Through the New River Collaboration Agreements Shire also acquired the license in the RoW territory to develop and commercialize VYVANSE, in consideration of a low double-digit royalty.
Shire paid an initial sum of $50 million to New River in January 2005 on signing the original collaboration agreement and a further $50 million was paid by Shire to New River following acceptance of the filing of a New Drug Application ("NDA") by the FDA in January 2006. These payments were capitalized by the Company as intangible assets in accordance with IAS 38, "Intangible Assets". As at the acquisition date, no amortization had been recorded in respect of these intangible assets as they were not yet available for use as final DEA scheduling was yet to be received.
As Shire has a pre-existing relationship with New River, Shire has
accounted for the acquisition of New River as a multiple element
transaction, with one element being the business combination and one
element being the effective settlement of Shire's pre-existing relationship
with New River. As no specific guidance exists under IFRS 3 `Business
Combinations' governing the accounting for business combinations when a
pre-existing relationship is present, Shire has analogised the multiple
element approach as outlined in IAS 18, "Revenue", together with specific
guidance in US GAAP in respect of accounting for business combinations when
pre-existing relationships exist as outlined in EITF 04-1, "
|SOURCE Shire plc|
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