Eli Lilly and Company (LLY)

In 2008, we entered into an agreement with an affiliate of TPG-Axon Capital (TPG) for the Phase III development of a gamma-secretase inhibitor and an A-beta antibody, our two lead molecules for the treatment of mild to moderate Alzheimer’s disease. Under the agreement, both we and TPG will provide funding for the Alzheimer’s clinical trials. Funding from TPG will not exceed $325 million and could extend into 2014. In exchange for their funding, TPG may receive success-based milestones totaling $330 million and mid- to high-single digit royalties that are contingent upon the successful development of the Alzheimer’s treatments. The royalties will be paid for approximately eight years after launch of a product. Reimbursements received from TPG for its portion of research and development costs incurred related to the Alzheimer’s treatments are recorded as a reduction to the research and development expense line item on the consolidated statements of operations. The reimbursement from TPG is not expected to be material in any period.

 

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 $319.2 million, $307.6 million, and $217.5 million in 2009, 2008, and 2007, respectively.

 

 

In 2008, we entered into an agreement with an affiliate of TPG-Axon Capital (TPG) for the Phase III development of our gamma-secretase inhibitor and our A-beta antibody, our two lead molecules for the treatment of mild to moderate Alzheimer’s disease. Pursuant to the terms of the agreement, both we and TPG will provide funding for the Alzheimer’s clinical trials. Funding from TPG will not exceed $325 million and could extend into 2014. In exchange for their funding, TPG may receive success-based milestones totaling $330 million and mid- to high-single digit royalties that are contingent upon the successful development of the Alzheimer’s treatments. The royalties will be paid for approximately eight years after launch of a product. Reimbursements received from TPG for their portion of research and development costs incurred related to the Alzheimer’s treatments are recorded as a reduction to the research and development expense line item on the consolidated statement of operations. The reimbursement from TPG is not expected to be material in any period.

 

 

The components of the charges included in asset impairments, restructuring, and other special charges in our consolidated statements of income are described below.

 

 

In 2008, we entered into an agreement with an affiliate of
TPG-Axon Capital (TPG) for the Phase III development of our
gamma-secretase inhibitor and our A-beta antibody, our two lead
molecules for the treatment of mild to moderate Alzheimer’s
disease. Pursuant to the terms of the agreement, both we and TPG
will provide funding for the Alzheimer’s clinical trials.
Funding from TPG will not exceed $325 million and could
extend into 2014. In exchange for their funding, TPG may receive
success-based milestones totaling $330 million and mid- to
high-single digit royalties that are contingent upon the
successful development of the Alzheimer’s treatments. The
royalties will be paid for approximately eight years after
launch of a product. Reimbursements received from TPG for their
portion of research and development costs incurred related to
the Alzheimer’s treatments are recorded as a reduction to
the research and development expense line item on the
consolidated statement of operations. The reimbursement from TPG
is not expected to be material in any period.

 

 

The components of the charges included in asset impairments,
restructuring, and other special charges in our consolidated
statements of income are described below.