What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2021-02-03 compared with 2020-02-06 · 999 added, 908 removed, 1925 unchanged (50% of the section changed)

3 unchanged sentences

We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of December 31, 2020.

Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that (a) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(a) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S.

Securities and Exchange Commission's rules and forms;

(b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

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Based on our assessment, our management has concluded that, as of December 31, 2020, our internal control over financial reporting is effective based on those criteria.

The effectiveness of our internal control over financial reporting as of December 31, 2019 , has been audited by PricewaterhouseCoopers LLP, an

independent registered public accounting firm, as stated in their attestation report, which is included herein.

The effectiveness of our internal control over financial reporting as of December 31, 2020, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein.

Other Information

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The following financial statements are filed as part of this report:

Financial Statements

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Equity

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Financial Statements Page Number

Consolidated Statements of Income F-2

Consolidated Statements of Comprehensive Income F-3

Consolidated Balance Sheets F-4

Consolidated Statements of Cash Flows F-5

Consolidated Statements of Equity F-6

Notes to Consolidated Financial Statements F-9

Report of Independent Registered Public Accounting Firm F-79

Certain totals may not sum due to rounding.

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Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on June 9, 2017.

4.1 Second Supplemental Indenture, dated April 30, 2020, between Biogen Inc.

Bank National Association, including the forms of Global Notes attached as Exhibit A and Exhibit B, respectively, thereto.

Filed as Exhibit 4.2 to our Current Report on Form 8-K filed on April 30, 2020.

4.1 Reference is made to Exhibit 3.1 for a description of the rights, preferences and privileges of our Series A Preferred Stock and Series X Junior Participating Preferred Stock.

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Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 1, 2017.

10.6* Biogen Inc.

2017 Omnibus Equity Plan.

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Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2010.

10.25* Biogen Inc.

2006 Non-Employee Directors Equity Plan, as amended.

Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.

10.26* Biogen Inc.

2015 Employee Stock Purchase Plan.

3 unchanged sentences

Filed as Appendix B to our Definitive Proxy Statement on Schedule 14A filed on May 8, 2008.

10.28* Biogen Inc.

2019 Form of Performance-Based Management Incentive Plan.

9 unchanged sentences

Filed as Exhibit 10.24 to our Annual Report on Form 10-K for the year ended December 31, 2015.

10.32* Biogen Inc.

Executive Severance Policy - U.S.

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Filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

Annual Retainer Summary for Board of Directors.

Filed as Exhibit 10.31 to our Annual Report on Form 10-K for the year ended December 31, 2018.

10.33* Biogen Inc.

Executive Severance Policy - U.S.

Executive Vice President, as ame nded effective July 13, 2020 .

Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

10.34* Annual Retainer Summary for Board of Directors (effective January 1, 2020).

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Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on December 19, 2016.

10.37* Letter regarding employment arrangement of Michael McDonnell dated July 16, 2020.

Filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

10.38* Letter regarding employment arrangement of Susan Alexander dated December 13, 2005.

Filed as Exhibit 10.58 to our Annual Report on Form 10-K for the year ended December 31, 2009.

10.39* Letter regarding employment arrangement of Alfred W.

Sandrock, Jr.

dated May 7, 2013.

Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.

10.40* Letter regarding employment arrangement of Alfred Sandrock dated October 19, 2015.

Filed as Exhibit 10.37 to our Annual Report on Form 10-K for the year ended December 31, 2015.

10.41*+ Letter regarding employment arrangement of Chirfi Guindo dated October 12, 2017.

10.42* Letter regarding employment arrangement of Jeffrey Capello dated November 14, 2017.

Filed as Exhibit 10.31 to our Annual Report on Form 10-K for the year ended December 31, 2017.

10.43* Separation Agreement between Biogen Inc.

and Jeffrey Capello dated July 16, 2020.

Filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.

10.44* Letter regarding employment arrangement of Michael Ehlers dated April 16, 2016.

Filed as Exhibit 10.33 to our Annual Report on Form 10-K for the year ended December 31, 2017.

Letter regarding employment arrangement of Susan Alexander dated December 13, 2005.

Filed as Exhibit 10.58 to our Annual Report on Form 10-K for the year ended December 31, 2009.

Letter regarding employment arrangement for Paul McKenzie dated December 14, 2015.

Filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

21+ Subsidiaries.

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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name Capacity Date

/ S / M ICHEL V OUNATSOS

Director and Chief Executive Officer (principal executive officer)

February 6, 2020

Director and Chief Executive Officer (principal executive officer) February 3, 2021

Michel Vounatsos

/ S / J EFFREY D .

Executive Vice President and Chief Financial Officer (principal financial officer)

February 6, 2020

/ S / M ICHAEL R.

Executive Vice President and Chief Financial Officer (principal financial officer) February 3, 2021

/ S / R OBIN C.

Vice President, Chief Accounting Officer (principal accounting officer)

February 6, 2020

Senior Vice President, Chief Accounting Officer (principal accounting officer) February 3, 2021

/ S / S TELIOS P APADOPOULOS

Director and Chairman of the Board of Directors

February 6, 2020

Director and Chairman of the Board of Directors February 3, 2021

Stelios Papadopoulos

/ S / A LEXANDER J .

February 6, 2020

Director February 3, 2021

/ S / C AROLINE D.

February 6, 2020

Director February 3, 2021

/ S / W ILLIAM A.

February 6, 2020

Director February 3, 2021

/ S / N ANCY L.

February 6, 2020

Director February 3, 2021

/ S / J ESUS B.

February 6, 2020

Director February 3, 2021

/ S / R ICHARD C .

February 6, 2020

Director February 3, 2021

/ S / R OBERT W.

February 6, 2020

Director February 3, 2021

/ S / B RIAN S.

February 6, 2020

Director February 3, 2021

/ S / E RIC K.

February 6, 2020

/ S / L YNN S CHENK

February 6, 2020

Director February 3, 2021

/ S / S TEPHEN A.

February 6, 2020

Director February 3, 2021

AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Statements of Income

Consolidated Statements of Comprehensive Income

Consolidated Balance Sheets

Consolidated Statements of Cash Flows

Consolidated Statements of Equity

Notes to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Income F-2

Consolidated Statements of Comprehensive Income F-3

Consolidated Balance Sheets F-4

Consolidated Statements of Cash Flows F-5

Consolidated Statements of Equity F-6

Notes to Consolidated Financial Statements F-9

Report of Independent Registered Public Accounting Firm F-80

AND SUBSIDIARIES

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For the Years Ended December 31,

2020 2019 2018

Product, net $ 10,692.2 $ 11,379.8 $ 10,886.8

Revenues from anti-CD20 therapeutic programs 1,977.8 2,290.4 1,980.2

Other 774.6 707.7 585.9

Total revenues 13,444.6 14,377.9 13,452.9

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Collaboration profit (loss) sharing 232.9 241.6 185.0

Loss on divestiture of Hillerød, Denmark manufacturing operations

(Gain) loss on divestiture of Hillerød, Denmark manufacturing operations ( 92.5 ) 55.3 —

(Gain) loss on fair value remeasurement of contingent consideration ( 86.3 ) ( 63.7 ) ( 12.3 )

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Income tax expense 992.3 1,158.0 1,425.6

Equity in loss of investee, net of tax

Equity in (income) loss of investee, net of tax ( 5.3 ) 79.4 —

Net income 4,060.5 5,888.5 4,474.0

Net income (loss) attributable to noncontrolling interests, net of tax 59.9 — 43.3

Net income attributable to Biogen Inc.

$ 4,000.6 $ 5,888.5 $ 4,430.7

Net income per share:

Basic earnings per share attributable to Biogen Inc.

$ 24.86 $ 31.47 $ 21.63

Diluted earnings per share attributable to Biogen Inc.

$ 24.80 $ 31.42 $ 21.58

Weighted-average shares used in calculating:

Basic earnings per share attributable to Biogen Inc.

160.9 187.1 204.9

Diluted earnings per share attributable to Biogen Inc.

161.3 187.4 205.3

See accompanying notes to these consolidated financial statements.

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For the Years Ended December 31,

2020 2019 2018

Net income attributable to Biogen Inc.

$ 4,000.6 $ 5,888.5 $ 4,430.7

Other comprehensive income:

Unrealized gains (losses) on securities available for sale:

Unrealized gains (losses) recognized during the period, net of tax

reclassification adjustment for (gains) losses included in net income, net of tax

Unrealized gains (losses) on securities available for sale, net of tax ( 2.8 ) 8.2 ( 3.9 )

Unrealized gains (losses) on cash flow hedges:

Unrealized gains (losses) recognized during the period, net of tax

reclassification adjustment for (gains) losses included in net income, net of tax

Unrealized gains (losses) on cash flow hedges, net of tax ( 186.8 ) ( 26.9 ) 139.2

Gains (losses) on net investment hedges:

Gains (losses) recognized during the period, net of tax

reclassification adjustment for (gains) losses included in net income, net of tax

Gains (losses) on net investment hedges, net of tax ( 33.6 ) 21.6 3.5

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Comprehensive income attributable to Biogen Inc.

3,836.8 5,993.7 4,507.2

Comprehensive income (loss) attributable to noncontrolling interests, net of tax 60.9 ( 0.4 ) 42.9

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Due from anti-CD20 therapeutic programs 413.5 590.2

Inventory 1,068.6 804.2

Other current assets 881.1 631.0

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Intangible assets, net 3,084.3 3,527.4

Goodwill 5,762.1 5,757.8

Deferred tax asset 1,369.5 3,232.1

Investments and other assets 2,899.0 1,252.8

Total assets $ 24,618.9 $ 27,234.3

LIABILITIES AND EQUITY

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Total liabilities 13,932.8 13,895.2

Commitments and contingencies

Commitments, contingencies and guarantees (Notes 21 and 22)

shareholders’ equity

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Noncontrolling interests ( 14.2 ) ( 4.1 )

Total equity 10,686.1 13,339.1

Total liabilities and equity $ 24,618.9 $ 27,234.3

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For the Years Ended December 31,

2020 2019 2018

Cash flows from operating activities:

Net income $ 4,060.5 $ 5,888.5 $ 4,474.0

Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation, amortization and impairments

Depreciation and amortization 457.2 464.7 650.5

Impairment of intangible assets 209.7 215.9 366.1

Acquired in-process research and development 75.0 — 112.5

Share-based compensation 198.3 182.3 157.5

Deferred income taxes

Contingent consideration ( 86.3 ) ( 63.7 ) ( 12.3 )

Loss on divestiture of Hillerød, Denmark manufacturing operations

(Gain)/loss on divestiture of Hillerod, Denmark manufactuing operations ( 92.5 ) 55.3 —

Deferred income taxes 149.0 67.1 108.3

Unrealized (gain) loss on strategic investments ( 681.8 ) ( 147.3 ) ( 124.8 )

Loss on equity method investment ( 3.3 ) 77.4 —

Other 131.2 139.1 55.7

Changes in operating assets and liabilities, net:

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Due from anti-CD20 therapeutic programs 176.7 ( 63.3 ) 5.7

Inventory ( 316.3 ) ( 19.2 ) ( 52.1 )

Accrued expenses and other current liabilities 154.2 240.2 465.5

Income tax assets and liabilities ( 67.5 ) 16.1 321.7

Other liabilities

Other changes in operating assets and liabilities, net ( 137.1 ) ( 43.3 ) ( 135.4 )

Net cash flows provided by operating activities 4,229.8 7,078.6 6,187.7

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Purchases of marketable securities ( 6,397.7 ) ( 5,252.6 ) ( 7,694.8 )

Contingent consideration related to Fumapharm AG acquisition

Contingent consideration paid related to Fumapharm AG acquisition — ( 300.0 ) ( 1,500.0 )

Acquisition of Nightstar Therapeutics plc, net of cash acquired — ( 744.4 ) —

Proceeds from divestiture of Hillerød, Denmark manufacturing operations

Acquired in-process research and development

Purchase of Ionis Pharmaceuticals, Inc.

stock — — ( 462.9 )

Purchase of Sangamo Therapeutics, Inc.

stock ( 141.8 ) — —

Purchase of Denali Therapeutics Inc.

stock ( 423.7 ) — —

Purchase of Sage Therapeutics, Inc.

stock ( 441.0 ) — —

Proceeds from divesiture of Hillerod, Denmark manufacturing operations — 923.7 —

Purchases of property, plant and equipment ( 424.8 ) ( 514.5 ) ( 770.6 )

Acquired in-process research and development ( 75.0 ) — ( 112.5 )

Acquisitions of intangible assets ( 52.0 ) ( 155.0 ) ( 3.0 )

Purchase of Ionis Pharmaceuticals, Inc.

Investment in Samsung Bioepis — — ( 676.6 )

Proceeds from sales of strategic investments 74.9 479.3 —

Other ( 26.9 ) 27.0 0.4

Net cash flows provided by (used in) investing activities ( 608.6 ) 470.5 ( 2,046.3 )

Cash flows from financing activities:

Purchases of treasury stock

Net contribution (distribution) to noncontrolling interests

Purchase of treasury stock ( 6,679.1 ) ( 5,868.3 ) ( 4,352.6 )

Payments related to issuance of stock for share-based compensation arrangements, net ( 4.6 ) — —

Proceeds from borrowings 2,967.4 — —

Repayments of borrowings ( 1,500.0 ) — ( 3.2 )

Net cash contribution to Bioverativ, Inc.

Net contribution (distribution) to noncontrolling interest ( 71.0 ) 4.3 ( 36.4 )

Contingent consideration payments — — ( 58.2 )

Other 14.6 3.6 ( 21.6 )

Net cash flows (used in) financing activities ( 5,272.7 ) ( 5,860.4 ) ( 4,472.0 )

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(In millions)

Preferred stock

Preferred stock Common stock Additional

capital Accumulated

comprehensive

Treasury stock

loss Retained

earnings Treasury stock Total

shareholders’

Noncontrolling

equity Noncontrolling

interests Total

Shares Amount Shares Amount Shares Amount

Balance, December 31, 2019 — $ — 198.0 $ 0.1 $ — $ ( 135.2 ) $ 16,455.4 ( 23.8 ) $ ( 2,977.1 ) $ 13,343.2 $ ( 4.1 ) $ 13,339.1

Net income — — — — — — 4,000.6 — — 4,000.6 59.9 4,060.5

Other comprehensive income (loss), net of tax — — — — — ( 163.8 ) — — — ( 163.8 ) 1.0 ( 162.8 )

Capital contribution by noncontrolling interest

Repurchase of common stock pursuant to the March 2019 Share Repurchase Program, at cost

Retirement of common stock pursuant to the March 2019 Share Repurchase Program, at cost

Distribution to noncontrolling interest — — — — — — — — — — ( 75.0 ) ( 75.0 )

Capital contribution from noncontrolling interest — — — — — — — — — — 4.0 4.0

Repurchase of common stock pursuant to the 2020 Share Repurchase Program, at cost — — — — — — — ( 1.6 ) ( 400.0 ) ( 400.0 ) — ( 400.0 )

Retirement of common stock pursuant to the 2020 Share Repurchase Program, at cost — — ( 1.6 ) — ( 60.8 ) — ( 339.2 ) 1.6 400.0 — — —

Repurchase of common stock pursuant to the December 2019 Share Repurchase Program, at cost — — — — — — — ( 16.7 ) ( 5,000.0 ) ( 5,000.0 ) — ( 5,000.0 )

Retirement of common stock pursuant to the December 2019 Share Repurchase Program, at cost — — ( 16.7 ) — ( 121.3 ) — ( 4,878.7 ) 16.7 5,000.0 — — —

Repurchase of common stock pursuant to the March 2019 Share Repurchase Program, at cost — — — — — — — ( 4.1 ) ( 1,279.1 ) ( 1,279.1 ) — ( 1,279.1 )

Retirement of common stock pursuant to the March 2019 Share Repurchase Program, at cost — — ( 4.1 ) — ( 71.0 ) — ( 1,208.1 ) 4.1 1,279.1 — — —

Issuance of common stock under stock option and stock purchase plans — — 0.2 — 49.3 — — — — 49.3 — 49.3

Issuance of common stock under stock award plan — — 0.4 — — — ( 53.7 ) — — ( 53.7 ) — ( 53.7 )

Compensation related to share-based payments

Compensation expense related to share-based payments — — — — 204.5 — — — — 204.5 — 204.5

Other — — — ( 0.7 ) — — — — ( 0.7 ) — ( 0.7 )

Balance, December 31, 2020 — $ — 176.2 $ 0.1 $ — $ ( 299.0 ) $ 13,976.3 ( 23.8 ) $ ( 2,977.1 ) $ 10,700.3 $ ( 14.2 ) $ 10,686.1

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(In millions)

Preferred stock

Preferred stock Common stock Additional

capital Accumulated

comprehensive

Treasury stock

loss Retained

earnings Treasury stock Total

shareholders’

Noncontrolling

equity Noncontrolling

interests Total

Shares Amount Shares Amount Shares Amount

Balance, December 31, 2018 — $ — 221.0 $ 0.1 $ — $ ( 240.4 ) $ 16,257.0 ( 23.8 ) $ ( 2,977.1 ) $ 13,039.6 $ ( 8.0 ) $ 13,031.6

Net income — — — — — — 5,888.5 — — 5,888.5 — 5,888.5

Other comprehensive income (loss), net of tax — — — — — 105.2 — — — 105.2 ( 0.4 ) 104.8

Capital contribution by noncontrolling interests

Distribution to noncontrolling interests

Repurchase of common stock pursuant to the 2018 Share Repurchase Program, at cost

Retirement of common stock pursuant to the 2018 Share Repurchase Program, at cost

Capital contribution from noncontrolling interest — — — — — — — — — — 4.3 4.3

Repurchase of common stock pursuant to the March 2019 Share Repurchase Program, at cost — — — — — — — ( 14.7 ) ( 3,720.9 ) ( 3,720.9 ) — ( 3,720.9 )

Retirement of common stock pursuant to the March 2019 Share Repurchase Program, at cost — — ( 14.7 ) — ( 121.5 ) — ( 3,599.4 ) 14.7 3,720.9 — — —

Repurchase of common stock pursuant to the 2018 Share Repurchase Program, at cost — — — — — — — ( 8.9 ) ( 2,147.4 ) ( 2,147.4 ) — ( 2,147.4 )

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Compensation related to share-based payments — — — — 191.2 — — — — 191.2 — 191.2

Adoption of new accounting guidance

Balance, December 31, 2019 — $ — 198.0 $ 0.1 $ — $ ( 135.2 ) $ 16,455.4 ( 23.8 ) $ ( 2,977.1 ) $ 13,343.2 $ ( 4.1 ) $ 13,339.1

3 unchanged sentences

(In millions)

Preferred stock

Preferred stock Common stock Additional

capital Accumulated

comprehensive

Treasury stock

loss Retained

earnings Treasury stock Total

shareholders’

Noncontrolling

equity Noncontrolling

interests Total

Shares Amount Shares Amount Shares Amount

Balance, December 31, 2017 — $ — 235.3 $ 0.1 $ 97.8 $ ( 318.4 ) $ 15,810.4 ( 23.8 ) $ ( 2,977.1 ) $ 12,612.8 $ ( 14.7 ) $ 12,598.1

Other comprehensive income, net of tax

Capital contribution to noncontrolling interests

Net income — — — — — — 4,430.7 — — 4,430.7 43.3 4,474.0

Other comprehensive income (loss), net of tax — — — — — 76.5 — — — 76.5 ( 0.4 ) 76.1

Capital contribution from noncontrolling interests — — — — — — — — — — 13.8 13.8

Distribution to noncontrolling interests — — — — — — — — — — ( 50.0 ) ( 50.0 )

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Repurchase of common stock pursuant to the 2016 Share Repurchase Program, at cost — — — — — — — ( 10.5 ) ( 3,000.0 ) ( 3,000.0 ) — ( 3,000.0 )

Retirement of common stock pursuant to the 2016 Share Repurchase Program, at cost — — ( 10.5 ) — ( 171.1 ) — ( 2,828.9 ) 10.5 3,000.0 — — —

Issuance of common stock under stock option and stock purchase plans — — 0.2 — 41.2 — — — — 41.2 — 41.2

Issuance of common stock under stock award plan — — 0.3 — ( 43.8 ) — — — — ( 43.8 ) — ( 43.8 )

Compensation related to share-based payments

Hemophilia spin-off adjustment

Compensation expense related to share-based payments — — — — 168.7 — — — — 168.7 — 168.7

Adoption of new accounting guidance — — — — — 1.5 104.6 — — 106.1 — 106.1

Balance, December 31, 2018 — $ — 221.0 $ 0.1 $ — $ ( 240.4 ) $ 16,257.0 ( 23.8 ) $ ( 2,977.1 ) $ 13,039.6 $ ( 8.0 ) $ 13,031.6

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Our core growth areas include multiple sclerosis (MS) and neuroimmunology;

Alzheimer’s disease (AD) and dementia;

Alzheimer’s disease and dementia;

neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis (ALS);

movement disorders, including Parkinson's disease;

and ophthalmology.

ophthalmology;

and neuropsychiatry.

We are also focused on discovering, developing and delivering worldwide innovative therapies in our emerging growth areas of immunology;

neurocognitive disorders;

acute neurology;

and neuropathic pain.

In addition, we commercialize biosimilars of advanced biologics.

We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities.

Our marketed products include TECFIDERA, AVONEX, PLEGRIDY, TYSABRI, VUMERITY and FAMPYRA for the treatment of MS;

Our marketed products include TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS;

SPINRAZA for the treatment of SMA;

and FUMADERM for the treatment of severe plaque psoriasis.

We also have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions;

We have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions;

RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL;

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For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

Our innovative drug development and commercialization activities are complemented by our biosimilar business that expands access to medicines and reduce the cost burden for healthcare systems.

Through Samsung Bioepis Co., Ltd.

Our innovative drug development and commercialization activities are complemented by our biosimilar business that expands access to medicines and reduces the cost burden for healthcare systems.

Through our agreements with Samsung Bioepis Co., Ltd.

(Samsung Bioepis), our joint venture with Samsung BioLogics Co., Ltd.

(Samsung BioLogics), we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe and have exclusive rights to commercialize these products in China.

Additionally, we have exclusive rights to commercialize two potential ophthalmology biosimilar products, SB11 referencing LUCENTIS and SB15 referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia.

(Samsung BioLogics), we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe and have an option to acquire exclusive rights to commercialize these products in China.

Additionally, we have exclusive rights to commercialize two potential ophthalmology biosimilar products, SB11, a proposed ranibizumab biosimilar referencing LUCENTIS, and SB15, a proposed aflibercept biosimilar referencing EYLEA, in major markets worldwide, including the United States (U.S.), Canada, Europe, Japan and Australia.

For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

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Actual results may differ from these estimates.

The length of time and full extent to which the COVID-19 pandemic directly or indirectly impacts our business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, clinical trials, research and development costs and employee-related amounts, depends on future developments that are highly uncertain, subject to change and are difficult to predict, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19 as well as the economic impact on local, regional, national and international customers and markets.

We have made estimates of the impact of COVID-19 within our condensed consolidated financial statements and there may be changes to those estimates in future periods.

Revenue Recognition

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The adoption of this standard as of January 1, 2018, did not change our revenue recognition.

W e recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

We recognize revenues when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services.

We recognize revenues following the five-step model prescribed under the FASB Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers :

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Product Revenues

In the United States (U.S.), we sell our products primarily to wholesale distributors and specialty pharmacy providers.

In the U.S., we sell our products primarily to wholesale distributors and specialty pharmacy providers.

In other countries, we sell our products primarily to wholesale distributors, hospitals, pharmacies and other third-party distribution partners.

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discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer).

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

is payable to a party other than our customer).

Our estimates of reserves established for variable consideration are calculated based upon a consistent application of our methodology utilizing the expected value method.

3 unchanged sentences

If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Discounts include trade term discounts and wholesaler incentives.

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We determine these reserves based on our historical experience, including the timing of customer payments.

Contractual adjustments primarily relate to Medicaid and managed care rebates, co-payment (copay) assistance, Veterans Administration (VA) and Public Health Service (PHS) discounts, specialty pharmacy program fees and other governmental rebates or applicable allowances.

Contractual adjustments primarily relate to Medicaid and managed care rebates, pharmacy rebates, co-payment (copay) assistance, Veterans Administration (VA) and Public Health Service (PHS) discounts, specialty pharmacy program fees and other governmental rebates or applicable allowances.

• Medicaid rebates relate to our estimated obligations to states under established reimbursement arrangements.

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These rebates result from performance-based goals, formulary position and price increase limit allowances (price protection).

The calculation of the accrual for these rebates is based on an estimate of the customer’s buying patterns and the resulting applicable contractual rebate rate(s) to be earned over a contractual period.

The calculation of the accrual for these rebates is based on an estimate of the coverage patterns and the resulting applicable contractual rebate rate(s) to be earned over a contractual period.

• Copay assistance represents financial assistance to qualified patients, assisting them with prescription drug co-payments required by insurance.

The calculation of the accrual for copay is based on an estimate of claims and the cost per claim that we expect to receive associated with inventory that exists in the distribution channel at period end.

• Pharmacy rebates represent our estimated obligations resulting from contractual commitments to sell products to specific pharmacies.

Rebate accruals are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability which is included in accrued expenses and other current liabilities.

These rebates result from contracted discounts on product purchased or product dispensed.

The calculation of the accrual for these rebates is based on an

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estimate of the pharmacy’s buying or dispensing patterns and the resulting applicable contractual rebate rate(s) to be earned over the contractual period.

• Other governmental rebates, non-U.S.

pharmaceutical taxes or applicable allowances primarily relate to mandatory rebates and discounts in international markets where government-sponsored healthcare systems are the primary payors for healthcare.

Product returns are established for returns expected to be made by wholesalers and are recorded in the period the related revenue is recognized, resulting in a reduction to product revenues.

Product return reserves are established for returns expected to be made by wholesalers and are recorded in the period the related revenue is recognized, resulting in a reduction to product revenues.

In accordance with contractual terms, wholesalers are permitted to return product for reasons such as damaged or expired product.

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In addition to discounts, rebates and product returns, we also maintain certain customer service contracts with distributors and other customers in the distribution channel that provide us with inventory management, data and distribution services, which are generally reflected as a reduction of revenues.

To the extent we can demonstrate a

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separable benefit and fair value for these services we classify these payments in selling, general and administrative expenses.

To the extent we can demonstrate a separable benefit and fair value for these services we classify these payments in selling, general and administrative expenses.

Revenues from Anti-CD20 Therapeutic Programs

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Revenues from anti-CD20 therapeutic programs consist of:

our share of pre-tax profits and losses in the U.S.

(i) our share of pre-tax profits and losses in the U.S.

for RITUXAN and GAZYVA;

other revenues from anti-CD20 therapeutic programs, which primarily consist of our share of pre-tax co-promotion profits on RITUXAN in Canada and royalty revenues on sales of OCREVUS.

Pre-tax co-promotion profits on RITUXAN and GAZYVA are calculated and paid to us by Genentech in the U.S.

Pre-tax co-promotion profits on RITUXAN are calculated and paid to us by the Roche Group in Canada.

Pre-tax co-promotion profits consist of U.S.

and Canadian net sales to third-party customers less applicable costs to manufacture, third-party royalty expenses, distribution, selling and marketing expenses and joint development expenses incurred by Genentech and the Roche Group.

Our share of the pre-tax profits on RITUXAN and GAZYVA in the U.S.

and pre-tax co-promotion profits on RITUXAN in Canada include estimates that are based on information received from Genentech and Roche.

(ii) other revenues from anti-CD20 therapeutic programs, which primarily consist of our share of pre-tax co-promotion profits on RITUXAN in Canada and royalty revenues on sales of OCREVUS.

Pre-tax co-promotion profits on RITUXAN and GAZYVA are calculated and paid to us by Genentech and the Roche Group.

Pre-tax co-promotion profits consist of net sales to third-party customers less applicable costs to manufacture, third-party royalty expenses, distribution, selling and marketing expenses and joint development expenses incurred by Genentech and the Roche Group.

Our share of the pre-tax profits on RITUXAN and GAZYVA include estimates that are based on information received from Genentech and the Roche Group.

These estimates are subject to change and actual results may differ.

We recognize royalty revenues on sales of OCREVUS based on our estimates from third party and market research data of OCREVUS sales occurring during the corresponding period.

Differences between actual and estimated royalty revenues will be adjusted for in the period in which they become known, which is generally expected to be the following quarter.

For additional information on our relationship with Genentech, please read Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

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Royalty Revenues

We receive royalty revenues on sales by our licensees of products covered under patents that we own.

We do not have future performance obligations under these license arrangements.

We record these revenues based on estimates of the sales that occurred during the relevant period as a component of other revenues.

The relevant period estimates of sales are based on interim data provided by licensees and other third parties and analysis of historical royalties that have been paid to us, adjusted for any changes in facts and circumstances, as appropriate.

Differences between actual and estimated royalty revenues are adjusted for in the period in which they become known, typically the following quarter.

Historically, adjustments have not been material when compared to actual amounts paid by licensees.

We recognize royalty revenues related to sales by our licensees of products covered under patents that we own.

Collaborative and Other Relationships

We have a number of significant collaborative and other third-party relationships for revenues and for the development, regulatory approval, commercialization and marketing of certain of our products and product candidates.

Where we are the principal on sales transactions with third parties, we recognize revenues, cost of sales and operating expenses on a gross basis in their respective lines in our consolidated statements of income.

Where we are the principal on sales transactions with third parties, we recognize revenues, cost of sales

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and operating expenses on a gross basis in their respective lines in our consolidated statements of income.

Where we are not the principal on sales transactions with third parties, we record our share of the revenues, cost of sales and operating expenses on a net basis in collaborative and other relationships included in other revenues in our consolidated statements of income.

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For additional information on our collaboration arrangements with Genentech and Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

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Other Corporate Revenues

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As of December 31, 2020 and 2019, cash equivalents were comprised of money market funds, commercial paper, overnight reverse repurchase agreements and other debt securities with maturities less than 90 days from the date of purchase.

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Accounts Receivable

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The related receivables are classified at the time of sale as non-current assets.

We accrete interest

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income on these receivables, which is recorded as a component of other income (expense), net in our consolidated statements of income.

We accrete interest income on these receivables, which is recorded as a component of other income (expense), net in our consolidated statements of income.

We provide reserves against accounts receivable for estimated losses that may result from a customer's inability to pay.

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The underlying investments of the venture capital funds in which we invest are in equity securities of certain biotechnology companies and are included in investments and other assets in our consolidated balance sheets.

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Non-Marketable Equity Securities

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We conduct periodic reviews to identify and evaluate each investment that has an unrealized loss, in accordance with the meaning of other-than-temporary impairment.

An unrealized loss exists when the current fair

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value of an individual security is less than its amortized cost basis.

An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis.

Unrealized losses on available-for-sale debt securities that are determined to be temporary, and not related to credit loss, are recorded, net of tax, in accumulated other comprehensive income.

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Finally, we consider the reimbursement strategies that may prevail with respect to the product and assess the economic benefit that we are likely to realize.

We expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or significant delay of approval by necessary regulatory bodies.

We expense previously capitalized costs related to pre-approval

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inventory upon a change in such judgment, due to, among other potential factors, a denial or significant delay of approval by necessary regulatory bodies.

At December 31, 2020, we capitalized approximately $ 93.8 million of pre-launch inventory for aducanumab, an anti-amyloid beta antibody candidate for the potential treatment of Alzheimer's disease that we are developing in collaboration with Eisai Co., Ltd.

If aducanumab does not receive regulatory approval in the U.S., we would expense this inventory as research and development expense and, under the terms of our collaboration agreement with Eisai to jointly develop and commercialize aducanumab, Eisai would reimburse us for 45.0 % of the costs.

Obsolescence and Unmarketable Inventory

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In the event that certain batches or units of product no longer meet quality specifications, we will record a charge to cost of sales to write-down any unmarketable inventory to its estimated net realizable value.

In all cases, product inventory is carried at the lower of

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cost or its estimated net realizable value.

In all cases, product inventory is carried at the lower of cost or its estimated net realizable value.

Amounts written-down due to unmarketable inventory are charged to cost of sales.

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We generally depreciate or amortize the cost of our property, plant and equipment using the straight-line method over the estimated useful lives of the respective assets, which are summarized as follows:

Asset Category

Not depreciated

15 to 40 years

Leasehold Improvements

Lesser of the useful life or the term of the respective lease

Furniture and Fixtures

Machinery and Equipment

5 to 20 years

Computer Software and Hardware

Asset Category Useful Lives

Land Not depreciated

Buildings 15 to 40 years

Leasehold Improvements Lesser of the useful life or the term of the respective lease

Furniture and Fixtures 5 to 7 years

Machinery and Equipment 5 to 20 years

Computer Software and Hardware 3 to 5 years

When we dispose of property, plant and equipment, we remove the associated cost and accumulated depreciation from the related accounts in our consolidated balance sheets and include any resulting gain or loss in our consolidated statements of income.

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In February 2016 the FASB issued ASU No.

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Upon adoption, we elected the package of transition practical expedients, which allowed us to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for existing leases.

We also elected the practical expedient to not reassess certain land

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easements and made an accounting policy election to not recognize leases with an initial term of 12 months or less within our consolidated balance sheets and to recognize those lease payments on a straight-line basis in our consolidated statements of income over the lease term.

We also elected the practical expedient to not reassess certain land easements and made an accounting policy election to not recognize leases with an initial term of 12 months or less within our consolidated balance sheets and to recognize those lease payments on a straight-line basis in our consolidated statements of income over the lease term.

Upon adoption of the new leasing standards we recognized an operating lease asset of approximately $ 463.0 million and a corresponding operating lease liability of approximately $ 526.0 million, which are included in our consolidated balance sheets.

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For additional information on the adoption of the new leasing standards, please read Note 11, Leases , to these consolidated financial statements.

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Intangible Assets

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(Elan), an affiliate of Elan Corporation, plc.

Acquired and in-licensed rights and patents also include our rest of world license to Forward Pharma A/S' (Forward Pharma) intellectual property, including Forward Pharma's intellectual property related to TECFIDERA, and other amounts related to our other marketed products and other programs acquired through business combinations.

Acquired and in-licensed rights and patents also include other amounts related to our other marketed products and programs acquired through business combinations.

Developed technology primarily relates to our AVONEX product, which was recorded in connection with the merger of Biogen, Inc.

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We amortize the intangible assets related to our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products using the economic consumption method based on revenues generated from the products underlying the related intangible assets.

An analysis of the anticipated

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lifetime revenues of our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products is performed annually during our long-range planning cycle and whenever events or changes in circumstances would significantly affect the anticipated lifetime revenues of our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products.

An analysis of the anticipated lifetime revenues of our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products is performed annually during our long-range planning cycle and whenever events or changes in circumstances would significantly affect the anticipated lifetime revenues of our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products.

Intangible assets related to trademarks, trade names and IPR&D prior to commercialization are not amortized because they have indefinite lives;

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Assets that have been previously impaired, including our vixotrigine (BIIB074) program for the potential treatment of neuropathic pain, such as trigeminal neuralgia (TGN), could become further impaired in the future.

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Goodwill represents the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting.

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Long-lived assets to be disposed of are carried at fair value less costs to sell.

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Contingent Consideration

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We assess at inception and on an ongoing basis, whether the derivative instruments that are used in hedging transactions are highly effective in offsetting the changes in cash flows or fair values of the hedged items.

We exclude the forward points portion of the derivative instruments used in a hedging transaction from the effectiveness test and record the fair value gain or loss related to this portion each period in our consolidated statements of income in the same line as the underlying hedged item.

We exclude the forward points portion of the derivative instruments used in a hedging transaction from the effectiveness

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test and record the fair value gain or loss related to this portion each period in our consolidated statements of income in the same line as the underlying hedged item.

If we determine that a forecasted transaction is no longer probable of occurring, we discontinue hedge accounting for the affected portion of the hedge instrument, and any related unrealized gain or loss on the contract is recognized in current earnings.

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dollar, assets and liabilities are translated at current rates of exchange at the balance sheet date.

Income and expense items are translated at the average foreign currency

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exchange rates for the period.

Income and expense items are translated at the average foreign currency exchange rates for the period.

Adjustments resulting from the translation of the financial statements of our foreign operations into U.S.

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The fair values of our MSUs are estimated using a lattice model with a Monte Carlo simulation.

We apply an accelerated attribution method to recognize share-based compensation expense over the applicable service period for our MSUs.

We apply an accelerated attribution method to recognize share-based compensation expense over the applicable service period

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for our MSUs.

The probability of actual shares expected to be earned is considered in the grant date valuation, therefore the expense is not adjusted to reflect the actual units earned.

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If performance criteria are not met or not expected to be met, any compensation expense previously recognized to date associated with the awards will be reversed.

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Research and Development Expenses

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For the years ended December 31, 2020, 2019 and 2018, advertising costs totaled $ 111.8 million, $ 79.2 million and $ 90.2 million, respectively.

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The provision for income taxes includes federal, state, local and foreign taxes.

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Upon adoption, we recognized additional net deferred tax assets of approximately $ 0.5 billion, offset by a corresponding net increase to retained earnings of approximately $ 0.5 billion.

In the fourth quarter of 2018, when we elected to begin recognizing deferred taxes on the GILTI tax calculation, we recorded an additional deferred tax liability of $ 0.4 billion with a corresponding reduction to

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our retained earnings as these differences are related to intra-entity transactions.

We will recognize incremental deferred income tax expense thereafter as these deferred tax assets and liabilities are utilized.

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As additional information becomes available, we reassess the potential liability related to pending claims and litigation and may change our estimates.

Legal costs associated with legal proceedings are expensed when incurred.

Earnings per Share

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New Accounting Pronouncements

F rom time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that we adopt as of the specified effective date.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that we adopt as of the specified effective date.

Unless otherwise discussed below, we do not believe that the adoption of recently issued standards have or may have a material impact on our consolidated financial statements or disclosures.

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In February 2016 the FASB issued the new leasing standards to increase transparency and comparability among organizations related to their leasing activities.

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These standards limit the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases.

Based on the composition of our investment portfolio, accounts receivable and other financial assets, current market conditions and historical credit loss activity, the adoption of these standards are not expected to have a material impact on our consolidated financial position and results of operations and related disclosures.

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Based on the composition of our investment portfolio, accounts receivable and other financial assets, current market conditions and historical credit loss activity, the adoption of these standards did not have a material impact on our consolidated financial position and results of operations and related disclosures.

Debt Securities

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This standard became effective for us on January 1, 2020.

The adoption of this standard will not have a material impact on our disclosures.

The adoption of this standard did not have a material impact on our disclosures.

Derivative Instruments and Hedging Activities

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• Adds unit-of-account guidance to ASC 808, Collaborative Arrangements , to align with the guidance in ASC 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606;

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• Precludes a company from presenting transactions with collaborative arrangement participants that are not directly related to sales to third parties with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer.

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The adoption of this standard did not have a material impact on our consolidated financial position, results of operations and related disclosures.

BIIB118 Acquisition

In March 2020 we acquired BIIB118 (CK1 inhibitor), a novel CNS-penetrant small molecule inhibitor of casein kinase 1, for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases from Pfizer Inc.

We are developing BIIB118 for the potential treatment of irregular sleep wake rhythm disorder in Parkinson’s disease and plan to develop BIIB118 for the potential treatment of sundowning in Alzheimer's disease.

In connection with this acquisition, we made an upfront payment of $ 75.0 million to Pfizer, which was accounted for as an asset acquisition and recorded as acquired IPR&D in our consolidated statements of income as BIIB118 has not yet reached technological feasibility.

We may also pay Pfizer up to $ 635.0 million in potential additional development and commercialization milestone payments as well as tiered royalties in the high single digits to sub-teens.

Acquisition of Nightstar Therapeutics plc

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These assets include BIIB111 (timrepigene emparvovec), which is in Phase 3 development for the potential treatment of choroideremia, a rare, degenerative, X-linked inherited retinal disorder that leads to blindness and currently has no approved treatments, and BIIB112 (RPGR gene therapy), which is in Phase 2/3 development for the potential treatment of X-linked retinitis pigmentosa, which is a rare inherited retinal disease with no currently approved treatments.

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Under the terms of the acquisition, we paid NST shareholders $ 25.50 in cash for each issued and outstanding NST share, which totaled $ 847.6 million.

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We finalized purchase accounting for this acquisition in the fourth quarter of 2019.

The following table summarizes the fair values of the separately identifiable assets acquired and liabilities assumed:

(In millions)

Cash and cash equivalents

Marketable securities

In-process research and development intangible assets

Deferred tax liability

Total purchase price

The fair value of the IPR&D programs acquired was determined through a probability adjusted discounted cash flow analysis utilizing a discount rate of 12.5 %.

This valuation was primarily driven by the value associated with BIIB111.

The fair value associated with BIIB111 was $ 480.0 million .

We have recorded an additional IPR&D asset related to BIIB112 of $ 220.0 million .

We recorded IPR&D assets for BIIB111 and BIIB112 at their initial fair values of $ 480.0 million and $ 220.0 million, respectively.

Some of the more significant assumptions utilized in our asset valuations included the estimated net cash flows for each year for each asset or product, including net revenues, cost of sales, research and development and other operating expenses, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream as well as other factors.

These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 fair value measurements.

We have recognized goodwill in relation to the fair value associated with NST workforce's expertise and early research in retinal disorders.

We reco gnized goodwill in relation to the fair value associated with NST workforce's expertise and early research in retinal disorders.

We also recognized goodwill in relation to the establishment of a deferred tax liability for the acquired IPR&D intangible assets, which have no tax basis.

This deferred tax liability is net of the related impacts on the deferred taxes for GILTI.

Goodwill that is tax deductible for GILTI purposes is approximately $ 35.5 million .

Goodwill that is tax deductible for GILTI purposes is approximately $ 60.9 million as of December 31, 2020.

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Pro forma results of operations as a result of this acquisition have not been presented as this acquisition is not material to our consolidated statements of income.

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(Karyopharm).

BIIB100 is a Phase 1 investigational oral compound for the treatment of certain neurological and neurodegenerative diseases, primarily in ALS.

BIIB100 is a Phase 1 investigational oral compound for the potential treatment of certain neurological and neurodegenerative diseases, primarily in ALS.

BIIB100 is a novel therapeutic candidate that works by inhibiting a protein known as XPO1, with the goal of reducing inflammation and neurotoxicity, along with increasing neuroprotective responses.

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We may also pay Karyopharm up to $ 207.0 million in additional milestone payments as well as tiered royalties on potential net commercial sales in the mid-single digit to low-teen percentages.

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BIIB104 Acquisition

In April 2018 we acquired BIIB104 (AMPA) from Pfizer Inc.

In April 2018 we acquired BIIB104 (AMPA) from Pfizer.

BIIB104 is a first-in-class, Phase 2b ready AMPA receptor potentiator for cognitive impairment associated with schizophrenia.

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In connection with the closing of this transaction, we made an upfront payment of $ 75.0 million to Pfizer, which was recorded as acquired IPR&D in our consolidated statements of income as BIIB104 had not yet reached technological feasibility.

We may also pay Pfizer up to $ 515.0 million in additional development and commercialization milestone payments as well as tiered royalties on potential net commercial sales in the low to mid-teen percentages.

TMS Co., Ltd.

In June 2018 we entered into an exclusive option agreement with TMS Co., Ltd.

(TMS) granting us the option to acquire TMS-007, a plasminogen activator with a novel mechanism of action associated with breaking down blood clots, which is in Phase 2 development in Japan, and backup compounds for the treatment of stroke.

In exchange for the purchase option, we made a $ 4.0 million upfront payment to TMS, which was recorded as research and development expense in our consolidated statements of income as TMS-007 had not yet reached technological feasibility.

If we exercise the purchase option, we will make an additional payment of $ 18.0 million upon closing of the asset acquisition, which will be recorded as acquired IPR&D expense in our consolidated statements of income as TMS-007 will not have reached technological feasibility at that time.

In addition, we may pay TMS up to $ 335.0 million in additional development and commercialization milestone payments as well as tiered royalties on potential net commercial sales in the high-single digit to low-teen percentages.

If we exercise the purchase option, consummation of the asset acquisition may be subject to the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the U.S.

We may also pay Pfizer up to $ 515.0 million in total development and commercialization milestone payments as well as tiered royalties on potential net commercial sales in the low to mid-teen percentages.

BIIB110 Acquisition

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We may also pay AliveGen up to $ 535.0 million in additional development and commercialization milestones.

BIIB093 Acquisition

In May 2017 we acquired BIIB093 (glibencamide IV) from Remedy Pharmaceuticals Inc.

BIIB093 is in a Phase 3 study for large hemispheric infarction (LHI), a severe form of ischemic stroke where brain swelling (cerebral edema) often leads to a disproportionately large share of stroke-related morbidity and mortality.

Food and Drug Administration (FDA) granted BIIB093 orphan drug designation for severe cerebral edema in patients with acute ischemic stroke.

The FDA has also granted BIIB093 fast track designation.

We are responsible for the future development and commercialization of BIIB093 and Remedy may share in the cost of development for the target indication for BIIB093 in LHI stroke.

We accounted for this transaction as an asset acquisition as we did not acquire any employees from Remedy nor did we acquire any significant processes required in the development of BIIB093.

In connection with the closing of this transaction, we made an upfront payment of $ 120.0 million to Remedy, which was recorded as acquired IPR&D in our consolidated statements of income as BIIB093 had not yet reached technological feasibility.

We may also pay Remedy certain development and sales based milestone payments that are substantially payable upon or after regulatory approval, as well as royalties on potential net commercial sales.

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Divestiture of Hillerød, Denmark Manufacturing Operations

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We determined that the operations disposed of in this transaction did not meet the criteria to be classified as discontinued operations under the applicable guidance.

As part of this transaction, we have provided FUJIFILM with certain minimum batch production commitment guarantees.

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As part of this transaction, we provided FUJIFILM with certain minimum batch production commitment guarantees.

There is a risk that the minimum contractual batch production commitments will not be met.

Based upon current estimates we expect to incur an adverse commitment obligation of approximately $ 74.0 million associated with such guarantees and have accrued for this obligation.

We may adjust this estimate based upon changes in business conditions, which may result in the increase or reduction of this adverse commitment obligation in subsequent periods.

Based upon current estimates we do not expect to incur an adverse commitment obligation associated with such guarantees.

We may further adjust this estimate based upon changes in business conditions, which may result in the increase or reduction of this adverse commitment obligation in subsequent periods.

We also may be obligated to indemnify FUJIFILM for liabilities that existed relating to certain business activities incurred prior to the closing of this transaction.

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As part of this transaction, we entered into certain manufacturing services agreements with FUJIFILM pursuant to which FUJIFILM will use the Hillerød facility to produce commercial products for us, such as TYSABRI, as well as other third-party products.

In connection with this transaction, we recognized a total net loss of approximately $ 164.4 million in our consolidated statements of income.

For the year ended December 31, 2019, we recognized a total net loss of approximately $ 124.2 million related to the transaction in our consolidated statements of income.

This loss included a pre-tax loss of $ 55.3 million, which was recorded in loss on divestiture of Hillerød, Denmark manufacturing operations.

The loss recognized was based on exchange rates and business conditions on the closing date of this transaction, and included costs to sell our Hillerød, Denmark manufacturing operations of approximately $ 11.2 million and our estimate of the fair value of an adverse commitment of approximately $ 114.0 million associated with the guarantee of future minimum batch production at the Hillerød facility.

The value of this adverse commitment was determined using a probability-weighted estimate of future manufacturing activity.

The loss recognized was based on exchange rates and business conditions on the closing date of this transaction, and included costs to sell our Hillerød, Denmark manufacturing operations of approximately $ 11.2 million and our estimate of the fair value of adverse commitments of approximately $ 74.0 million, primarily associated with the guarantee of future minimum batch production at the Hillerød facility.

We also recorded a tax expense of $ 68.9 million related to this transaction.

During the fourth quarter of 2019 we recorded a $ 40.2 million reduction in our estimate of the future minimum batch commitment utilizing our current manufacturing forecast, which reflects the impact of forecasted aducanumab batches, resulting in a reduction in the pre-tax loss on divestiture from $ 95.5 million to $ 55.3 million .

In addition, we sold to FUJIFILM $ 41.8 million of raw materials that were remaining at the Hillerød facility on the closing date of this transaction.

In addition, upon the closing of this transaction, we sold to FUJIFILM $ 41.8 million of raw materials that were remaining at the Hillerød facility on the closing date of this transaction.

These materials were sold at cost, which approximates fair value.

Our estimate of the fair value of the adverse commitment is a Level 3 measurement and is based on forecasted batch production at the Hillerød facility.

During the year ended December 31, 2020, we reduced our estimate of the fair value of the adverse commitment associated with the guarantee of future batch production by approximately $ 62.0 million based on our current manufacturing forecasts.

Additionally, we recorded a reduction to our pre-tax loss of approximately $ 30.5 million due to a refund of interest paid associated with a tax matter.

Our estimate of the fair value of the adverse commitments is a Level 3 measurement and is based on forecasted batch production at the Hillerød facility.

AND SUBSIDIARIES

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For the Years Ended December 31,

(In millions)

2020 2019 2018

(In millions) United

States Rest of

World Total United

States Rest of

World Total United

States Rest of

Multiple Sclerosis (MS):

MS Product Revenues

Fumarate* $ 2,742.0 $ 1,163.4 $ 3,905.4 $ 3,312.0 $ 1,126.2 $ 4,438.2 $ 3,253.2 $ 1,020.9 $ 4,274.1

Interferon** 1,273.5 604.0 1,877.5 1,426.6 675.2 2,101.8 1,668.3 694.7 2,363.0

TYSABRI 1,096.8 849.3 1,946.1 1,041.8 850.4 1,892.2 1,025.0 839.0 1,864.0

FAMPYRA — 103.1 103.1 — 97.1 97.1 — 92.7 92.7

ZINBRYTA — — — — — — — 1.4 1.4

MS 5,112.3 2,719.8 7,832.1 5,780.4 2,748.9 8,529.3 5,946.5 2,648.7 8,595.2

Spinal Muscular Atrophy:

Biosimilar product revenues

Hemophilia product revenues

SPINRAZA 787.8 1,264.3 2,052.1 933.4 1,163.6 2,097.0 854.0 870.2 1,724.2

BENEPALI — 481.6 481.6 — 486.2 486.2 — 485.2 485.2

IMRALDI — 216.3 216.3 — 184.0 184.0 — 16.7 16.7

FLIXABI — 97.9 97.9 — 68.1 68.1 — 43.2 43.2

Biosimilars — 795.8 795.8 — 738.3 738.3 — 545.1 545.1

FUMADERM — 12.2 12.2 — 15.2 15.2 — 22.3 22.3

Total product revenues $ 5,900.1 $ 4,792.1 $ 10,692.2 $ 6,713.8 $ 4,666.0 $ 11,379.8 $ 6,800.5 $ 4,086.3 $ 10,886.8

*Fumarate includes TECFIDERA and VUMERITY.

VUMERITY became commercially available in the U.S.

in November 2019.

**Interferon includes AVONEX and PLEGRIDY.

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As of December 31, 2020, two wholesale distributors individually accounted for approximately 21.1 % and 8.5 % of net accounts receivable associated with our product sales, as compared to 24.1 % and 13.9 % as of December 31, 2019, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

An analysis of the change in reserves for discounts and allowances is summarized as follows:

(In millions)

December 31, 2020

(In millions) Discounts Contractual

Adjustments Returns Total

Beginning balance $ 131.1 $ 1,027.3 $ 40.5 $ 1,198.9

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Ending balance $ 141.4 $ 1,093.0 $ 41.6 $ 1,276.0

(In millions)

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2019

(In millions) Discounts Contractual

Adjustments Returns Total

Beginning balance $ 127.8 $ 888.8 $ 34.7 $ 1,051.3

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Ending balance $ 131.1 $ 1,027.3 $ 40.5 $ 1,198.9

(In millions)

December 31, 2018

(In millions) Discounts Contractual

Adjustments Returns Total

Beginning balance $ 109.6 $ 606.0 $ 46.0 $ 761.6

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Biogen's share of pre-tax profits in the U.S.

for RITUXAN and GAZYVA, including the reimbursement of selling and development expenses

for RITUXAN and GAZYVA $ 1,080.2 $ 1,542.4 $ 1,431.9

Other revenues from anti-CD20 therapeutic programs 897.6 748.0 548.3

Total revenues from anti-CD20 therapeutic programs $ 1,977.8 $ 2,290.4 $ 1,980.2

Approximately 16 % , 15 % and 13 % of our total revenues in 2019 , 2018 and 2017 , respectively, are derived from our collaboration arrangements with Genentech.

Approximately 14.7 %, 15.9 % and 14.7 % of our total revenues in 2020, 2019 and 2018, respectively, were derived from our collaboration arrangements with Genentech.

For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

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Revenues from collaborative and other relationships:

(Loss) profit earned under our 50% share of the co-promotion losses on ZINBRYTA in the U.S.

with AbbVie Inc.

Revenues earned under our technical development services and manufacturing service agreements and royalty revenues on biosimilar products with Samsung Bioepis

Revenues earned under manufacturing services agreement on shipments of ELOCTA and ALPROLIX to Swedish Orphan Biovitrum AB (Sobi) and royalties from Sobi on sales of ELOCTA and ALPROLIX

Revenues earned under our technical development agreement, manufacturing service agreements and royalty revenues on biosimilar products with Samsung Bioepis $ 20.9 $ 106.2 $ 96.4

Other revenues from collaborative and other relationships 0.7 — ( 8.6 )

Other royalty and corporate revenues:

Royalty 33.9 17.0 38.7

Other corporate 719.1 584.5 459.4

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During the years ended December 31, 2020, 2019 and 2018, we recognized $ 48.6 million, $ 383.2 million and $ 206.7 million, respectively, in revenues under the manufacturing and supply agreement with Bioverativ entered into in connection with the spin-off of our hemophilia business.

During the third quarter of 2019 we amended our agreement with a contract manufacturing customer.

Under the amended agreement, we will license certain of our manufacturing-related intellectual property to the customer.

We will be eligible to receive $ 500.0 million in a series of three payments.

The first payment is due upon a regulatory achievement related to the customer's product manufactured using our manufacturing-related intellectual property, with subsequent payments payable upon the first and second anniversaries of the regulatory achievement.

We expect the regulatory achievement to occur in 2020.

If we earn this payment, we expect to allocate the consideration between the license for the manufacturing-related intellectual property and the manufacturing product supply services.

For additional information on our collaboration arrangements with AbbVie Inc.

(AbbVie) and Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

During the third quarter of 2019, we amended our agreement with a contract manufacturing customer pursuant to which we licensed certain of our manufacturing-related intellectual property to the customer.

In the second quarter of 2020, the customer received regulatory approval for its product that is being manufactured using certain of our manufacturing-related intellectual property.

As a result we are entitled to $ 500.0 million in a series of three payments.

The first payment became due upon a regulatory approval of such product and was received during the second quarter of 2020.

Subsequent payments are due on the first and second anniversaries of the regulatory approval.

Other corporate revenues for the year ended December 31, 2020, reflect $ 346.2 million related to the delivery of the license for certain of our manufacturing-related intellectual property under the amended agreement discussed above and the performance of manufacturing product supply services for such customer.

We have allocated the remaining $ 153.8 million of the $ 500.0 million transaction price to the performance of manufacturing product supply services for the customer, which we expect to perform through 2026.

The value allocated to the manufacturing services was based on expected demand for supply and the fair value of comparable manufacturing and development services.

For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

The components of inventory are summarized as follows:

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Total inventory $ 1,068.6 $ 804.2

Balance Sheet Classification:

Investments and other assets

Total inventory

Inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons are charged to cost of sales, and totaled $ 26.6 million, $ 52.2 million and $ 41.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During 2019 we sold to Bioverativ hemophilia-related inventory on hand as of December 31, 2018, with a cost basis totaling $ 184.5 million pursuant to the terms of the manufacturing and supply agreement with Bioverativ entered into in connection with the spin-off of our hemophilia business.

Long-term inventory, which primarily consists of work in process, is included in investments and other assets in our consolidated balance sheets.

Inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons are charged to cost of sales, and totaled $ 52.2 million , $ 41.9 million and $ 76.9 million for the years ended December 31, 2019 , 2018 and 2017 , respectively.

Divestiture of Hillerød, Denmark Manufacturing Operations

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Intangible assets, net of accumulated amortization, impairment charges and adjustments are summarized as follows:

As of December 31, 2019

As of December 31, 2018

(In millions)

Estimated Life

Completed technology

In-process research and development

Indefinite until commercialization

Trademarks and trade names

As of December 31, 2020 As of December 31, 2019

(In millions) Estimated Life Cost Accumulated

Amortization Net Cost Accumulated

Amortization Net

Completed technology 4-28 years $ 7,394.3 $ ( 5,136.5 ) $ 2,257.8 $ 7,379.3 $ ( 4,881.4 ) $ 2,497.9

In-process research and development Indefinite until commercialization 762.5 — 762.5 965.5 — 965.5

Trademarks and trade names Indefinite 64.0 — 64.0 64.0 — 64.0

Total intangible assets $ 8,220.8 $ ( 5,136.5 ) $ 3,084.3 $ 8,408.8 $ ( 4,881.4 ) $ 3,527.4

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Amortization of acquired intangible assets, excluding impairment charges, totaled $ 255.1 million, $ 274.0 million and $ 381.2 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The decrease in amortization of acquired intangible assets, excluding impairment charges, over the three years was primarily due to a lower rate of amortization for acquired intangible assets, primarily due to prior year impairments.

For the year ended December 31, 2019 , amortization and impairments of acquired intangible assets reflects the impact of a $ 215.9 million impairment charge to reduce the fair value of IPR&D assets associated with BG00011 (STX-100) to zero, as discussed below.

Amortization and impairments of acquired intangible assets for the year ended December 31, 2018 , reflects the impact of impairment charges related to certain IPR&D assets associated with our vixotrigine program totaling $ 189.3 million , as discussed below.

Amortization and impairments of acquired intangible assets for the years ended December 31, 2018 and 2017 , reflect the impact of impairment charges of $ 176.8 million and $ 328.2 million , respectively, related to our intangible

The decrease in amortization of acquired intangible assets, excluding impairment charges, over the three years was primarily due to a low er rate of amortization for acquired intangible assets.

For the year ended December 31, 2020, amortization and impairment of acquired intangible assets reflects the impact of a $ 115.0 million impairment charge related to BIIB111, which was obtained as part of our acquisition of NST, a $ 75.4 million impairment charge related to BIIB054 (cinpanemab) and a $ 19.3 million impairment charge related to one of our other IPR&D intangible assets.

For the year ended December 31, 2019, amortization and impairments of acquired intangible assets reflects the impact of a $ 215.9 million impairment charge related to certain IPR&D assets associated with the Phase 2b study of BG00011 (STX-100) for the potential treatment of idiopathic pulmonary fibrosis (IPF), which was discontinued in the third quarter of 2019.

For the year ended December 31, 2018, amortization and impairments of acquired intangible assets reflects the impact of a $ 189.3 million impairment charge related to certain IPR&D assets associated with our vixotrigine program, as discussed below, and a $ 176.8 million impairment charge related to our U.S.

license to Forward Pharma A/S' (Forward Pharma) intellectual property, including Forward Pharma's intellectual property related to TECFIDERA.

Completed Technology

Completed technology primarily relates to our acquisition of all remaining rights to TYSABRI from Elan as well as other amounts related to our other marketed products and programs acquired through business combinations.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

assets associated with our U.S.

license to Forward Pharma's intellectual property, including Forward Pharma's intellectual property related to TECFIDERA.

Completed Technology

Completed technology primarily relates to our acquisition of all remaining rights to TYSABRI from Elan.

The net book value of the TYSABRI asset as of December 31, 2019 , was $ 1.8 billion .

Completed technology also includes $ 155.0 million in milestone payments made to Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc (Alkermes), following the approval of VUMERITY in the U.S.

in October 2019, technology related to our AVONEX product, which we recorded in connection with the merger of Biogen, Inc.

and IDEC Pharmaceuticals Corporation in 2003, our rest of world license to Forward Pharma's intellectual property, including Forward Pharma's intellectual property related to TECFIDERA, as discussed below, and other amounts related to our other marketed products and other programs acquired through business combinations.

TECFIDERA License Rights

In January 2017 we entered into a settlement and license agreement among Biogen Swiss Manufacturing GmbH, Biogen International Holding Ltd., Forward Pharma and certain related parties, which was effective as of February 1, 2017.

Pursuant to this agreement, we obtained U.S.

and rest of world licenses to Forward Pharma's intellectual property, including Forward Pharma's intellectual property related to TECFIDERA.

In exchange, we paid Forward Pharma $ 1.25 billion in cash, of which $ 795.2 million was recorded within intangible assets in the first quarter of 2017.

We had an intellectual property dispute with Forward Pharma in the U.S.

concerning intellectual property related to TECFIDERA.

In March 2017 the U.S.

intellectual property dispute was decided in our favor.

Forward Pharma appealed to the U.S.

Court of Appeals for the Federal Circuit.

We evaluated the recoverability of the U.S.

asset acquired from Forward Pharma and recorded a $ 328.2 million impairment charge in the first quarter of 2017 to adjust the carrying value of the acquired U.S.

asset to fair value reflecting the impact of the developments in the U.S.

legal dispute and continued to amortize the remaining net book value of the U.S.

intangible asset in our consolidated statements of income utilizing an economic consumption model.

Court of Appeals for the Federal Circuit upheld the U.S.

Patent and Trademark Office’s March 2017 ruling and in January 2019 denied Forward Pharma's petition for rehearing.

We evaluated the recoverability of the U.S.

asset based upon these most recent developments and recorded a $ 176.8 million impairment charge in the fourth quarter of 2018 to reduce the remaining net book value of the U.S.

asset to zero.

We have an intellectual property dispute with Forward Pharma in the European Union (E.U.) concerning intellectual property related to TECFIDERA.

In March 2018 the European Patent Office (EPO) revoked Forward Pharma’s European Patent No.

Forward Pharma has filed an appeal to the Technical Boards of Appeal of the EPO and a hearing has been set for June 2020.

Based upon our assessment of this ruling, we continue to amortize the remaining net book value of the rest of world intangible asset in our consolidated statements of income utilizing an economic consumption model.

The remaining net book value of the TECFIDERA rest of world intangible asset as of December 31, 2019 , was $ 36.1 million .

For additional information on the dispute with Forward Pharma in the E.U., please read Note 20, Litigation, to these consolidated financial statements.

IPR&D Related to Business Combinations

IPR&D represents the fair value assigned to research and development assets that we acquired as part of a business combination and had not yet reached technological feasibility at the date of acquisition.

Upon commercialization, we will determine the estimated useful life and amortize these amounts based upon an economic consumption method.

The carrying value associated with our IPR&D assets as of December 31, 2019 and 2018 , relates to the various IPR&D programs we acquired in connection with our acquisitions of NST, Convergence Pharmaceuticals Holdings Limited (Convergence), Stromedix Inc.

(Stromedix) and Biogen International Neuroscience GmbH (BIN) in 2019, 2015, 2012 and 2010, respectively.

IPR&D balances include adjustments related to foreign currency exchange rate fluctuations.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

An analysis of anticipated lifetime revenues and anticipated development costs is performed annually during our long-range planning cycle, which was most recently updated in the second quarter of 2019 .

This analysis is based upon certain assumptions that we evaluate on a periodic basis, including anticipated future product sales, the expected impact of changes in the amount of development costs and the probabilities of our programs succeeding, the introduction of new products by our competitors and changes in our commercial and pipeline product candidates.

In connection with our acquisition of NST in June 2019, we acquired IPR&D programs with an estimated fair value of $ 700.0 million .

Included in IPR&D balances are adjustments related to foreign currency exchange rate fluctuations.

We review amounts capitalized as acquired IPR&D for impairment annually, as of October 31, and whenever events or changes in circumstances indicate to us that the carrying value of the assets might not be recoverable.

The carrying value associated with our IPR&D assets as of December 31, 2020 and 2019, relates to the various IPR&D programs we acquired in connection with our acquisitions of NST and Convergence Pharmaceuticals Holdings Ltd.

(Convergence).

The majority of the balance relates to our acquisition of NST in June 2019 whereby we acquired IPR&D programs with an estimated fair value of approximately $ 585.0 million as of December 31, 2020 .

For additional information on our acquisition of NST, please read Note 2, Acquisitions , to these consolidated financial statements.

During the third quarter of 2019 we discontinued the Phase 2b study of BG00011 for the potential treatment of idiopathic pulmonary fibrosis (IPF) due to safety concerns.

As a result, we recognized an impairment charge of approximately $ 215.9 million during the third quarter of 2019 to reduce the fair value of the IPR&D intangible asset to zero.

We also adjusted the value of our contingent consideration obligations related to this asset resulting in a gain of $ 61.2 million in the third quarter of 2019.

During the third quarter of 2018 we completed a Phase 2b study of vixotrigine for the potential treatment of painful lumbosacral radiculopathy (PLSR).

The study did not meet its primary or secondary efficacy endpoints and we discontinued development of vixotrigine for the potential treatment of PLSR.

As a result, we recognized an impairment charge of approximately $ 60.0 million during the third quarter of 2018 to reduce the fair value of the related IPR&D intangible asset to zero.

In addition, we delayed the initiation of the Phase 3 studies of vixotrigine for the potential treatment of TGN as we awaited the outcome of ongoing interactions with the FDA regarding the design of the Phase 3 studies, a more detailed review of the data from the Phase 2b study of vixotrigine for the potential treatment of PLSR and insights from the Phase 2 study of vixotrigine for the potential treatment of small fiber neuropathy.

We reassessed the fair value of the TGN program using reduced expected lifetime revenues, higher expected clinical development costs and lower cumulative probability of success.

As a result of that reassessment, we recognized an impairment charge of $ 129.3 million during the third quarter of 2018 to reduce the fair value of the TGN IPR&D intangible asset to $ 41.8 million .

During the fourth quarter of 2020 we began experiencing third-party manufacturing delays that may impact our timeline for a potential filing of a Biologics License Application (BLA) for BIIB111 for regulatory approval by up to one year.

In addition, we determined that forecasted costs associated with advancing the BIIB111 program through Phase 3 development and potential commercialization will exceed our original estimates.

We reassessed the fair value of the program based on these changes in assumptions and determined that the program was partially impaired.

We recognized an impairment charge of $ 115.0 million during the fourth quarter of 2020, which resulted in a reduction of the IPR&D asset from $ 480.0 million to $ 365.0 million.

In February 2021 we announced that we discontinued development of BIIB054 as a potential treatment of Parkinson's disease as our Phase 2 SPARK study did not meet its primary or secondary endpoints.

Although we made this determination in February 2021, it was based on conditions that existed as of December 31, 2020.

As a result, we recognized an impairment charge of approximately $ 75.4 million during the fourth quarter of 2020 to reduce the fair value of the related IPR&D intangible asset to zero.

The IPR&D impairment charges were included in amortization and impairment of acquired intangible assets and the gain resulting from the remeasurement of our contingent consideration obligation was recorded in (gain) loss on fair value remeasurement of contingent consideration in our consolidated statements of income.

The fair value of the intangible assets and contingent consideration obligations were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements and inputs including estimated revenues, costs and probabilities of success.

In the periods since we acquired vixotrigine, there have been numerous delays in the initiation of Phase 3 studies for the potential treatment of TGN as we engaged with the U.S.

Food and Drug Administration (FDA) regarding the design of the Phase 3 studies and awaited data and insights from mid-stage clinical trials of vixotrigine in other indications that have since been completed.

The fair value of the TGN asset is not significantly in excess of carrying value.

As of December 31, 2020, the carrying value associated with our vixotrigine IPR&D assets was $ 177.5 million.

Estimated Future Amortization of Intangible Assets

Our most recent long-range planning cycle was completed in the second quarter of 2019 .

Based upon this most recent analysis, the estimated future amortization of acquired intangible assets for the next five years is expected to be as follows:

(In millions)

As of December 31, 2019

The estimated future amortization of finite-lived intangible assets for the next five years is expected to be as follows:

(In millions) As of December 31, 2020

AND SUBSIDIARIES

6 unchanged sentences

Elimination of goodwill allocated to Hillerød, Denmark manufacturing operations — ( 69.5 )

Other 4.3 3.4

Goodwill, end of year $ 5,762.1 $ 5,757.8

The increase to goodwill during 2019 was related to our acquisition of NST.

For additional information on our acquisition of NST, please read Note 2, Acquisitions , to these consolidated financial statements.

The increase to goodwill during 2018 was related to $ 1.2 billion in contingent milestones achieved (exclusive of $ 119.9 million in tax benefits) and payable to the former shareholders of Fumapharm AG and holders of their rights.

In the fourth quarter of 2018 we achieved the $ 20.0 billion cumulative sales level threshold and accrued the final contingent payment of $ 300.0 million related to FUMADERM and TECFIDERA (together, the Fumapharm Products), which was paid in the first quarter of 2019.

The elimination of goodwill represents an allocation based upon the relative fair value of our Hillerød, Denmark manufacturing operations at the divestiture date.

In connection with the divestiture of our Hillerød, Denmark manufacturing operations, our remaining goodwill was reviewed for impairment, and based upon this review, no impairments were recognized.

For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures , to these consolidated financial statements.

As of December 31, 2020, we had no accumulated impairment losses related to goodwill.

Other includes changes related to foreign currency exchange rate fluctuations.

Other includes adjustments related to foreign currency exchange rate fluctuations.

Fair Value Measurements

The tables below present information about our assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques we utilized to determine such fair value:

As of December 31, 2019 (In millions)

As of December 31, 2020

(In millions) Total Quoted Prices in

Active Markets

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

Cash equivalents $ 626.9 $ — $ 626.9 $ —

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Plan assets for deferred compensation 28.2 — 28.2 —

Total $ 4,700.9 $ 271.1 $ 4,429.8 $ —

Derivative contracts $ 217.2 $ — $ 217.2 $ —

Contingent consideration obligations 259.8 — — 259.8

Total $ 477.0 $ — $ 217.2 $ 259.8

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2018 (In millions)

As of December 31, 2019

(In millions) Total Quoted Prices

in Active Markets

(Level 1) Significant

Other Observable

(Level 2) Significant

Cash equivalents $ 2,541.1 $ — $ 2,541.1 $ —

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Plan assets for deferred compensation 27.7 — 27.7 —

Total $ 5,920.4 $ 7.9 $ 5,912.5 $ —

Derivative contracts $ 8.3 $ — $ 8.3 $ —

Contingent consideration obligations 346.1 — — 346.1

There have been no changes in valuation techniques or transfers between fair value measurement levels during the years ended December 31, 2019 and 2018 .

The fair value of Level 2 instruments classified as cash equivalents, marketable debt securities and our marketable equity security investment in Ionis Pharmaceuticals, Inc.

(Ionis) were determined through third-party pricing services or an option pricing valuation model.

Total $ 354.4 $ — $ 8.3 $ 346.1

There have been no material impairments of our assets measured and carried at fair value during the years ended December 31, 2020 and 2019.

In addition, there have been no changes in valuation techniques during the years ended December 31, 2020 and 2019.

The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities was determined through third-party pricing services.

The fair value of Level 2 instruments classified as marketable equity securities represents our investments in Sangamo Therapeutics, Inc.

(Sangamo) common stock, Denali Therapeutics Inc.

(Denali) common stock and Sage Therapeutics, Inc.

(Sage) common stock and are valued using an option pricing valuation model as the investments are each subject to certain holding period restrictions.

For additional information on our investments in Sangamo, Denali and Sage common stock, please read Note 8, Financial Instruments , to these consolidated financial statements.

Our investments in marketable equity securities also include shares of Ionis Pharmaceuticals, Inc.

(Ionis) common stock acquired in June 2018.

Our shares of Ionis common stock were initially subject to certain holding period restrictions that have since expired.

The fair value of this investment was a Level 1 measurement as of December 31, 2020.

For additional information on our collaboration arrangements with Ionis, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

For a description of our validation procedures related to prices provided by third-party pricing services and our option pricing valuation model, please read Note 1, Summary of Significant Accounting Policies - Fair Value Measurements , to these consolidated financial statements.

The following table summarizes the significant unobservable inputs in the fair value measurement of our contingent consideration obligations as of December 31, 2020:

As of December 31, 2020

(In millions) Fair Value Valuation Technique Unobservable Input Range Weighted Average

Contingent consideration obligation $ 259.8 Discounted cash flow Discount rate 0.60 % 0.60 %

Expected timing of achievement of development milestones 2021 to 2025 —

The weighted average discount rate was calculated based on the relative fair value of our contingent consideration obligations.

In addition, we apply various probabilities of technological and regulatory success, ranging from 39.9 % to certain probability, to the valuation models to estimate the fair values of our contingent consideration obligations.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Nonrecurring Fair Value Measurements

In addition to assets and liabilities that are recorded at fair value on a recurring basis, we record assets and liabilities at fair value on a nonrecurring basis as required by accounting principles generally accepted in the U.S.

Generally, assets are recorded at fair value on a nonrecurring basis as a result of impairment charges.

The gains or losses on assets measured at fair value on a nonrecurring basis, are summarized as follows:

As of December 31, 2020

(In millions) Beginning Book Value Impairment Ending Book Value

BIIB111 intangible asset $ 480.0 $ ( 115.0 ) $ 365.0

For the year ended December 31, 2020, we recorded a partial impairment charge of $ 115.0 million related to BIIB111.

For additional information, please read Note 6, Intangible Assets and Goodwill , to these consolidated financial statements.

Debt Instruments

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2.900% Senior Notes due September 15, 2020 (1)

$ — $ 1,509.6

3.625% Senior Notes due September 15, 2022 1,054.1 1,038.9

4.050% Senior Notes due September 15, 2025 2,003.1 1,897.2

2.250% Senior Notes due May 1, 2030 1,557.2 —

5.200% Senior Notes due September 15, 2045 2,365.1 2,107.9

3.150% Senior Notes due May 1, 2050 1,536.4 —

Total $ 8,515.9 $ 6,553.6

(1) Our 2.900 % Senior Notes due September 15, 2020, were redeemed in full in May 2020 using the net proceeds from the issuance on April 30, 2020, of our senior unsecured notes for an aggregate principal amount of $ 3.0 billion.

For additional information, please read Note 12, Indebtedness , to these consolidated financial statements.

The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources.

For additional information related to our Senior Notes, please read Note 12, Indebtedness , to these consolidated financial statements.

Contingent Consideration Obligations

In connection with our acquisitions of Convergence, Stromedix and BIN in 2015, 2012 and 2010, respectively, we agreed to make additional payments based upon the achievement of certain milestone events.

In connection with our acquisitions of Convergence and Biogen International Neuroscience GmbH (BIN) , we agreed to make additional payments based upon the achievement of certain milestone events.

The following table provides a roll forward of the fair values of our contingent consideration obligations, which includes Level 3 measurements:

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Fair value, end of year $ 259.8 $ 346.1

As of December 31, 2019 and 2018 , approximately $ 197.7 million and $ 265.0 million , respectively, of the fair value of our total contingent consideration obligations was reflected as a component of other long-term liabilities in

As of December 31, 2020 and 2019, approximately $ 110.3 million and $ 197.7 million, respectively, of the fair value of our total contingent consideration obligations was reflected as a component of other long-term liabilities in our consolidated balance sheets with the remaining balance reflected as a component of accrued expenses and other.

For the year ended December 31, 2020, changes in the fair value of our contingent consideration obligations were primarily due to our discontinuing development of BIIB054 for the potential treatment of Parkinson's disease, resulting in a reduction of our contingent consideration obligations of $ 51.0 million as well as other changes in the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

our consolidated balance sheets with the remaining balance reflected as a component of accrued expenses and other.

For the year ended December 31, 2019 , changes in the fair value of our contingent consideration obligations were primarily due to the discontinuation of the Phase 2b study of BG00011 for the potential treatment of IPF resulting in a reduction of our contingent consideration obligations of $ 61.2 million , partially offset by changes in the probability and expected timing of achievement of certain developmental milestones, a decrease in interest rates used to revalue our contingent consideration liabilities and the passage of time.

For the year ended December 31, 2018 , changes in the fair value of our contingent consideration obligations were primarily due to delays in the expected timing of achievement of milestones related to the TGN program and an increase in discount rates used to revalue our contingent consideration liabilities, partially offset by the passage of time.

For the year ended December 31, 2018 , payments and other reflects an $ 81.5 million milestone payment made to the former shareholders of Stromedix.

The fair values of the contingent consideration liabilities were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements and inputs including estimated revenues and probabilities of success.

probability and the expected timing of the achievement of certain remaining developmental milestones, changes in the interest rates used to revalue our contingent consideration liabilities and the passage of time.

For the year ended December 31, 2019, changes in the fair value of our contingent consideration obligations were primarily due to the discontinuation of the Phase 2b study of BG00011 for the potential treatment of IPF resulting in a reduction of our contingent consideration obligations of $ 61.2 million as well as other changes in the probability and expected timing of achievement of certain developmental milestones, a decrease in interest rates used to revalue our contingent consideration liabilities and the passage of time.

The fair values of the contingent consideration liabilities were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements and inputs.

For additional information on the valuation techniques and inputs utilized in the valuation of our financial assets and liabilities, please read Note 1, Summary of Significant Accounting Policies, to these consolidated financial statements.

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Our most recent valuation was determined based upon net cash flow projections of $ 400.0 million, probability weighted and discounted using a rate of 0.6 %, which is a measure of the credit risk associated with settling the liability.

For 2019 compared to 2018 , the net decrease in our contingent consideration obligation was primarily due to changes in the expected timing and probabilities of success related to the achievement of certain developmental milestones, partially offset by a decrease in discount rates used to revalue our contingent consideration liabilities and the passage of time.

Accrued expenses and other in our consolidated balances sheets include $ 148.5 million as we expect to make the payment within one year.

Stromedix Inc.

In connection with our acquisition of Stromedix in March 2012 we recorded a contingent consideration obligation of $ 122.2 million .

During the third quarter of 2019 we discontinued the Phase 2b study of BG00011 for the potential treatment of IPF due to safety concerns.

As a result, we adjusted the fair value of this contingent consideration obligation to zero, resulting in a gain of $ 61.2 million in the third quarter of 2019.

As of December 31, 2018 , the fair value of this contingent consideration obligation was $ 83.0 million .

Biogen Idec International Neuroscience GmbH

Biogen International Neuroscience GmbH

In connection with our acquisition of BIN in December 2010 we recorded a contingent consideration obligation of $ 81.2 million.

As of December 31, 2019 and 2018 , the fair value of this contingent consideration obligation was $ 101.5 million and $ 80.2 million , respectively.

Our most recent valuation was determined based upon net cash outflow projections of $ 335.0 million , probability weighted and discounted using a rate of 2.3 % , which is a measure of the credit risk associated with settling the liability.

For 2019 compared to 2018 , the net increase in our contingent consideration obligation was primarily due to changes in the expected timing and probabilities of success related to the achievement of certain developmental milestones, a decrease in discount rates used to revalue our contingent consideration liabilities and the passage of time.

No amounts are reflected as a current liability in our consolidated balance sheets at December 31, 2019 , as we do not expect to make a payment in the next year.

We discontinued further development of BIIB054 for the potential treatment of Parkinson's disease based on the results of a Phase 2 study of BIIB054.

Additionally, during the third and fourth quarters of 2020 we discontinued other programs related to our acquisition of BIN for which we had immaterial contingent consideration obligations.

As a result, the fair value of the contingent consideration obligations related to our acquisition of BIN has been adjusted to zero , resulting in a gain of $ 101.5 million for the year ended December 31, 2020.

Acquired IPR&D

The fair values of the acquired IPR&D assets were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements and inputs including estimated revenues and probabilities of success.

These assets are tested for impairment annually until commercialization, after which time the acquired

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

IPR&D will be amortized over its estimated useful life using the economic consumption method.

In connection with our acquisition of Stromedix, we recognized a $ 219.2 million acquired IPR&D intangible asset.

During the third quarter of 2019 we discontinued the Phase 2b study of BG00011 for the potential treatment of IPF due to safety concerns and recognized an impairment charge of $ 215.9 million to reduce the fair value of the IPR&D intangible asset to zero.

These assets are tested for impairment annually until commercialization, after which time the acquired IPR&D will be amortized over its estimated useful life using the economic consumption method.

In connection with our acquisition of BIN, we recognized a $ 110.9 million acquired IPR&D intangible asset.

We discontinued further development of BIIB054 for the potential treatment of Parkinson's disease and recognized an impairment charge of $ 75.4 million during the fourth quarter of 2020 to reduce the fair value of the IPR&D intangible asset to zero .

In connection with our acquisition of Stromedix Inc., we recognized a $ 219.2 million acquired IPR&D intangible asset.

During the third quarter of 2019 we discontinued the Phase 2b study of BG00011 for the potential treatment of IPF and recognized an impairment charge of $ 215.9 million to reduce the fair value of the IPR&D intangible asset to zero .

In connection with our acquisition of Convergence, we recognized a $ 424.6 million acquired IPR&D intangible asset.

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For additional information on our IPR&D intangible assets, including a discussion of our most significant assumptions, please read Note 6, Intangible Assets and Goodwill , to these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Financial Instruments

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Short-term debt securities 23.3 159.4

Total $ 626.9 $ 2,541.1

The carrying values of our commercial paper, including accrued interest, overnight reverse repurchase agreements, money market funds and our short-term debt securities approximate fair value due to their short-term maturities.

Marketable equity securities gains (losses) are recorded in other income (expense), net in our consolidated statements of income.

Our marketable equity securities gains (losses) are recorded in other income (expense), net in our consolidated statements of income.

The following tables summarize our marketable debt and equity securities, classified as available for sale:

As of December 31, 2019 (In millions)

As of December 31, 2020

(In millions) Amortized

Corporate debt securities

Current $ 897.8 $ 0.4 $ ( 0.2 ) $ 898.0

Non-current 402.5 1.1 ( 0.1 ) 403.5

Government securities

Current 380.6 0.1 — 380.7

Non-current 245.9 0.5 — 246.4

Mortgage and other asset backed securities

Current 0.2 — — 0.2

Non-current 122.1 0.2 ( 0.1 ) 122.2

Total marketable debt securities $ 2,049.1 $ 2.3 $ ( 0.4 ) $ 2,051.0

Marketable equity securities, current $ 70.6 $ 15.9 $ — $ 86.5

Marketable equity securities, non-current $ 1,168.9 $ 733.8 $ ( 14.9 ) $ 1,887.8

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2018 (In millions)

As of December 31, 2019

(In millions) Amortized

Corporate debt securities

Current $ 1,057.2 $ 1.0 $ — $ 1,058.2

Non-current 633.9 3.0 — 636.9

Government securities

Current 502.9 0.4 — 503.3

Non-current 510.1 0.8 ( 0.3 ) 510.6

Mortgage and other asset backed securities

Current 0.7 — — 0.7

Non-current 260.2 0.8 ( 0.4 ) 260.6

Total marketable debt securities $ 2,965.0 $ 6.0 $ ( 0.7 ) $ 2,970.3

Marketable equity securities, non-current $ 218.4 $ 132.1 $ ( 13.0 ) $ 337.5

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Summary of Contractual Maturities:

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The estimated fair value and amortized cost of our marketable debt securities available-for-sale by contractual maturity are summarized as follows:

As of December 31, 2019

As of December 31, 2018

(In millions)

As of December 31, 2020 As of December 31, 2019

(In millions) Estimated

Fair Value Amortized

Cost Estimated

Fair Value Amortized

Due in one year or less $ 1,278.9 $ 1,278.6 $ 1,562.2 $ 1,560.8

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Total marketable debt securities $ 2,051.0 $ 2,049.1 $ 2,970.3 $ 2,965.0

The average maturity of our marketable debt securities available-for-sale as of December 31, 2019 and 2018 , were 14 months and 12 months, respectively.

The average maturity of our marketable debt securities available-for-sale as of December 31, 2020 and 2019, was approximately 11 months and 14 months, respectively.

Proceeds from Marketable Debt Securities

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Realized losses 26.0 1.5 11.7

Realized losses for the year ended December 31, 2019 , primarily relate to sales of corporate bonds, agency mortgage-backed securities and other asset-backed securities.

Realized losses for the year ended December 31, 2018 , primarily relate to sales of corporate bonds, agency mortgage-backed securities and other asset-backed securities.

Realized losses for the year ended December 31, 2017 , primarily relate to impairments recognized on certain of our available-for-sale marketable debt securities, sales of agency mortgage-backed securities, corporate bonds and government securities.

Realized losses for the year ended December 31, 2020, 2019 and 2018, primarily relate to sales of corporate bonds, agency mortgage-backed securities and other asset-backed securities.

Strategic Investments

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Our strategic investment portfolio includes investments in equity securities of certain biotechnology companies, which are reflected within our disclosures included in Note 7, Fair Value Measurements , to these consolidated financial statements, venture capital funds where the underlying investments are in equity securities of certain biotechnology companies and non-marketable equity securities.

The increase in our strategic investment portfolio for the year ended December 31, 2020, was primarily due to our purchases of Sage, Denali and Sangamo common stock, as discussed below.

These purchases were reflected as net cash flows used in investing activities within the consolidated statement of cash flows.

Sage Therapeutics, Inc.

In November 2020 we entered into a global collaboration and license agreement with Sage.

In connection with the closing of this collaboration in December 2020 we purchased approximately 6.2 million shares of Sage common stock.

This investment is classified as a Level 2 marketable equity security due to certain holding period restrictions and is remeasured each reporting period and carried at fair value.

The effects of certain holding period restrictions on the investment are estimated using an option pricing valuation model.

The most significant assumptions within the model are the term of the restrictions and the stock price volatility, which is based upon historical volatility of similar companies.

We also use a constant maturity risk free-interest rate to match the remaining term of the restrictions on our investment in Sage common stock and a dividend yield of zero based upon the fact that Sage and similar companies generally have not historically granted cash dividends.

For additional information on our collaboration agreement with Sage, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our investments in equity securities include shares of Ionis common stock acquired in June 2018.

This investment is classified as a Level 2 marketable security due to certain holding period restrictions and is remeasured each reporting period and carried at fair value.

The effect of the holding period restrictions on our investment in Ionis common stock valuation are estimated using an option pricing valuation model.

Denali Therapeutics Inc.

In August 2020 we entered into a collaboration and license agreement with Denali.

As part of this collaboration we purchased approximately 13 million shares of Denali common stock in September 2020.

This investment is classified as a Level 2 marketable equity security due to certain holding period restrictions and is remeasured each reporting period and carried at fair value.

The effects of certain holding period restrictions on the investment are estimated using an option pricing valuation model.

The most significant assumptions within the model are the term of the restrictions and the stock price volatility, which is based upon historical volatility of similar companies.

We also use a constant maturity risk-free interest rate to match the remaining term of the restrictions on our investment in Ionis common stock and a dividend yield of zero based upon the fact that Ionis and similar companies generally have not historically granted cash dividends.

The remainder of our investments in equity securities of certain publicly-traded biotechnology companies are regularly measured and carried at fair value and classified as Level 1.

The decrease in our strategic investment portfolio for the year ended December 31, 2019 , primarily reflects our sale of a portion of our investment in Ionis common stock for approximately $ 382.0 million as well as our sale of our investment in a non-marketable equity security, partially offset by an increase in the fair value of our remaining investment in Ionis common stock.

For additional information on the June 2018 investment in Ionis common stock, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

We also use a constant maturity risk free-interest rate to match the remaining term of the restrictions on our investment in Denali common stock and a dividend yield of zero based upon the fact that Denali and similar companies generally have not historically granted cash dividends.

For additional information on our collaboration agreement with Denali, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

Sangamo Therapeutics, Inc.

In February 2020 we entered into a collaboration and license agreement with Sangamo.

In connection with the closing of this transaction in April 2020 we purchased approximately 24 million shares of Sangamo common stock.

This equity method investment will be remeasured each reporting period and carried at fair value due to our election of the fair value option.

The effects of certain holding period restrictions on the investment are estimated using an option pricing valuation model.

The most significant assumptions within the model are the term of the restrictions and the stock price volatility, which is based upon historical volatility of similar companies.

We also use a constant maturity risk free-interest rate to match the remaining term of the restrictions on our investment in Sangamo common stock and a dividend yield of zero based upon the fact that Sangamo and similar companies generally have not historically granted cash dividends.

For additional information on our collaboration agreement with Sangamo, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

Samsung Bioepis

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Foreign currency forward contracts in effect as of December 31, 2020 and 2019, had durations of 1 to 24 months and 1 to 15 months, respectively.

These contracts have been designated as cash flow hedges and unrealized gains or losses on the portion of these foreign currency forward contracts that are included in the effectiveness test are reported in accumulated other comprehensive income (loss) (referred to as AOCI in the tables below).

Realized gains and losses of such contracts are recognized in revenues when the sale of product in the currency being hedged is recognized and in operating expenses when the expense in the currency being hedged is recorded.

We recognize all cash flow hedge reclassifications from accumulated other comprehensive income and fair value changes of excluded portions in the same line item in our consolidated statements of income that has been impacted by the hedged item.

We recognize all cash flow hedge reclassifications from accumulated other comprehensive income (loss)

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and fair value changes of excluded portions in the same line item in our consolidated statements of income that has been impacted by the hedged item.

The notional value of foreign currency forward contracts that were entered into to hedge forecasted revenues and operating expenses is summarized as follows:

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As of December 31,

Foreign Currency:

(In millions) 2020 2019

British pound sterling

Canadian dollar

Euro $ 2,979.1 $ 1,892.4

British pound 250.6 —

Total foreign currency forward contracts $ 3,229.7 $ 1,892.4

The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity reflected net gains of $ 0.5 million as of December 31, 2019 , net gains of $ 27.3 million as of December 31, 2018 , and net losses of $ 113.0 million as of December 31, 2017 .

We expect the net gains of $ 0.5 million to be settled over the next 15 months , of which $ 2.4 million of these gains are expected to be settled over the next 12 months, with any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenues or operating expenses.

The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity reflected net losses of $ 212.5 million as of December 31, 2020 , net gains of $ 0.5 million as of December 31, 2019, and net gains of $ 27.3 million as of December 31, 2018.

We expect the net losses of $ 212.5 million to be settled over the next 24 months, of which $ 175.2 million of these losses are expected to be settled over the next 12 months, with any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenues or operating expenses.

We consider the impact of our and our counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its contractual obligations.

As of December 31, 2019 and 2018 , credit risk did not change the fair value of our foreign currency forward contracts.

The following tables summarize the effect of foreign currency forward contracts designated as hedging instruments in our consolidated statements of income:

As of December 31, 2020 and 2019, credit risk did not materially change the fair value of our foreign currency forward contracts.

The following table summarizes the effect of foreign currency forward contracts designated as hedging instruments in our consolidated statements of income:

For the Years Ended December 31,

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Recognized in Operating Income (in millions)

Operating expenses

For the Years Ended December 31,

Net Gains/(Losses)

Reclassified from AOCI into Operating Income (in millions)

Net Gains/(Losses)

Recognized Directly into Net Income (in millions)

Other income (expense)

Operating expenses

Other income (expense)

Location 2020 2019 2018 Location 2020 2019 2018

Revenues $ 18.3 $ 118.6 $ ( 42.5 ) Revenues $ ( 9.9 ) $ 2.9 $ 10.8

Operating expenses 3.3 ( 3.3 ) 0.2 Operating expenses — 0.2 ( 0.1 )

Interest Rate Contracts - Hedging Instruments

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Interest Rate Swap Contracts

In connection with the issuance of our 2.90 % Senior Notes, as described in Note 12, Indebtedness , to these consolidated financial statements, we entered into interest rate swaps with an aggregate notional amount of $ 675.0 million , which expire on September 15, 2020.

The interest rate swap contracts are designated as hedges of the fair value changes in our 2.90 % Senior Notes attributable to changes in interest rates.

The carrying value of our 2.90 % Senior Notes as of December 31, 2019 and 2018 , includes approximately $ 2.3 million and $ 14.5 million , respectively, related to changes in the fair value of these interest rate swap contracts.

Since the specific terms and notional amount of the swaps match the debt being hedged, it is assumed to be a highly effective hedge and all changes in the fair value of the swaps are recorded as a component of our 2.90 % Senior Notes with no net impact recorded in income.

Any net interest payments made or received on the interest rate swap contracts are recorded as a component of interest expense in our consolidated statements of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In connection with the issuance of our 2.90 % Senior Notes due September 15, 2020, we entered into interest rate swaps with an aggregate notional amount of $ 675.0 million, which were set to expire on September 15, 2020.

The interest rate swap contracts were designated as hedges of the fair value changes in our 2.90 % Senior Notes attributable to changes in interest rates.

The carrying value of our 2.90 % Senior Notes as of December 31, 2019, included approximately $ 2.3 million related to changes in the fair value of these interest rate swap contracts.

In May 2020 we settled our interest rate swap contracts, in conjunction with our early redemption of our 2.90 % Senior Notes, resulting in a gain of approximately $ 3.3 million for the year ended December 31, 2020, which was recorded as a component of interest expense in our consolidated statements of income.

Net Investment Hedges - Hedging Instruments

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We recognize changes in the spot exchange rate in accumulated other comprehensive income (loss).

The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity reflected net losses of $ 1.5 million and $ 3.8 million as of December 31, 2019 and 2018 , respectively.

The pre-tax portion

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity reflected net losses of $ 21.2 million and $ 1.5 million as of December 31, 2020 and 2019, respectively.

We exclude fair value changes related to the forward rate from our hedging relationship and will amortize the forward points in other income (expense), net in our consolidated statements of income over the term of the contract.

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Net Gains/(Losses)

Recognized in Other Comprehensive Income (Effective Portion) (in millions)

Net Gains/(Losses)

Recognized in Other Comprehensive Income (Amounts Excluded from Effectiveness Testing)

(in millions)

Net Gains/(Losses)

Recognized in Other Comprehensive Income (Effective Portion) (in millions) Net Gains/(Losses)

Recognized in Other Comprehensive Income (Amounts Excluded from Effectiveness Testing) (in millions) Net Gains/(Losses)

Recognized in Net Income

(Amounts Excluded from Effectiveness Testing) (in millions)

Gains (losses) on net investment hedge

Other income (expense)

Location 2020 2019 2018 Location 2020 2019 2018 Location 2020 2019 2018

Gains (losses) on net investment hedge $ ( 35.1 ) $ 25.3 $ ( 3.8 ) Gains (losses) on net investment hedge $ 4.5 $ 3.3 $ — Other income (expense) $ 2.9 $ 7.0 $ 1.5

For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

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We have not elected hedge accounting for these transactions.

The aggregate notional amount of these outstanding foreign currency contracts as of December 31, 2019 and 2018 , were $ 793.8 million and $ 735.1 million , respectively.

Net losses of $ 5.9 million and net gains of $ 2.0 million and $ 4.5 million related to these contracts were recorded as a component of other income (expense), net, for the years ended December 31, 2019 , 2018 and 2017 , respectively.

The aggregate notional amount of these outstanding foreign currency contracts was $ 1,158.0 million and $ 793.8 million as of December 31, 2020 and 2019, respectively.

Net gains of $ 30.1 million, net losses of $ 5.9 million and net gains of $ 2.0 million related to these contracts were recorded as a component of other income (expense), net for the years ended December 31, 2020, 2019 and 2018, respectively.

Summary of Derivative Instruments

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The amounts in the table below would not be substantially different if the derivative assets and liabilities were offset.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the fair value and presentation in our consolidated balance sheets of our outstanding derivative instruments, including those designated as hedging instruments:

(In millions)

Balance Sheet Location

As of December 31,

As of December 31, 2018

(In millions) Balance Sheet Location 2020 2019

Cash Flow Hedging Instruments:

Asset derivative instruments

Other current assets

Liability derivative instruments

Accrued expenses and other

Asset derivative instruments Other current assets $ — $ 33.8

Liability derivative instruments Accrued expenses and other 157.1 2.0

Other long-term liabilities 35.7 1.7

Net Investment Hedging Instruments:

Asset derivative instruments

Other current assets

Asset derivative instruments Other current assets — 2.0

Liability derivative instruments Accrued expenses and other 19.7 —

Fair Value Hedging Instruments

Liability derivative instruments

Accrued expenses and other

Other long-term liabilities

Liability derivative instruments Accrued expenses and other — 2.3

Other Derivative Instruments:

Asset derivative instruments

Other current assets

Liability derivative instruments

Accrued expenses and other

Asset derivative instruments Other current assets 20.5 8.0

Liability derivative instruments Accrued expenses and other 4.7 2.4

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment

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(In millions) 2020 2019

Land $ 119.8 $ 118.1

Buildings 1,025.3 835.0

Leasehold improvements 104.6 99.5

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Construction in progress 1,950.8 2,084.4

Total cost 5,193.8 4,838.2

accumulated depreciation ( 1,782.3 ) ( 1,590.9 )

Total property, plant and equipment, net $ 3,411.5 $ 3,247.3

Depreciation expense totaled $ 190.6 million , $ 269.4 million and $ 266.3 million for 2019 , 2018 and 2017 , respectively.

For 2019 , 2018 and 2017 we capitalized interest costs related to construction in progress totaling approximately $ 68.8 million , $ 54.0 million and $ 30.7 million , respectively.

The increase in capitalized interest costs is primarily due to the construction of our large-scale biologics manufacturing facility in Solothurn, Switzerland, as discussed below.

Depreciation expense totaled $ 201.9 million, $ 190.6 million and $ 269.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

For the years ended December 31, 2020, 2019 and 2018, we capitalized interest costs related to construction in progress totaling approximately $ 65.2 million, $ 68.8 million and $ 54.0 million, respectively.

Solothurn, Switzerland Manufacturing Facility

In order to support our drug development pipeline, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland.

We expect this facility to be partially operational by the end of 2020.

Upon completion, the facility will include 393,000 square feet related to a large-scale biologics manufacturing facility, 290,000 square feet of warehouse, utilities and support space and 51,000 square feet of administrative space.

In order to support our future growth and drug development pipeline, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland.

We expect this facility to be partially operational during the first half of 2021.

Upon completion, this facility will include 393,000 square feet related to a large-scale biologics manufacturing facility, 290,000 square feet of warehouse, utilities and support space and 51,000 square feet of administrative space.

As of December 31, 2020 and 2019, we had approximately $ 1.8 billion and $ 1.9 billion, respectively, capitalized as construction in progress related to this facility.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the year ended December 31, 2020, we placed approximately $ 256.8 million of fixed assets in service related to this facility.

Divestiture of Hillerød, Denmark Manufacturing Operations

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In addition, we sublease certain real estate to third parties.

Our sublease portfolio consists of operating leases, with remaining lease terms ranging from less than one year to nine years .

Our sublease portfolio consists of operating leases, with remaining lease terms ranging from four years to eight years .

Our subleases do not include an option to renew as they are coterminous with our operating leases.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

All of our leases qualify as operating leases.

The following table summarizes the presentation in our consolidated balance sheets of our operating leases:

(In millions)

Balance sheet location

As of December 31,

Operating lease assets

Current operating lease liabilities

Accrued expenses and other

Non-current operating lease liabilities

Long-term operating lease liabilities

(In millions) Balance sheet location 2020 2019

Operating lease assets Operating lease assets $ 433.3 $ 427.0

Current operating lease liabilities Accrued expenses and other $ 83.2 $ 73.6

Non-current operating lease liabilities Long-term operating lease liabilities 402.0 412.7

Total operating lease liabilities $ 485.2 $ 486.3

The following table summarizes the effect of lease costs in our consolidated statements of income:

For the year ended December 31,

(In millions)

Income Statement Location

Operating lease cost

Research and development

Selling, general and administrative

Variable lease cost

Research and development

For the Years Ended December 31,

(In millions) Income Statement Location 2020 2019

Operating lease cost Research and development $ 5.2 $ 6.7

Selling, general and administrative 93.1 84.6

Sublease income

Variable lease cost Research and development 1.1 1.2

Selling, general and administrative 21.1 23.7

Sublease income Selling, general and administrative ( 24.2 ) ( 25.6 )

Other (income) expense, net ( 3.9 ) ( 3.9 )

Net lease cost $ 92.4 $ 86.7

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Variable lease cost primarily related to operating expenses, taxes and insurance associated with our operating leases.

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The minimum lease payments for the next five years and thereafter is expected to be as follows:

(In millions)

As of December 31, 2019

(In millions) As of December 31, 2020

Thereafter 129.8

Total lease payments $ 533.0

interest 47.8

Present value of operating lease liabilities $ 485.2

Under the prior lease accounting guidance minimum rental commitments under non-cancelable leases, net of income from subleases, for each of the five years and total thereafter as of December 31, 2018, were as follows:

(In millions)

Minimum lease payments

income from subleases (1)

Net minimum lease payments

Represents sublease income expected to be received for the vacated manufacturing facility in Cambridge, MA, the vacated portion of our Weston, MA facility and other facilities throughout the world.

The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows:

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Weighted average discount rate 2.9 % 3.2 %

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Supplemental disclosure of cash flow information related to our operating leases included in cash flows provided by operating activities in our consolidated statements of cash flows is as follows:

For the year ended December 31,

As of December 31,

(In millions) 2020 2019

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Operating lease assets obtained in exchange for lease obligations 59.0 35.9

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our indebtedness is summarized as follows:

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2.900% Senior Notes due September 15, 2020 (1)

$ — $ 1,495.8

Current portion of notes payable $ — $ 1,495.8

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4.050% Senior Notes due September 15, 2025 1,741.2 1,739.5

4.050% Senior Notes due September 15, 2025

2.250% Senior Notes due May 1, 2030 1,491.1 —

5.200% Senior Notes due September 15, 2045 1,723.4 1,722.9

3.150% Senior Notes due May 1, 2050 1,472.6 —

Non-current portion of notes payable $ 7,426.2 $ 4,459.0

2020 Senior Notes

The following is a summary of our principal indebtedness as of December 31, 2019 :

$ 1.5 billion aggregate principal amount of 2.90 % Senior Notes due September 15, 2020, valued at 99.792 % of par;

On April 30, 2020, we issued senior unsecured notes for an aggregate principal amount of $ 3.0 billion (2020 Senior Notes) as of December 31, 2020, consisting of the following:

• $ 1.5 billion aggregate principal amount of 2.25 % Senior Notes due May 1, 2030, valued at 99.973 % of par;

• $ 1.5 billion aggregate principal amount of 3.15 % Senior Notes due May 1, 2050, valued at 99.174 % of par.

Our 2020 Senior Notes are senior unsecured obligations and may be redeemed at our option at any time at 100.0 % of the principal amount plus accrued interest and, until a specified period before maturity, a specified make-whole amount.

Our 2020 Senior Notes contain a change-of-control provision that, under certain circumstances, may require us to purchase our 2020 Senior Notes at a price equal to 101.0 % of the principal amount plus accrued and unpaid interest to the date of repurchase.

We incurred approximately $ 24.4 million of costs associated with this offering which have been recorded as a reduction to the carrying amount of the debt on our consolidated balance sheet.

These costs will be amortized as additional interest expense using the effective interest rate method over the period from issuance through maturity.

The discounts will be amortized as additional interest expense over the period from issuance through maturity using the effective interest rate method.

Interest on our 2020 Senior Notes is payable May 1 and November 1 of each year, commencing November 1, 2020.

2015 Senior Notes

The following is a summary of our currently outstanding senior secured notes issued in 2015 (the 2015 Senior Notes) as of December 31, 2020:

• $ 1.0 billion aggregate principal amount of 3.625 % Senior Notes due September 15, 2022, valued at 99.920 % of par;

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• $ 1.75 billion aggregate principal amount of 4.05 % Senior Notes due September 15, 2025, valued at 99.764 % of par;

• $ 1.75 billion aggregate principal amount of 5.20 % Senior Notes due September 15, 2045, valued at 99.294 % of par.

The costs associated with these offerings of approximately $ 47.5 million have been recorded as a reduction to the carrying amount of the debt in our consolidated balance sheets.

The original costs associated with this offering of approximately $ 47.5 million have been recorded as a reduction to the carrying amount of the debt in our consolidated balance sheets.

These costs along with the discounts will be amortized as additional interest expense using the effective interest rate method over the period from issuance through maturity.

These notes are senior unsecured obligations.

These Senior Notes may be redeemed at our option at any time at 100 % of the principal amount plus accrued interest and a specified make-whole amount.

These Senior Notes contain a change of control provision that may require us to purchase the notes at a price equal to 101 % of the principal amount plus accrued and unpaid interest to the date of purchase under certain circumstances.

In connection with the 2.90 % Senior Notes offering due in 2020, we entered into interest rate swap contracts.

The carrying value of the 2.90 % Senior Notes as of December 31, 2019 and 2018 , includes approximately $ 2.3 million and $ 14.5 million , respectively, related to changes in the fair value of these contracts.

Our 2015 Senior Notes are senior unsecured obligations and may be redeemed at our option at any time at 100.0 % of the principal amount plus accrued interest and a specified make-whole amount.

Our 2015 Senior Notes contain a change of control provision that may require us to purchase the notes at a price equal to 101.0 % of the principal amount plus accrued and unpaid interest to the date of purchase under certain circumstances.

On September 15, 2015, we issued $ 1.5 billion aggregate principal amount of 2.90 % Senior Notes due September 15, 2020, at 99.792 % of par.

Our 2.90 % Senior Notes were senior unsecured obligations.

In connection with the 2.90 % Senior Notes, we entered into interest rate swap contracts where we received a fixed rate and paid a variable rate.

In May 2020 we used the net proceeds from the sale of our 2020 Senior Notes to redeem our 2.90 % Senior Notes prior to their maturity and recognized a net pre-tax charge of $ 9.4 million upon the extinguishment of these notes.

This charge, which was recognized in interest expense in other income (expense), net in our consolidated statements of income for the year ended December 31, 2020, reflects the payment of a $ 12.7 million early call premium and the write off of remaining unamortized original debt issuance costs and discount balances, partially offset by a $ 3.3 million gain related to the settlement of the associated interest rate swap contracts.

For additional information on our interest rate contracts, please read Note 9, Derivative Instruments, to these consolidated financial statements.

2020 Credit Facility

In August 2015 we entered into a $ 1.0 billion , five -year senior unsecured revolving credit facility under which we were permitted to draw funds for working capital and general corporate purposes.

The terms of the revolving credit facility included a financial covenant that required us not to exceed a maximum consolidated leverage ratio.

In January 2020 we entered into a $ 1.0 billion, five-year senior unsecured revolving credit facility under which we are permitted to draw funds for working capital and general corporate purposes.

The terms of the revolving credit facility include a financial covenant that requires us not to exceed a maximum consolidated leverage ratio.

This revolving credit facility replaced the revolving credit facility that we entered into in August 2015.

As of December 31, 2020, we had no outstanding borrowings and were in compliance with all covenants under this facility.

In January 2020 we entered into a new $ 1.0 billion , five -year senior unsecured revolving credit facility that replaced the credit facility entered into in August 2015.

For additional information, please read Note 26, Subsequent Events , to these consolidated financial statements.

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Debt Maturity

The total gross payments due under our debt arrangements are as follows:

(In millions)

As of December 31, 2019

(In millions) As of December 31, 2020

2026 and thereafter 4,750.0

Total $ 7,500.0

The fair value of our debt is disclosed in Note 7, Fair Value Measurements, to these consolidated financial statements.

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We have 8.0 million shares of Preferred Stock authorized, of which 1.75 million shares are authorized as Series A, 1.0 million shares are authorized as Series X junior participating and 5.25 million shares are undesignated.

Shares may be issued without a vote or action of shareholders from time to time in classes or series with the designations, powers, preferences and the relative, participating, optional or other special rights of the shares of each such class or series and any qualifications, limitations or restrictions thereon as set forth in the instruments governing such shares.

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each such class or series and any qualifications, limitations or restrictions thereon as set forth in the instruments governing such shares.

Any such Preferred Stock may rank prior to common stock as to dividend rights, liquidation preference or both, and may have full or limited voting rights and may be convertible into shares of common stock.

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The following table describes the number of shares authorized, issued and outstanding of our common stock as of December 31, 2020, 2019 and 2018:

As of December 31, 2019

As of December 31, 2018

As of December 31, 2017

(In millions)

As of December 31, 2020 As of December 31, 2019 As of December 31, 2018

(In millions) Authorized Issued Outstanding Authorized Issued Outstanding Authorized Issued Outstanding

Common stock 1,000.0 176.2 152.4 1,000.0 198.0 174.2 1,000.0 221.0 197.2

Share Repurchases

In December 2019 our Board of Directors authorized a program to repurchase up to $ 5.0 billion of our common stock (December 2019 Share Repurchase Program).

Our December 2019 Share Repurchase Program does not have an expiration date.

All share repurchases under our December 2019 Share Repurchase Program will be retired.

We did not repurchase shares of our common stock under our December 2019 Share Repurchase Program during the year ended December 31, 2019 .

In March 2019 our Board of Directors authorized a program to repurchase up to $ 5.0 billion of our common stock (March 2019 Share Repurchase Program).

Our March 2019 Share Repurchase Program does not have an expiration date.

All share repurchases under our March 2019 Share Repurchase Program will be retired.

Under our March 2019 Share Repurchase Program, we repurchased and retired approximately 14.7 million shares of our common stock at a cost of approximately $ 3.7 billion during the year ended December 31, 2019 .

In October 2020 our Board of Directors authorized a program to repurchase up to $ 5.0 billion of our common stock (2020 Share Repurchase Program).

Our 2020 Share Repurchase Program does not have an expiration date.

All share repurchases under our 2020 Share Repurchase Program will be retired.

Under our 2020 Share Repurchase Program, we repurchased and retired approximately 1.6 million shares of our common stock at a cost of approximately $ 400.0 million during the year ended December 31, 2020.

In December 2019 our Board of Directors authorized a program to repurchase up to $ 5.0 billion of our common stock (December 2019 Share Repurchase Program), which was completed as of September 30, 2020.

All shares repurchased under our December 2019 Share Repurchase Program were retired.

Under our December 2019 Share Repurchase Program, we repurchased and retired approximately 16.7 million shares of our common stock at a cost of approximately $ 5.0 billion during the year ended December 31, 2020.

In March 2019 our Board of Directors authorized a program to repurchase up to $ 5.0 billion of our common stock (March 2019 Share Repurchase Program), which was completed as of March 31, 2020.

All shares repurchased under our March 2019 Share Repurchase Program were retired.

Under our March 2019 Share Repurchase Program, we repurchased and retired approximately 4.1 million and 14.7 million shares of our common stock at a cost of approximately $ 1.3 billion and $ 3.7 billion during the years ended December 31, 2020 and 2019, respectively.

In August 2018 our Board of Directors authorized a program to repurchase up to $ 3.5 billion of our common stock (2018 Share Repurchase Program), which was completed as of June 30, 2019.

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In July 2016 our Board of Directors authorized a program to repurchase up to $ 5.0 billion of our common stock (2016 Share Repurchase Program), which was completed as of June 30, 2018.

All share repurchases under our

All share repurchases under our 2016 Share Repurchase Program were retired.

Under our 2016 Share Repurchase Program, we repurchased and retired approximately 10.5 million shares of common stock at a cost of approximately $ 3.0 billion during the year ended December 31, 2018.

Amounts paid to repurchase shares in excess of their par value are allocated between additional paid-in capital and retained earnings, with payments in excess of our additional paid-in-capital balance recorded as a reduction to retained earnings.

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2016 Share Repurchase Program were retired.

Under our 2016 Share Repurchase Program, we repurchased and retired approximately 10.5 million and 3.7 million shares of common stock at a cost of approximately $ 3.0 billion and $ 1.0 billion during the years ended December 31, 2018 and 2017 , respectively.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in accumulated other comprehensive income (loss), net of tax by component:

(In millions)

Unrealized Gains (Losses) on Securities Available for Sale, net of tax

Unrealized Gains (Losses) on Cash Flow Hedges, net of tax

Gains (Losses) on Net Investment Hedge, Net of Tax

Unfunded Status of Postretirement Benefit Plans, net of tax

Currency Translation Adjustments

December 31, 2020

(In millions) Unrealized Gains (Losses) on Securities Available for Sale, net of tax Unrealized Gains (Losses) on Cash Flow Hedges, net of tax Gains (Losses) on Net Investment Hedge, Net of Tax Unfunded Status of Postretirement Benefit Plans, net of tax Currency Translation Adjustments Total

Balance, December 31, 2019 $ 4.2 $ 7.8 $ 25.1 $ ( 32.8 ) $ ( 139.5 ) $ ( 135.2 )

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Balance, December 31, 2020 $ 1.4 $ ( 179.0 ) $ ( 8.5 ) $ ( 66.3 ) $ ( 46.6 ) $ ( 299.0 )

(In millions)

Unrealized Gains (Losses) on Securities Available for Sale, net of tax

Unrealized Gains (Losses) on Cash Flow Hedges, net of tax

Gains (Losses) on Net Investment Hedge, Net of Tax

Unfunded Status of Postretirement Benefit Plans, net of tax

Currency Translation Adjustments

December 31, 2019

Balance, December 31, 2018 $ ( 4.0 ) $ 34.7 $ 3.5 $ ( 31.3 ) $ ( 243.3 ) $ ( 240.4 )

Amounts reclassified, net of tax, upon adoption of ASU 2016-01

Balance, January 1, 2018

Other comprehensive income (loss) before reclassifications 11.8 88.1 28.6 ( 1.5 ) 103.8 230.8

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Balance, December 31, 2019 $ 4.2 $ 7.8 $ 25.1 $ ( 32.8 ) $ ( 139.5 ) $ ( 135.2 )

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(In millions)

Unrealized Gains (Losses) on Securities Available for Sale, net of tax

Unrealized Gains (Losses) on Cash Flow Hedges, net of tax

Gains (Losses) on Net Investment Hedge, Net of Tax

Unfunded Status of Postretirement Benefit Plans, net of tax

Currency Translation Adjustments

December 31, 2018

Balance, December 31, 2017 $ ( 1.6 ) $ ( 104.5 ) $ — $ ( 36.8 ) $ ( 175.5 ) $ ( 318.4 )

Amount reclassified, net of tax, upon adoption of ASU 2016-01 1.5 — — — — 1.5

Balance, January 1, 2018 ( 0.1 ) ( 104.5 ) — ( 36.8 ) ( 175.5 ) ( 316.9 )

Other comprehensive income (loss) before reclassifications ( 10.6 ) 97.4 5.0 5.5 ( 67.8 ) 29.5

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Balance, December 31, 2018 $ ( 4.0 ) $ 34.7 $ 3.5 $ ( 31.3 ) $ ( 243.3 ) $ ( 240.4 )

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The following table summarizes the amounts reclassified from accumulated other comprehensive income:

(In millions)

Income Statement Location

Amounts Reclassified from

(In millions) Income Statement Location Amounts Reclassified from

Accumulated Other Comprehensive Income

For the Years Ended December 31,

Gains (losses) on securities available for sale

Other income (expense)

2020 2019 2018

Gains (losses) on securities available for sale Other income (expense) $ ( 8.2 ) $ 4.5 $ ( 8.5 )

Income tax benefit (expense) 1.7 ( 0.9 ) 1.8

Gains (losses) on cash flow hedges

Gains (losses) on cash flow hedges Revenues 18.3 118.6 ( 42.5 )

Operating expenses 3.3 ( 3.3 ) 0.2

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Income tax benefit (expense) ( 0.1 ) ( 0.6 ) 0.2

Gains (losses) on net investment hedge

Other Income (expense)

Gains (losses) on net investment hedge Other Income (expense) 2.9 7.0 1.5

Total reclassifications, net of tax $ 18.2 $ 125.6 $ ( 47.0 )

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Net income attributable to Biogen Inc.

$ 4,000.6 $ 5,888.5 $ 4,430.7

Weighted average number of common shares outstanding 160.9 187.1 204.9

Effect of dilutive securities:

Stock options and employee stock purchase plan

Time-vested restricted stock units 0.2 0.2 0.3

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Amounts excluded from the calculation of net income per diluted share because their effects were anti-dilutive were insignificant.

Earnings per share for the years ended December 31, 2020, 2019 and 2018, reflects the repurchase of approximately 22.4 million shares, 23.6 million shares and 14.8 million shares of our common stock, respectively, under our share repurchase programs.

For additional information on our share repurchase programs, please read Note 13, Equity , to these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Earnings per share for the years ended December 31, 2019 , 2018 and 2017 , reflects, on a weighted average basis, the repurchase of approximately 23.6 million shares, 14.8 million shares and 3.7 million shares of our common stock, respectively, under our March 2019, 2018 and 2016 Share Repurchase Programs.

Share-Based Payments

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Selling, general and administrative 131.3 148.3 105.8

Subtotal 211.3 225.4 181.6

Capitalized share-based compensation costs ( 6.2 ) ( 8.9 ) ( 11.5 )

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Share-based compensation expense included in net income attributable to Biogen Inc.

$ 171.6 $ 180.8 $ 142.6

The following table summarizes share-based compensation expense associated with each of our share-based compensation programs:

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NST stock options — 26.2 —

Subtotal 211.3 225.4 181.6

Capitalized share-based compensation costs ( 6.2 ) ( 8.9 ) ( 11.5 )

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We have reserved a total of 1.6 million shares of common stock for issuance under the 2006 Directors Plan.

The 2006 Directors Plan

The 2006 Directors Plan provides that awards other than stock options and stock appreciation rights will be counted against the total number of shares reserved under the plan in a 1.5 -to-1 ratio.

In June 2015 our shareholders approved an amendment to extend the term of the 2006 Directors Plan until June 2025.

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provides that awards other than stock options and stock appreciation rights will be counted against the total number of shares reserved under the plan in a 1.5-to-1 ratio.

In June 2015 our shareholders approved an amendment to extend the term of the 2006 Directors Plan until June 2025.

In June 2017 our shareholders approved the 2017 Omnibus Equity Plan for share-based awards to our employees.

Awards granted from the 2017 Omnibus Equity Plan may include stock options, shares of restricted stock, RSUs, performance shares, stock appreciation rights and other awards in such amounts and with such terms and conditions as may be determined by a committee of our Board of Directors, subject to the provisions of the 2017 Omnibus Equity Plan.

Shares of common stock available for grant under the 2017 Omnibus Equity Plan consist of 8.0 million shares reserved for this purpose, plus shares of common stock that remained available for grant under our 2008 Omnibus Equity Plan as of June 7, 2017, or that could again become available for grant if outstanding awards under the 2008 Omnibus Equity Plan as of June 7, 2017, are cancelled, surrendered or terminated in whole or in part.

2008 Omnibus Equity Plan (2008 Omnibus Equity Plan) as of June 7, 2017, or that could again become available for grant if outstanding awards under the 2008 Omnibus Equity Plan as of June 7, 2017, are cancelled, surrendered or terminated in whole or in part.

The 2017 Omnibus Equity Plan provides that awards other than stock options and stock appreciation rights will be counted against the total number of shares available under the plan in a 1.5 -to-1 ratio.

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The following table summarizes our stock option activity:

Shares Weighted Average

Exercise Price

Outstanding at December 31, 2019 12,000 $ 58.46

Exercised ( 12,000 ) 58.46

Cancelled — —

Outstanding at December 31, 2020 — $ —

The total intrinsic values of options exercised in 2020, 2019 and 2018 totaled $ 2.9 million, $ 4.2 million and $ 4.0 million, respectively.

The aggregate intrinsic values of options outstanding as of December 31, 2019 , totaled $ 2.9 million .

The weighted average remaining contractual term for options outstanding as of December 31, 2019 , was 0.2 years.

The following table summarizes the amount of tax benefit realized for stock options and cash received from the exercise of stock options:

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MSUs awarded to employees prior to 2014 vested in four equal annual increments beginning on the first anniversary of the grant date.

Participants may ultimately earn between 0 % and 150 % of the target number of units granted based on actual stock performance.

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MSUs awarded to employees in 2014 and thereafter vest in three equal annual increments beginning on the first anniversary of the grant date, and participants may ultimately earn between 0 % and 200 % of the target number of units granted based on actual stock performance.

Participants may ultimately earn between zero and 150.0 % of the target number of units granted based on actual stock performance.

MSUs awarded to employees in 2014 and thereafter vest in three equal annual increments beginning on the first anniversary of the grant date, and participants may ultimately earn between zero and 200.0 % of the target number of units granted based on actual stock performance.

The vesting of these awards is subject to the respective employee’s continued employment.

The number of MSUs granted represents the target number of units that are eligible to be earned based on the attainment of certain market-based criteria involving our stock price.

The number of MSUs earned is calculated at each annual anniversary from the date of grant over the respective vesting periods, resulting in multiple performance periods.

The number of MSUs earned is calculated at each annual

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anniversary from the date of grant over the respective vesting periods, resulting in multiple performance periods.

Accordingly, additional MSUs may be issued or currently outstanding MSUs may be cancelled upon final determination of the number of awards earned.

The following table summarizes our MSU activity:

December 31, 2020

Shares Weighted Average

Grant Date Fair Value

Unvested at December 31, 2019 183,000 $ 378.09

133,000 398.61

Vested ( 82,000 ) 375.42

Forfeited ( 33,000 ) 402.62

Unvested at December 31, 2020 201,000 $ 388.98

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This valuation methodology utilizes several key assumptions, the 30 calendar day average closing stock price on the date of grant for MSUs, expected volatility of our stock price, risk-free rates of return and expected dividend yield.

T he assumptions used in our valuation are summarized as follows:

The assumptions used in our valuation are summarized as follows:

For the Years Ended December 31,

2020 2019 2018

Expected dividend yield — % — % — %

Range of expected stock price volatility 37.8% - 44.1% 31.2% - 33.6% 27.5% - 32.4%

31.2% - 33.6%

27.5% - 32.4%

33.0% - 35.6%

Range of risk-free interest rates 1.41% - 1.48% 2.46% - 2.53% 1.9% - 2.3%

2.46% - 2.53%

30 calendar day average stock price on grant date $257.83 - $325.40 $228.59 - $331.18 $279.47 - $346.76

$228.59 - $331.18

$279.47 - $346.76

$263.18 - $267.88

Weighted-average per share grant date fair value $ 398.61 $ 378.08 $ 378.85

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The number of CSPUs granted represents the target number of units that are eligible to be earned based on the attainment of certain performance measures established at the beginning of the performance period, which ends on December 31 of each year.

Participants may ultimately earn between 0 % and 200 % of the target number of units granted based on the degree of actual performance metric achievement.

Participants may ultimately earn between zero and 200.0 % of the target number of units granted based on the degree of actual performance metric achievement.

Accordingly, additional CSPUs may be issued or currently outstanding CSPUs may be cancelled upon final determination of the number of units earned.

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Since no shares are issued, these awards do not dilute equity.

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The following table summarizes our CSPU activity:

Unvested at December 31, 2019 13,000

Vested ( 13,000 )

Unvested at December 31, 2020 —

The cash paid in settlement of CSPUs vested in 2020, 2019 and 2018 totaled $ 3.8 million, $ 10.6 million and $ 15.1 million, respectively.

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Performance-vested Restricted Stock Units (PUs)

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The number of PUs granted represents the target number of units that are eligible to be earned based on the attainment of certain performance measures established at the beginning of the performance period, which ends on December 31 of each year.

Participants may ultimately earn between 0 % and 200 % of the target number of units granted based on the degree of actual performance metric achievement.

Participants may ultimately earn between zero and 200.0 % of the target number of units granted based on the degree of actual performance metric achievement.

Accordingly, additional PUs may be issued or currently outstanding PUs may be cancelled upon final determination of the number of units earned.

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Unvested at December 31, 2019 11,000

Vested ( 11,000 )

Unvested at December 31, 2020 —

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The number of PSUs granted represents the target number of units that are eligible to be earned based on the achievement of cumulative three-year performance measures established at the beginning of the performance period, which ends on December 31 of the third year of the performance period.

Participants may ultimately earn between 0 % and 200 % of the target number of PSUs granted based on the degree of achievement of the applicable performance metric.

Participants may ultimately earn between zero and 200.0 % of the target number of PSUs granted based on the degree of achievement of the applicable performance metric.

Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the number of units earned.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes our PSUs that settle in stock activity:

Shares Weighted

Unvested at December 31, 2019 111,000 $ 316.39

73,000 293.35

Forfeited ( 29,000 ) 323.42

Unvested at December 31, 2020 155,000 $ 304.19

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The vesting of these awards is subject to the respective employee’s continued employment.

The number of PSUs granted represents the target number of units that are eligible to be earned based on the achievement of three annual performance measures established when the performance objectives are defined, which will be at the beginning of each year and will end on December 31 of such year.

Participants may ultimately earn between 0 % and 200 % of the target number of PSUs granted based on the degree of achievement of the applicable performance metric.

The number of PSUs granted represents the target number of units that are eligible to be earned based on the

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

achievement of three annual performance measures established when the performance objectives are defined, which will be at the beginning of each year and will end on December 31 of such year.

Participants may ultimately earn between zero and 200.0 % of the target number of PSUs granted based on the degree of achievement of the applicable performance metric.

Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the number of units earned.

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Unvested at December 31, 2019 82,000

Vested ( 2,000 )

Forfeited ( 23,000 )

Unvested at December 31, 2020 120,000

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Shares of our common stock will be delivered to the director upon vesting and are not subject to any withholding taxes.

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The following table summarizes our RSU activity:

Shares Weighted Average

Unvested at December 31, 2019 938,000 $ 306.55

620,000 318.87

Vested ( 440,000 ) 304.45

Forfeited ( 100,000 ) 314.46

Unvested at December 31, 2020 1,018,000 $ 314.46

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The following table summarizes our ESPP activity:

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For the Years Ended December 31,

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Income Tax Expense

Income before income tax provision and the income tax expense consist of the following:

Income before income tax expense and the income tax expense consist of the following:

For the Years Ended December 31,

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Income before income taxes (benefit):

Domestic $ 3,290.0 $ 4,725.3 $ 3,877.0

Foreign 1,757.5 2,400.6 2,022.6

Total $ 5,047.5 $ 7,125.9 $ 5,899.6

Income tax expense (benefit):

Federal $ 647.0 $ 947.4 $ 1,131.8

State 41.2 59.1 45.5

Foreign 155.1 84.4 140.0

Total 843.3 1,090.9 1,317.3

Federal $ ( 1,749.9 ) $ 1,143.9 $ ( 62.0 )

State ( 6.8 ) ( 2.3 ) ( 7.4 )

Foreign 1,905.7 ( 1,074.5 ) 177.7

Total 149.0 67.1 108.3

Total income tax expense $ 992.3 $ 1,158.0 $ 1,425.6

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The Tax Cuts and Jobs Act of 2017 (2017 Tax Act) resulted in significant changes to the U.S.

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The 2017 Tax Act also transitions international taxation from a worldwide system to a modified territorial system, which has the effect of subjecting certain earnings of our foreign subsidiaries and collaborations to immediate U.S.

taxation as GILTI or Subpart F income, and includes base erosion prevention measures on U.S.

earnings and the reduced effective tax rate on income that comes from U.S.

taxation as GILTI or Subpart F income, includes a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax) and base erosion prevention measures on U.S.

earnings and reduces the effective tax rate on income that comes from U.S.

exports, called Foreign Derived Intangible Income.

These changes became effective in 2018.

During the fourth quarter of 2017 we recognized within our provision for income taxes a $ 1.2 billion estimate pursuant to the U.S.

Securities and Exchange Commission Staff Accounting Bulletin No.

Our estimate included an amount of $ 989.6 million associated with a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax), as discussed below, and $ 184.0 million related to the impact of remeasuring our deferred tax balances to reflect the new federal statutory rate and other changes to U.S.

During the year ended December 31, 2018, we recognized a net reduction of $ 34.6 million in our estimated Transition Toll Tax, an expense of $ 12.7 million to remeasure our deferred tax balances, an expense of $ 135.8 million related to establishing deferred taxes for GILTI and an expense of $ 11.0 million to reflect other aspects of the 2017 Tax Act.

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As of December 31, 2020 and 2019, we have accrued income tax liabilities of $ 697.0 million under the Transition Toll Tax.

Of the amounts accrued as of December 31, 2019 , no amounts are expected to be paid within one year due to an approximately $ 87.0 million carryforward of taxes paid in relation to the company's 2017 tax return.

The Transition Toll Tax will be paid over an eight--year period, which started in 2018, and does not accrue interest.

Of the amounts accrued as of December 31, 2020, $ 62.0 million is expected to be paid within one year.

The Transition Toll Tax will be paid over an eight--year period, which started in 2018, and does not accrue

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unremitted Earnings

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The residual U.S.

tax liability, if these differences reverse, would be between $ 0.3 billion and $ 0.4 billion as of December 31, 2019.

Article 20 Procedure of ZINBRYTA

In 2017 the European Medicines Agency initiated a review (referred to as an Article 20 Procedure) of ZINBRYTA following the report of a case of fatal fulminant liver failure, as well as four cases of serious liver injury.

As a result of the Article 20 Procedure of ZINBRYTA, for the year ended December 31, 2017, we recognized a net impairment charge on certain tax assets related to ZINBRYTA reflected within income tax expense of $ 48.8 million .

This charge reflected the write-off of $ 142.6 million related to prepaid taxes, which was partially offset by the recognition of an unrecorded deferred tax benefit of $ 93.8 million .

For additional information on our collaboration arrangement with AbbVie, please read Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

tax liability, if these differences reverse, would be between $ 300.0 million and $ 400.0 million as of December 31, 2020.

Coronavirus Aid, Relief and Economic Security Act

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in the U.S.

in March 2020.

The CARES Act adjusted a number of provisions of the tax code, including the calculation and eligibility of certain deductions and the treatment of net operating losses and tax credits.

The enactment of the CARES Act did not result in any material adjustments to our income tax provision for the year ended December 31, 2020, or to our net deferred tax assets as of December 31, 2020.

In June 2020 and September 2020 judgments were entered in favor of the defendants in the patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, in West Virginia and Delaware.

We have appealed the judgments in both actions.

For additional information, please read Note 20, Litigation , to these consolidated financial statements.

Multiple TECFIDERA generic entrants are now in the U.S.

market and have deeply discounted prices compared to TECFIDERA.

The generic competition for TECFIDERA significantly reduced our TECFIDERA revenues during the year ended December 31, 2020, and is expected to have a substantial negative impact on our TECFIDERA revenues for as long as there is generic competition.

As of December 31, 2020, we have assessed the realizability of our deferred tax assets that are dependent on future expected sales of TECFIDERA in the U.S.

and reduced the net value of certain deferred tax assets by approximately $ 1.7 billion and reduced the net value of deferred tax liabilities associated with GILTI and tax credits by approximately $ 1.6 billion.

For the year ended December 31, 2020, the income tax expense associated with these reductions was approximately $ 90.3 million.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred Tax Assets and Liabilitie s

Deferred Tax Assets and Liabilities

Significant components of our deferred tax assets and liabilities are summarized as follows:

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Deferred tax assets:

Tax credits $ 113.4 $ 106.6

Inventory, other reserves and accruals 165.9 162.0

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Share-based compensation 23.3 23.8

Other 103.1 103.7

Valuation allowance ( 1,753.9 ) ( 1.1 )

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Purchased intangible assets $ ( 396.2 ) $ ( 350.3 )

GILTI ( 1,143.7 ) ( 1,381.6 )

Tax credits ( 174.6 ) ( 1,617.2 )

Depreciation, amortization and other ( 227.0 ) ( 135.0 )

Total deferred tax liabilities $ ( 1,941.5 ) $ ( 3,484.1 )

In addition to deferred tax assets and liabilities, we have recorded prepaid tax and deferred charges related to intra-entity sales of inventory.

As of December 31, 2019 and 2018 , the total deferred charges and prepaid taxes were $ 243.8 million and $ 239.2 million , respectively.

The change in the valuation allowance between December 31, 2020 and 2019, was primarily related to the establishment of a valuation allowance against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above.

In addition to deferred tax assets and liabilities, we have recorded deferred charges related to intra-entity sales of inventory.

As of December 31, 2020 and 2019, the total deferred charges were $ 142.2 million and $ 243.8 million, respectively.

A reconciliation between the U.S.

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For the Years Ended December 31,

2020 2019 2018

Statutory rate 21.0 % 21.0 % 21.0 %

State taxes 0.7 0.8 0.6

Taxes on foreign earnings ( 3.3 ) ( 4.5 ) ( 1.9 )

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Internal reorganization of certain intellectual property rights — ( 2.1 ) —

Other permanent items

TECFIDERA impairment 1.8 — —

GILTI 1.3 1.5 1.6

tax reform — — 2.1

Swiss tax reform — ( 0.8 ) —

Manufacturing deduction

Impairment of ZINBRYTA related tax assets

Other ( 0.9 ) 0.1 0.5

Effective tax rate 19.7 % 16.3 % 24.2 %

Changes in Tax Rate

For the year ended December 31, 2019 , as compared to 2018 , the decrease in our effective tax rate was primarily due to the combination of the internal reorganization of certain intellectual property rights and the impact of the enactment of a new taxing regime in the country and certain cantons of Switzerland.

This decrease was partially offset by a $ 68.9 million tax expense related to the divestiture of our subsidiary that owned our Hillerød, Denmark manufacturing operations.

We also had a higher effective tax rate in 2018 resulting from the unfavorable effects of

For the year ended December 31, 2020, our effective tax rate was primarily increased by the income tax expense related to the establishment of a valuation allowance against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above, and partially offset by the benefit recognized on the effective settlement of certain tax matters.

Additionally, our 2019 effective tax rate benefited from

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the 2017 Tax Act and our sale of inventory, the tax effect of which had been included within prepaid taxes at January 1, 2018, at a higher effective tax rate than the 2018 statutory tax rate.

Although we are recognizing a loss on the divestiture of our Hillerød, Denmark manufacturing operations, the divestiture required us to write-off certain deferred tax assets and resulted in a taxable gain in certain jurisdictions.

an internal reorganization of certain intellectual property rights and the enactment of a new taxing regime in the country and certain cantons of Switzerland, which we refer to as Swiss Tax Reform, partially offset by tax expense related to the divestiture of our Hillerød, Denmark manufacturing operations.

Although we recognized a loss on the divestiture of our Hillerød, Denmark manufacturing operations, the divestiture required us to write-off certain deferred tax assets and resulted in a taxable gain in certain jurisdictions.

For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures , to these consolidated financial statements.

As a result of the 2019 internal reorganization of certain intellectual property rights, we recorded a deferred tax asset of $ 754.1 million and a deferred tax liability of $ 603.3 million as of December 31, 2019.

For the year ended December 31, 2018 , as compared to 2017 , the decrease in our effective tax rate was primarily due to the enactment of the 2017 Tax Act.

The effects of an overall reduction in the federal statutory rate in the U.S.

were partially offset by the elimination of the manufacturing deduction, the imposition of the GILTI tax on international earnings, our recording of deferred taxes on GILTI in 2018, limits on the deductibility of certain benefits on executive compensation and a reduction in the tax benefit associated with the Orphan Drug Credit, all resulting from the 2017 Tax Act, and a change in accounting rules related to recording the tax impacts of intra-entity transactions.

For the year ended December 31, 2019, as compared to 2018, the decrease in our effective tax rate was primarily due to the combination of the internal reorganization of certain intellectual property rights and the impact of the Swiss Tax Reform.

This decrease was partially offset by a $ 68.9 million tax expense related to the divestiture of our subsidiary that owned our Hillerød, Denmark manufacturing operations.

We also had a higher effective tax rate in 2018 resulting from the unfavorable effects of the 2017 Tax Act and our sale of inventory, the tax effect of which had been included within prepaid taxes at January 1, 2018, at a higher effective tax rate than the 2018 statutory tax rate.

Tax Attributes

As of December 31, 2019 , we had net operating losses and general business credit carry forwards for federal income tax purposes of approximately $ 0.7 million and $ 1.3 million , respectively, which begin to expire in 2022.

Additionally, for state income tax purposes, we had net operating loss carry forwards of approximately $ 4.6 million that begin to expire in 2020.

For state income tax purposes, we had research and investment credit carry forwards of approximately $ 133.8 million that begin to expire in 2020.

For foreign income tax purposes, we had $ 1,773.8 million of net operating loss carryforwards that begin to expire in 2025.

As of December 31, 2020, we had net operating losses and general business credit carry forwards for U.S.

federal income tax purposes of approximately $ 0.6 million and $ 1.3 million, respectively, which begin to expire in 2026.

state income tax purposes, we had research and investment credit carry forwards of approximately $ 142.4 million that begin to expire in 2022.

For foreign income tax purposes, we had $ 18.0 billion of Swiss federal net operating loss carryforwards that begin to expire in 2025 and $ 16.8 billion of Swiss cantonal net operating loss carryforwards that begin to expire in 2025.

In assessing the realizability of our deferred tax assets, we have considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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In making this determination, under the applicable financial reporting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies.

Based upon the level of historical taxable income and income tax liability and projections for future taxable income over the periods in which the deferred tax assets are utilizable, we believe it is more likely than not that we will realize the net benefits of the deferred tax assets of our wholly owned subsidiaries.

In the event that actual results differ from our estimates or we adjust our estimates in future periods, we may need to establish a valuation allowance, which could materially impact our consolidated financial position and results of operations.

Accounting for Uncertainty in Income Taxe s

In the event that actual results differ from our estimates or we adjust our estimates in future periods, we may need to adjust or establish a valuation allowance, which could materially impact our consolidated financial position and results of operations.

Accounting for Uncertainty in Income Taxes

A reconciliation of the beginning and ending amount of our unrecognized tax benefits is summarized as follows:

For the Years Ended December 31,

(In millions) 2020 2019 2018

Balance at January 1,

Beginning balance at January 1, $ 129.9 $ 114.2 $ 66.8

Additions based on tax positions related to the current period 1.5 5.3 0.5

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Settlement refund (payment) ( 35.9 ) 3.6 4.7

Balance at December 31,

Our 2017 activity reflects a refund received from a state related to the settlement of an uncertain tax position.

Ending balance ar December 31, $ 75.7 $ 129.9 $ 114.2

Our 2020 activity reflects the impact of the effective settlement of certain tax matters.

We and our subsidiaries are routinely examined by various taxing authorities.

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income tax examinations for years before 2012.

Internal Revenue Service and other national tax authorities routinely examine our intercompany transfer pricing with respect to intellectual property related transactions and it is possible that they may disagree with one or more positions we have taken with respect to such valuations.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Included in the balance of unrecognized tax benefits as of December 31, 2020, 2019 and 2018, are $ 68.8 million, $ 122.7 million and $ 109.1 million (net of the federal benefit on state issues), respectively, of unrecognized tax benefits that, if recognized, would affect the effective income tax rate in future periods.

We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense.

In 2019 , 2018 and 2017 we recognized a net interest expense of $ 4.7 million , $ 2.2 million and $ 4.8 million , respectively.

In 2020, 2019 and 2018 we recognized a net interest and penalty expense of $ 1.0 million, $ 4.7 million and $ 2.2 million, respectively.

We have accrued $ 21.2 million and $ 20.0 million for the payment of interest and penalties as of December 31, 2020 and 2019, respectively.

Accounting for Uncertainty in Income Taxes

Federal and State Uncertain Tax Positions

It is reasonably possible that we will adjust the value of our uncertain tax positions related to certain transfer pricing, collaboration matters and other issues as we receive additional information from various taxing authorities, including reaching settlements with such authorities.

We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could decrease by up to approximately $ 25.0 million in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations.

Accounting for Bioverativ Spin-off

On February 1, 2017, in connection with the spin-off of our hemophilia business, we distributed all of the then outstanding shares of Bioverativ common stock to Biogen shareholders pursuant to a separation agreement.

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The spin-off of our hemophilia business was intended to qualify for tax-free treatment to Biogen and its shareholders under the Internal Revenue Code.

Our 2017 tax return remains open to audit.

Our 2017 tax return position remains open to audit.

Bioverativ and Sanofi agreed to indemnify us for certain potential liabilities that may arise.

Federal and State Uncertain Tax Positions

We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could decrease by up to approximately $ 75.0 million in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations.

Other Consolidated Financial Statement Detail

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Cash paid during the year for:

Interest $ 272.7 $ 244.2 $ 243.2

Income taxes 906.7 1,064.5 1,007.1

Non-cash Operating, Investing and Financing Activity

In the fourth quarter of 2018 we accrued $ 300.0 million upon reaching $ 20.0 billion in total cumulative sales of the Fumapharm Products, which was paid in the first quarter of 2019.

In the fourth quarter of 2017 we accrued $ 600.0 million upon reaching $ 15.0 billion and $ 16.0 billion in total cumulative sales of the Fumapharm Products, which was paid in the first quarter of 2018.

In the fourth quarter of 2018 we accrued $ 300.0 million upon reaching $ 20.0 billion in total cumulative sales of FUMADERM and TECFIDERA (together, the Fumapharm Products), which was paid in the first quarter of 2019.

These amounts, net of tax benefit, were accounted for as increases to goodwill in accordance with the accounting standard applicable to business combinations when we acquired Fumapharm AG.

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Foreign exchange gains (losses), net ( 10.7 ) ( 7.0 ) ( 9.9 )

Other, net 2.9 ( 47.0 ) ( 10.5 )

Total other income (expense), net $ 497.4 $ 83.3 $ 11.0

Gain (loss) on investments, net, as reflected in the table above, relate to debt securities, equity securities of certain biotechnology companies, venture capital funds where the underlying investments are in equity securities of certain biotechnology companies and non-marketable equity securities.

For the year ended December 31, 2020, net unrealized and realized gains on our holdings in equity securities were approximately $ 681.8 million and $ 12.1 million, respectively, compared to net unrealized and realized gains of $ 150.1 million and $ 50.0 million in 2019.

The net unrealized gains recognized during the year ended December 31, 2020, primarily reflects an increase in the fair value of Denali and Sangamo common stock of approximately $ 703.9 million.

The following table summarizes our gain (loss) on investments, net that relates to our equity securities held as of December 31, 2020, 2019 and 2018:

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Net gains (losses) recognized during the period on equity securities $ 693.9 $ 200.1 $ 127.9

Net gains (losses) recognized during the period on equity securities sold during the period

Unrealized gains (losses) recognized during the period on equity securities held as of December 31

Net gains (losses) recognized on equity securities sold during the period and on capital distributions 12.1 50.0 ( 0.6 )

Unrealized gains (losses) recognized during the period on equity securities $ 681.8 $ 150.1 $ 128.5

Accrued Expenses and Other

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Revenue-related reserves for discounts and allowances $ 1,080.6 $ 1,001.1

Employee compensation and benefits

Collaboration expenses 389.9 281.6

Employee compensation and benefits 333.8 309.1

Royalties and licensing fees 218.5 220.9

Derivative liabilities 181.5 6.7

Current portion of contingent consideration obligations 149.6 148.4

Construction in progress

Other 791.4 798.0

Total accrued expenses and other $ 3,145.3 $ 2,765.8

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Our collaboration arrangements will continue in effect until we mutually agree to terminate the collaboration, except that if we undergo a change in control, as defined in our collaboration agreement, Genentech has the right to present an offer to buy the rights to RITUXAN and we must either accept Genentech’s offer or purchase Genentech’s rights on the same terms as its offer.

Genentech will also be deemed concurrently to have purchased our rights to any other anti-CD20 products in development in exchange for a royalty and our rights to GAZYVA in exchange for the compensation described in the table below.

Genentech will also be deemed concurrently to have purchased our rights to OCREVUS and any other collaboration anti-CD20 products in development in exchange for a royalty as well as our rights to GAZYVA in exchange for the compensation described in the collaboration arrangement.

Our collaboration with Genentech was created through a contractual arrangement and not through a joint venture or other legal entity.

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OCREVUS royalty revenues were based on our estimates from third party and market research data of OCREVUS sales occurring during the corresponding period.

Differences between actual and estimated royalty revenues will be adjusted for in the period in which they become known, which is expected to be the following quarter.

Differences between actual and estimated royalty revenues will be adjusted for in the period in which they become known, which is generally expected to be the following quarter.

AND SUBSIDIARIES

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Our share of RITUXAN pre-tax profits in the U.S.

decreased from 39 % to 37.5 % in the third quarter of 2017 as gross sales of GAZYVA in the U.S.

for the preceding 12-month period exceeded $ 150.0 million .

in excess of $ 50.0 million for the years ended December 31, 2020, 2019 and 2018, was 37.5 %.

In addition, should the FDA approve an anti-CD20 product other than OCREVUS or GAZYVA that is acquired or developed by Genentech and subject to the collaboration agreement, our share of the co-promotion operating profits would be between 30.0 % and 37.5 % based on certain events.

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After Second GAZYVA Threshold Date 35.0 %

Our share of GAZYVA operating profits in 2019 and 2018 was 37.5 % .

In 2017 our share of operating profits on GAZYVA was 35 % .

Our share of GAZYVA pre-tax profits in excess of $ 50.0 million for the years ended December 31, 2020, 2019 and 2018, was 37.5 %.

In November 2017 the FDA approved GAZYVA in combination with chemotherapy, followed by GAZYVA alone, for people with previously untreated advanced follicular lymphoma.

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Total revenues from anti-CD20 therapeutic programs $ 1,977.8 $ 2,290.4 $ 1,980.2

Prior to regulatory approval, we record our share of the expenses incurred by the collaboration for the development of anti-CD20 products in research and development expense in our consolidated statements of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

After an anti-CD20 product is approved, we record our share of the development expenses related to that product as a reduction of our share of pre-tax profits in revenues from anti-CD20 therapeutic programs.

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In January 2012 we entered into a collaboration and license agreement with Ionis pursuant to which we have an exclusive, worldwide license to develop and commercialize SPINRAZA for the treatment of SMA.

SPINRAZA was approved for the treatment of SMA in the U.S., E.U.

and Japan in December 2016, June 2017 and July 2017, respectively.

For the years ended December 31, 2019 , 2018 and 2017 , we recognized product revenues of $ 2,097.0 million , $ 1,724.2 million and $ 883.7 million , respectively, on our sales of SPINRAZA.

Under our agreement with Ionis, we make royalty payments to Ionis on annual worldwide net sales of SPINRAZA using a tiered royalty rate between 11.0 % and 15.0 %, which are recognized in cost of sales within our consolidated statements of income.

Royalty cost of sales related to sales of SPINRAZA for the years ended December 31, 2020, 2019 and 2018, totaled $ 286.6 million, $ 293.0 million and $ 238.0 million, respectively.

During 2017 we made milestone payments to Ionis totaling $ 150.0 million related to the marketing approvals discussed above, which were capitalized in intangible assets, net in our consolidated balance sheets.

Antisense Therapeutics

2012 Ionis Agreement

In December 2012 we entered into an agreement with Ionis for the development and commercialization of up to three gene targets.

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Upon entering into this agreement, we made an upfront payment of $ 30.0 million to Ionis and agreed to make potential additional payments, prior to licensing, of up to $ 10.0 million based on the development of the selected product candidate as well as a mark-up of the cost estimate of the Phase 1 and Phase 2 trials.

During 2015 we recognized this $ 10.0 million developmental milestone upon the selection of BIIB080 (tau ASO), which is currently in Phase 1 development for the potential treatment of AD.

During 2015 we recognized this $ 10.0 million developmental milestone upon the selection of BIIB080 (tau ASO), which is currently in Phase 1 development for the potential treatment of Alzheimer's disease.

In December 2019 we exercised our option with Ionis and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB080.

In connection with the option exercise, we made a payment of $ 45.0 million to Ionis, which was recorded as research and development expense in our consolidated statements of income.

Future payments may include additional milestone payments of up to $ 155.0 million and royalties on future sales of in the low- to mid-teens if we successfully develop the product candidate after option exercise.

Future payments may include additional milestone payments of up to $ 155.0 million and royalties on future sales in the low- to mid-teens if we successfully develop the product candidate after option exercise.

2018 Ionis Agreement

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The amount recorded as prepaid services represented the value of the employee resources committed to the arrangement to provide research and discovery services over the term of the agreement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The 11.5 million shares of Ionis common stock were purchased at a premium to their fair value at the transaction closing date.

The premium consisted of acquiring the shares at a price above the fair value based on the trailing 10-day weighted-average close price prior to entering into the 2018 Ionis Agreement in April 2018 and the effect of certain holding period restrictions.

We recorded an asset of $ 462.9 million in investments and other assets in our consolidated balance sheets reflecting the fair value of the common stock as of the purchase date and a charge of $ 162.1 million to research and development expense in our consolidated statements of income in the second quarter of 2018 reflecting the premium paid for the common stock.

We recorded an asset of $ 462.9 million in investments and other assets in our consolidated balance sheets reflecting the fair value of the Ionis common stock as of the purchase date and a charge of $ 162.1 million to research and development expense in our consolidated statements of income in the second quarter of 2018 reflecting the premium paid for the Ionis common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our investment in Ionis common stock is remeasured each reporting period.

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For additional information on the fair value of our investment in Ionis common stock, please read Note 7, Fair Value Measurements , to these consolidated financial statements.

We have the option to license therapies arising out of this agreement and will be responsible for the development and commercialization of such therapies.

We have the option to license therapies arising out of the 2018 Ionis Agreement and will be responsible for the development and commercialization of such therapies.

We may pay development milestones to Ionis of up to $ 125.0 million or $ 270.0 million for each program, depending on the indication plus an annual license fee, as well as royalties on potential net commercial sales.

During the year ended December 31, 2019 , we incurred milestones of $ 30.0 million related to the advancement of neurological targets identified under this agreement.

During the years ended December 31, 2020 and 2019, we incurred milestones of $ 11.3 million and $ 30.0 million, respectively, related to the advancement of neurological targets identified under the 2018 Ionis Agreement.

2017 SMA Collaboration Agreement

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We are solely responsible for the costs and expenses related to the development, manufacturing and commercialization of tofersen following the option exercise.

During the years ending December 31, 2020, 2019 and 2018, we incurred milestones of $ 28.0 million, $ 20.0 million and $ 18.0 million, respectively, related to the advancement of programs under this agreement, which were recorded as research and development expense in our consolidated statements of income.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the years ending December 31, 2019 , 2018 and 2017 , we incurred milestones of $ 20.0 million , $ 18.0 million and $ 12.0 million , respectively, related to the advancement of programs under this agreement, which were recorded as research and development expense in our consolidated statements of income.

Eisai Co., Ltd.

BAN2401 and Elenbecestat Collaboration

We have a collaboration agreement with Eisai Co., Ltd.

(Eisai) to jointly develop and commercialize BAN2401, a monoclonal antibody that targets amyloid beta aggregates for the potential treatment of AD, and elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor (the BAN2401 and Elenbecestat Collaboration).

In September 2019 we and Eisai announced the decision to discontinue the global Phase 3 studies (MISSION AD1 and MISSION AD2) of elenbecestat in early AD.

As a result of this decision, in the third quarter of 2019, we accrued approximately $ 48.0 million related to our share of the termination of various clinical trials and research and development contracts incurred under the BAN2401 and Elenbecestat Collaboration.

BAN2401 Collaboration

We have a collaboration agreement with Eisai to jointly develop and commercialize BAN2401, a monoclonal antibody that targets amyloid beta aggregates, and elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor, two Eisai product candidates for the potential treatment of Alzheimer's disease (the BAN2401 Collaboration).

In September 2019 we and Eisai discontinued the global Phase 3 studies of elenbecestat in early Alzheimer's disease.

Eisai serves as the global operational and regulatory lead for BAN2401 and all costs, including research, development, sales and marketing expenses, are shared equally between us and Eisai.

Upon marketing approval we and Eisai will co-promote BAN2401 and share profits equally.

In addition, the BAN2401 and Elenbecestat Collaboration provides both parties with certain rights and obligations in the event of a change in control of either party.

The BAN2401 and Elenbecestat Collaboration also provided Eisai with an option to jointly develop and commercialize aducanumab, our anti-amyloid beta antibody candidate for early AD (Aducanumab Option), and an option to jointly develop and commercialize one of our anti-tau monoclonal antibodies (Anti-Tau Option).

In October 2017 Eisai exercised its Aducanumab Option and we entered into a new collaboration agreement for the joint development and commercialization of aducanumab (Aducanumab Collaboration Agreement).

If BAN2401 receives marketing approval, we and Eisai will co-promote BAN2401 and share profits equally.

In addition, the BAN2401 Collaboration provides both parties with certain rights and obligations in the event of a change in control of either party.

The BAN2401 Collaboration also provided Eisai with an option to jointly develop and commercialize aducanumab (Aducanumab Option) and an option to jointly develop and commercialize one of our anti-tau monoclonal antibodies (Anti-Tau Option).

In October 2017 Eisai exercised its Aducanumab Option and we entered into a new collaboration agreement for the joint development and commercialization of aducanumab (the Aducanumab Collaboration Agreement).

Eisai may exercise the Anti-Tau Option after completion of the Phase 1 clinical trial of such anti-tau monoclonal antibody.

If Eisai exercises its Anti-Tau Option, we will receive an upfront payment from Eisai and will be entitled to additional development and commercial milestone payments.

Eisai has not yet exercised its Anti-Tau Option.

Under the Aducanumab Collaboration Agreement, the two companies will continue to jointly develop BAN2401 in accordance with the BAN2401 and Elenbecestat Collaboration;

however, we are no longer required to pay Eisai any milestone payments for products containing BAN2401 and we are no longer entitled to any potential development and commercial milestone payments from Eisai in relation to aducanumab.

A summary of development and sales and marketing expenses related to the BAN2401 and Elenbecestat Collaboration is as follows:

A summary of development and sales and marketing expenses related to the BAN2401 Collaboration is as follows:

For the Years Ended December 31,

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Aducanumab Collaboration Agreement

Under the Aducanumab Collaboration Agreement, the two companies will co-promote aducanumab with a region-based profit split and we lead the ongoing development of aducanumab.

In March 2019, based on a pre-specified futility analysis, we discontinued the global Phase 3 trials, EMERGE and ENGAGE, designed to evaluate the efficacy and safety of aducanumab in patients with early AD.

A new analysis of a larger dataset from these trials, conducted in consultation with the FDA, showed that the Phase 3 EMERGE

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

study met its pre-specified primary and secondary endpoints.

Under the Aducanumab Collaboration Agreement, we and Eisai will co-promote aducanumab with a region-based profit split and we lead the ongoing development of aducanumab.

A new analysis of a larger dataset from these trials, conducted in scientific collaboration with the FDA, showed that the Phase 3 EMERGE study met its pre-specified primary and secondary endpoints.

In the first quarter of 2019, as a result of the decision to discontinue the Phase 3 EMERGE and ENGAGE trials following the futility analysis, we accrued and subsequently paid approximately $ 45.0 million related to the termination of various clinical trials and research and development contracts net of the expected 45.0 % Eisai reimbursement of development costs incurred under the Aducanumab Collaboration Agreement.

In October 2019 we and Eisai announced that we plan to pursue regulatory approval for aducanumab in the U.S.

In July 2020 we completed the submission of a BLA for the approval of aducanumab to the FDA.

For the period through March 31, 2018, we were responsible for 100.0 % of development costs incurred by the collaboration for the advancement of aducanumab (aducanumab development expense).

For the period April 1, 2018 through December 31, 2018, Eisai reimbursed us for 15.0 % of aducanumab development expense incurred and beginning January 1, 2019, is reimbursing us for 45.0 % of aducanumab development expense incurred.

In the first quarter of 2019, as a result of the decision to discontinue the Phase 3 EMERGE and ENGAGE trials following the futility analysis, we accrued and subsequently paid approximately $ 45.0 million related to the termination of various clinical trials and research and development contracts net of the expected 45 % Eisai reimbursement of development costs incurred under the Aducanumab Collaboration Agreement.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the year ended December 31, 2020, we recognized net profit-sharing income of $ 33.8 million to reflect Eisai's 45.0 % share of the $ 75.0 million milestone expense related to the submission of the BLA for the approval of aducanumab to the FDA.

Upon commercialization, both companies will co-promote aducanumab with a region-based profit split.

We will receive a 55 % share of the potential profits (losses) in the U.S., a 68.5 % share of the potential profits (losses) in the E.U.

and a 20 % share of the potential profits (losses) in Japan and Asia, excluding China and South Korea.

We will receive a 55.0 % share of the potential profits (losses) in the U.S., a 68.5 % share of the potential profits (losses) in the European Union (E.U.) and a 20.0 % share of the potential profits (losses) in Japan and Asia, excluding China and South Korea.

The two companies will continue to share equally in the potential profits (losses) in rest of world markets.

Sales and marketing expense incurred before commercialization are shared in proportion to the same region-based profit split that will be utilized to co-promote aducanumab.

A summary of development and sales and marketing expenses related to the Aducanumab Collaboration Agreement is as follows:

A summary of development, sales and marketing and milestone expense related to the Aducanumab Collaboration Agreement is as follows:

For the Years Ended December 31,

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Biogen's share of aducanumab sales and marketing expense reflected in selling, general and administrative expense in our consolidated statements of income 193.7 15.1 27.3

Total aducanumab collaboration third party milestone expense 75.0 — —

Eisai's share of aducanumab milestone expense reflected in collaboration profit sharing in our consolidated statements of income 33.8 — —

In addition, we and Eisai co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings and Eisai distributes AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets, excluding China.

Anti-Tau Option

Eisai may exercise the Anti-Tau Option after completion of the Phase 1 clinical trial of such anti-tau monoclonal antibody.

If Eisai exercises its Anti-Tau Option, we will receive an upfront payment from Eisai and will be entitled to additional development and commercial milestone payments.

In November 2017 we entered into an exclusive license and collaboration agreement with Alkermes for VUMERITY, a novel fumarate for the treatment of RMS.

UCB Pharma S.A.

We have a collaboration agreement with UCB Pharma S.A.

(UCB) to jointly develop and commercialize dapirolizumab pegol, an anti-CD40L pegylated Fab, for the potential treatment of systemic lupus erythematosus and other future agreed indications.

Either we or UCB may propose development of dapirolizumab pegol in additional indications.

If the parties do not agree to add an indication as an agreed indication to the collaboration, we or UCB may, at the sole expense of the applicable party, pursue development in such excluded indication(s), subject to an opt-in right of the non-pursuing party after proof of clinical activity.

All costs incurred for agreed indications, including research, development, sales and marketing expenses, are shared equally between us and UCB.

Upon marketing approval, we and UCB will co-promote dapirolizumab pegol and share profits equally.

A summary of development expense related to the UCB collaboration agreement is as follows:

For the Years Ended December 31,

(In millions) 2020 2019 2018

Total UCB development expense $ 58.3 $ 31.9 $ 29.7

Biogen's share of UCB development expense reflected in research and development expense in our consolidated statements of income 29.2 16.0 14.9

In November 2017 we entered into an exclusive license and collaboration agreement with Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc (Alkermes), for VUMERITY, a novel fumarate for the treatment of RMS.

In October 2019 the FDA approved VUMERITY in the U.S.

for the treatment of RMS.

In November 2019 VUMERITY became available in the U.S.

In November 2019 VUMERITY became commercially available in the U.S.

Under this agreement, we received an exclusive, worldwide license to develop and commercialize VUMERITY and we pay Alkermes a royalty of 15.0 % on worldwide net commercial sales of VUMERITY.

Royalties payable on net commercial sales of VUMERITY are subject, under certain circumstances, to tiered minimum annual payment requirements for a period of five years following FDA approval.

Alkermes is eligible to receive royalties in the high-single digits to sub-teen double digits of annual net commercial sales upon successful development and commercialization of new product candidates, other than VUMERITY, developed under the exclusive license from Alkermes.

Upon entering into this agreement, we made a $ 28.0 million upfront payment to Alkermes representing our share of VUMERITY development costs already incurred in 2017.

Beginning in 2018 we became responsible for all

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development expenses related to VUMERITY.

In December 2017 we also recognized a $ 50.0 million expense, which was paid to Alkermes in 2018, enabling the continuation of the agreement to develop VUMERITY.

Both the $ 28.0 million upfront payment and $ 50.0 million continuation payment were recorded as research and development expense in our consolidated financial statements during the year ended December 31, 2017.

During the fourth quarter of 2019, following the FDA's approval of VUMERITY, we paid Alkermes $ 155.0 million in milestone payments, which were recorded in intangible assets in our consolidated balance sheets and will be amortized over the useful life of the product.

For the years ended December 31, 2020, 2019 and 2018, we recorded $ 32.4 million, $ 53.5 million and $ 68.7 million, respectively, in research and development expense in our consolidated statements of income related to this collaboration.

Alkermes currently supplies VUMERITY to us pursuant to a supply agreement with Alkermes.

In October 2019 we entered into a new supply agreement and amended our license and collaboration agreement with Alkermes pursuant to which we have the election, following a transition period, to manufacture VUMERITY or have manufacturing transitioned to a third party in exchange for an increase in the royalty rate on worldwide net commercial sales of VUMERITY that is manufactured by us or our designee.

Alkermes currently supplies VUMERITY to us pursuant to a supply agreement.

In October 2019 we entered into a new supply agreement and amended our license and collaboration agreement with Alkermes.

We have elected to initiate a technology transfer and, following a transition period, to manufacture VUMERITY or have VUMERITY manufactured by a third party we have engaged in exchange for paying an increased royalty rate to Alkermes on any portion of future worldwide net commercial sales of VUMERITY that is manufactured by us or our designee.

Bristol-Myers Squibb Company

In June 2017 we completed an exclusive license agreement with Bristol-Myers Squibb Company (BMS) for the development and potential commercialization of BIIB092 (gosuranemab), an antibody targeting tau, the protein that forms the deposits, or tangles, in the brain associated with AD.

Under this agreement, we received worldwide rights to gosuranemab and are responsible for the full development and potential commercialization of gosuranemab in AD and progressive supranuclear palsy (PSP).

Under this agreement, we received worldwide rights to gosuranemab and are responsible for the full development and potential commercialization of gosuranemab in Alzheimer's disease and progressive supranuclear palsy (PSP).

In December 2019 we announced that the Phase 2 PASSPORT study investigating gosuranemab in individuals with PSP did not meet its primary endpoint.

Based on these results, we discontinued development of gosuranemab in PSP and other primary tauopathies.

We will continue our ongoing Phase 2 TANGO study of gosuranemab for mild cognitive impairment due to AD or mild AD, given differences in disease pathology.

We will continue our ongoing Phase 2 TANGO study of gosuranemab for mild cognitive impairment due to Alzheimer's disease or mild Alzheimer's disease, given differences in disease pathology.

Upon entering into this agreement, we made an upfront payment of $ 300.0 million to BMS and assumed all remaining obligations to the former shareholders of iPierian, Inc.

(iPierian) related to BMS’s acquisition of iPierian in 2014.

In June 2017 we recognized a $ 60.0 million developmental milestone payable to the former shareholders of iPierian upon dosing of the first patient in the Phase 2 PASSPORT study of gosuranemab for PSP.

Both the $ 300.0 million upfront payment and the $ 60.0 million developmental milestone payment were recorded as research and development expense in our consolidated statements of income for the year ended December 31, 2017.

We may pay BMS up to $ 360.0 million in additional milestone payments, and potential royalties, and we may pay the former shareholders of iPierian up to $ 370.0 million in remaining milestone payments as well as potential royalties on net commercial sales.

For the years ended December 31, 2019 and 2018 , we recorded $ 144.0 million and $ 97.0 million , respectively, in research and development expense in our consolidated statements of income related to this collaboration.

For the years ended December 31, 2020, 2019 and 2018, we recorded $ 62.4 million, $ 144.0 million and $ 97.0 million, respectively, in research and development expense in our consolidated statements of income related to this agreement.

Acorda Therapeutics, Inc.

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net sales and we may pay potential milestone payments based on the successful achievement of certain regulatory and commercial milestones, which would be capitalized as intangible assets upon achievement of the milestones and amortized utilizing an economic consumption model.

The next expected milestone would be $ 15.0 million , due if ex-U.S.

net sales reach $ 100.0 million over a period of four consecutive quarters.

The next expected milestone of $ 15.0 million, due if ex-U.S.

net sales reach $ 100.0 million over a period of four consecutive quarters, was recognized during the third quarter of 2020 and capitalized within intangible assets, net in our consolidated balance sheet.

Royalty payments are recognized in cost of sales within our consolidated statements of income.

In connection with the collaboration and license agreement, we also entered into a supply agreement with Acorda for the commercial supply of FAMPYRA.

This agreement is a sublicense arrangement of an existing

This agreement is a sublicense arrangement of an existing agreement between Acorda and Alkermes Inc., who acquired Elan Drug Technologies, the original party to the license with Acorda.

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agreement between Acorda and Alkermes Inc., who acquired Elan Drug Technologies, the original party to the license with Acorda.

For the years ending December 31, 2020, 2019 and 2018, total cost of sales related to royalties and commercial supply of FAMPYRA reflected in our consolidated statements of income were $ 44.5 million, $ 42.0 million and $ 36.5 million, respectively.

We have a collaboration agreement with AbbVie for the development and commercialization of ZINBRYTA, which was approved for the treatment of RMS in the U.S.

in May 2016 and in the E.U.

in July 2016.

The collaboration began selling ZINBRYTA in the third quarter of 2016.

In March 2018 we and AbbVie announced the voluntary worldwide withdrawal of ZINBRYTA for RMS.

Under this agreement, we and AbbVie conducted ZINBRYTA co-promotion activities in the U.S., E.U.

and Canadian territories, where development and commercialization costs and profits were shared equally.

We were responsible for manufacturing and research and development activities and recorded these activities within their respective lines in our consolidated statements of income, net of any reimbursement of research and development expenditures received from AbbVie.

For the years ended December 31, 2019 , 2018 and 2017 , the collaboration incurred $ 0.6 million , $ 32.4 million and $ 39.9 million for research and development activities, respectively, for which we recognized $ 0.3 million , $ 16.2 million and $ 19.9 million , respectively, in our consolidated statements of income.

Co-promotion Profits and Losses

In the U.S., AbbVie recognized revenues on sales to third parties and we recognized our 50 % share of the co-promotion profits or losses as a component of total revenues in our consolidated statements of income.

Our share of the co-promotion losses on ZINBRYTA in the U.S.

for the year ended December 31, 2019, was immaterial.

For the years ended December 31, 2018 and 2017 , we recognized a net reduction in revenues from collaborative and other relationships, a component of other revenues, of $ 8.6 million and $ 16.9 million , respectively, to reflect our share of the overall net losses within the collaboration for each of those years.

Other Research and Discovery Arrangements

These arrangements may include the potential for future milestone payments based on the achievement of certain clinical and commercial development payable over a period of several years.

Skyhawk Therapeutics, Inc.

In January 2019 we entered into a collaboration and research and development services agreement with Skyhawk Therapeutics, Inc.

(Skyhawk) pursuant to which the companies are leveraging Skyhawk's SkySTAR technology platform with the goal of discovering innovative small molecule treatments for patients with neurological diseases, including MS and SMA.

We are responsible for the development and potential commercialization of any therapies resulting from this collaboration and we may also pay Skyhawk up to a total of approximately $ 2.4 billion in additional milestone payments as well as potential royalties on net commercial sales.

In connection with this agreement, we made an upfront payment of $ 74.0 million to Skyhawk, of which $ 38.5 million was recorded as research and development expense in our consolidated statements of income and $ 35.5 million was recorded as prepaid research and development expenditures within investments and other assets in our consolidated balance sheets and will be expensed as the services are provided.

In October 2019 we amended this agreement to add an additional discovery program.

In connection with this amendment, we made a payment to Skyhawk of $ 15.0 million , of which approximately $ 8.0 million was recorded as research and development and approximately $ 7.0 million was recorded as prepaid research and development expenditures within investments and other assets in our consolidated balance sheets.

For the years ended December 31, 2019 , 2018 and 2017 , we entered into several research, discovery and other related arrangements that resulted in $ 30.6 million , $ 22.0 million and $ 10.0 million , respectively, recorded as research and development expense in our consolidated statements of income.

Sage Therapeutics, Inc.

In November 2020 we entered into a global collaboration and license agreement with Sage to jointly develop and commercialize zuranolone (SAGE-217) for the potential treatment of major depressive disorder, postpartum depression and other psychiatric disorders and SAGE-324 for the potential treatment of essential tremor and other neurological disorders.

In connection of the closing of this transaction in December 2020 we purchased $ 650.0 million of Sage common stock, or approximately 6.2 million shares at approximately $ 104.14 per share, which are subject to transfer restrictions.

We recorded an asset in investments and other assets in our consolidated balance sheets to reflect the initial fair value of the Sage common stock acquired and a charge of approximately $ 209.0 million to research and development expense in our consolidated statements of income to reflect the premium paid for the Sage common stock.

We also made an upfront payment of $ 875.0 million that was recorded as research and development expense.

We may also pay Sage development and commercial milestone payments that could total up to approximately $ 1.6 billion if all the specified milestones set forth in this agreement are achieved.

Both companies will share equal responsibility and costs for development as well as profits and losses for commercialization in the U.S.

Outside of the U.S., we are responsible for development and commercialization, excluding Japan, Taiwan and South Korea, with respect to zuranolone and will pay Sage potential tiered royalties in the high teens to low twenties.

Denali Therapeutics Inc.

In August 2020 we entered into a collaboration and license agreement with Denali to co-develop and co-commercialize Denali's small molecule inhibitors of leucine-rich repeat kinase 2 (LRRK2) for Parkinson's disease.

In addition to the LRRK2 program, we also have an exclusive option to license two preclinical programs from Denali’s Transport Vehicle platform, including its Antibody Transport Vehicle (ATV):

ATV enabled anti-amyloid beta program and a second program utilizing its Transport Vehicle technology.

Further, we have a right of first negotiation on two additional Transport Vehicle-enabled therapeutics, should Denali decide to seek a collaboration for such programs.

As part of this collaboration we purchased approximately $ 465.0 million of Denali common stock in September 2020, or approximately 13 million shares at approximately $ 34.94 per share, which are subject to transfer restrictions.

We recorded an asset in investments and other assets in our consolidated balance sheets to reflect the initial fair value of the Denali common stock acquired and a charge of approximately $ 41.3 million to research and development expense in our consolidated statements of income to reflect the premium paid for the Denali common stock.

We also made an upfront payment of $ 560.0 million that was recorded as research and development expense.

We may also pay Denali development and commercial milestone payments that could total up to approximately $ 1.1 billion if the milestones related to the LRRK2 program are achieved.

Under this agreement, both companies share responsibility and costs for global development based on specified percentages and we are responsible for commercialization and will pay Denali potential tiered royalties.

For the year ended December 31, 2020, we recorded $ 8.8 million in research and development expense in our consolidated statements of income related to this collaboration.

Sangamo Therapeutics, Inc.

In February 2020 we entered into a collaboration and license agreement with Sangamo to develop and commercialize ST-501 for tauopathies, including Alzheimer's disease;

ST-502 for synucleinopathies, including Parkinson’s disease;

a third neuromuscular disease target;

and up to nine additional neurological disease targets to be identified and selected within a five-year period.

The companies are leveraging Sangamo’s proprietary zinc finger protein technology delivered via adeno-associated virus to modulate the expression of key genes involved in neurological diseases.

In connection with the closing of this transaction in April 2020 we purchased $ 225.0 million of Sangamo common stock, or approximately 24 million shares at approximately $ 9.21 per share, which are subject to transfer restrictions.

We recorded an asset in investments and other assets in our consolidated balance sheets to reflect the initial fair value of the Sangamo common stock acquired and a charge of approximately $ 83.0 million to research

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and development expense in our consolidated statements of income to reflect the premium paid for the Sangamo common stock.

We also made an upfront payment of $ 125.0 million that was recorded as research and development expense.

We may also pay Sangamo research, development, regulatory and commercial milestone payments that could total up to approximately $ 2.4 billion if we select all of the targets allowed under this agreement and all the specified milestones set forth in this agreement are achieved.

Of this amount, up to $ 80.0 million relates to the selection of targets, $ 1.9 billion relates to the achievement of specified research, clinical development, regulatory and first commercial sale milestones and $ 380.0 million relates to the achievement of specified sales-based milestones if annual worldwide net sales of licensed products reach specified levels.

In addition, we will pay Sangamo tiered royalties on potential net commercial sales of any products developed under this collaboration in the high single digit to double digit sub-teen percentages.

For the year ended December 31, 2020, we recorded $ 6.4 million in research and development expense in our consolidated statements of income related to this collaboration.

Other Research and Discovery Arrangements

These arrangements may include the potential for future milestone payments based on the achievement of certain clinical and commercial development payable over a period of several years.

For the years ended December 31, 2020, 2019 and 2018, we recorded $ 92.1 million, $ 77.0 million and $ 48.6 million, respectively, as research and development expense in our consolidated statements of income related to other research and discovery related arrangements.

Samsung Bioepis Co., Ltd.

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In February 2012 we entered into a joint venture agreement with Samsung BioLogics establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar products.

Samsung BioLogics contributed 280.5 billion South Korean won (approximately $ 250.0 million ) for an 85 % stake in Samsung Bioepis and we contributed 49.5 billion South Korean won (approximately $ 45.0 million ) for the remaining 15 % ownership interest.

Samsung BioLogics contributed 280.5 billion South Korean won (approximately $ 250.0 million) for an 85.0 % ownership interest in Samsung Bioepis and we contributed 49.5 billion South Korean won (approximately $ 45.0 million) for the remaining 15.0 % ownership interest.

In June 2018 we exercised our option under our joint venture agreement to increase our ownership percentage in Samsung Bioepis from approximately 5.0 %, which reflected the effect of previous equity financings in which we did not participate, to approximately 49.9 %.

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These basis differences are amortized over their economic life.

The total basis difference was approximately $ 675 million , consisting of approximately $ 115 million attributed to inventory, approximately $ 615 million attributed to developed technology and approximately $ 170 million attributed to IPR&D.

A deferred tax liability of $ 225 million was established for the acquired assets that had no tax basis.

The basis differences related to inventory and developed technology will be amortized, net of tax, over their estimated useful lives of 1.5 years and 15 years, respectively, one quarter in arrears.

Our joint venture partner, Samsung BioLogics, is currently subject to an ongoing criminal investigation that we continue to monitor.

While this investigation could impact the operations of Samsung Bioepis and its business, we have assessed the value of our investment in Samsung Bioepis and continue to believe that the fair value of the investment is in excess of its net book value.

For the year ended December 31, 2019 , we recognized losses on our investment of $ 79.4 million .

These losses reflect our share of losses totaling $ 1.2 million and amortization of basis differences totaling $ 78.2 million .

The total basis difference was approximately $ 675.0 million and relates to inventory, developed technology, IPR&D and deferred tax balances.

The basis differences related to inventory were amortized, net of tax, over their estimated useful lives of 1.5 years, and the basis differences related to developed technology and IPR&D for marketed products will be amortized, net of tax, over their estimated useful lives of 15 years.

The former chief executive officer (the incumbent chairman of the board) and the chief financial officer of our joint venture partner, Samsung BioLogics, is currently subject to ongoing criminal proceedings that we continue to monitor.

While these proceedings could impact the operations of Samsung Bioepis and its business, we have assessed the value of our investment in Samsung Bioepis and continue to believe that the fair value of the investment is in excess of its net book value.

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For the year ended December 31, 2020, we recognized net income on our investment of $ 5.3 million, reflecting our share of income totaling $ 45.3 million offset by amortization of basis differences totaling $ 40.0 million.

For the year ended December 31, 2019, we recognized net losses on our investment of $ 79.4 million, reflecting our share of losses totaling $ 1.2 million and amortization of basis differences totaling $ 78.2 million.

As of December 31, 2020 and 2019, the carrying value of our investment in Samsung Bioepis totaled 673.8 billion South Korean won ($ 620.2 million) and 670.8 billion South Korean won ($ 580.2 million), respectively, which is classified as a component of investments and other assets within our consolidated balance sheets.

2019 Transaction

In December 2019 we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilar products, SB11 referencing LUCENTIS and SB15 referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia.

In December 2019 we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilar products, SB11, a proposed ranibizumab biosimilar referencing LUCENTIS, and SB15, a proposed aflibercept biosimilar referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia.

Samsung Bioepis will be responsible for development and will supply both products to us.

In connection with this transaction, we made an upfront payment of $ 100.0 million to Samsung Bioepis in January 2020, of which $ 63.0 million was recorded as research and development expense in our consolidated statements of income and $ 37.0 million was recorded as an intangible asset in our consolidated balance sheets.

Additionally, we may pay Samsung Bioepis up to $ 210.0 million in additional development, regulatory and sales-based milestones, including a $ 15.0 million development milestone that we may pay in 2020.

We also acquired an option to extend the term of our current European commercial agreement for BENEPALI, IMRALDI and FLIXABI by an additional five years, subject to payment of an option exercise fee of $ 60.0 million , and obtained exclusive rights to commercialize these products in China.

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In connection with this transaction, we made an upfront payment of $ 100.0 million to Samsung Bioepis in January 2020, of which $ 63.0 million was recorded as research and development expense in 2019 and $ 37.0 million was recorded as an intangible asset in 2019.

Additionally, during the third quarter of 2020, we paid Samsung Bioepis a $ 15.0 million development milestone, which was included in research and development expense in our consolidated statements of income.

We may pay Samsung Bioepis up to $ 195.0 million in additional development, regulatory and sales-based milestones.

We also acquired an option to extend the term of our 2013 commercial agreement for BENEPALI, IMRALDI and FLIXABI by an additional five years , subject to payment of an option exercise fee of $ 60.0 million, and obtained an option to acquire exclusive rights to commercialize these products in China.

2013 Commercial Agreement

In December 2013 pursuant to our rights under the joint venture agreement with Samsung BioLogics, we entered into an agreement with Samsung Bioepis to commercialize, over a 10-year term, 3 anti-tumor necrosis factor (TNF) biosimilar product candidates in Europe and in the case of BENEPALI, Japan.

In December 2013 we entered into an agreement with Samsung Bioepis to commercialize, over a 10 -year term, 3 anti-tumor necrosis factor (TNF) biosimilar product candidates in Europe and in the case of BENEPALI, Japan.

As discussed above, we have an option to extend this agreement by an additional five years .

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in August 2017, May 2016 and January 2016, respectively, and we capitalized the related milestone payments totaling $ 75.0 million as intangible assets, net in our consolidated balance sheets.

In April 2018 we and Samsung Bioepis announced an agreement with AbbVie related to the commercialization of IMRALDI.

In April 2018 we and Samsung Bioepis announced an agreement with AbbVie Inc.

(AbbVie) related to the commercialization of IMRALDI.

Under the terms of the agreement, AbbVie granted us and Samsung Bioepis patent licenses for the use and sale of IMRALDI in Europe, on a country-by-country basis, and we make royalty payments to AbbVie on behalf of Samsung Bioepis.

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For the years ended December 31, 2020, 2019 and 2018, we recognized a net profit-sharing expense of $ 266.5 million, $ 241.6 million and $ 187.4 million, respectively, to reflect Samsung Bioepis' 50 % sharing of the net collaboration profits.

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Other Services

Simultaneous with the formation of Samsung Bioepis, we also entered into a technical development services agreement, a manufacturing agreement and a license agreement with Samsung Bioepis.

Under the technical development services agreement, we provide Samsung Bioepis technical development and technology transfer services, which include, but are not limited to, cell culture development, purification process development, formulation development and analytical development.

Under the technical development services agreement, we provided Samsung Bioepis technical development and technology transfer services, which included, but were not limited to, cell culture development, purification process development, formulation development and analytical development.

Under the manufacturing agreement, we manufacture clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis pursuant to contractual terms.

Following the divestiture of our Hillerød, Denmark manufacturing operations in August 2019, FUJIFILM assumed responsibility for the manufacture of clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis.

We no longer recognize revenues for the manufacturing completed after the divestiture date under the technical development services and manufacturing agreements with Samsung Bioepis.

We no longer recognize revenues for the manufacturing completed after the divestiture date under the manufacturing agreements with Samsung Bioepis.

For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures , to these consolidated financial statements.

Under the license agreement, we granted Samsung Bioepis an exclusive license to use, develop, manufacture and commercialize biosimilar products created by Samsung Bioepis using Biogen product-specific technology.

In exchange, we receive single digit royalties on all biosimilar products developed and commercialized by Samsung Bioepis.

In exchange, we receive single digit royalties on biosimilar products developed and commercialized by Samsung Bioepis.

For the years ended December 31, 2020, 2019 and 2018, we recognized $ 20.9 million, $ 106.2 million and $ 96.4 million, respectively, in revenues under the license, technical development services and manufacturing agreements, which is reflected in revenues from collaborative and other relationships, as a component of other revenues in our consolidated statements of income.

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Amounts receivable from Samsung Bioepis related to the agreements discussed above were $ 5.1 million and $ 85.0 million as of December 31, 2020 and 2019, respectively.

Amounts payable to Samsung Bioepis as of December 31, 2019 , consisted of the $ 100.0 million upfront payment related to the 2019 transaction we completed in December 31, 2019 , as discussed above.

Amounts payable to Samsung Bioepis as of December 31, 2020, were $ 99.0 million.

Amounts payable to Samsung Bioepis as of December 31, 2019, consisted of the $ 100.0 million upfront payment related to the transaction we completed in December 2019, as discussed above.

Investments in Variable Interest Entities

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Neurimmune SubOne AG

We have a collaboration and license agreement with Neurimmune SubOne AG (Neurimmune) for the development and commercialization of antibodies for the potential treatment of AD, including aducanumab, our anti-amyloid beta antibody candidate for the potential treatment of AD (as amended, the Neurimmune Agreement).

We are responsible for the development, manufacturing and commercialization of all licensed products.

This agreement is effective for the longer of the duration of certain patents relating to a licensed product or 12 years from the first commercial sale of any product using such a licensed compound.

We have a collaboration and license agreement with Neurimmune SubOne AG (Neurimmune) for the development and commercialization of antibodies for the potential treatment of Alzheimer's disease, including aducanumab (as amended, the Neurimmune Agreement).

We are responsible for the development, manufacturing and commercialization of all collaboration products.

The Neurimmune Agreement is effective for the longer of the duration of certain patents relating to a licensed product or 12 years from the first commercial sale of a licensed product.

We consolidate the results of Neurimmune as we determined that we are the primary beneficiary of Neurimmune because we have the power through the collaboration to direct the activities that most significantly impact the entity’s economic performance and we are required to fund 100.0 % of the research and development costs incurred in support of the collaboration.

In October 2017 we amended the terms of the Neurimmune Agreement and made a $ 150.0 million payment to Neurimmune in exchange for a 15.0 % reduction in the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including royalties payable on potential commercial sales of aducanumab.

In May 2018 we made an additional $ 50.0 million payment to Neurimmune to further reduce the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including royalties payable on potential commercial sales of aducanumab, by an additional 5 % .

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royalties payable on potential commercial sales of aducanumab, by an additional 5.0 %.

Our royalty rates payable on products developed under the Neurimmune Agreement, including royalty rates payable on potential commercial sales of aducanumab, now range from the high single digits to sub-teens.

As we consolidate the results of Neurimmune, we treated these payments as distributions and recognized them as charges to noncontrolling interests in the fourth quarter of 2017 and the second quarter of 2018, as applicable.

Additionally, under the terms of the Neurimmune Agreement, we would be required to pay Neurimmune a milestone payment of $ 75.0 million upon the regulatory filing with the FDA for approval of aducanumab and a milestone payment of $ 100.0 million if aducanumab is launched in the U.S.

Under the terms of the Neurimmune Agreement, we were required to pay Neurimmune a milestone payment of $ 75.0 million upon the regulatory filing with the FDA for the approval of aducanumab.

During the second quarter of 2020, we paid Neurimmune $ 75.0 million upon the completed submission of the BLA for the approval of aducanumab to the FDA, which was recognized as a charge to noncontrolling interests for the year ended December 31, 2020.

In addition, for the year ended December 31, 2020, we recognized net profit-sharing income of $ 33.8 million to reflect Eisai's 45.0 % share of the $ 75.0 million milestone expense.

Additionally, if aducanumab receives regulatory approval in the jurisdictions where we have submitted filings, we may pay up to approximately $ 200.0 million in milestones to Neurimmune in 2021, which includes $ 100.0 million if launched in the U.S., $ 50.0 million if launched in three or more countries within the E.U.

and $ 50.0 million if launched in Japan.

Milestones payable to Neurimmune are shared expenses under the Aducanumab Collaboration Agreement with Eisai.

Research and development costs for which we reimburse Neurimmune are reflected in research and development expense in our consolidated statements of income.

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The assets and liabilities of Neurimmune are not significant to our consolidated financial position or results of operations as it is a research and development organization.

We have provided no financing to Neurimmune other than previously contractually required amounts.

We have provided no financing to Neurimmune other than contractually required amounts.

Under the Aducanumab Collaboration Agreement, Eisai had an option to share in the benefit and cost associated with the royalty reductions discussed above;

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For additional information on our collaboration arrangements with Eisai, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Unconsolidated Variable Interest Entities

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For information as to our accounting policies relating to claims and legal proceedings, including use of estimates and contingencies, please read Note 1, Summary of Significant Accounting Policies , to these consolidated financial statements.

With respect to some loss contingencies, an estimate of the possible loss or range of loss cannot be made until management has further information, including, for example, (i) which claims, if any, will survive dispositive motion practice;

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motion practice;

(ii) information to be obtained through discovery;

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Loss Contingencies

Aducanumab Securities Litigation

We and certain current and former officers are named as defendants in an action filed by a shareholder on November 13, 2020, in the U.S.

District Court for the Central District of California and an action filed by a shareholder on January 5, 2021, in the U.S.

District Court for the District of Massachusetts.

Both actions allege violations of federal securities laws under 15 U.S.C §78j(b) and §78t(a) and 17 C.F.R.

§240.10b-5 and are seeking a declaration of the action as a class action and an award of damages, interest and attorneys' fees.

An estimate of the possible loss or range of loss cannot be made at this time.

No trial date has been set.

IMRALDI Patent Litigation

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3 148 510 (the '510 Patent), which was issued in June 2018 and expires in May 2035.

No hearing on the merits has been scheduled.

No hearing has been scheduled.

In October 2018 Fresenius Kabi commenced preliminary injunction proceedings against Biogen (Denmark) Manufacturing ApS and Biogen Denmark A/S in Denmark's Maritime and Commercial High Court alleging infringement of Danish Utility Models.

In June 2019 the Danish court denied Fresenius Kabi's request for a preliminary injunction and Fresenius Kabi has appealed that decision.

In November 2018 Fresenius Kabi commenced infringement proceedings for damages and injunctive relief against Biogen Italia S.R.L.

in the District Court of Milan relating to the Italian counterpart of the ‘510 Patent, and against Biogen GmbH in the Düsseldorf Regional Court relating to the German counterpart of the ‘510 Patent.

In Italy, Fresenius Kabi has surrendered the Italian counterpart of the ‘510 Patent and has moved to dismiss its infringement action.

A hearing in the proceeding in Germany has not yet been set but is expected to occur after a decision on our pending opposition to the ‘510 patent in the EPO.

In June 2019 the Danish court denied Fresenius Kabi's request for a preliminary injunction.

Fresenius Kabi has appealed that decision and was permitted to add a claim of infringement of the Danish counterpart of the ‘510 patent, and the appeal is pending.

In July 2020 the Danish Patent Board of Appeal revoked the Danish Utility Models that were the subject of Fresenius Kabi’s October 2018 request for a preliminary injunction and Fresenius Kabi has appealed those revocations to Denmark’s Maritime and Commercial High Court.

No hearing has been scheduled in that appeal.

In June 2020 Fresenius Kabi commenced preliminary injunction proceedings against Biogen (Denmark) Manufacturing ApS and Biogen (Denmark) A/S in Denmark’s Maritime and Commercial High Court alleging infringement of another Danish Utility Model.

A hearing has been scheduled for May 2021.

In November 2018 Fresenius Kabi commenced infringement proceedings for damages and injunctive relief against Biogen GmbH in the Düsseldorf Regional Court relating to the German counterpart of the ‘510 Patent.

A hearing has been set for August 2021.

In July 2019 Gedeon Richter PLC (Gedeon Richter) commenced proceedings against Biogen GmbH in the Düsseldorf Regional Court alleging infringement of the German counterpart of European Patent No.

3 212 667 (the

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'667 Patent), which was issued in September 2018 and expires in October 2035, and seeking damages and injunctive relief.

3 212 667 (the '667 Patent), which was issued in September 2018 and expires in October 2035, and seeking damages and injunctive relief.

A hearing has been set for November 2021.

In July 2019 Biogen Idec Ltd.

(Biogen UK) and Samsung Bioepis UK Limited filed an action in the United Kingdom Patents Court to revoke the United Kingdom (U.K.) counterpart of the '667 Patent.

In January 2020 the U.K.

court revoked the patent.

In August 2019 Biogen B.V.

(Netherlands) and Samsung Bioepis UK Limited filed an action in the District Court of the Hague, Netherlands to revoke the Dutch counterpart of the '667 Patent.

Gedeon Richter filed a separate action for infringement in the same court and a hearing in both cases has been set for May 2020.

An estimate of the possible loss or range of loss in the pending IMRALDI patent litigation described above cannot be made at this time.

An estimate of the possible loss or range of loss in the IMRALDI patent litigation described above cannot be made at this time.

Qui Tam Litigation

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An estimate of the possible loss or range of loss cannot be made at this time.

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Dispute with Former Convergence Shareholders

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We dispute the claims.

Dispute with Jacobs Switzerland GmbH

Jacobs Switzerland GmbH, the general contractor for the construction of our large-scale biologics manufacturing facility in Solothurn, Switzerland, claimed additional payments were due for construction costs.

We have reached an agreement in principle to resolve the claim.

Other Matters

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Patent Trial and Appeal Board (PTAB) for inter partes review of our U.S.

8,399,514 (the '514 Patent), which covers treatment of MS with 480 mg of dimethyl fumarate per day as provided for in our TECFIDERA label.

Sawai USA, Inc.

and Sawai Pharmaceutical Co.

were later joined as petitioners, but in January 2020 the PTAB terminated their involvement in the proceeding.

A hearing on Mylan’s petition was held in November 2019 and on February 5, 2020, the PTAB issued a final written decision upholding the patentability of the ‘514 Patent.

8,399,514 (the '514 Patent).

The '514 Patent includes claims covering treatment of MS with 480 mg of dimethyl fumarate per day as provided for in our TECFIDERA label.

In February 2020 the PTAB issued a final written decision upholding the patentability of the ‘514 Patent and in April 2020 Mylan filed an appeal in the U.S.

Court of Appeals for the Federal Circuit (the Federal Circuit), which is pending.

Hatch-Waxman Act Litigation relating to TECFIDERA Orange-Book Listed Patents

In 2017, 2018 and 2019 we filed patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, against Accord Healthcare Inc., Alkem Laboratories Ltd., Amneal Pharmaceuticals LLC, Aurobindo Pharma U.S.A., Inc., Cipla Limited, Glenmark Pharmaceuticals Ltd., Graviti Pharmaceuticals Pvt.

In 2017 to 2020, we filed patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act (the Delaware Actions), against Accord Healthcare Inc., Alkem Laboratories Ltd., Amneal Pharmaceuticals LLC, Cipla Limited, Graviti Pharmaceuticals Pvt.

Ltd., Hetero USA, Inc., Lupin Atlantis Holdings SA, Macleods Pharmaceuticals, Ltd., MSN Laboratories Pvt.

Ltd., Pharmathen S.A., Prinston Pharmaceutical Inc., Sandoz Inc., Sawai USA, Inc., Shipla Medicare Limited, Slayback Pharma LLC, Torrent Pharmaceuticals Ltd., TWi Pharmaceuticals, Inc., Windlas Healthcare Pvt.

Ltd., Pharmathen S.A., Prinston Pharmaceutical Inc., Sandoz Inc., Shilpa Medicare Limited, Slayback Pharma LLC, Sun Pharmaceutical Industries, Ltd., Sun Pharmaceutical Industries, Inc., Sun Pharma Global FZE, Torrent Pharmaceuticals Ltd., TWi Pharmaceuticals, Inc., Windlas Healthcare Pvt.

and Zydus Pharmaceuticals (USA) Inc.

(the Delaware Defendants) in the U.S.

(collectively, the Delaware Defendants) in the U.S.

District Court for the District of Delaware (the Delaware Court) and against Mylan in the U.S.

District Court for the Northern District of West Virginia.

The litigation against Aurobindo Pharma U.S.A., Inc., Glenmark Pharmaceuticals Ltd.

and Sawai USA was dismissed in the fourth quarter of 2019.

A trial against the remaining Delaware Defendants was held in the Delaware Court in December 2019 and we are awaiting a decision.

A trial is ongoing in the West Virginia action against Mylan.

We have entered into settlement agreements with some of the Delaware Defendants and we now anticipate market entry of a generic product equivalent to TECFIDERA before the ‘514 Patent expires in February 2028.

In December 2018 we filed an action under the Hatch-Waxman Act against Banner Life Sciences LLC (Banner) for infringement of our U.S.

7,619,001 (the ‘001 patent) expiring on June 20, 2020, and claiming treatment of MS with dimethyl fumarate or methyl hydrogen fumarate or a combination thereof.

In January 2020 the

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Delaware Court entered judgment that Banner’s drug product does not infringe the ‘001 patent.

We have appealed the decision.

District Court for the Northern District of West Virginia (the West Virginia Court).

On June 22, 2020, the West Virginia Court entered judgment for Mylan that the asserted claims of the ‘514 Patent are invalid for lack of written description.

We appealed the judgment to the Federal Circuit and the appeal is pending.

The Delaware Court entered judgment for the Delaware Defendants on the grounds that the judgment of the West Virginia Court applies to the Delaware Actions under principles of collateral estoppel.

We have appealed the judgments and the appeal is pending.

European Patent Office Oppositions

In 2016 the EPO revoked our European patent number 2 137 537 (the '537 Patent), which covers the treatment of MS with 480 mg of dimethyl fumarate as provided for in our TECFIDERA label.

We have appealed to the Technical Boards of Appeal of the EPO and a hearing has been set for March 2020.

In 2016 the European Patent Office (EPO) revoked our European Patent No.

2 137 537, which covers the treatment of MS with 480 mg of dimethyl fumarate as provided for in our TECFIDERA label.

We have appealed to the Technical Boards of Appeal of the EPO and a hearing date has been set for January 2022.

In March 2018 the EPO revoked Forward Pharma's European Patent No.

2 801 355, which expires in October 2025.

Forward Pharma has filed an appeal to the Technical Boards of Appeal of the EPO and a hearing has been set for June 2020.

For additional information regarding this matter, please read Note 6, Intangible Assets and Goodwill, to these consolidated financial statements.

Forward Pharma has filed an appeal to the Technical Boards of Appeal of the EPO and a hearing has been set for September 2021.

TYSABRI Patent Revocation Matters

In November 2017 Bioeq GMBH, affiliated with the Polpharma Group, brought an action in the Polish Patent Office seeking to revoke Polish Patent Number 215263 (the Polish '263 Patent), corresponding to our European Patent Number 1 485 127 (the E.U.

'127 Patent) and covering administration of natalizumab (TYSABRI) to treat MS.

In November 2017 Bioeq GMBH, affiliated with the Polpharma Group, brought an action in the Polish Patent Office seeking to revoke Polish Patent No.

215263 (the Polish '263 Patent), which corresponds to our European Patent No.

1 485 127 (the E.U.

'127 Patent) and covers administration of natalizumab (TYSABRI) to treat MS.

The Polish '263 Patent expires in February 2023.

No hearing on the merits has been set in this matter.

A hearing was held in January 2021 and a decision is pending.

In August 2020 a related entity, Polpharma Biologics S.A., also brought an action seeking to revoke the Polish ‘263 Patent.

No hearing has been set in this matter.

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Swiss Pharma International AG, also affiliated with the Polpharma Group, filed actions in the District Court of the Hague, Netherlands (January 2016), the German Patents Court (March 2016) and the Commercial Court of Rome (November 2017) seeking to invalidate the Dutch, German and Italian counterparts, respectively, of the E.U.

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The Dutch and German counterparts were ruled invalid.

The decision in the Dutch action was affirmed on appeal and a hearing has been set for July 2020 in our appeal in the German action.

No date for a hearing on the merits has been set in the Italian action.

'755 Patent Litigation

In May 2010 Biogen MA Inc.

(formerly Biogen Idec MA Inc.) filed a complaint in the U.S.

District Court for the District of New Jersey alleging infringement by Bayer Healthcare Pharmaceuticals Inc.

(Bayer) (manufacturer, marketer and seller of BETASERON and manufacturer of EXTAVIA), EMD Serono, Inc.

(EMD Serono) (manufacturer, marketer and seller of REBIF), Pfizer (co-marketer of REBIF) and Novartis Pharmaceuticals Corp.

(Novartis) (marketer and seller of EXTAVIA) of our U.S.

7,588,755 ('755 Patent), which claims the use of interferon beta for immunomodulation or treating a viral condition, viral disease, cancers or tumors.

The complaint seeks monetary damages, including lost profits and royalties.

Bayer, Pfizer, Novartis and EMD Serono all filed counterclaims seeking declaratory judgments of patent invalidity and non-infringement and seeking monetary relief in the form of costs and attorneys' fees.

Bayer had previously filed a complaint against us in the same court, on May 27, 2010, seeking a declaratory judgment that it does not infringe the '755 Patent and that the '755 Patent is invalid, and seeking monetary relief in the form of attorneys' fees, costs and expenses.

In September 2018 the trial court entered judgment against EMD Serono and Pfizer that the '755 Patent is infringed and valid and ordered a new trial on damages.

EMD Serono and Pfizer filed an appeal in the U.S.

Court of Appeals for the Federal Circuit and oral argument is scheduled for March 2020.

The trial court has not yet scheduled the new damages trial or a trial against Bayer and Novartis.

Government Matters

We have learned that state and U.S.

governmental authorities are investigating our sales and promotional practices and have received related subpoenas.

We are cooperating with the investigation.

We have received subpoenas and other requests from the U.S.

government for documents and information relating to our relationship with non-profit organizations that assist patients taking drugs sold by Biogen and the government has challenged some of our contributions to these organizations.

We are cooperating with the investigation and have participated in preliminary discussions with the government regarding potential resolution of aspects of the matter.

We have accrued the amount of our best estimate of the minimum probable loss in this matter.

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In the second quarter of 2018 the State Treasury of Goias, Brazil issued tax assessments for the period 2013 through February 2018 relating to tax on the circulation of goods and totaling approximately $ 70.0 million including interest and penalties.

We dispute the assessments and have filed defenses with the Administrative Court of Appeals for the State of Goias, which are pending.

We have not formed an opinion that an unfavorable outcome of the dispute is either probable or remote.

The decision in the Dutch action was affirmed on appeal and the German appeal has been withdrawn.

No hearing has been set in the Italian action.

Annulment Proceedings in General Court of the European Union relating to TECFIDERA

Pharmaceutical Works Polpharma SA (Polpharma) and Mylan Ireland Ltd.

(Mylan Ireland) have each filed applications in the General Court of the European Union (Polpharma in October 2018 and Mylan Ireland in November 2020) seeking to annul decisions of the European Medicines Agency (EMA) refusing to validate Polpharma’s and Mylan Ireland’s respective applications to market a generic version of TECFIDERA.

The EMA’s refusals were on the grounds that TECFIDERA benefits from regulatory data protection.

Biogen and the European Commission were granted leave to intervene in support of the EMA in the case brought by Polpharma.

That case was heard in July 2020 and we are awaiting a decision.

We intend to seek leave to intervene in support of the EMA in the case brought by Mylan Ireland.

No hearing has been set in that matter.

Product Liability and Other Legal Proceedings

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Contingent Consideration related to Business Combinations

In connection with our acquisitions of Convergence and BIN, we agreed to make additional payments based upon the achievement of certain milestone events.

As the acquisitions of Convergence and BIN occurred after January 1, 2009, we recognized the contingent consideration liabilities associated with these transactions at their fair value on the acquisition date and revalue the remaining obligations each reporting period.

In connection with our acquisition of Convergence, we agreed to make additional payments based upon the achievement of certain milestone events.

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As the acquisition of Convergence occurred after January 1, 2009, we recognized the contingent consideration liabilities associated with this transaction at their fair value on the acquisition date and revalue the remaining obligations each reporting period.

We may pay up to approximately $ 400.0 million in remaining milestones related to these acquisitions.

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We were required to make contingent payments to former shareholders of Fumapharm AG and holders of their rights based on the attainment of certain cumulative sales levels of Fumapharm Products and the level of total net sales of Fumapharm Products in the prior 12-month period, as defined in the acquisition agreement, until such time as the cumulative sales level reached $ 20.0 billion, at which time no further contingent payments were due.

During the first

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quarter of 2019 we paid the final $ 300.0 million contingent payment as we achieved the $ 20.0 billion cumulative sales levels related to the Fumapharm Products in the fourth quarter of 2018.

During the first quarter of 2019 we paid the final $ 300.0 million contingent payment as we achieved the $ 20.0 billion cumulative sales levels related to the Fumapharm Products in the fourth quarter of 2018.

Contingent Development, Regulatory and Commercial Milestone Payments

Based on our development plans as of December 31, 2019 , we could make potential future milestone payments to third parties of up to approximately $ 6.8 billion , including approximately $ 1.2 billion in development milestones, approximately $ 1.4 billion in regulatory milestones and approximately $ 4.2 billion in commercial milestones, as part of our various collaborations, including licensing and development programs.

Based on our development plans as of December 31, 2020, we could trigger potential future milestone payments to third parties of up to approximately $ 10.2 billion, including approximately $ 1.9 billion in development milestones, approximately $ 1.3 billion in regulatory milestones and approximately $ 7.0 billion in commercial milestones, as part of our various collaborations, including licensing and development programs.

Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones.

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Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory or commercial milestones.

Provided various development, regulatory or commercial milestones are achieved, we anticipate that we may pay approximately $ 430.0 million of milestone payments in 2020 , including $ 75.0 million upon the regulatory filing with the FDA for approval of aducanumab and $ 100.0 million if aducanumab is launched in the U.S.

If certain clinical and commercial milestones are met, we may pay up to $ 86.2 million in milestones in 2021 under our current agreements.

Additionally, if aducanumab receives regulatory approval in the jurisdictions where we have submitted filings, we may pay up to $ 200.0 million in milestones to Neurimmune in 2021, which includes $ 100.0 million if launched in the U.S., $ 50.0 million if launched in three or more countries within the E.U.

and $ 50.0 million if launched in Japan.

Milestones payable to Neurimmune are shared expenses under the Aducanumab Collaboration Agreement with Eisai.

During the second quarter of 2020 we paid Neurimmune $ 75.0 million upon the completed submission of the BLA for the approval of aducanumab to the FDA, which was recognized as a charge to noncontrolling interests for the year ended December 31, 2020.

Other Funding Commitments

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We have approximately $ 593.0 million in cancellable future commitments based on existing CRO contracts as of December 31, 2020.

As part of the sale of our Hillerød, Denmark manufacturing operations to FUJIFILM, we have provided FUJIFILM with certain minimum batch production commitment guarantees.

As part of the sale of our Hillerød, Denmark manufacturing operations to FUJIFILM, we provided FUJIFILM with certain minimum batch production commitment guarantees.

There is a risk that the minimum contractual batch production commitments will not be met.

Based upon current estimates we expect to incur an adverse commitment obligation of approximately $ 74.0 million associated with such guarantees and have accrued for this obligation.

We may adjust this estimate based upon changes in business conditions, which may result in the increase or reduction of this adverse commitment obligation in subsequent periods.

Based upon current estimates we do not expect to incur an adverse commitment obligation associated with such guarantees.

We developed this estimate using a probability-weighted estimate of future manufacturing activity and may further adjust this estimate based upon changes in business conditions, which may result in the increase or reduction of this adverse commitment obligation in subsequent periods.

Tax Related Obligations

We exclude liabilities pertaining to uncertain tax positions from our summary of contractual obligations as we cannot make a reliable estimate of the period of cash settlement with the respective taxing authorities.

As of December 31, 2019 , we have $ 136.9 million of net liabilities associated with uncertain tax positions.

As of December 31, 2019 and 2018 , we have accrued income tax liabilities of $ 697.0 million under the Transition Toll Tax.

The Transition Toll Tax will be paid over an eight-year period, which started in 2018, and will not accrue interest.

As of December 31, 2020, we have approximately $ 79.6 million of liabilities associated with uncertain tax positions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2020 and 2019, we have accrued income tax liabilities of $ 697.0 million, respectively, under the Transition Toll Tax.

Of the amounts accrued as of December 31, 2020, $ 62.0 million is expected to be paid within one year.

The Transition Toll Tax will be paid over an eight--year period, which started in 2018, and does not accrue interest.

For additional information on the Transition Toll Tax, please read Note 16, Income Taxes , to these consolidated financial statements.

Solothurn, Switzerland Manufacturing Facility

In order to support our drug development pipeline, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland.

We expect this facility to be partially operational by the end of 2020.

In order to support our future growth and drug development pipeline, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland.

We expect this facility to be partially operational during the first half of 2021.

As of December 31, 2020, we had contractual commitments of approximately $ 9.3 million related to the construction of this facility.

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These indemnification provisions generally survive termination of the underlying agreement.

The maximum potential amount of future payments we could be required to make under these

indemnification provisions is unlimited.

The maximum potential amount of future payments we could be required to make under these indemnification provisions is unlimited.

However, to date we have not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions.

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Our retiree benefit plans include defined benefit plans for employees in our affiliates in Switzerland and Germany as well as other insignificant defined benefit plans in certain other countries where we maintain an operating presence.

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Our Swiss plan is a government-mandated retirement fund that provides employees with a minimum investment return.

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Segment Information

We operate as one operating segment, focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic

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Our Chief Executive Officer (CEO), as the chief operating decision-maker, manages and allocates resources to the operations of our company on a total company basis.

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Revenues are primarily attributed to individual countries based on location of the customer or licensee.

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Geographic Information

The following tables contain certain financial information by geographic area:

December 31, 2019 (In millions)

December 31, 2020

(In millions) U.S.

Europe Asia Other Total

Product revenues from external customers $ 5,900.1 $ 3,656.4 $ 596.7 $ 539.0 $ 10,692.2

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Long-lived assets 1,496.3 2,321.4 16.2 10.9 3,844.8

December 31, 2018 (In millions)

December 31, 2019

(In millions) U.S.

Europe Asia Other Total

Product revenues from external customers $ 6,713.8 $ 3,794.5 $ 320.3 $ 551.2 $ 11,379.8

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Long-lived assets 1,493.2 2,162.9 6.2 12.0 3,674.3

December 31, 2017 (In millions)

December 31, 2018

(In millions) U.S.

Europe Asia Other Total

Product revenues from external customers $ 6,800.5 $ 3,370.3 $ 281.2 $ 434.8 $ 10,886.8

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In August 2019 we completed the sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM.

As of December 31, 2018 and 2017 , approximately $ 646.5 million and $ 707.1 million , respectively, of our long-lived assets were related to our manufacturing facility in Hillerød, Denmark.

As of December 31, 2018, approximately $ 646.5 million of our long-lived assets were related to our manufacturing facility in Hillerød, Denmark.

For additional information on our large-scale biologics manufacturing facility in Solothurn, Switzerland, please read Note 10, Property, Plant and Equipment, to these consolidated financial statements.

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Quarterly Financial Data (Unaudited)

(In millions, except per share amounts)

(In millions, except per share amounts) First

Quarter Second

Quarter Third

Quarter Fourth

Quarter Total

Product revenues, net $ 2,904.6 $ 2,795.7 $ 2,690.3 $ 2,301.6 $ 10,692.2

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Gross profit (1)

Net income (a)

$ 3,080.0 $ 3,270.5 $ 2,927.0 $ 2,361.9 $ 11,639.4

Net income $ 1,392.6 $ 1,606.5 $ 703.9 $ 357.6 $ 4,060.5

Net income attributable to Biogen Inc.

$ 1,399.1 $ 1,542.1 $ 701.5 $ 357.9 $ 4,000.6

Net income per share:

Basic earnings per share attributable to Biogen Inc.

$ 8.10 $ 9.60 $ 4.47 $ 2.33 $ 24.86

Diluted earnings per share attributable to Biogen Inc.

$ 8.08 $ 9.59 $ 4.46 $ 2.32 $ 24.80

Weighted-average shares used in calculating:

Basic earnings per share attributable to Biogen Inc.

172.8 160.6 156.9 153.7 160.9

Diluted earnings per share attributable to Biogen Inc.

(In millions, except per share amounts)

173.1 160.9 157.2 154.0 161.3

(In millions, except per share amounts) First

Quarter Second

Quarter Third

Quarter Fourth

Quarter Total

Product revenues, net $ 2,680.0 $ 2,880.3 $ 2,894.7 $ 2,924.8 $ 11,379.8

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Gross profit (1)

Net income (b)

$ 2,887.8 $ 3,140.4 $ 3,170.1 $ 3,224.2 $ 12,422.5

Net income $ 1,408.8 $ 1,494.1 $ 1,545.9 $ 1,439.7 $ 5,888.5

Net income attributable to Biogen Inc.

$ 1,408.8 $ 1,494.1 $ 1,545.9 $ 1,439.7 $ 5,888.5

Net income per share:

Basic earnings per share attributable to Biogen Inc.

$ 7.17 $ 7.85 $ 8.40 $ 8.10 $ 31.47

Diluted earnings per share attributable to Biogen Inc.

$ 7.15 $ 7.85 $ 8.39 $ 8.08 $ 31.42

Weighted-average shares used in calculating:

Basic earnings per share attributable to Biogen Inc.

196.6 190.3 184.0 177.8 187.1

Diluted earnings per share attributable to Biogen Inc.

197.0 190.4 184.2 178.2 187.4

(1) Gross profit is calculated as total revenues less cost of sales, excluding amortization and impairment of acquired intangible assets .

Net income and net income attributable to Biogen Inc.

for 2019 include:

Pre-tax gains (losses) related to changes in the fair value of our strategic investments of $ 376.1 million , ($ 174.2 ) million , ($ 4.6 ) million and $ 2.8 million for the first, second, third and fourth quarters, respectively.

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Impairment charges related to certain intangible assets of $ 215.9 million in the third quarter.

For additional information, please read Note 6, Intangible Assets and Goodwill , to these consolidated financial statements.

A total net loss in our consolidated statements of income of approximately $ 124.2 million related to the sale of all the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM.

This loss included a pre-tax loss of $ 55.3 million and a tax expense of $ 68.9 million related to this transaction.

For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read, Note 3, Divestitures , to these consolidated financial statements.

An expense of $ 63.0 million was recorded in research and development expense in our consolidated statements of income in the fourth quarter as we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilar products, SB11 referencing LUCENTIS and SB15 referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia.

We also acquired an option to extend our existing commercial agreement with Samsung Bioepis for BENEPALI, IMRALDI and FLIXABI in Europe and obtained exclusive rights to commercialize these products in China.

For additional information, please read, Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

Losses (gains) related to the adjustments to the fair values of our contingent consideration obligations of $ 11.5 million , $( 20.0 ) million , $( 57.8 ) million and $ 2.6 million for the first, second, third and fourth quarters, respectively.

For additional information on the valuation of our contingent consideration obligations, please read Note 7, Fair Value Measurements , to these consolidated financial statements.

A payment of $ 45.0 million to Ionis in the fourth quarter, as we exercised our option to obtain a worldwide, exclusive, royalty-bearing license from Ionis to develop and commercialize BIIB080.

For additional information, please read, Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

A payment of $ 38.5 million to Skyhawk in the first quarter as we entered into a collaboration and research and development services agreement with Skyhawk pursuant to which the companies are leveraging Skyhawk's SkySTAR technology platform with the goal of discovering innovative small molecule treatments for patients with neurological diseases, including MS and SMA.

For additional information, please read, Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

Net income and net income attributable to Biogen Inc.

for 2018 include:

Pre-tax (losses) gains related to changes in the fair value of our strategic investments of $( 6.4 ) million , $ 5.4 million , $ 141.2 million and $( 12.2 ) million for the first, second, third and fourth quarters, respectively.

Pre-tax charges to acquired IPR&D of $ 10.0 million , $ 75.0 million and $ 27.5 million for the first, second and third quarters, respectively, for upfront payments made upon closing of asset purchase transactions.

For additional information, please read Note 2, Acquisitions , to these consolidated financial statements.

Pre-tax research and development expenses for the second quarter of $ 486.2 million related to the 2018 Ionis Agreement.

For additional information, please read, Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

Pre-tax charge to noncontrolling interests of $ 50.0 million for the second quarter for a payment to Neurimmune in exchange for a 5 % reduction in the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including royalties payable on potential commercial sales of aducanumab.

For additional information, please read Note 19, Investments in Variable Interest Entities , to these consolidated financial statements.

Impairment charges related to certain intangible assets of $ 189.3 million and $ 176.8 million in the third and fourth quarters, respectively.

For additional information, please read Note 6, Intangible Assets and Goodwill , to these consolidated financial statements.

Losses (gains) related to the adjustments to the fair values of our contingent consideration obligations of $( 5.6 ) million , $ 1.9 million , $( 87.9 ) million and $ 79.3 million for the first, second, third and fourth quarters,

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

respectively.

For additional information, please read Note 7, Fair Value Measurements , to these consolidated financial statements.

Net increase to income tax expense of $ 135.8 million for the fourth quarter reflecting the impact of electing to record deferred taxes on GILTI.

For additional information, please read Note 16, Income Taxes , to these consolidated financial statements.

An upfront payment of $ 35.0 million to Ionis, as we exercised our option in the fourth quarter to obtain a worldwide, exclusive, royalty-bearing license from Ionis to develop and commercialize tofersen.

For additional information, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

Subsequent Events

In January 2020 we entered into an agreement to acquire PF-05251749, a novel CNS-penetrant small molecule inhibitor of casein kinase 1, for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases from Pfizer.

In particular, we plan to develop the Phase 1 asset for the treatment of sundowning in AD and irregular sleep wake rhythm disorder in Parkinson’s disease.

In connection with the closing of this transaction, we will make an upfront payment of $ 75.0 million to Pfizer, which will be recorded as acquired IPR&D in our consolidated statements of income as PF-05251749 has not yet reached technological feasibility.

We may also pay Pfizer up to $ 635.0 million in potential additional development and commercialization milestone payments, as well as tiered royalties in the high single digits to sub-teens.

This transaction will be accounted for as an asset acquisition and is subject to customary closing conditions, including the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 in the U.S.

We expect the transaction to close in the first quarter of 2020.

2020 Credit Facility

In January 2020 we entered into a $ 1.0 billion , five -year senior unsecured revolving credit facility under which we are permitted to draw funds for working capital and general corporate purposes.

The terms of the revolving credit facility include a financial covenant that requires us not to exceed a maximum consolidated leverage ratio.

This revolving credit facility replaced the revolving credit facility entered into in August 2015.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance

with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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Within Accrued expenses and other, total contractual adjustments amounted to $1,093.0 million as of December 31, 2020.

This balance primarily includes provisions for Medicaid and managed care rebates in the U.S.

This balance primarily includes provisions for Medicaid and managed care rebates in the US.

Medicaid rebates relate to the Company’s estimated obligations to states under established reimbursement arrangements.

The Company’s liability for Medicaid rebates consists of estimates for claims that a state will make for the current quarter, claims for prior quarters that have been estimated for which an invoice has not been received, invoices received for claims from the prior quarters that have not been paid and an estimate of potential claims that will be made for inventory that exists in the distribution channel at period end.

Managed care rebates represent the Company’s obligations to third parties, primarily pharmacy benefit managers.

Managed care rebates result from performance-based goals, formulary position and price increase limit allowances (price protection).

The calculation of the accrual of the managed care rebate is based on an estimate of the customer’s buying patterns and the resulting applicable contractual rebate rate(s) to be earned over a contractual period.

Managed care rebates represent the Company’s estimated obligations to third parties, primarily pharmacy benefit managers.

These rebates result from performance-based goals, formulary position and price increase limit allowances (price protection).

The calculation of the accrual for these rebates is based on an estimate of the customer’s buying coverage patterns and the resulting applicable contractual rebate rate(s) to be earned over a contractual period.

As disclosed by management, the Medicaid and managed care estimates reflect historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.

The principal considerations for our determination that performing procedures relating to reserves for Medicaid and managed care rebates is a critical audit matter are there was significant judgment by management due to the significant measurement uncertainty involved in developing these reserves, as the reserves are based on assumptions developed using historical experience, current contractual requirements, specific known market events and payment patterns.

This in turn led to a high degree of auditor judgment, subjectivity and effort in applying procedures related to these assumptions.

The principal considerations for our determination that performing procedures relating to reserves for Medicaid and managed care rebates is a critical audit matter are the significant judgment by management due to the significant measurement uncertainty involved in developing these reserves, as the reserves are based on assumptions developed using historical experience, current contractual requirements, specific known market events and payment patterns, which in turn led to a high degree of auditor judgment, subjectivity and effort in applying procedures related to these assumptions.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the reserves for Medicaid and managed care rebates, including controls over the assumptions used to estimate these rebate reserves.

These procedures also included, among others, (i) developing an independent estimate of the rebate reserves by utilizing third party data related to product demand, data related to price changes, the terms of the specific rebate programs, the historical trend of actual rebate claims paid and

consideration of contractual requirement changes and market events;

These procedures also included, among others, (i) developing an independent estimate of the rebate reserves by utilizing third-party data related to product demand, data related to price changes, the terms of the specific rebate programs, the historical trend of actual rebate claims paid and consideration of contractual requirement changes and market events;

(ii) comparing the independent estimate to management’s estimate, and (iii) testing rebate claims paid by the Company, including evaluating the claims for consistency with the contractual terms of the Company’s rebate agreements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures