...Recognition (Topic 605) An Amendment of the FASB Accounting Standards CodificationTM No. 2009-13 October 2009 Multiple-Deliverable Revenue Arrangements a consensus of the FASB Emerging Issues Task Force The FASB Accounting Standards CodificationTM is the single source of authoritative nongovernmental U.S. generally accepted accounting principles. An Accounting Standards Update is not authoritative; rather, it is a document that communicates the specific amendments that change the Accounting Standards Codification. It also provides other information to help a user of U.S. GAAP understand how and why U.S. GAAP is changing and when the changes will be effective. For additional copies of this Accounting Standards Update and information on applicable prices and discount rates contact: Order Department Financial Accounting Standards Board 401 Merritt 7 PO Box 5116 Norwalk, CT 06856-5116 Please ask for our Product Code No. ASU2009-13. FINANCIAL ACCOUNTING SERIES (ISSN 0885-9051) is published quarterly by the Financial Accounting Foundation. Periodicals postage paid at Norwalk, CT and at additional mailing offices. The full subscription rate is $230 per year. POSTMASTER: Send address changes to Financial Accounting Standards Board, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. | No. 325 Copyright © 2009 by Financial Accounting Foundation. All rights reserved. Content copyrighted by Financial Accounting Foundation may not be reproduced, stored in a retrieval...
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...are provided to illustrate the application of the various views under Issue 2 of Issue Summary No. 1, Supplement No. 1. Fact Pattern - Biotech License and R&D Contract Biotech Company (Biotech) enters into an agreement with Pharmaceutical Company (Pharma) on January 1, 20X1. The agreement includes Biotech (a) licensing certain intellectual property rights to Pharma and (b) providing research and development (R&D) services to Pharma with the objective of developing a viable drug candidate and receiving U.S. Food and Drug Administration (FDA) approval of the drug candidate. Arrangement consideration is as follows: • • Biotech receives $5 million in licensing fees upon signing the agreement Biotech receives $250,000 per year for each full-time equivalent (FTE) that performs R&D activities • Milestone Events: 1. Biotech receives $2 million upon identification of a viable drug candidate 2. Biotech receives $3 million upon successful Phase II clinical trial completion 3. Biotech receives $5 million upon FDA approval. The license and FTE fees are comparable to rates charged by Biotech in other arrangements and are also considered comparable to rates charged by Biotech's competitors and contract research organizations. None of these payments, once received, are refundable, even if FDA approval is never received. In addition, while Biotech must perform on a best-efforts basis, it is not obligated to achieve the milestones. Biotech’s analysis of its other R&D arrangements indicates...
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...Executive Summary The purpose of this paper is to analyze the best exit route that would help Adnexus continue its objective of developing therapeutics compounds. First, analysis will be made on the biotechnology marketspace. Then, light will be shed on the internal and external environments of Adnexus. Then, discussion will be made on the company’s current status and available solutions. Finally, recommendation and action plans will be devised on the best route for Adnexus. The company competes in the biotechnology industry. A large portion of the market (65%) is controlled by fewer players. The market is characterized by high R&D spending. Adnexus had a successful strategic partnership with Bristol-Myers Squibb (BMS), and leadership was considering weather to further negotiate an acquisition deal with them or instead, go public. One of Adnexus key problems was the struggle to generate a study revenue stream. This is why the company has to decide on an exit route that will generate high liquidity and preserve its mission. Recommended course of action is to take the acquisition exit route. First, on average an IPO can generate up to $52.6 million, which is not enough for Adnexus expenses and operations needs. Prior to acquisition offer, BMS offered Adnexus a deal of $1.5 billion. This is why for an acquisition the company might be welling to pay more. Going public is a costly process, and public companies obligated to comply with higher regulatory standards. With a well devised...
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...Dr. Christian Tidona - Biotech entrepreneur Topically: Founder, Owner, Managing Director with BioMed X GmbH, Co-Founder, Managing, Director with BioRN Cluster Management GmbH, Managing Director with BioRN Network e. V., Founder, Owner, Managing Director with MANTICORE GmbH Education: Diploma in Biology, Ph.D in molecular biology and virology at the age of 28, Ruprecht-Karls-Universität, Heidelberg, Germany. Languages: English, French, German, Italian Interests: Networking, Golf, Tennis Personal Interests: Medical biotechnology, entrepreneurship, coaching and incubation of biotech startups, business plan competitions, cluster management, innovation sandboxes at the interface between academia and industry. Area of Expertise and skills: Entrepreneurship, Business planning, Commercialization, Business strategy, Global Strategy, Visionary, Management, Mentoring, Licensing, Innovation management, International Business, Venture financing, New venture Development, Business development, Molecular virology, Drug Discovery and development, Pharmaceutical industry, Molecular biology, Biochemistry, Oncology, Genomics, Immunology, Bioinformatics, Clinical Development, Cancer, Biopharmaceuticals. Websites: Publications Research gate , BioRN website , BioMed X website Dr. Christian Tidona - Biotech entrepreneur Topically: Founder, Owner, Managing Director with BioMed X GmbH, Co-Founder, Managing, Director with BioRN Cluster Management GmbH, Managing Director with BioRN Network...
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...FINANCIAL INFORMATION ANALYSIS ACCOUNTING-BASED VALUATION TECHNIQUES Application Exercises Question 2 Construct a two-period numerical example to show that the accounting-based valuation of a firm is the same whether R&D is capitalized or expensed. ACCOUNTING-BASED VALUATION TECHNIQUES Application Exercises Question 2 Consider R&D Inc., a biotech start up. This firm: • Incurs expenditures in R&D of $50 in the first year of activity; • Has an opening book value of equity of $1,000; • Generates income (before R&D expenses) of $200 in year 1 and $220 in year 2, at the end of which it is liquidated; • Has a cost of equity capital of 10%; • Pays no dividends prior to liquidation; Show that the PVAE obtains regardless of whether R&D Inc. expenses R&D expenditure as incurred or capitalizes and amortizes R&D expenditure! ACCOUNTING-BASED VALUATION TECHNIQUES Application Exercises Question 2 Expensing R&D As Incurred Assume that the R&D expenditure is expensed at the end of year1: [pic] And Thus: PVAE = 1132.2 ACCOUNTING-BASED VALUATION TECHNIQUES Application Exercises Question 2 Capitalising And Amortising R&D (1) Assume that the R&D expenditure is capitalised and amortised linearly: • R&D expense recognised at end of year 1: 25; • R&D expense recognised at end of year 2: 25; [pic] And thus: PVAE = 1132.2 ACCOUNTING-BASED VALUATION TECHNIQUES Application Exercises Question 2 Capitalising And Amortising...
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...Deliverables for the Arrangement The deliverables for this arrangement are as follows: • Research and development • Licensing combined with research and development • The Five payments milestones as a whole An Example given in FASB 605-25-55-46 states, “The license deliverable does not meet the first criterion for separation. The license does not have standalone value to Pharma. Because Drug B has not yet been developed, the license is of no value to Pharma without the ensuing research and development activities using Technology A, which is proprietary to Biotech. Likewise, Pharma could not sell the license to another party (that is, without Biotech's agreeing to provide the research and development activities for that other party).” Likewise with the three deliverables stated above, research and development has value on a standalone basis, licensing when combined with research and development has value, and also the five milestones as a whole have value, this being that without the research and development to support the five milestones, there is no measure of their true value if sold to another party. Milestone Revenue Recognition Under FASB 605-25-55 we have concluded that a deliverable be measured and accounted for separately under these circumstances: (1) The delivered item has value to the customer on a standalone basis, (2) There is objective and reliable evidence of the fair value of the undelivered items, and (3) The arrangement includes a general right of...
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...Industry Snapshot The Indian pharmaceutical industry is highly dynamic and offers great opportunities for both domestic and foreign companies. The industry is estimated to have generated revenue worth US$ 13.1 billion in FY 2011, according to a new Research and Market’s report, “Indian Pharma Sector Forecast 2014.” India will emerge as a leading global player in pharmaceutical industry by 2020, securing a place among the top five major global markets, according to Ikon Marketing Consultant (IMC). Also, Associated Chambers of Commerce and Industry (Assocham) has said it expects the Indian pharmaceutical industry to reach US$ 20 billion by 2015, making it one of the world's top 10 pharmaceuticals markets. India has a strong local manufacturing base and domestic players are developing substantial international presence. Healthcare is also one of the largest service sector industries in India, in terms of revenue and employment. Rising health awareness and increasing government expenditure on healthcare sector is driving growth in the sector. Medical tourism and health insurance are also on a rise, with significant growth in healthcare sector and establishment of large number of hospitals, both public and private. The Indian healthcare industry, estimated at US$ 50 billion, is expected to reach over US$ 75 billion by 2012, and US$ 100 billion by 2015. Talent Challenges While specialised talent is critical for any knowledge industry, it is more so within the pharmaceuticals industry...
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...Rocky Mountain Advanced Genome – Case Study Background:Rocky Mountain Advanced Genome (RMAG) is headquartered in Colorado Springs, Colorado and has recently been founded by seven research scientists who have taken a leave of absence from major universities and pharmaceutical companies to establish this firm. This company uses gene-sequencing techniques with a computer-driven search algorithm to identify genes in human DNA. In January 1996, negotiations were coming to the end for a private equity investment by Big Sur Capital Management to buy a 90 percent equity interest for $46 million in RMAG. The proceeds of the sale would be used to finance the growth of RMAG. Big Sur's saw a highly promising, but a highly risky investment opportunity. Kim McGraw, a managing director with Big Sur was put in the position to negotiate a price and terms of the investment. She based her negotiations on the assessment of RAMG's economic value. Big Sur Capital Management is located in San Francisco, California and has been organized as a hedge fund since 1968. Over the years it proved more successful in variety of "private equity" investments and had gradually shifted its activities to this area. The firm has $2 billion under management with 64 investments evenly split between venture capital investments and participations in leveraged buyouts. Importance of Terminal Value:Terminal value is the lump-sum of cash flows at the end of a stream of cash flows. It is important when trying to...
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...NewAge BIOTECH Enter the Business Name BUSINESS PLAN Business Plan Prepared By Gerald Sawyer, PhD. Enter your full name Enter your title Enter the company name Enter the company address Enter City, State, and Zip Code Enter the phone/fax number(s) Enter your e-mail and Web addresses Date Prepared January 200B Enter Month and Year Insert your company’s disclaimer and confidentiality notice. Consult with your attorney as to the wording. The information contained herein is furnished on the condition that it is solely for internal use, for evaluation and planning purposes only, and this information shall not be disclosed, duplicated, used in whole or in part, for any other reason whatsoever. TABLE OF CONTENTS To jump directly to any title listed in the Table of Contents, hold down CTRL and then click the title. TABLE OF CONTENTS 2 Executive Summary 5 The Company 5 The Market 5 Competitive Analysis 5 The Product/Service 5 Value Proposition 6 Marketing and Sales Plan 6 Management and Organization 6 Financial Summary 6 Investor Summary 6 The Company 8 Name and Location 8 Facilities 8 Legal Form of Business 8 Employees 8 Company History 8 Marketing Plan 9 Industry Profile 9 Current Size 9 Growth Potential 9 Industry Trends 9 Other Characteristics 10 Sales Channels...
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...A Pluripotent Challenge Recent advances in human stem cell research have generated enormous enthusiasm on the part of researchers and optimistic predictions of revolutionary advances in biomedicine. These same advances have also sparked considerable ethical debate. The main ethical challenges associated with stem cell research have to do with the source of those cells. Although some advances have been made in the use of adult stem cells, the consensus seems to be that the most promising categories of stem cells are embryonic stem (ES) cells (derived from the five- to seven-day-old embryos known as blastocysts) and embryonic germ (EG) cells, derived from immature aborted fetuses. In fact, there are four main sources of (non-adult) stem cells, and each presents its own challenging ethical issues. The first such source (of ES cells) is the surplus embryos that are a by-product of the activities of in vitro fertilisation (IVF) labs. One ethical concern here has to do with the status of the embryo itself. The degree of respect that ought to be granted to a human embryo is highly controversial. Some hold that the embryo - genetically human and a potential person - deserves our full respect and protection. Others hold that while the embryo may be genetically human, it has (particularly at early stages) none of the characteristics of persons. It is not conscious; it is not self-aware. It is a cluster of cells with no independent ethical status. Still others hold an in-between view, arguing...
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...NewAge BIOTECH Enter the Business Name BUSINESS PLAN Business Plan Prepared By Gerald Sawyer, PhD. Enter your full name Enter your title Enter the company name Enter the company address Enter City, State, and Zip Code Enter the phone/fax number(s) Enter your e-mail and Web addresses Date Prepared January 200B Enter Month and Year Insert your company’s disclaimer and confidentiality notice. Consult with your attorney as to the wording. The information contained herein is furnished on the condition that it is solely for internal use, for evaluation and planning purposes only, and this information shall not be disclosed, duplicated, used in whole or in part, for any other reason whatsoever. TABLE OF CONTENTS To jump directly to any title listed in the Table of Contents, hold down CTRL and then click the title. TABLE OF CONTENTS 2 Executive Summary 5 The Company 5 The Market 5 Competitive Analysis 5 The Product/Service 5 Value Proposition 6 Marketing and Sales Plan 6 Management and Organization 6 Financial Summary 6 Investor Summary 6 The Company 8 Name and Location 8 Facilities 8 Legal Form of Business 8 Employees 8 Company History 8 Marketing Plan 9 Industry Profile 9 Current Size 9 Growth Potential 9 Industry Trends 9 Other Characteristics 10 Sales Channels...
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...IIM BANGALORE Final Report for Contemporary Concerns Study Project Repositioning Strategy for Indian Pharmaceutical Companies in Global Context Submitted to PROFESSOR MURALI PATIBANDLA (FACULTY,CORPORATE STRATEGY AND POLICY) Submitted By Ravela Madhurika- 1211132 Tanveer Mohd Ansari-1211151 Contents Introduction .................................................................................................................................................. 3 Global Pharma Industry ............................................................................................................................ 3 Major players of the world pharmaceutical industry ................................................................................... 5 Major Players ............................................................................................................................................ 6 Pfizer Inc................................................................................................................................................ 6 GlaxoSmithKline .................................................................................................................................... 6 Sanofi-Aventis ....................................................................................................................................... 6 Novartis ..............................................................................................................
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...The development of financial accounting As we all known, the system of financial accounting is getting more and more perfect because of the emergency of a great amount of the financial transaction . Generally speaking, the developed speriod of accounting can divide three parts:Ancient Accounting, Contemporary Accounting and Morden Accounting. Accounting gets a better growth with the development of the world and science and technology after we step into the 21th century. Ancient Accounting About 1000BC,financial accounting had been created . Accounting, as a way to record expenses and receipts,has exsited for a long time . In the ancient time, most of the people can support their own life by cultivating. In other words,there will be much less financial transaction emerging. Therefore, they will use simple way to record food, clothes or the other sources left, such as, using knotted strings of different length and colours or engraving on stones etc. This king of method is fit with economical situation which is called “Self Sufficient Natural Economy Although accounting in the early stage is briefly, it experience a long time trasition which is from simple to complex , elementary to senior . Contemporary Accounting 1.1The rise of Italy at the Middle Age The outbreak of the Renaissance advanced the rise of Italy sharply. Luca Pacioli first described the practice and theory that had developed in commercial cities in Italy. Pacioli...
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...September 13, 2015 Amgen Whistleblowing Case ACCT 530 Ethical Obligations and Decision Making in Accounting Lisa Moreaux Amgen Inc. is a pharmaceutical company based out of California. In 2009, there were 15 states that filed lawsuits against the company for accusations of participating in Medicaid kickback schemes. In 2007, Amgen’s board of directors discovered a potential problem with the dealings of post-market complaints regarding their drugs. Amgen was out to push the sale of their new drug Aranesp, which was developed to treat amnesia associated with chronic renal failure. They employed Shawn O’Brien to take a deeper look into the company’s process to make sure they were abiding by the Food and Drug Administration federal laws and reporting problems properly after they hit the market. The following report will summarize the ethical issues surrounding the case along. Federal law requires after-market reporting on all new drugs under the FDA drug compliance program; however, Amgen violated both ethical and legal standards. The integrity of the company was jeopardized when they chose to withhold information received regarding adverse effects of the drug. Shawn O’Brien was a senior project manager who was hired to improve the company compliance process with FDA reporting. He became aware of the lack of reporting complaints and took this information to top management and was told to be quite about his findings. When he did not comply, he was later fired....
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...Establishing a Business in Hungary, Europe Victoria Delay Dr. Michael Jazzar Jones International University Executive Summary I have been hired by a large U.S. Biotechnology Corporation to create a strategic report on establishing a business in Europe. I have the specific task of providing an overview of the cultural, political, and macroeconomic environment in the target city of Budapest, Hungary. Based on these considerations, I am required to make a clear-cut, yes-or-no executive recommendation on whether to establish a business operation abroad. A yes recommendation requires a description of the form that I think that the operation should take (joint venture, direct foreign investment, etc.) and provide a short analysis of risks and benefits. Budapest, Hungary is the capital of Hungary, on the Danube (a river on S. Europe, flowing from SW Germany eastward into the Black Sea).Their native language is Hungarian (Magyar), but some speak German and English. Hungary is considerate to be the center of politics, cultural, commercial, industry and transportation; a vital base to reach all European countries regarding marketing products to surrounding countries. The cost of living is inexpensive and the unemployment rate is low. Hungary was the first country in Central and Eastern Europe to apply for membership of the EU (European Union). The benefit of Hungary’s EU membership has significant effects on the Hungarian economy, and...
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