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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2021
COMMISSION FILE NUMBER 001-6351
ELI LILLY AND COMPANY
(Exact name of Registrant as specified in its charter)
Indiana 35-0470950
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Lilly Corporate Center, Indianapolis, Indiana 46285
(Address and zip code of principal executive offices)
Registrant’s telephone number, including area code (317276-2000
Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading SymbolsName of Each Exchange On Which Registered
Common Stock (no par value)LLYNew York Stock Exchange
1.000% Notes due 2022LLY22New York Stock Exchange
7 1/8% Notes due 2025LLY25New York Stock Exchange
1.625% Notes due 2026LLY26New York Stock Exchange
2.125% Notes due 2030LLY30New York Stock Exchange
0.625% Notes due 2031LLY31New York Stock Exchange
6.77% Notes due 2036LLY36New York Stock Exchange
1.700% Notes due 2049LLY49ANew York Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes No
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
Yes No
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
  Emerging growth company
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes No
The number of shares of common stock outstanding as of April 27, 2021:
Class Number of Shares Outstanding
Common 959,025,446 



Eli Lilly and Company
Form 10-Q
For the Quarter Ended March 31, 2021
Table of Contents
Page
2


Forward-Looking Statements
This Quarterly Report on Form 10-Q and our other publicly available documents include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act), and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. In particular, information appearing under “Management's Discussion and Analysis of Results of Operations and Financial Condition” includes forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts, and generally can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue,” or similar expressions or future or conditional verbs.
Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those expressed in forward-looking statements. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, it is based on management's current plans and expectations, expressed in good faith and believed to have a reasonable basis. However, we can give no assurance that any such expectation or belief will result or will be achieved or accomplished. Investors therefore should not place undue reliance on forward-looking statements. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:
the impact of the evolving COVID-19 pandemic and the global response thereto;
uncertainties related to our efforts to develop potential treatments for COVID-19;
the significant costs and uncertainties in the pharmaceutical research and development process, including with respect to the timing and process of obtaining regulatory approvals;
the impact of acquisitions and business development transactions and related integration costs;
the expiration of intellectual property protection for certain of our products and competition from generic and/or biosimilar products;
our ability to protect and enforce patents and other intellectual property;
changes in patent law or regulations related to data package exclusivity;
competitive developments affecting current products and our pipeline;
market uptake of recently launched products;
information technology system inadequacies, breaches, or operating failures;
unauthorized access, disclosure, misappropriation, or compromise of confidential information or other data stored in our IT systems, networks, and facilities, or those of third parties with whom we share our data;
unexpected safety or efficacy concerns associated with our products;
litigation, investigations, or other similar proceedings involving past, current, or future products or commercial activities as we are largely self-insured;
issues with product supply and regulatory approvals stemming from manufacturing difficulties or disruptions, including as a result of regulatory actions relating to our facilities;
reliance on third-party relationships and outsourcing arrangements;
regulatory changes or other developments;
regulatory actions regarding currently marketed products;
continued pricing pressures and the impact of actions of governmental and private payers affecting pricing of, reimbursement for, and access to pharmaceuticals;
devaluations in foreign currency exchange rates or changes in interest rates, and inflation;
changes in tax law, tax rates, or events that differ from our assumptions related to tax positions;
asset impairments and restructuring charges;
the impact of global macroeconomic conditions and trade disruptions or disputes;
changes in accounting and reporting standards promulgated by the Financial Accounting Standards Board and the Securities and Exchange Commission (SEC); and
regulatory compliance problems or government investigations.
More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the SEC, including in our Annual Report on Form 10-K for the year ended December 31, 2020, particularly under the caption “Risk Factors”.
3


All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included in or incorporated by reference into this Quarterly Report on Form 10-Q. Except as is required by law, we expressly disclaim any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this Quarterly Report on Form 10-Q.
4


PART I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Statements of Operations
(Unaudited)
ELI LILLY AND COMPANY AND SUBSIDIARIES
(Dollars and shares in millions, except per-share data)
 
 Three Months Ended March 31,
 20212020
Revenue (Note 2)$6,805.6 $5,859.8 
Costs, expenses, and other:
Cost of sales1,878.6 1,215.1 
Research and development1,684.8 1,392.1 
Marketing, selling, and administrative1,576.0 1,549.6 
Acquired in-process research and development (Note 3)
299.3 52.3 
Asset impairment, restructuring, and other special charges (Note 5)211.6 59.9 
Other–net, (income) expense (Note 11)(321.1)(89.1)
5,329.2 4,179.9 
Income before income taxes1,476.4 1,679.9 
Income taxes (Note 7)121.1 223.4 
Net income$1,355.3 $1,456.5 
Earnings per share:
Basic$1.49 $1.60 
Diluted$1.49 $1.60 
Shares used in calculation of earnings per share:
Basic908.8908.2
Diluted912.4911.7
See notes to consolidated condensed financial statements.
5


Consolidated Condensed Statements of Comprehensive Income (Loss)
(Unaudited)
ELI LILLY AND COMPANY AND SUBSIDIARIES
(Dollars in millions)
 
Three Months Ended March 31,
20212020
Net income$1,355.3 $1,456.5 
Other comprehensive income (loss), net of tax (Note 10)100.8 (362.3)
Comprehensive income$1,456.1 $1,094.2 
See notes to consolidated condensed financial statements.

6


Consolidated Condensed Balance Sheets
ELI LILLY AND COMPANY AND SUBSIDIARIES
(Dollars in millions)
March 31, 2021December 31, 2020
Assets(Unaudited) 
Current Assets
Cash and cash equivalents (Note 6)$3,002.4 $3,657.1 
Short-term investments (Note 6)49.0 24.2 
Accounts receivable, net of allowances of $23.9 (2021) and $25.9 (2020)
5,592.8 5,875.3 
Other receivables1,065.8 1,053.7 
Inventories3,660.8 3,980.3 
Prepaid expenses and other3,233.7 2,871.5 
Total current assets16,604.5 17,462.1 
Investments (Note 6)3,232.4 2,966.8 
Goodwill3,877.4 3,766.5 
Other intangibles, net8,087.8 7,450.0 
Deferred tax assets2,649.9 2,830.4 
Property and equipment, net of accumulated depreciation of $9,643.4 (2021) and $9,570.7 (2020)
8,630.1 8,681.9 
Other noncurrent assets3,756.2 3,475.4 
Total assets$46,838.3 $46,633.1 
Liabilities and Equity
Current Liabilities
Short-term borrowings and current maturities of long-term debt$4.9 $8.7 
Accounts payable1,639.6 1,606.7 
Employee compensation649.9 997.2 
Sales rebates and discounts5,821.4 5,853.0 
Dividends payable 770.6 
Income taxes payable791.6 495.1 
Other current liabilities2,806.8 2,750.3 
Total current liabilities11,714.2 12,481.6 
Other Liabilities
Long-term debt16,199.6 16,586.6 
Accrued retirement benefits (Note 8)3,969.8 4,094.5 
Long-term income taxes payable3,917.5 3,837.8 
Deferred tax liabilities2,200.6 2,099.9 
Other noncurrent liabilities1,737.3 1,707.5 
Total other liabilities28,024.8 28,326.3 
Commitments and Contingencies (Note 9)
Eli Lilly and Company Shareholders’ Equity
Common stock599.7 598.2 
Additional paid-in capital6,579.2 6,778.5 
Retained earnings9,181.3 7,830.2 
Employee benefit trust(3,013.2)(3,013.2)
Accumulated other comprehensive loss (Note 10)(6,395.6)(6,496.4)
Cost of common stock in treasury(52.7)(55.7)
Total Eli Lilly and Company shareholders’ equity6,898.7 5,641.6 
Noncontrolling interests200.6 183.6 
Total equity7,099.3 5,825.2 
Total liabilities and equity$46,838.3 $46,633.1 
See notes to consolidated condensed financial statements.
7


Consolidated Condensed Statements of Equity
(Unaudited)
ELI LILLY AND COMPANY AND SUBSIDIARIES
Equity of Eli Lilly and Company Shareholders

(Dollars in millions and shares in thousands)
Common StockAdditional
Paid-in
Capital
Retained
Earnings
Employee Benefit TrustAccumulated Other Comprehensive Loss
Common Stock in Treasury(1)
Noncontrolling Interests
SharesAmountSharesAmount
Balance at January 1, 2020958,056 $598.8 $6,685.3 $4,920.4 $(3,013.2)$(6,523.6)530 $(60.8)$92.2 
Net income 1,456.5 26.2 
Other comprehensive loss, net of tax(362.3)
Retirement of treasury shares(3,627)(2.3)(497.7)(3,627)500.0 
Purchase of treasury shares3,627 (500.0)
Issuance of stock under employee stock plans, net2,500 1.6 (201.0)(43)5.1 
Stock-based compensation71.8 
Other 0.2 
Balance at March 31, 2020956,929 $598.1 $6,556.1 $5,879.4 $(3,013.2)$(6,885.9)487 $(55.7)$118.4 
Balance at January 1, 2021957,077 $598.2 $6,778.5 $7,830.2 $(3,013.2)$(6,496.4)487 $(55.7)$183.6 
Net income1,355.3 16.4 
Other comprehensive income, net of tax100.8 
Issuance of stock under employee stock plans, net2,405 1.5 (283.9)(24)3.0 
Stock-based compensation85.5 
Other(0.9)(4.2)0.6 
Balance at March 31, 2021959,482 $599.7 $6,579.2 $9,181.3 $(3,013.2)$(6,395.6)463 $(52.7)$200.6 
(1) As of March 31, 2021, there was $1.00 billion remaining under our $8.00 billion share repurchase program authorized in June 2018.
See notes to consolidated condensed financial statements.

8


Consolidated Condensed Statements of Cash Flows
(Unaudited)
ELI LILLY AND COMPANY AND SUBSIDIARIES
(Dollars in millions)
 
Three Months Ended March 31,
 20212020
Cash Flows from Operating Activities
Net income$1,355.3 $1,456.5 
Adjustments to Reconcile Net Income to Cash Flows from Operating Activities:
Depreciation and amortization350.3 273.6 
Change in deferred income taxes(119.1)11.2 
Stock-based compensation expense85.5 71.8 
Net investment gains(302.2)(186.7)
Acquired in-process research and development (Note 3)299.3 52.3 
Other changes in operating assets and liabilities, net of acquisitions and divestitures
(102.8)(1,408.1)
Other non-cash operating activities, net131.1 111.8 
Net Cash Provided by Operating Activities1,697.4 382.4 
Cash Flows from Investing Activities
Net purchases of property and equipment(300.3)(258.3)
Proceeds from sales and maturities of short-term investments4.0 36.8 
Purchases of short-term investments(19.4) 
Proceeds from sales of noncurrent investments284.8 54.5 
Purchases of noncurrent investments(291.5)(83.0)
Cash paid for acquisitions, net of cash acquired (Note 3)(747.4)(849.3)
Purchases of in-process research and development(191.8)(13.0)
Other investing activities, net(21.9)51.4 
Net Cash Used for Investing Activities(1,283.5)(1,060.9)
Cash Flows from Financing Activities
Dividends paid(774.8)(671.3)
Net change in short-term borrowings(3.7)1,748.7 
Repayments of long-term debt (276.3)
Purchases of common stock (500.0)
Other financing activities, net(279.9)(194.4)
Net Cash (Used for) Provided by Financing Activities(1,058.4)106.7 
Effect of exchange rate changes on cash and cash equivalents(10.2)(66.7)
Net decrease in cash and cash equivalents(654.7)(638.5)
Cash and cash equivalents at January 13,657.1 2,337.5 
Cash and Cash Equivalents at March 31$3,002.4 $1,699.0 
See notes to consolidated condensed financial statements.


9


Notes to Consolidated Condensed Financial Statements
(Tables present dollars in millions, except per-share data)
Note 1: Basis of Presentation
We have prepared the accompanying unaudited consolidated condensed financial statements in accordance with the requirements of Form 10-Q and, therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States (GAAP). In our opinion, the consolidated condensed financial statements reflect all adjustments (including those that are normal and recurring) that are necessary for a fair presentation of the results of operations for the periods shown. In preparing financial statements in conformity with GAAP, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures at the date of the financial statements and during the reporting period. Actual results could differ from those estimates.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with our consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2020. We issue our financial statements by filing them with the Securities and Exchange Commission and have evaluated subsequent events up to the time of the filing of this Quarterly Report on Form 10-Q.
All per-share amounts, unless otherwise noted in the footnotes, are presented on a diluted basis, that is, based on the weighted-average number of common shares outstanding plus the effect of incremental shares from our stock-based compensation programs.
We operate as a single operating segment engaged in the discovery, development, manufacturing, marketing, and sales of pharmaceutical products worldwide. A global research and development organization and a supply chain organization are responsible for the discovery, development, manufacturing, and supply of our products. Regional commercial organizations market, distribute, and sell the products. The business is also supported by global corporate staff functions. Our determination that we operate as a single segment is consistent with the financial information regularly reviewed by the chief operating decision maker for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting for future periods.



10


Note 2: Revenue
The following table summarizes our revenue recognized in our consolidated condensed statements of operations:
Three Months Ended March 31,
 20212020
Net product revenue$6,320.0 $5,403.5 
Collaboration and other revenue (1)
485.6 456.3 
Revenue$6,805.6 $5,859.8 
(1) Collaboration and other revenue associated with prior period transfers of intellectual property was $43.0 million and $35.4 million during the three months ended March 31, 2021 and 2020, respectively.
We recognize revenue primarily from two different types of contracts, product sales to customers (net product revenue) and collaborations and other arrangements. Revenue recognized from collaborations and other arrangements includes our share of profits from the collaboration, as well as royalties, upfront and milestone payments we receive under these types of contracts. See Note 4 for additional information related to certain of our collaborations and other arrangements. Collaboration and other revenue disclosed above includes the revenue from the Jardiance® and Trajenta® families of products resulting from our collaboration with Boehringer Ingelheim discussed in Note 4. Substantially all of the remainder of collaboration and other revenue is related to contracts accounted for as contracts with customers.
Adjustments to Revenue
Adjustments to increase revenue recognized as a result of changes in estimates for our most significant United States (U.S.) sales returns, rebates, and discounts liability balances for products shipped in previous periods were less than 2 percent of U.S. revenue during the three months ended March 31, 2021 and 2020.
Contract Liabilities
Our contract liabilities result from arrangements where we have received payment in advance of performance under the contract and do not include sales returns, rebates, and discounts. Changes in contract liabilities are generally due to either receipt of additional advance payments or our performance under the contract.
The following table summarizes contract liability balances:
 March 31, 2021December 31, 2020
Contract liabilities$346.6 $276.8 
During the three months ended March 31, 2021 and 2020, revenue recognized from contract liabilities as of the beginning of the respective year was not material. Revenue expected to be recognized in the future from contract liabilities as the related performance obligations are satisfied is not expected to be material in any one year.

11


Disaggregation of Revenue
The following table summarizes revenue by product for the three months ended March 31, 2021 and 2020:
Three Months Ended March 31,
 20212020
U.S.
Outside U.S.Total
U.S.
Outside U.S.Total
Revenue—to unaffiliated customers:
Diabetes:
Trulicity®
$1,116.8 $335.7 $1,452.4 $929.5 $299.9 $1,229.4 
Humalog® (1)
332.7 284.4 617.0 398.6 297.2 695.8 
Humulin®
219.0 102.7 321.7 214.1 101.5 315.7 
Jardiance (2)
151.2 160.8 312.0 144.6 122.9 267.5 
Basaglar®
175.2 71.4 246.6 230.4 73.3 303.7 
Other Diabetes66.3 94.9 161.4 74.0 82.9 156.8 
Total Diabetes2,061.2 1,049.9 3,111.1 1,991.2 977.7 2,968.9 
Oncology:
Alimta®
261.1 297.8 559.0 324.2 235.8 560.1 
Verzenio®
172.8 96.2 269.0 129.4 58.6 188.0 
Cyramza®
80.2 160.3 240.5 89.1 149.9 239.0 
Erbitux®
107.9 14.4 122.4 117.8 13.0 130.8 
Tyvyt®
 109.7 109.7  57.4 57.4 
Other Oncology20.5 51.3 71.6 (2.6)28.9 26.2 
Total Oncology642.5 729.7 1,372.2 657.9 543.6 1,201.5 
Immunology:
Taltz®
249.6 153.6 403.2 327.5 116.0 443.5 
Olumiant®
24.7 169.1 193.8 11.3 128.4 139.7 
Other Immunology10.5 6.4 16.9 2.6  2.6 
Total Immunology284.8 329.1 613.9 341.4 244.4 585.8 
Neuroscience:
Cymbalta®
11.0 165.7 176.6 11.6 198.8 210.4 
Emgality®
101.5 18.0 119.5 67.3 6.7 74.0 
Zyprexa®
6.9 88.9 95.8 11.2 87.2 98.4 
Other Neuroscience22.3 51.1 73.5 20.2 60.5 80.7 
Total Neuroscience141.7 323.7 465.4 110.3 353.2 463.5 
Other:
COVID-19 Antibodies (3)
650.6 159.5 810.1    
Forteo®
97.7 100.8 198.5 122.5 149.8 272.4 
Cialis®
8.6 118.1 126.8 26.1 167.0 193.0 
Other54.2 53.4 107.5 79.4 95.3 174.7 
Total Other811.1 431.8 1,242.9 228.0 412.1 640.1 
Revenue$3,941.3 $2,864.3 $6,805.6 $3,328.8 $2,531.0 $5,859.8 
Numbers may not add due to rounding.
(1) Humalog revenue includes insulin lispro.
(2) Jardiance revenue includes Glyxambi®, Synjardy®, and Trijardy® XR.
(3) COVID-19 antibodies include sales for bamlanivimab administered alone as well as sales for bamlanivimab and etesevimab administered together and were made pursuant to Emergency Use Authorizations (EUAs).

12


The following table summarizes revenue by geographical area:
Three Months Ended March 31,
20212020
Revenue—to unaffiliated customers (1):
U.S.$3,941.3 $3,328.8 
Europe1,321.2 1,061.0 
Japan571.8 592.3 
China362.2 267.3 
Other foreign countries609.1 610.4 
Revenue$6,805.6 $5,859.8 
Numbers may not add due to rounding.
(1) Revenue is attributed to the countries based on the location of the customer.

Note 3: Acquisitions
In January 2021 and February 2020, we completed the acquisitions of Prevail Therapeutics Inc. (Prevail) and Dermira, Inc. (Dermira), respectively. These transactions, as further discussed in this note below in Acquisitions of Businesses, were accounted for as business combinations under the acquisition method of accounting. Under this method, the assets acquired and liabilities assumed were recorded at their respective fair values as of the acquisition date in our consolidated condensed financial statements. The determination of estimated fair value required management to make significant estimates and assumptions. The excess of the purchase price over the fair value of the acquired net assets, where applicable, has been recorded as goodwill. The results of operations of these acquisitions are included in our consolidated condensed financial statements from the date of acquisition.
We also acquired assets in development which are further discussed in this note below in Asset Acquisitions. Upon each acquisition, the cost allocated to acquired in-process research and development (IPR&D) was immediately expensed because the compound had no alternative future use. We recognized $299.3 million and $52.3 million of acquired IPR&D charges for the three months ended March 31, 2021 and 2020, respectively.
Acquisitions of Businesses
Prevail Acquisition
Overview of Transaction
In January 2021, we acquired all shares of Prevail for a purchase price that included $22.50 per share in cash (or an aggregate of $747.4 million, net of cash acquired) plus one non-tradable contingent value right (CVR) per share. The CVR entitles Prevail stockholders to up to an additional $4.00 per share in cash (or an aggregate of approximately $160 million) payable, subject to certain terms and conditions, upon the first regulatory approval of a Prevail product in one of the following countries: U.S., Japan, United Kingdom, Germany, France, Italy or Spain. To achieve the full value of the CVR, such regulatory approval must occur by December 31, 2024. If such regulatory approval occurs after December 31, 2024, the value of the CVR will be reduced by approximately 8.3 cents per month until December 1, 2028, at which point the CVR will expire.
Prevail is a biotechnology company developing potentially disease-modifying AAV9-based gene therapies for patients with neurodegenerative diseases. The acquisition establishes a new modality for drug discovery and development, extending our research efforts through the creation of a gene therapy program that will be anchored by Prevail’s portfolio of assets. Prevail’s lead gene therapies in clinical development are PR001 for patients with Parkinson’s disease with GBA1 mutations and neuronopathic Gaucher disease and PR006 for patients with frontotemporal dementia with GRN mutations. Both PR001 and PR006 were granted Fast Track designation from the U.S. Food and Drug Administration (FDA).
13


Assets Acquired and Liabilities Assumed
Our access to Prevail information was limited prior to the acquisition. As a consequence, we are in the process of determining fair values and tax bases of a significant portion of the assets acquired and liabilities assumed, including the identification and valuation of intangible assets and tax exposures. The final determination of these amounts will be completed as soon as possible but no later than one year from the acquisition date. The final determination may result in asset and liability fair values and tax bases that differ from the preliminary estimates and require changes to the preliminary amounts recognized.
The following table summarizes the preliminary amounts recognized for assets acquired and liabilities assumed as of the acquisition date:
Estimated Fair Value at January 22, 2021
Cash$90.5 
Acquired IPR&D(1)
834.0
Goodwill(2)
111.0
Deferred tax liabilities(100.2)
Other assets and liabilities, net(31.5)
Acquisition date fair value of consideration transferred 903.8
Less:
     Cash acquired(90.5)
     Fair value of CVR liability(3)
(65.9)
Cash paid, net of cash acquired$747.4 
(1) Acquired IPR&D intangibles primarily relate to PR001.
(2) The goodwill recognized from this acquisition is not deductible for tax purposes.
(3) See Note 6 for a discussion on the estimation of the CVR liability.
Pro forma information has not been included as this acquisition did not have a material impact on our consolidated condensed statements of operations for the three months ended March 31, 2021 and 2020.
Dermira Acquisition
Overview of Transaction
In February 2020, we acquired all shares of Dermira for a purchase price of approximately $849.3 million, net of cash acquired. Under the terms of the agreement, we acquired lebrikizumab, a novel, investigational, monoclonal antibody being evaluated for the treatment of moderate-to-severe atopic dermatitis. Lebrikizumab was granted Fast Track designation from the FDA. We also acquired Qbrexza® (glycopyrronium) cloth, a medicated cloth approved by the FDA for the topical treatment of primary axillary hyperhidrosis (uncontrolled excessive underarm sweating). During the three months ended March 31, 2021, we decided to sell the rights to Qbrexza. See Note 5 for additional information.
Assets Acquired and Liabilities Assumed
The fair values recognized related to the assets acquired and liabilities assumed in this acquisition included goodwill of $86.8 million, other intangibles of $1.20 billion primarily related to lebrikizumab, deferred income tax liabilities of $49.5 million, and long-term debt of $375.5 million. After the acquisition, we repaid $276.2 million of long-term debt assumed as part of our acquisition of Dermira.

14


Asset Acquisitions
The following table summarizes our asset acquisitions during the three months ended March 31, 2021 and 2020:
CounterpartyCompound(s) or TherapyAcquisition Month
Phase of Development (1)
Acquired IPR&D Expense
Precision Biosciences, Inc. Research and development of potential in vivo therapies for genetic disordersJanuary 2021Pre-clinical$107.8 
Merus N.V. CD3-engaging T-cell re-directing bispecific antibodies for the potential treatment of cancerJanuary 2021Pre-clinical46.5 
Asahi Kasei Pharma CorporationAK1780, an orally bioavailable P2X7 receptor antagonist for the potential treatment of chronic pain conditionsJanuary 2021Phase I20.0 
Rigel Pharmaceuticals, Inc.R552, a receptor-interacting serine/threonine-protein kinase 1 (RIPK1) inhibitor, for the potential treatment of autoimmune and inflammatory diseasesMarch 2021Phase I125.0 
Sitryx Therapeutics LimitedPre-clinical targets that could lead to potential new medicines for autoimmune diseasesMarch 2020Pre-clinical52.3 
AbCellera Biologics Inc. (AbCellera)(2)
Neutralizing antibodies for the treatment and prevention of COVID-19March 2020Pre-clinical25.0 
(1) The phase of development presented is as of the date of the arrangement and represents the phase of development of the most advanced asset acquired, where applicable.
(2) We recognized an acquired IPR&D expense of $25.0 million in May 2020 upon closing of the transaction.
In connection with these arrangements, our partners may be entitled to future royalties and/or commercial milestones based on sales should products be approved for commercialization and/or milestones based on the successful progress of compounds through the development process.
Note 4: Collaborations and Other Arrangements
We often enter into collaborative and other similar arrangements to develop and commercialize drug candidates. Collaborative activities may include research and development, marketing and selling (including promotional activities and physician detailing), manufacturing, and distribution. These arrangements often require milestone as well as royalty or profit-share payments, contingent upon the occurrence of certain future events linked to the success of the asset in development, as well as expense reimbursements from or payments to the collaboration partner. See Note 2 for amounts of collaboration and other revenue recognized from these types of arrangements.
Operating expenses for costs incurred pursuant to these arrangements are reported in their respective expense line item, net of any payments due to or reimbursements due from our collaboration partners, with such reimbursements being recognized at the time the party becomes obligated to pay. Each collaboration is unique in nature, and our more significant arrangements are discussed below.
Boehringer Ingelheim Diabetes Collaboration
We and Boehringer Ingelheim have a global agreement to jointly develop and commercialize a portfolio of diabetes compounds. Currently included in the collaboration are Boehringer Ingelheim’s oral diabetes products: Jardiance, Glyxambi, Synjardy, Trijardy® XR, Trajenta, and Jentadueto® as well as our basal insulin, Basaglar. Glyxambi, Synjardy, and Trijardy XR are included in the Jardiance product family. Jentadueto is included in the Trajenta product family.
15


The table below summarizes the net amount of significant milestones (deferred) capitalized at March 31, 2021 and December 31, 2020 for the compounds included in this collaboration:
Net Milestones (Deferred) Capitalized (1) as of:
Product FamilyMarch 31, 2021December 31, 2020
Jardiance (2)
$151.2 $156.2 
Trajenta (3)
108.1 114.6 
Basaglar(163.3)(168.0)
(1) In connection with the regulatory approvals of Basaglar in the U.S., Europe, and Japan, milestone payments received were recorded as contract liabilities and are being amortized through the term of the collaboration (2029) to collaboration and other revenue. In connection with the regulatory approvals of Jardiance and Trajenta, milestone payments made were capitalized as intangible assets and are being amortized to cost of sales through the term of the collaboration. This represents the amounts that have been (deferred) or capitalized from the start of this collaboration through the end of the reporting period, net of amount amortized.
(2) The collaboration agreement with Boehringer Ingelheim for Jardiance ends upon expiration of the compound patent and any supplementary protection certificates or extensions thereto.
(3) The collaboration agreement with Boehringer Ingelheim for Trajenta ends upon expiration of the compound patent and any supplementary protection certificates or extensions thereto.
For the Jardiance product family, we and Boehringer Ingelheim share equally the ongoing development and commercialization costs in the most significant markets, and we record our portion of the development and commercialization costs as research and development expense and marketing, selling, and administrative expense, respectively. We receive a royalty on net sales of Boehringer Ingelheim's products in the most significant markets and recognize the royalty as collaboration and other revenue. Boehringer Ingelheim is entitled to potential performance payments depending on the net sales of the Jardiance product family; therefore, our reported revenue for Jardiance may be reduced by any potential performance payments we make related to this product family. Beginning January 1, 2021, the royalty received by us related to the Jardiance product family may also be increased or decreased depending on whether net sales for this product family exceed or fall below certain thresholds. We pay to Boehringer Ingelheim a royalty on net sales for Basaglar in the U.S. We record our sales of Basaglar to third parties as net product revenue with the royalty payments made to Boehringer Ingelheim recorded as cost of sales.
The following table summarizes our net product revenue recognized with respect to Basaglar and collaboration and other revenue recognized with respect to the Jardiance and Trajenta families of products:
Three Months Ended March 31,
Product Family20212020
Jardiance$