrative expense             $   526.4     $  421.6     $  374.1     $      (104.8 )     $       (47.5 )




The increase in selling, general and administrative ("SG&A") expense in both
periods presented was primarily due to increases in marketing and professional
services fees and employee-related expenses. Marketing and professional services
fees increased by 29% and 27%, respectively, and were primarily due to
additional brand investments in both VIVITROL and ARISTADA, as well as an
increase investment in patient access support services, such as reimbursement
and transition assistance, for both of these products. Employee-related expenses
increased by 21% and 6%, respectively, and were primarily due to an increase in
our SG&A-related headcount of 22% in 2018 and 17% in 2017.

Amortization of Acquired Intangible Assets

                                                                                         Change
                                          Year Ended December 31,                Favorable/(Unfavorable)
(In millions)                        2018            2017         2016       2018 - 2017        2017 - 2016
Amortization of acquired
intangible assets                  $    65.2       $   62.1     $   61.0     $       (3.1 )     $       (1.1 )




Our amortizable intangible assets consist of technology and collaborative
arrangements acquired as part of the acquisition of EDT in September 2011, which
are being amortized over 12 to 13 years. We amortize our amortizable intangible
assets using the economic use method, which reflects the pattern that the
economic benefits of the intangible assets are consumed as revenue is generated
from the underlying patent or contract.

Based on our most recent analysis, amortization of intangible assets included
within our consolidated balance sheet at December 31, 2018 is expected to be
approximately $40.0 million, $40.0 million, $40.0 million, $35.0 million and
$35.0 million in the years ending December 31, 2019 through 2023, respectively.

Other (Expense) Income, Net

                                                                                       Change
                                         Year Ended December 31,               Favorable/(Unfavorable)
(In millions)                        2018          2017         2016       2018 - 2017        2017 - 2016
Interest income                    $     9.2     $    4.6     $    3.8     $        4.6       $        0.8
Interest expense                       (15.4 )      (12.0 )      (14.9 )           (3.4 )              2.9
Change in the fair value of
contingent consideration               (19.6 )       21.6          7.9            (41.2 )             13.7
Other expense, net                      (2.0 )       (9.6 )       (2.5 )            7.6               (7.1 )
Total other (expense) income,
net                                $   (27.8 )   $    4.6     $   (5.7 )   $      (32.4 )     $       10.3




The increase in interest expense in 2018, as compared to 2017, was due to our
amending and refinancing our 2023 Term Loans in March 2018 in order to, among
other things, extend the due date of the loan from September 25, 2021 to March
26, 2023, reduce the interest payable from LIBOR plus 2.75% with a LIBOR floor
of 0.75% to LIBOR plus 2.25% with a 0% LIBOR floor and increase covenant
flexibility (the "Refinancing"). The Refinancing resulted in a $2.3 million
charge in 2018, which was included in interest expense. The decrease in interest
expense in 2017, as compared to 2016, was due an amendment of our outstanding
term loans at September 25, 2016. We incurred a charge of $2.1 million in
connection with this transaction in 2016, which was included in interest
expense.

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In April 2015, we entered into the Gainesville Transaction with Recro Pharma,
Inc. ("Recro") and Recro Pharma LLC and received $54.0 million in cash, $2.1
million in warrants to acquire Recro common stock and $57.6 million in
contingent consideration tied to low double digit royalties on net sales of the
IV/IM and parenteral forms of Meloxicam and any other product with the same
active ingredient as Meloxicam IV/IM that is discovered or identified using
certain of our intellectual property to which Recro was provided a right of use,
through license or transfer, pursuant to the Gainesville Transaction (the
"Meloxicam Products"), and up to $120.0 million in milestone payments upon the
achievement of certain regulatory and sales milestones related to the Meloxicam
Products. We determined the fair value of the contingent consideration through
three valuation approaches, which are described in greater detail in Critical
Accounting Estimates, Contingent Consideration, later in "Item 7-Management's
Discussion and Analysis of Financial Condition and Results of Operations" of
this Annual Report. At each reporting date, we update our assessment of the fair
value of this contingent consideration and reflect any changes to the fair value
within the consolidated statements of operations and comprehensive loss and will
continue to do so until the milestones and/or royalties included in the
contingent consideration have been settled.

During the years ended December 31, 2018, 2017 and 2016, we determined that the
fair value of the contingent consideration decreased by $19.6 million and
increased by $21.6 million and $7.9 million, respectively. The decrease in 2018
was primarily due to the complete response letter Recro received from the FDA in
May 2018 regarding its NDA for IV Meloxicam. As a result of the receipt of the
complete response letter, we delayed our expectation of the anticipated date for
the FDA's approval of the IV Meloxicam NDA and reduced the amount of forecasted
sales in our valuation model. Recro resubmitted the NDA for IV Meloxicam in
September 2018 and the FDA assigned a PDUFA date of March 24, 2019 to the
resubmitted application. In addition, in December 2018, we amended our
agreements with Recro and its affiliates relating to certain development
milestone payments owed to us by Recro, such that the $45.0 million previously
due to us upon approval by the FDA of the IV Meloxicam NDA, was replaced with
$5.0 million which was paid in the first quarter of 2019, $5.0 million to be
paid in the second quarter of 2019, and if the IV Meloxicam NDA is approved by
the FDA, $5.0 million to be paid within 180 days following such approval and
$45.0 million payable in seven equal annual installments of approximately $6.4
million beginning on the first anniversary of such NDA approval date.

The increase in the fair value of the contingent consideration in 2017, as
compared to 2016, was primarily due to a prior change in the structure of the
development milestones related to approval of the IV Meloxicam NDA and a shorter
time to payment and improved probability of success on the milestones and
royalties included in the contingent consideration. The valuation of the
contingent consideration is discussed in greater detail in Critical Accounting
Estimates, Contingent Consideration, later in "Item 7-Management's Discussion
and Analysis of Financial Condition and Results of Operations" of this Annual
Report.

The decrease in other expense, net in 2018, as compared to 2017, and the
increase in 2017, as compared to 2016, were primarily due to an impairment
charge related to our investment in Synchronicity, which was accounted for under
the equity method. In September 2017, we recorded an other-than-temporary
impairment charge of $10.5 million, which represented our remaining investment
in Synchronicity, as we believed that Synchronicity was unable to generate
future earnings that justified the carrying amount of the investment.

Provision (Benefit) for Income Taxes


                                                                                          Change
                                          Year Ended December 31,           

Favorable/(Unfavorable)

(In millions)                        2018            2017         2016        2018 - 2017         2017 - 2016
Income tax provision (benefit)     $    12.3       $   14.7     $   (5.9 )  

$ 2.4 $ (20.6 )



The income tax provision (benefit) in 2018, 2017 and 2016 were primarily due to
U.S. federal and state taxes. The favorable change in income taxes in 2018, as
compared to 2017, was due to the one-off nature of a $21.5 million tax expense
in 2017 from the enactment of the Tax Cuts and Jobs Act (the "Act" or "Tax
Reform"), partially offset by increased taxes on income earned in the U.S. The
unfavorable change in income taxes in 2017, as compared to 2016, was primarily
due to Tax Reform and an increase in income earned in the U.S., partially offset
by the recognition of excess tax benefits related to share-based compensation.

No provision for income tax has been provided on undistributed earnings of our
foreign subsidiaries because such earnings are permanently reinvested or may be
repatriated to Ireland without incurring any tax liability. Cumulative
unremitted earnings of overseas subsidiaries totaled approximately
$327.1 million at December 31, 2018.

As of December 31, 2017, a deferred tax asset of $13.3 million was recorded as a
provisional amount related to performance-based compensation to covered
employees prior to November 2, 2017. We have since completed our review of the
Act and have determined the performance-based compensation was provided pursuant
to binding arrangements and should be deductible. We concluded that it had met
the requirements for recognition of the tax benefit and we no longer consider
this item a provisional amount in our financial statements in accordance with
Staff Accounting Bulletin 118 ("SAB 118").

We will continue to evaluate the future impact of the Act and will update our disclosures as additional information and interpretive guidance becomes available and management's analysis evolves.

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At December 31, 2018, we maintained a valuation allowance of $11.7 million
against certain U.S. state deferred tax assets and $207.4 million against
certain Irish deferred tax assets as we determined that it is
morelikelythannot that these net deferred tax assets will not be realized. If
we demonstrate consistent profitability in the future, the evaluation of the
recoverability of these deferred tax assets may change and the remaining
valuation allowance may be released in part or in whole.

As of December 31, 2018, we had $1.4 billion of Irish NOL carryforwards, $2.5
million of U.S. state NOL carryforwards, $44.8 million of federal R&D credits,
$2.0 million of alternative minimum tax ("AMT") credits and $14.8 million of
U.S. state tax credits which either expire on various dates through 2038 or can
be carried forward indefinitely. These loss and credit carryforwards are
available to reduce certain future Irish and U.S. taxable income and tax and, in
the case of the AMT credits, may be refundable. These loss and credit
carryforwards are subject to review and possible adjustment by the appropriate
taxing authorities. These loss and credit carryforwards, which may be utilized
in a future period, may be subject to limitations based upon changes in the
ownership of our ordinary shares.

Liquidity and Capital Resources

Our financial condition is summarized as follows:



                                        December 31, 2018                       December 31, 2017
(In millions)                    U.S.        Ireland       Total         U.S.        Ireland       Total
Cash and cash equivalents      $  139.3     $   127.5     $  266.8     $  114.7     $    76.6     $  191.3
Investments-short-term            203.3          69.2        272.5        127.5         114.7        242.2
Investments-long-term              51.5          29.2         80.7        108.9          48.3        157.2
Total cash and investments     $  394.1     $   225.9     $  620.0     $  351.1     $   239.6     $  590.7
Outstanding borrowings-short
and long-term                  $  279.3     $       -     $  279.3     $  281.4     $       -     $  281.4



At December 31, 2018, our investments consisted of the following:



                                                                      Gross
                                             Amortized             Unrealized              Estimated
(In millions)                                  Cost           Gains          Losses       Fair Value
Investments-short-term available-for-sale   $     272.3     $      0.3     $     (0.6 )   $     272.0
Investments-short-term held-to-maturity             0.5              -              -             0.5
Investments-long-term available-for-sale           77.4              -           (0.3 )          77.1
Investments-long-term held-to-maturity              3.5            0.1              -             3.6
Total                                       $     353.7     $      0.4     $     (0.9 )   $     353.2


Sources and Uses of Cash

We generated $99.3 million and $19.2 million and used $63.8 million of cash from
operating activities during the years ended December 31, 2018, 2017 and 2016,
respectively. We expect that our existing cash and investments will be
sufficient to finance our anticipated working capital and other cash
requirements, such as capital expenditures and principal and interest payments
on our longterm debt, for at least the twelve months following the date from
which our financial statements were issued. Subject to market conditions,
interest rates and other factors, we may pursue opportunities to obtain
additional financing in the future, including debt and equity offerings,
corporate collaborations, bank borrowings, arrangements relating to assets or
other financing methods or structures. In addition, the 2023 Term Loans have an
incremental facility capacity in an amount of $175.0 million, plus additional
amounts as long as we meet certain conditions, including a specified leverage
ratio.

Our investment objectives are, first, to preserve liquidity and conserve capital
and, second, to generate investment income. We mitigate credit risk in our cash
reserves by maintaining a welldiversified portfolio that limits the amount of
investment exposure as to institution, maturity and investment type. Our
availableforsale investments consist primarily of short and longterm U.S.
government and agency debt securities and corporate debt securities. We classify
availableforsale investments in an unrealized loss position, which do not
mature within 12 months, as longterm investments. We have the intent and
ability to hold these investments until recovery, which may be at maturity, and
it is morelikelythannot that we would not be required to sell these
securities before recovery of their amortized cost. At December 31, 2018, we
performed an analysis of our investments with unrealized losses for impairment
and determined that they were temporarily impaired.

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Information about our cash flows, by category, is presented in the accompanying
consolidated statements of cash flows. The following table summarizes our cash
flows for the years ended December 31, 2018, 2017 and 2016:



                                                             Year Ended December 31,
 (In millions)                                             2018        2017        2016

Cash and cash equivalents, beginning of period $ 191.3 $ 186.4 $ 181.1

Cash flows provided by (used in) operating activities 99.3 19.2 (63.8 )

Cash flows (used in) provided by investing activities (22.2 ) (18.4 ) 127.2

Cash flows (used in) provided by financing activities (1.6 ) 4.1 (58.1 )

 Cash and cash equivalents, end of period                $  266.8     $ 191.3     $ 186.4


Operating Activities

The increases in cash provided by operating activities in 2018, as compared to
2017, and in 2017, as compared to 2016, were primarily due to a 21% increase in
the amount of cash collected from our customers. This was partially offset by a
20% and 17% increase in the amount of cash paid to our employees, respectively,
and a 4% and 6% increase in the amount of cash paid to our suppliers,
respectively. The increase in the amount of cash we collected from our customers
is primarily due to the increase in revenues in each period as compared to the
prior period. The increase in the amount of cash paid to our employees is
primarily due to the increase in our headcount in each period, as compared to
the prior period, and the increase in the amount of cash paid to our suppliers
is due to the increase in R&D and commercial activity in each period, as
compared to the prior period, as previously discussed.

Investing Activities


The increases in cash used in investing activities in 2018, as compared to 2017,
and in 2017, as compared to 2016, were primarily due to an increase in property,
plant and equipment additions. Cash paid for the addition to property, plant and
equipment increased by 35% and 15%, respectively, and was primarily due to the
construction of facilities and equipment at our Wilmington, Ohio location for
the manufacture of products currently in development and existing proprietary
products. Amounts included as construction in progress at December 31, 2018
primarily include capital expenditures at our manufacturing facility in
Wilmington, Ohio. We expect to spend approximately $95.0 million during the year
ended December 31, 2019 for capital expenditures. We continue to evaluate our
manufacturing capacity based on expectations of demand for our products and will
continue to record such amounts within construction in progress until such time
as the underlying assets are placed into service, or we determine we have
sufficient existing capacity and the assets are no longer required, at which
time we would recognize an impairment charge. We continue to periodically
evaluate whether facts and circumstances indicate that the carrying value of
these longlived assets to be held and used may not be recoverable.

In addition to the increase in capital spending, we had an increase in the net
sales of investments of 43% and a decrease of 82% in 2018 as compared to 2017,
and in 2017 as compared to 2016, respectively. In 2017, this increase was
partially offset by a $15.0 million investment in Synchronicity that we made in
2016.

Financing Activities

The change in cash flows from financing activities in 2018, as compared to 2017,
was primarily due to a $5.8 million decrease in the net cash provided from stock
option exercises by our employees. The increase in cash provided by financing
activities in 2017, as compared to 2016, was primarily due to a $60.9 million
principal payment for a term loan which matured in September 2016, which had an
original principal balance of $75.0 million, bore interest at LIBOR plus 2.75%,
with no LIBOR floor. In 2017, our financing activities consisted of $7.1 million
in cash received from our employees related to stock option exercises and $3.0
million in principal payments we made under the Term Loan B-1 (which has since
been refinanced as described above into the 2023 Term Loans).

Borrowings


At December 31, 2018, our borrowings consisted of $282.1 million outstanding
under the 2023 Term Loans. Please refer to Note 10, LongTerm Debt, in the
accompanying "Notes to Consolidated Financial Statements" for a discussion of
our outstanding term loans.

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Contractual Obligations

The following table summarizes our obligations to make future payments under our current contracts at December 31, 2018:



                                                       Less Than          One to            Three to           More than
                                                        One Year       Three Years         Five Years          Five Years
Contractual Obligations (In thousands)     Total         (2019)       (2020 - 2021)       (2022 - 2023)       (After 2023)
2023 Term Loans-Principal                $ 282,118     $    2,843     $        5,686     $       273,589     $            -
2023 Term Loans-Interest                    53,690         12,844             25,298              15,548                  -
Operating lease obligations                 53,601          9,394             15,424               4,843             23,940
Purchase obligations                       530,307        530,307                  -                   -                  -

Total contractual cash obligations $ 919,716 $ 555,388 $

46,408 $ 293,980 $ 23,940



As interest on the 2023 Term Loans is based on a one, three or six-month LIBOR
rate of our choosing, we are using the one-month LIBOR rate, which was 2.32% at
December 31, 2018 as this exceeds the LIBOR rate floor under the terms of the
2023 Term Loans and is the frequency in which we make interest payments.

This table excludes any liabilities pertaining to uncertain tax positions as we
cannot make a reliable estimate of the period of cash settlement with the
respective taxing authorities. At December 31, 2018, we had $6.1 million of net
liabilities associated with uncertain tax positions. We do not anticipate that
the amount of existing unrecognized tax benefits will significantly increase or
decrease within the next 12 months.

OffBalance Sheet Arrangements


At December 31, 2018, we were not a party to any offbalance sheet arrangements
that have, or are reasonably likely to have, a current or future effect on our
financial condition, results of operations, liquidity, capital expenditures or
capital resources.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP. In
connection with the preparation of our financial statements, we are required to
make assumptions and estimates about future events, and apply judgments on
historical experience, current trends and other factors that management believes
to be relevant at the time our consolidated financial statements are prepared.
On a regular basis, we review the accounting policies, assumptions, estimates
and judgments to ensure that our financial statements are presented fairly and
in accordance with GAAP. However, because future events and their effects cannot
be determined with certainty, actual results could differ from our assumptions
and estimates, and such differences could be material.

Our significant accounting policies are discussed in Note 2, Summary of
Significant Accounting Policies, of the "Notes to Consolidated Financial
Statements." We believe that the following accounting estimates are the most
critical to aid in fully understanding and evaluating our reported financial
results, and they require our most difficult, subjective or complex judgments,
resulting from the need to make estimates about the effects of matters that are
inherently uncertain. We have reviewed these critical accounting estimates and
related disclosures with the Audit and Risk Committee of our board of directors.

Revenue from Contracts with Customers


When entering into arrangements with customers, we identify whether our
performance obligations under each arrangement represent a distinct good or
service or a series of distinct goods or services. If a contract contains more
than one performance obligation, we allocate the total transaction price to each
performance obligation in an amount based on the estimated relative standalone
selling prices of the promised goods or services underlying each performance
obligation. The fair value of performance obligations under each arrangement may
be derived using an estimate of selling price if we do not sell the goods or
services separately.

We recognize revenue when or as we satisfy a performance obligation by
transferring an asset or providing a service to a customer. Management judgment
is required in determining the consideration to be earned under an arrangement
and the period over which we are expected to complete our performance
obligations under an arrangement. Steering committee services that are not
inconsequential or perfunctory and that are determined to be performance
obligations are combined with other research services or performance obligations
required under an arrangement, if any, in determining the level of effort
required in an arrangement and the period over which we expect to complete our
aggregate performance obligations.

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Manufacturing Revenue


We recognize manufacturing revenues from the sale of products we manufacture for
resale by our licensees. Manufacturing revenues for our partnered products, with
the exception of those from Janssen related to RISPERDAL CONSTA, are recognized
over time as products move through the manufacturing process, using a standard
cost-based model as a measure of progress, which represents a faithful depiction
of the transfer of control of the goods. We recognize manufacturing revenue from
these products over time as we determined, in each instance, that we would have
a right to payment for performance completed to date if our customer were to
terminate the manufacturing agreement for reasons other than our non-performance
and the products have no alternative use. We invoice our licensees upon shipment
with payment terms between 30 to 90 days. Prior to the adoption of Topic 606, we
recorded manufacturing revenue from the sale of products we manufactured for
resale by our partners after we had shipped such products and risk of loss had
passed to our partner, assuming persuasive evidence of an arrangement existed,
the sales price was fixed or determinable and collectability was reasonably
assured.

We are the exclusive manufacturer of RISPERDAL CONSTA for commercial sale under
our manufacturing and supply agreement with Janssen. We determined that it is
appropriate to record revenue under this agreement at the point in time when
control of the product passes to Janssen, which is determined to be when the
product has been fully manufactured, since Janssen does not control the product
during the manufacturing process and, in the event Janssen terminates the
manufacturing and supply agreement, it is uncertain whether, and at what amount,
we would be reimbursed for performance completed to date for product not yet
fully manufactured. The manufacturing process is considered fully complete once
the finished goods have been approved for shipment by both us and Janssen.

The sales price for certain of our manufacturing revenues is based on the
end-market sales price earned by our licensees. As end-market sales generally
occur after we have recorded manufacturing revenue, we estimate the sales price
for such products based on information supplied to us by our licensees, our
historical transaction experience and other third-party data. Differences
between actual manufacturing revenues and estimated manufacturing revenues are
reconciled and adjusted for in the period in which they become known, which is
generally within the same quarter. The difference between our actual and
estimated manufacturing revenues has not been material to date.

Royalty Revenue


We recognize royalty revenues related to the sale of products by our licensees
that incorporate our technology. Royalties, with the exception of those earned
on sales of AMPYRA as set forth below, qualify for the sales-and-usage exemption
under Topic 606 as (i) royalties are based strictly on the sales-and-usage by
the licensee; and (ii) a license of IP is the sole or predominant item to which
such royalties relate. Based on this exemption, these royalties are earned in
the period the products are sold by our partner and we have a present right to
payment. Royalties on AMPYRA manufactured under our license and supply
agreements with Acorda are incorporated into the standard cost-based model
described in the manufacturing revenues section, above, as the terms of such
agreements entitle us to royalty revenue as the product is being manufactured,
which represents a faithful depiction of the transfer of goods, and not based on
the actual end-market sales of the licensee.

In anticipation of the entry of generic forms of AMPYRA to the U.S. market,
during the three months ended September 30, 2018, we supplied five batches of
AMPYRA to Acorda for which we agreed to defer the receipt of royalties on
end-market sales of the product until the product was sold by Acorda, rather
than as it was manufactured. Upon delivery of these five batches, royalty
revenue for AMPYRA reverted to being recognized as the product is manufactured.

Certain of our royalty revenues are recognized based on information supplied to
us by our licensees and require estimates to be made. Differences between actual
royalty revenues and estimated royalty revenues are reconciled and adjusted for
in the period in which they become known, which is generally within the same
quarter. The difference between our actual and estimated royalty revenues has
not been material to date.

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Research and Development Revenue and License Revenue


In November 2017, we granted Biogen, under a license and collaboration
agreement, a worldwide, exclusive, sublicensable license to develop, manufacture
and commercialize BIIB098 and other products covered by patents licensed to
Biogen under the agreement. Upon entering into the agreement, we received an
up-front cash payment of $28.0 million. In June 2018, we received an additional
cash payment of $50.0 million following Biogen's review of preliminary
gastrointestinal tolerability data from the ongoing clinical development program
for BIIB098. We are also eligible to receive an additional payment of $150.0
million upon an approval by the FDA on or before December 31, 2021 of a
505(b)(2) NDA (or, in certain circumstances, a 505(b)(1) NDA) for BIIB098. We
are also eligible to receive additional payments upon achievement of
developmental milestones with respect to the first two products, other than
BIIB098, covered by patents licensed to Biogen under the agreement. In addition,
we will receive a mid-teens percentage royalty on worldwide net sales of
BIIB098, subject to, under certain circumstances, minimum annual payments for
the first five years following FDA approval of BIIB098. We will also receive
royalties on net sales of products, other than BIIB098, covered by patents
licensed to Biogen under the agreement, at tiered royalty rates calculated as
percentages of net sales ranging from high-single digits to sub-teen
double-digits. All royalties are payable on a product-by-product and
country-by-country basis until the later of (i) the last-to-expire patent right
covering the applicable product in the applicable country and (ii) a specified
period of time from the first commercial sale of the applicable product in the
applicable country. Royalties for all such products and the minimum annual
payments for BIIB098 are subject to reductions as set forth in the agreement.
Biogen paid a portion of the BIIB098 development costs we incurred in 2017 and,
since January 1, 2018, Biogen is responsible for all BIIB098 development costs
we incur, subject to annual budget limitations. We have retained the right to
manufacture clinical supplies and commercial supplies of BIIB098 and all other
products covered by patents licensed to Biogen under the agreement, subject to
Biogen's right to manufacture or have manufactured commercial supplies as a
back-up manufacturer and subject to good faith agreement by the parties on the
terms of such manufacturing arrangements.

We evaluated the agreement under Topic 606 and determined that we had four
deliverables: (i) the grant of a distinct, right-to-use license of intellectual
property to Biogen; (ii) future development services; (iii) clinical supply; and
(iv) participation on a joint steering committee with Biogen. Our participation
on the joint steering committee was considered to be perfunctory and thus not
recognized as a performance obligation. The deliverables, aside from the
participation in the joint steering committee which was considered to be
perfunctory, were determined to be separate performance obligations as the
license is separately identifiable from the development services and clinical
supply, and the development services are not expected to significantly modify or
customize the IP.

We allocated the arrangement consideration to each performance obligation using
standalone selling prices based on an estimate of selling price for the license
and other deliverables. We used a discounted cash flow model to estimate the
standalone selling price of the license in order to allocate the consideration
to the performance obligations. To estimate the standalone selling price of the
license, we assessed the likelihood of the FDA's approval of BIIB098 and
estimated the expected future cash flows assuming FDA approval and maintenance
of the IP protecting BIIB098. We then discounted these cash flows using a
discount rate of 8.0%, which we believed captured a market participant's view of
the risk associated with the expected cash flows. The estimate of selling price
of the development services and clinical supply were determined through
third-party evidence. We believe that a change in the assumptions used to
determine our estimate of selling price for the license most likely would not
have a significant effect on the allocation of consideration transferred.

Under Topic 606, we allocated the upfront payment of $28.0 million as follows:
$27.0 million to the delivery of the license; $0.9 million to future development
services; and $0.1 million to clinical supply. We alloc
						



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