BIOGEN INC. 10-K

biib-20211231 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31 , 2021 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 0-19311 BIOGEN INC. (Exact name of registrant as specified in its charter) Delaware 33-0112644 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 225 Binney Street , Cambridge , MA 02142 ( 617 ) 679-2000 (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices) Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Trading Symbol(s) Name of Each Exchange Where Registered Common Stock, $0.0005 par value BIIB The Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. x Large accelerated filer x Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $ 51,264,577,902 . As of February 2, 2022, the registrant had 146,962,793 shares of common stock, $0.0005 par value, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive proxy statement for our 2022 Annual Meeting of Stockholders are incorporated by reference into Part III of this report. Table of Contents BIOGEN INC. ANNUAL REPORT ON FORM 10-K For the Year Ended December 31, 2021 TABLE OF CONTENTS Page PART I Item 1. Business 1 Item 1A. Risk Factors 37 Item 1B. Unresolved Staff Comments 51 Item 2. Properties 52 Item 3. Legal Proceedings 52 Item 4. Mine Safety Disclosures 53 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 54 Item 6. Reserved 56 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 56 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 87 Item 8. Financial Statements and Supplementary Data 88 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 89 Item 9A. Controls and Procedures 89 Item 9B. Other Information 90 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 90 PART III Item 10. Directors, Executive Officers and Corporate Governance 91 Item 11. Executive Compensation 91 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 91 Item 13. Certain Relationships and Related Transactions, and Director Independence 91 Item 14. Principal Accountant Fees and Services 91 PART IV Item 15. Exhibits and Financial Statement Schedules 92 Item 16. Form 10-K Summary 92 Signatures 96 Consolidated Financial Statements F- 1 T a ble of Content s NOTE REGARDING FORWARD-LOOKING STATEMENTS This report contains forward-looking statements that are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 (the Act) with the intention of obtaining the benefits of the “Safe Harbor” provisions of the Act. These forward-looking statements may be accompanied by such words as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” "goal," “intend,” “may,” “plan,” “potential,” “possible,” “will,” “would” and other words and terms of similar meaning. Reference is made in particular to forward-looking statements regarding: • the anticipated amount, timing and accounting of revenue; contingent, milestone, royalty and other payments under licensing, collaboration, acquisition or divestiture agreements; tax positions and contingencies; collectability of receivables; pre-approval inventory; cost of sales; research and development costs; compensation and other selling, general and administrative expense; amortization of intangible assets; foreign currency exchange risk; estimated fair value of assets and liabilities; and impairment assessments; • expectations, plans and prospects relating to sales, pricing, growth and launch of our marketed and pipeline products; • the potential impact of increased product competition in the markets in which we compete, including increased competition from new originator therapies, generics, prodrugs and biosimilars of existing products and products approved under abbreviated regulatory pathways, including generic or biosimilar versions of our products; • patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity; • our plans and investments in our portfolio as well as implementation of our corporate strategy; • the drivers for growing our business, including our plans and intention to commit resources relating to discovery, research and development programs and business development opportunities as well as the potential benefits and results of, and the anticipated completion of, certain business development transactions; • the expectations, development plans and anticipated timelines, including costs and timing of potential clinical trials, filings and approvals, of our products, drug candidates and pipeline programs, including collaborations with third-parties, as well as the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline products; • the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters; • our ability to finance our operations and business initiatives and obtain funding for such activities; • adverse safety events involving our marketed products, generic or biosimilar versions of our marketed products or any other products from the same class as one of our products; • the direct and indirect impact of the COVID-19 pandemic on our business and operations, including sales, expense, reserves and allowances, the supply chain, manufacturing, cyber-attacks or other privacy or data security incidents, research and development costs, clinical trials and employees; • the potential impact of healthcare reform in the United States (U.S.) and measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our products; • our manufacturing capacity, use of third-party contract manufacturing organizations, plans and timing relating to changes in our manufacturing capabilities, activities in new or existing manufacturing facilities and the expected timeline for the Solothurn manufacturing facility to begin manufacturing products or product candidates and for the gene therapy manufacturing facility in Research Triangle Park (RTP), North Carolina to be operational; • the impact of the continued uncertainty of the credit and economic conditions in certain countries and our collection of accounts receivable in such countries; • lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations; and • the impact of new laws (including tax), regulatory requirements, judicial decisions and accounting standards. T a ble of Content s These forward-looking statements involve risks and uncertainties, including those that are described in Item 1A. Risk Factors included in this report and elsewhere in this report, that could cause actual results to differ materially from those reflected in such statements. You should not place undue reliance on these statements. Forward-looking statements speak only as of the date of this report. Except as required by law, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise. NOTE REGARDING COMPANY AND PRODUCT REFERENCES References in this report to: • “Biogen,” the “company,” “we,” “us” and “our” refer to Biogen Inc. and its consolidated subsidiaries; and • “RITUXAN” refers to both RITUXAN (the trade name for rituximab in the U.S., Canada and Japan) and MabThera (the trade name for rituximab outside the U.S., Canada and Japan). NOTE REGARDING TRADEMARKS AVONEX ® , PLEGRIDY ® , RITUXAN ® , RITUXAN HYCELA ® , SPINRAZA ® , TECFIDERA ® , TYSABRI ® and VUMERITY ® are registered trademarks of Biogen. ADUHELM ™ , BENEPALI ™ , BYOOVIZ ™ , FLIXABI ™ , FUMADERM ™ , IMRALDI ™ and Healthy Climate Healthy Lives ™ are trademarks of Biogen. ENBREL ® , EYLEA ® , FAMPYRA ™ , GAZYVA ® , HUMIRA ® , LUCENTIS ® , OCREVUS ® , REMICADE ® and other trademarks referenced in this report are the property of their respective owners. T a ble of Content s PART I ITEM 1. BUSINESS Overview Biogen is a global biopharmaceutical company focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies. We have a leading portfolio of medicines to treat multiple sclerosis (MS), have introduced the first approved treatment for spinal muscular atrophy (SMA) and are providing the first and only approved treatment to address a defining pathology of Alzheimer’s disease. We also commercialize biosimilars of advanced biologics and focus on advancing our pipeline in neuroscience and specialized immunology. Lastly, we are focused on accelerating our efforts in digital health to support our commercial and pipeline programs while also creating opportunities for potential digital therapeutics. 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, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; ADUHELM for the treatment of Alzheimer's disease; and FUMADERM for the treatment of severe plaque psoriasis. 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; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of primary progressive MS (PPMS) and relapsing MS (RMS); and other potential anti-CD20 therapies, including mosunetuzumab, pursuant to our collaboration arrangements with Genentech, Inc. (Genentech), a wholly-owned member of the Roche Group. For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. For over two decades we have led in the research and development of new therapies to treat MS, resulting in our leading portfolio of MS treatments. Now our research is focused on developing next generation treatments for MS. We introduced the first approved treatment for SMA and are continuing to pursue research and development for potential advancements in the treatment of SMA. We are also applying our scientific expertise to solve some of the most challenging and complex diseases, including Alzheimer's disease, ALS, Parkinson's disease, major depressive disorder (MDD), postpartum depression (PPD), systemic lupus erythematosus (SLE), cutaneous lupus erythematosus (CLE), cognitive impairment associated with schizophrenia (CIAS), stroke and neuropathic pain. 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. We have also secured the exclusive rights to commercialize BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, which was approved in the U.S., the European Union (E.U.) and the U.K. during the third quarter of 2021. For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. Key Business Developments The following is a summary of key developments affecting our business since the beginning of 2021. For additional information on our acquisitions, collaborative and other relationships discussed below, please read Note 2, Acquisitions , Note 18, Collaborative and Other Relationships, and Note 19, Investments in Variable Interest Entities, to our consolidated financial statements included in this report. Acquisitions, Collaborative and Other Relationships Bio-Thera Solutions In April 2021 we entered into a commercialization and license agreement to develop, manufacture and commercialize BAT1806, a Phase 3 clinical stage anti-interleukin-6 (IL-6) receptor monoclonal antibody that is a proposed biosimilar referencing ACTEMRA. In connection with this agreement, we made an upfront payment of $30.0 million to Bio-Thera Solutions. 1 T a ble of Content s InnoCare Pharma Limited In August 2021 we closed a collaboration and license agreement with InnoCare Pharma Limited (InnoCare) for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS. Orelabrutinib is currently being studied in a multi-country, placebo-controlled Phase 2 trial in relapsing-remitting MS (RRMS). Under the terms of this collaboration, we have exclusive rights to orelabrutinib in the field of MS worldwide and certain autoimmune diseases outside of China (including Hong Kong, Macau and Taiwan), while InnoCare retains exclusive worldwide rights to orelabrutinib in the field of oncology and certain autoimmune diseases in China (including Hong Kong, Macau and Taiwan). In connection with this agreement, we made an upfront payment of $125.0 million to InnoCare. Mosunetuzumab In January 2022 we exercised our option with Genentech to participate in the joint development and commercialization of mosunetuzumab, a late-stage bispecific antibody in development for B-cell non-Hodgkin’s lymphoma and other therapeutic areas. In connection with this exercise, we recorded a $30.0 million option exercise fee payable to Genentech in December 2021. BIIB115 Option Exercise In December 2021 we exercised our option with Ionis and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB115, a preclinical investigational ASO in development for SMA. In connection with this option exercise, we made an opt-in payment of $60.0 million to Ionis. Samsung Bioepis - Biogen's Joint Venture with Samsung BioLogics In January 2022 we entered into an agreement to sell to Samsung Biologics our equity in Samsung Bioepis. Under the terms of the proposed transaction, we would receive $1.0 billion in cash at closing and $1.3 billion to be deferred over two payments of $812.5 million due at the first anniversary and $437.5 million due at the second anniversary of the closing of the transaction. We would also be eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones. Closing of the transaction is currently anticipated in mid-2022, contingent on the effectiveness of a securities registration statement filed by Samsung Biologics and satisfaction of certain regulatory and other customary closing conditions. For additional information on the proposed transaction and our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Other Key Developments ADUHELM (aducanumab) In June 2021 the U.S. Food and Drug Administration (FDA) granted accelerated approval of ADUHELM, which we are developing and commercializing in collaboration with Eisai Co., Ltd. (Eisai), based on reduction in amyloid beta plaques observed in patients treated with ADUHELM. As part of the accelerated approval, we will conduct a confirmatory trial to verify the clinical benefit of ADUHELM in patients with Alzheimer’s disease. The FDA may withdraw approval if, among other things, the confirmatory trial fails to verify clinical benefit of ADUHELM, ADUHELM's benefit-risk is no longer positive or we fail to comply with the conditions of the accelerated approval. In December 2021 the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a negative opinion on the Marketing Authorization Application (MAA) for aducanumab in Europe. We are seeking a re-examination of the opinion by the CHMP. In January 2022 the Centers for Medicare and Medicaid Services (CMS) released a proposed National Coverage Determination (NCD) decision memorandum stating the proposed NCD would cover FDA approved monoclonal antibodies that target amyloid for the treatment of Alzheimer's disease for people with Medicare only if they are enrolled in qualifying clinical trials. We expect a final Medicare NCD by the second quarter of 2022, which should clarify Medicare reimbursement for the class of antibodies directed against amyloid. 2 T a ble of Content s BIIB125 (zuranolone) In June 2021 we and Sage Therapeutics, Inc. (Sage) announced positive Phase 3 results for BIIB125 (zuranolone) for the potential treatment of MDD and PPD. In October 2021 we and Sage announced our plan to submit a New Drug Application (NDA) to the FDA for zuranolone in the second half of 2022, with rolling submission expected to start in the first half of 2022. The planned initial submission package will seek approval of zuranolone for MDD and an additional filing for PPD is anticipated in the first half of 2023. Lecanemab (BAN2401) In June 2021 the FDA granted Breakthrough Therapy designation for lecanemab, an anti-amyloid antibody for the potential treatment of Alzheimer's disease, which we are developing in collaboration with Eisai. In September 2021 Eisai initiated a rolling submission to the FDA of a Biologics License Application (BLA) for lecanemab. The BLA is being submitted under the accelerated approval pathway and is primarily based in clinical, biomarker and safety data from the Phase 2b clinical trial in patients with early Alzheimer's disease and confirmed amyloid pathology. BYOOVIZ (ranibizumab-nuna) In September 2021 we announced that the FDA has approved BYOOVIZ (ranibizumab-nuna), a biosimilar referencing LUCENTIS for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion and myopic choroidal neovascularization. In addition to the U.S. approval, BYOOVIZ was approved in the E.U. and the U.K. during the third quarter of 2021. BIIB067 (tofersen) In October 2021 we announced topline results from our pivotal Phase 3 VALOR study of BIIB067 (tofersen), an investigational antisense drug being evaluated for people with superoxide dismutase 1 (SOD1) amyotrophic lateral sclerosis (ALS), indicating that the primary endpoint was not met. Exchange Offer In February 2021 we completed a private offer to exchange (Exchange Offer) our tendered 5.200% Senior Notes due September 15, 2045 (2045 Senior Notes) for a new series of 3.250% Senior Notes due February 15, 2051 (2051 Senior Notes) and cash, and an offer to purchase our tendered 2045 Senior Notes for cash. North Carolina Gene Therapy Manufacturing Facility In March 2021 we announced our plans to build a new gene therapy manufacturing facility in RTP, North Carolina to support our gene therapy pipeline across multiple therapeutic areas. The new facility will be approximately 175,000 square feet and is expected to be operational by the end of 2023. Construction for this new facility began during the fourth quarter of 2021. Solothurn, Switzerland Manufacturing Facility In May 2021 we announced that a portion of our Solothurn manufacturing facility received a Good Manufacturing Practice (GMP) multi-product license from the Swiss Agency for Therapeutic Products (SWISSMEDIC). Management Changes In July 2021 we announced the appointment of Rachid Izzar to the Executive Committee of the Company as well as Head of the Alzheimer's Disease and Dementia Business Unit. In November 2021 we announced the retirement of Alfred Sandrock and the appointment of Priya Singhal, Head of Global Safety and Regulatory Sciences, as interim Head of Research and Development. For additional information on our executive officers, please read the subsection entitled "Information about our Executive Officers" included in this report. Product and Pipeline Developments Neurology Multiple Sclerosis and Neuroimmunology TECFIDERA (dimethyl fumerate) • In April 2021 China's National Medical Products Administration approved TECFIDERA for the treatment of RMS. 3 T a ble of Content s VUMERITY (diroximel fumarate; DRF) • In November 2021 the European Commission (EC) granted marketing authorization for VUMERITY in the E.U. for the treatment of RRMS. PLEGRIDY (peginterferon beta-1a) • In January 2021 the FDA approved a new intramuscular (IM) injection route of administration for PLEGRIDY for the treatment of RRMS. TYSABRI (natalizumab) • In April 2021 the EC granted marketing authorization for a new subcutaneous (SC) injection route of administration for TYSABRI for the treatment of RRMS. • In April 2021, at the 2021 American Academy of Neurology (AAN) Virtual Annual Meeting, we presented new data on quality of life benefits and analyses of extended interval dosing with TYSABRI. • In August 2021 we announced results from the two-year prospective, randomized, interventional, controlled, open-label Phase 3b NOVA study. NOVA was designed to estimate a potential difference between the efficacy of every six-weeks (Q6W) 300mg intravenous (IV) dosing compared to the efficacy of the approved every four-week (Q4W) dose in people treated with TYSABRI for RRMS. Alzheimer's Disease and Dementia ADUHELM (aducanumab) • In June 2021 the FDA granted accelerated approval for ADUHELM as the first and only Alzheimer's disease treatment to address a defining pathology of the disease by reducing amyloid beta plaques in the brain. • In July 2021 the FDA approved an updated label for ADUHELM injection 100 mg/mL solution. • In July 2021, at the Alzheimer's Association International Conference (AAIC), we presented the design for the first real-world observational Phase 4 study of Alzheimer's disease called ICARE AD-US. • In November 2021, at the 2021 Clinical Trials on Alzheimer's Disease (CTAD) conference, we announced that data from the ADUHELM Phase 3 clinical trials showed a statistically significant correlation between plasma p-tau reduction and less cognitive and functional decline in Alzheimer’s disease. We also presented data from the Phase 3b redosing study, EMBARK, which examined the impact of patients with Alzheimer's disease stopping ADUHELM treatment for an extended period of time before re-initiating treatment. • In November 2021 we received a negative trend vote on the aducanumab MAA in the E.U. • In December 2021 the CHMP adopted a negative opinion on the MAA for aducanumab. • In December 2021 the First Committee on New Drugs (NDC) of the Pharmaceutical Affairs and Food Sanitation Council that advises the Ministry of Health, Labour and Welfare (MHLW) in Japan decided to continue deliberations on the application for the manufacturing and marketing approval of aducanumab for the treatment of Alzheimer's disease. • In January 2022 the CMS released a proposed NCD decision memorandum, stating the proposed NCD would cover FDA approved monoclonal antibodies that target amyloid for the treatment of Alzheimer's disease for people with Medicare only if they are enrolled in qualifying clinical trials. BAN2401 (lecanemab) • In June 2021 the FDA granted Breakthrough Therapy designation for lecanemab for the potential treatment of Alzheimer's disease. • In July 2021, at the AAIC, Eisai presented results of a longitudinal preliminary assessment of the clinical effects of lecanemab following 18 months of treatment in the open-label extension (OLE) of the Phase 2b proof-of-concept study in subjects with early Alzheimer's disease. • In September 2021 Eisai initiated a rolling submission to the FDA of a BLA for lecanemab. The BLA is being submitted under the accelerated approval pathway and is primarily based on clinical, biomarker and safety data from the Phase 2b clinical trial (Study 201) in patients with early Alzheimer's disease and confirmed amyloid pathology. • In November 2021 Eisai presented results of new clinical, biomarker and safety assessments of brain amyloid reduction and five-year clinical status of people living with early Alzheimer's disease from the 4 T a ble of Content s lecanemab Phase 2b 201 and the OLE studies. The findings were presented and discussed in a late-breaking roundtable session at the 2021 CTAD conference. • In December 2021 we and Eisai announced that lecanemab was granted Fast Track designation by the FDA. Neuromuscular Disorders SPINRAZA (nusinersen) • In January 2021 the first patient was dosed in the global RESPOND study, which will examine the clinical benefit and assess the safety of SPINRAZA in infants and children with SMA. • In April 2021, at the AAN 2021 Virtual Annual Meeting, we announced new data from the Phase 2/3 DEVOTE study. Initial findings from the DEVOTE study suggest no new safety concerns and support continued development of a higher dose of SPINRAZA. • In June 2021, at the virtual Cure SMA Research & Clinical Care Meeting, we announced new data on the long-term efficacy of SPINRAZA. • In September 2021 we announced plans to initiate a global Phase 3b clinical study, ASCEND. The ASCEND study is designed to evaluate the clinical outcomes and assess the safety of a higher dose of SPINRAZA in children, teens and adults with later-onset SMA following treatment of Evrysdi. Movement Disorders SAGE-324 (GABA A receptor PAM) • In April 2021 we and Sage reported that the Phase 2 KINETIC study evaluating SAGE-324 in the treatment of patients with essential tremor (ET) met its primary endpoint. Neuropsychiatry BIIB125 (zuranolone) • In June 2021 we and Sage announced positive results from the Phase 3 WATERFALL study for zuranolone, an investigational two-week, once-daily therapeutic being evaluated for MDD. • In October 2021 we and Sage shared positive data from the LANDSCAPE and NEST clinical development program. This study evaluated the efficacy and safety of zuranolone for the treatment of MDD and PPD. The data was presented at the European College of Neuropsychopharmacology Congress. • In October 2021 we and Sage announced plans to submit a NDA to the FDA for zuranolone for the potential treatment of MDD in the second half of 2022 with rolling submission expected to start in early 2022. Plans also include the submission of a NDA to the FDA for zuranalone for the treatment of PPD, in the first half of 2023. • In December 2021 we and Sage announced positive data from the 12-month Phase 3 open-label SHORELINE study for zuranolone. The SHORELINE study, part of the LANDSCAPE clinical program, was designed to naturalistically follow adult patients with MDD and evaluate the safety and tolerability of zuranolone as well as the need for repeat dosing for up to one year. Specialized Immunology Immunology BIIB059 (anti-BDCA2) - SLE • In June 2021 the first patient was dosed in the Phase 3 TOPAZ-1 study of BIIB059 for SLE. The Phase 3 study will evaluate the clinical efficacy and assess the safety of BIIB059 in participants with active SLE. Neuropathic Pain BIIB074 (vixotrigine) • In September 2021 we announced positive results that the Phase 2 CONVEY study of vixotrigine, a non-opioid investigational oral pain drug being evaluated for the treatment of small fiber neuropathy. The CONVEY study 200 mg twice daily arm met its primary endpoint. The CONVEY study 350 mg twice daily arm did not meet its primary endpoint. 5 T a ble of Content s Biosimilars BAT1806 • In April 2021 we entered into a commercialization and license agreement to develop, manufacture and commercialize BAT1806, a Phase 3 clinical stage anti-interleukin-6 (IL-6) receptor monoclonal antibody that is a proposed biosimilar referencing ACTEMRA (tocilizumab). • In June 2021 we and Bio-Thera Solutions, Ltd. (Bio-Thera) announced positive results that the Phase 3 study of BAT1806, a proposed biosimilar referencing ACTEMRA (tocilizumab), met its primary endpoint. Samsung Bioepis - Biogen's Joint Venture with Samsung BioLogics • In June 2021 Samsung Bioepis announced that the CHMP adopted a positive opinion of BYOOVIZ (ranibizumab-nuna), a biosimilar referencing LUCENTIS, and in August 2021 BYOOVIZ was approved by the EMA. • In September 2021 Samsung Bioepis announced the FDA approval of BYOOVIZ. Digital Health • In January 2021 we announced a virtual research study, in collaboration with Apple Inc., to investigate the role Apple Watch and iPhone could play in monitoring cognitive performance and screening for decline in cognitive health including mild cognitive impairment (MCI). • In December 2021 we announced an expanded collaboration with TheraPanacea focused on multiple therapeutic areas in neuroscience. The expanded collaboration aims to leverage machine learning and artificial intelligence analysis to develop digital health solutions that may improve patient care, accelerate drug development, and further the understanding of the underlying pathologies of neurological diseases. Discontinued or Suspended Programs • In May 2021 we announced that the Phase 2/3 XIRIUS study of cotoretigene toliparvovec (BIIB112), a gene therapy being investigated as a one-time therapy for patients with X-linked retinitis pigmentosa, did not meet its primary endpoint. Based on these results, we suspended further development based on the decision of management as part of its strategic review process. • In June 2021 we announced that the Phase 3 STAR study of timrepigene emparvovec (BIIB111), an investigational gene therapy for the potential treatment of choroideremia, did not meet its primary endpoint. Based on these results, we suspended further development based on the decision of management as part of its strategic review process. • In June 2021 we announced that the Phase 2 TANGO study of BIIB092 (gosuranemab), an investigational anti-tau antibody that was being evaluated as a potential treatment for Alzheimer's disease, did not meet its primary endpoint. Based on these results, we discontinued development of gosuranemab. 6 T a ble of Content s Marketed Products The following graph shows our revenue by product and revenue from anti-CD20 therapeutic programs for the years ended December 31, 2021, 2020 and 2019. (1) Fumarate includes TECFIDERA and VUMERITY. VUMERITY became commercially available in the E.U. during the fourth quarter of 2021. (2) Interferon includes AVONEX and PLEGRIDY. (3) In June 2021 the FDA granted accelerated approval of ADUHELM, which became commercially available in the U.S. during the second quarter of 2021. For additional information, please read Note 18, Collaborative and Other Relationships - Eisai Co., Ltd. - ADUHELM Collaboration Agreement , to our consolidated financial statements included in this report. (4) Other includes FAMPYRA, FUMADERM, BENEPALI, IMRALDI and FLIXABI. (5) Anti-CD20 therapeutic programs include RITUXAN, RITUXAN HYCELA, GAZYVA and OCREVUS. Product sales for TECFIDERA, AVONEX, TYSABRI and SPINRAZA each accounted for more than 10.0% of our total revenue for the years ended December 31, 2021, 2020 and 2019. For additional financial information about our product and other revenue and geographic areas where we operate, please read Note 4, Revenue, and Note 24, Segment Information, to our consolidated financial statements included in this report and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. A discussion of the risks attendant to our operations is set forth in Item 1A. Risk Factors included in this report. 7 T a ble of Content s Multiple Sclerosis and Neuroimmunology We develop, manufacture and market a number of products designed to treat patients with MS. MS is a progressive neurological disease in which the body loses the ability to transmit messages along nerve cells, leading to a loss of muscle control, paralysis and, in some cases, death. Patients with active RMS experience an uneven pattern of disease progression characterized by periods of stability that are interrupted by flare-ups of the disease after which the patient may return to a lower baseline of functioning. The MS products we market and our major markets are as follows: Product Indication Collaborator Major Markets RMS in the U.S. RRMS in the E.U. None U.S. France Germany Italy Japan Spain U.K. RMS in the U.S. RRMS in the E.U. Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc (Alkermes) U.S. Germany Israel Switzerland U.K. RMS None U.S. France Germany Italy Japan Spain RMS in the U.S. RRMS in the E.U. None U.S. France Germany Italy Spain U.K. RMS RRMS in the E.U. Crohn's disease in the U.S. None U.S. France Germany Italy Spain U.K. Walking ability for patients with MS Acorda Therapeutics, Inc. (Acorda) France Germany For additional information on our collaboration arrangements with Alkermes and Acorda, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Neuromuscular Disorders SMA is characterized by loss of motor neurons in the spinal cord and lower brain stem, resulting in severe and progressive muscular atrophy and weakness. Ultimately, individuals with the most severe type of SMA can become paralyzed and have difficulty performing the basic functions of life, like breathing and swallowing. Due to a deletion or mutations in the SMN1 gene, people with SMA do not produce enough survival motor neuron (SMN) protein, which is critical to the survival of the neurons that control muscles. The severity of SMA correlates with the amount of SMN protein. People with Type 1 SMA, the most severe life-threatening form, produce very little SMN protein and do not 8 T a ble of Content s achieve the ability to sit without support, and typically do not live beyond two years of age without respiratory support and nutritional interventions. People with Type 2 and Type 3 SMA produce greater amounts of SMN protein and have less severe, but still life-altering, forms of SMA. Our SMA product and major markets are as follows: Product Indication Collaborator Major Markets SMA Ionis Pharmaceuticals Inc. (Ionis) U.S. Brazil Canada China France Germany Italy Japan Spain Turkey For additional information on our collaboration arrangements with Ionis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Alzheimer's Disease Alzheimer's disease is characterized by two abnormalities in the brain: amyloid plaques and neurofibrillary tangles. Amyloid plaques, which are found in the tissue between the nerve cells, are unusual clumps of a protein called beta amyloid along with degenerating bits of neurons and other cells. Our Alzheimer's disease product and major market is as follows: Product Indication Collaborator Major Market Alzheimer's disease Eisai U.S. For additional information on our collaboration arrangements with Eisai, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Biosimilars Biosimilars are a group of biologic medicines that are similar to currently available biologic therapies developed by companies known as "originators". Under our agreements with Samsung Bioepis, we commercialize three anti-tumor necrosis factor (TNF) biosimilars in certain countries in Europe: BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE. We have also secured the exclusive rights to commercialize BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, which was approved in the U.S., the E.U. and the U.K. during the third quarter of 2021. 9 T a ble of Content s Our current biosimilar products and major markets are as follows: Product Indication Major Markets Rheumatoid arthritis Juvenile idiopathic arthritis Psoriatic arthritis Axial spondyloarthritis Plaque psoriasis Paediatric plaque psoriasis France Germany Italy Spain U.K. Rheumatoid arthritis Juvenile idiopathic arthritis Axial spondyloarthritis Psoriatic arthritis Psoriasis Paediatric plaque psoriasis Hidradenitis suppurativa Adolescent hidradenitis suppurativa Crohn’s disease Paediatric Crohn's disease Ulcerative colitis Uveitis Paediatric Uveitis France Germany U.K. Rheumatoid arthritis Crohn’s disease Paediatric Crohn’s disease Ulcerative colitis Paediatric ulcerative colitis Ankylosing spondylitis Psoriatic arthritis Psoriasis France Germany Italy For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. 10 T a ble of Content s Genentech Relationships We have agreements with Genentech that entitle us to certain business and financial rights with respect to RITUXAN, RITUXAN HYCELA, GAZYVA, OCREVUS and other potential anti-CD20 therapies, including mosunetuzumab. Our current anti-CD20 therapeutic programs and major markets are as follows: Product Indication Major Markets Non-Hodgkin's lymphoma CLL Rheumatoid arthritis Two forms of ANCA-associated vasculitis Pemphigus vulgaris U.S. Canada Non-Hodgkin's lymphoma CLL U.S. In combination with chlorambucil for previously untreated CLL Follicular lymphoma In combination with chemotherapy followed by GAZYVA alone for previously untreated follicular lymphoma U.S. RMS PPMS U.S. Australia Germany Switzerland For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Other Product Indication Collaborator Major Markets Moderate to severe plaque psoriasis None Germany Patient Support and Access We interact with patients, advocacy organizations and healthcare societies in order to gain insights into unmet needs. The insights gained from these engagements help us support patients with services, programs and applications that are designed to help patients lead better lives. Among other things, we provide customer service and other related programs for our products, such as disease and product specific websites, insurance research services, financial assistance programs and the facilitation of the procurement of our marketed products. We are dedicated to helping patients obtain access to our therapies. Our patient representatives have access to a suite of financial assistance tools. With those tools, we help patients understand their insurance coverage and, if needed, help patients compare and select new insurance options and programs. In the U.S., we have established programs that provide co-pay assistance or free marketed product for qualified uninsured or underinsured patients, based on specific eligibility criteria. We also provide charitable contributions to independent charitable organizations that assist patients with out-of-pocket expenses associated with their therapy. We believe all healthcare stakeholders have a shared responsibility to ensure patients have equitable access to new, innovative medicines. We regularly review our pricing strategy and prioritize patient access to our therapies. We have a value-based contracting program designed to align the price of our therapies to the value our therapies deliver to patients. We also work with regulators, clinical researchers, ethicists, physicians and patient 11 T a ble of Content s advocacy organizations and communities, among others, to determine how best to address requests for access to our investigational therapies in a manner that is consistent with our patient-focused values and compliant with regulatory standards and protocols. In appropriate situations, patients may have access to investigational therapies through Early Access Programs, single patient access or emergency use based on humanitarian or compassionate grounds. Marketing and Distribution Sales Force and Marketing We promote our marketed products worldwide, including in the U.S., Europe and Japan, primarily through our own sales forces and marketing groups. In some countries, particularly in areas where we continue to expand into new geographic areas, we partner with third-parties. We and Eisai co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings. We and Eisai co-promote ADUHELM with a region-based profit split. RITUXAN, RITUXAN HYCELA, GAZYVA and OCREVUS are marketed by the Roche Group and its sublicensees. We commercialize BENEPALI, IMRALDI and FLIXABI pursuant to our agreement with Samsung Bioepis in certain countries in Europe. We focus our sales and marketing efforts on specialist physicians in private practice or at major medical centers. We use customary industry practices to market our products and to educate physicians, such as sales representatives calling on individual physicians, advertisements, professional symposia, direct mail, public relations and other methods. Distribution Arrangements We distribute our products in the U.S. principally through wholesale and specialty distributors of pharmaceutical products and specialty pharmacies, mail order specialty distributors or shipping service providers. In other countries, the distribution of our products varies from country to country, including through wholesale distributors of pharmaceutical products and third-party distribution partners who are responsible for most marketing and distribution activities. Eisai distributes AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets, excluding China. RITUXAN, RITUXAN HYCELA, GAZYVA and OCREVUS are distributed by the Roche Group and its sublicensees. We distribute BENEPALI, IMRALDI and FLIXABI in certain countries in Europe and have an option to acquire exclusive rights to distribute these products in China. Our product sales to two wholesale distributors each accounted for more than 10.0% of our total revenue for the years ended December 31, 2021, 2020 and 2019, and on a combined basis, accounted for approximately 38.9%, 45.8% and 47.0% of our gross product revenue for the years ended December 31, 2021, 2020 and 2019, respectively. For additional information, please read Note 4, Revenue , to our consolidated financial statements included in this report. Patents and Other Proprietary Rights Patents are important to obtaining and protecting exclusive rights in our products and product candidates. We regularly seek patent protection in the U.S. and in selected countries outside the U.S. for inventions originating from our research and development efforts and those we license or acquire. In addition, we license rights to various patents and patent applications. U.S. patents, as well as most foreign patents, are generally effective for 20 years from the date the earliest application was filed; however, U.S. patents that issue on applications filed before June 8, 1995, may be effective until 17 years from the issue date, if that is later than the 20-year date. In some cases, the patent term may be extended to recapture a portion of the term lost during regulatory review of the claimed therapeutic or, in the case of the U.S., because of U.S. Patent and Trademark Office (USPTO) delays in prosecuting the application. Specifically, in the U.S., under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, a patent that covers a drug approved by the FDA may be eligible for patent term extension (for up to 5 years, but not beyond a total of 14 years from the date of product approval) as compensation for patent term lost during the FDA regulatory review process. The duration and extension of the term of foreign patents varies, in accordance with local law. For example, supplementary protection certificates (SPCs) on some of our products have been granted in a number of European countries, compensating in part for delays in obtaining marketing approval. Regulatory exclusivity, which may consist of regulatory data protection and market protection, also can provide meaningful protection for our products. Regulatory data protection provides to the holder of a drug or biologic marketing authorization, for a set period of time, the exclusive use of the proprietary pre-clinical and clinical data that it created at significant cost and submitted to the applicable 12 T a ble of Content s regulatory authority to obtain approval of its product. After the period of exclusive use, third-parties are permitted to reference such data in abbreviated applications for approval and to market (subject to any applicable market protection) their generic drugs and biosimilars. Market protection provides the holder of a drug or biologic marketing authorization the exclusive right to commercialize its product for a period of time, thereby preventing the commercialization of another product containing the same active ingredient(s) during that period. Although the World Trade Organization's agreement on trade-related aspects of intellectual property rights (TRIPS) requires signatory countries to provide regulatory exclusivity to innovative pharmaceutical products, implementation and enforcement varies widely from country to country. We also rely upon other forms of unpatented confidential information to remain competitive. We protect such information principally through refraining from public disclosure and confidentiality agreements with our employees, consultants, outside scientific collaborators, scientists whose research we sponsor and other advisers. In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment are our exclusive property. Our trademarks are important to us and are generally covered by trademark applications or registrations in the USPTO and the patent or trademark offices of other countries. We also use trademarks licensed from third-parties, such as the trademark FAMPYRA, which we license from Acorda. Trademark protection varies in accordance with local law, and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered. Trademark registrations generally are for fixed but renewable terms. Our Patent Portfolio The following table describes our patents in the U.S. and Europe that we currently consider of primary importance to our marketed products, including the territory, patent number, general subject matter and expected expiration dates. Except as otherwise noted, the expected expiration dates include any granted patent term extensions and issued SPCs. In some instances, there are later-expiring patents relating to our products directed to, among other things, particular forms or compositions, methods of manufacturing or use of the drug in the treatment of particular diseases or conditions. We also continue to pursue additional patents and patent term extensions in the U.S. and other territories covering various aspects of our products that may, if issued, extend exclusivity beyond the expiration of the patents listed in the table. 13 T a ble of Content s Product Territory Patent No. General Subject Matter Patent Expiration (1) TECFIDERA U.S. 8,399,514 Methods of treatment 2028 (2) Europe 1131065 Formulations of dialkyl fumarates and their use for treating autoimmune diseases 2024 (3) PLEGRIDY U.S. 7,446,173 Polymer conjugates of interferon beta-1a 2022 U.S. 8,524,660 Methods of treatment 2023 U.S. 8,017,733 Polymer conjugates of interferon beta-1a 2027 Europe 1656952 Polymer conjugates of interferon-beta-1a and uses thereof 2024 (4) Europe 1476181 Polymer conjugates of interferon-beta-1a and uses thereof 2023 (5) TYSABRI U.S. 7,807,167 Methods of treatment 2023 U.S. 9,493,567 Methods of treatment 2027 U.S. 10,233,245 Methods of treatment 2027 Europe 1485127 Methods of use 2023 (2) Europe 2676967 Methods of use 2027 FAMPYRA Europe 1732548 Sustained-release aminopyridine compositions for increasing walking speed in patients with MS 2025 (6) Europe 2377536 Sustained-release aminopyridine compositions for treating MS 2025 (7) VUMERITY U.S. 8,669,281 Compounds and pharmaceutical compositions 2033 U.S. 9,090,558 Methods of treatment 2033 U.S. 10,080,733 Crystalline forms, pharmaceutical compositions and methods of treatment 2033 Europe 2,970,101 Crystalline forms, pharmaceutical compositions and methods of treatment Prodrugs of fumarates and their use in treating various diseases 2034 SPINRAZA U.S. 7,101,993 Oligonucleotides containing 2’-O-modified purines 2023 U.S. 7,838,657 SMA treatment via targeting of SMN2 splice site inhibitory sequences 2027 U.S. 8,110,560 SMA treatment via targeting of SMN2 splice site inhibitory sequences 2025 U.S. 8,361,977 Compositions and methods for modulation of SMN2 splicing 2030 U.S. 8,980,853 Compositions and methods for modulation of SMN2 splicing 2030 U.S. 9,717,750 Compositions and methods for modulation of SMN2 splicing 2030 U.S. 9,926,559 Compositions and methods for modulation of SMN2 splicing 2034 U.S. 10,266,822 SMA treatment via targeting of SMN2 splice site inhibitory sequences 2025 U.S. 10,436,802 Methods for Treating Spinal Muscular Atrophy 2035 Europe 1,910,395 Compositions and methods for modulation of SMN2 splicing 2026 (8) Europe 2,548,560 Compositions and methods for modulation of SMN2 splicing 2026 (9) Europe 3,305,302 Compositions and methods for modulation of SMN2 splicing 2030 Europe 3,308,788 Compositions and methods for modulation of SMN2 splicing 2026 Europe 3,449,926 Compositions and methods for modulation of SMN2 splicing 2030 ADUHELM U.S. 8,906,367 Method of providing disease-specific binding molecules and targets 2032 (10) U.S. 10,131,708 Methods of treating Alzheimer's disease 2028 Footnotes follow on next page. 14 T a ble of Content s (1) In addition to patent protection, certain of our products are entitled to regulatory exclusivity in the U.S. and the E.U. expected until the dates set forth below: Product Territory Expected Expiration TECFIDERA E.U. 2024 PLEGRIDY U.S. 2026 E.U. 2024 SPINRAZA U.S. 2023 E.U. 2029 ADUHELM U.S. 2033 (2) For additional information as to the validity of this patent, please read Note 20, Litigation , to our consolidated financial statements included in this report. (3) This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2024. (4) This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2024. (5) This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2028. (6) This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2026. (7) This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2026. (8) This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2031. (9) This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2031. (10) A patent with this subject matter may be entitled to patent term extension in the U.S. The existence of patents does not guarantee our right to practice the patented technology or commercialize the patented product. Patents relating to pharmaceutical, biopharmaceutical and biotechnology products, compounds and processes, such as those that cover our existing products, compounds and processes and those that we will likely file in the future, do not always provide complete or adequate protection. Litigation, interferences, oppositions, inter partes reviews, administrative challenges or other similar types of proceedings are, have been and may in the future be necessary in some instances to determine the validity and scope of certain of our patents, regulatory exclusivities or other proprietary rights, and in other instances to determine the validity, scope or non-infringement of certain patent rights claimed by third-parties to be pertinent to the manufacture, use or sale of our products. We also face challenges to our patents, regulatory exclusivities or other proprietary rights covering our products by third-parties, such as manufacturers of generics, biosimilars, prodrugs and products approved under abbreviated regulatory pathways. A discussion of certain risks and uncertainties that may affect our patent position, regulatory exclusivities or other proprietary rights is set forth in Item 1A. Risk Factors included in this report, and the discussion of legal proceedings related to certain patents described above is set forth in Note 20, Litigation, to our consolidated financial statements included in this report. 15 T a ble of Content s Competition Competition in the biopharmaceutical industry is intense. There are many companies, including biotechnology and pharmaceutical companies, engaged in developing products for the indications our approved products are approved to treat and the therapeutic areas we are targeting with our research and development activities. Some of our competitors may have substantially greater financial, marketing, research and development and other resources than we do. We believe that competition and leadership in the industry is based on managerial and technological excellence and innovation as well as establishing patent and other proprietary positions through research and development. The achievement of a leadership position also depends largely upon our ability to maximize the approval, acceptance and use of our product candidates and the availability of adequate financial resources to fund facilities, equipment, personnel, clinical testing, manufacturing and marketing. Another key aspect of remaining competitive in the industry is recruiting and retaining leading scientists and technicians to conduct our research activities and advance our development programs, including with the commercial expertise to effectively market our products. Competition among products approved for sale may be based, among other things, on patent position, product efficacy, safety, patient convenience, delivery devices, reliability, availability, reimbursement and price. In addition, early entry of a new pharmaceutical product into the market may have important advantages in gaining product acceptance and market share. Accordingly, the relative speed with which we can develop products, complete the testing and approval process and supply commercial quantities of products will have a significant impact on our competitive position. The introduction of new products or technologies, including the development of new processes or technologies by competitors or new information about existing products or technologies, results in increased competition for our marketed products and pricing pressure on our marketed products. The development of new or improved treatment options or standards of care or cures for the diseases our products treat reduces and could eliminate the use of our products or may limit the utility and application of ongoing clinical trials for our product candidates. In addition, the commercialization of certain of our own approved products, products of our collaborators and pipeline product candidates may negatively impact future sales of our existing products. We also face increased competitive pressures from the introduction of generic versions, prodrugs and biosimilars of existing products and products approved under abbreviated regulatory pathways. Such products are likely to be sold at substantially lower prices than branded products, which may significantly reduce both the price that we are able to charge for our products and the volume of products we sell. In addition, in some markets, when a generic or biosimilar version of one of our products is commercialized, it may be automatically substituted for our product and significantly reduce our revenue in a short period of time. We believe our long-term competitive position depends upon our success in discovering and developing innovative, cost-effective products that serve unmet medical needs, along with our ability to manufacture products efficiently and to launch and market them effectively in a highly competitive environment. Additional information about the competition that our marketed products face is set forth below and in Item 1A. Risk Factors included in this report. Multiple Sclerosis TECFIDERA, AVONEX, PLEGRIDY, TYSABRI and VUMERITY each compete with one or more of the following branded products as well as generic and biosimilar versions of these products: Competing Product Competitor AUBAGIO (teriflunomide) Sanofi Genzyme BETASERON/BETAFERON (interferon-beta-1b) Bayer Group COPAXONE (glatiramer acetate) Teva Pharmaceuticals Industries Ltd. EXTAVIA (interferon-beta-1b) Novartis AG GILENYA (fingolimod) Novartis AG GLATOPA (glatiramer acetate) Sandoz, a division of Novartis AG LEMTRADA (alemtuzumab) Sanofi Genzyme MAVENCLAD (cladribine) EMD Serono MAYZENT (siponimod) Novartis AG OCREVUS (ocrelizumab) Genentech PONVORY (ponesimod) Janssen Pharmaceutical Companies of Johnson & Johnson REBIF (interferon-beta-1) EMD Serono ZEPOSIA (ozanimod) BMS BAFIERTAM (monomethyl fumarate) Banner Life Sciences KESIMPTA (ofatumumab) Novartis AG Multiple TECFIDERA generic entrants are now in the U.S. market and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and is expected to continue to have a substantial and increasing negative impact on our U.S. TECFIDERA revenue in the future. 16 T a ble of Content s In May 2021 the European General Court annulled the EMA's decision not to validate applications for approval of TECFIDERA generics on the basis that the EMA conducted the wrong assessment when determining TECFIDERA's entitlement to regulatory data and marketing protection. Our Company, the EMA and the EC have each appealed the General Court’s decision as wrongly decided and the appeal is pending. In November 2021 the CHMP of the EMA issued an ad hoc opinion referencing the General Court’s decision which concluded that "the totality of the available data cannot establish that [monoethyl fumarate] exerts a clinically relevant therapeutic contribution within FUMADERM." The EC will decide TECFIDERA’s entitlement to regulatory data and market protection. If data and market protection is not upheld, we could face generic competition in the E.U. as early as the first half of 2022, which would have an adverse impact on our TECFIDERA sales in the E.U. and our results of operations. FAMPYRA is indicated as a treatment to improve walking in adult patients with MS who have a walking disability and is the first treatment that addresses this unmet medical need with demonstrated efficacy in people with all types of MS. FAMPYRA is currently the only therapy approved to improve walking in patients with MS. Competition in the MS market is intense. Along with us, a number of companies are working to develop additional treatments for MS that may in the future compete with our MS products. One such product that was approved in the U.S. in 2017 and in the E.U. in 2018 is OCREVUS, a treatment for RMS and PPMS that was developed by Genentech. While we have a financial interest in OCREVUS, future sales of our MS products may be adversely affected if OCREVUS continues to gain market share, or if other MS products that we or our competitors are developing are commercialized . Spinal Muscular Atrophy We face competition from a gene therapy product and an oral product. We expect that we will experience competition from both products in additional jurisdictions in the future, which may adversely affect our sales of SPINRAZA. Additionally, we are aware of other products now in development that, if launched, may also compete with SPINRAZA. Future sales of SPINRAZA may be adversely affected by the commercialization of competing products. Psoriasis FUMADERM competes with several different types of therapies in the psoriasis market within Germany, including oral systemics such as methotrexate and cyclosporine. Biosimilars BENEPALI, IMRALDI and FLIXABI, the three biosimilar products we currently commercialize in certain countries in Europe for Samsung Bioepis, compete with their reference products, ENBREL, HUMIRA and REMICADE, respectively, as well as other biosimilars of those reference products. Genentech Relationships in Other Indications RITUXAN, RITUXAN HYCELA and GAZYVA in Oncology RITUXAN, RITUXAN HYCELA and GAZYVA compete with a number of therapies in the oncology market, including TREANDA (bendamustine HCL), ARZERRA (ofatumumab), IMBRUVICA (ibrutinib) and ZYDELIG (idelalisib). We also expect that over time RITUXAN HYCELA and GAZYVA will increasingly compete with RITUXAN in the oncology market. In addition, we are aware of several other anti-CD20 molecules, including biosimilar products, that have recently been approved and are expected to compete with RITUXAN, RITUXAN HYCELA and GAZYVA in the oncology market. In November 2019, January 2020 and Janu ary 2021 bi osimilar products referencing RITUXAN were launched in the U.S and are being offered at lower prices. This competition has adversely affected the pre-tax profits of our collaboration arrangements with Genentech and could have a significant adverse affect our co-promotion profits in the U.S. in future years. RITUXAN in Rheumatoid Arthritis RITUXAN competes with several different types of therapies in the rheumatoid arthritis market, including, among others, traditional disease-modifying anti-rheumatic drugs such as steroids, methotrexate and cyclosporine, TNF inhibitors, ORENCIA (abatacept), ACTEMRA (tocilizumab) and XELJANZ (tofacitinib). We are also aware of other products, including biosimilars, in development that, if approved, may compete with RITUXAN in the rheumatoid arthritis market. Research and Development Programs A commitment to research is fundamental to our mission. Our research efforts are focused on better understanding the underlying biology of diseases so we can discover and deliver treatments that have the potential to make a real difference in the lives of patients with high unmet medical needs. By applying our expertise in biologics and our growing capabilities in small molecule, antisense, gene therapy, gene editing and other technologies, we target specific 17 T a ble of Content s medical needs where we believe new or better treatments are needed. We intend to continue committing significant resources to targeted research and development opportunities where there is a significant unmet need and where a drug candidate has the potential to be highly differentiated. As part of our ongoing research and development efforts, we have devoted significant resources to conducting clinical studies to advance the development of new pharmaceutical products and technologies and to explore the utility of our existing products in treating disorders beyond those currently approved in their labels. For additional information on our research and development expense included in our consolidated statements of income, please read Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations included in this report. 18 T a ble of Content s The table below highlights our current research and development programs that are in clinical trials and the current phase of such programs. Drug development involves a high degree of risk and investment, and the status, timing and scope of our development programs are subject to change. Important factors that could adversely affect our drug development efforts are discussed in Item 1A. Risk Factors included in this report. MS and Neuroimmunology BIIB135 (orelabrutinib)* Phase 2 BIIB061 (oral remyelination) - MS Phase 1 BIIB091 (BTK inhibitor) - MS Phase 1 BIIB107 (anti-VLA4) - MS Phase 1 Alzheimer's Disease and Dementia Aducanumab (Aβ mAb)* - Alzheimer's Filed in E.U., Japan, Other Markets Lecanemab (Aβ mAb)* - Alzheimer's Phase 3 BIIB080 tau ASO) - Alzheimer's Phase 1 BIIB076 (anti-tau mAb) - Alzheimer's Phase 1 Neuromuscular Disorders, including SMA and ALS Tofersen (SOD1 ASO) - ALS Phase 3 BIIB078 (IONIS-C9 Rx ) # - ALS Phase 1 BIIB105 (ataxin-2 ASO) # - ALS Phase 1 BIIB100 (XP01 inhibitor) - ALS Phase 1 Parkinson's Disease and Movement Disorders BIIB124 (SAGE-324)* - Essential Tremor Phase 2 BIIB094 (ION859) # - Parkinson's Phase 1 BIIB118 (CK1 inhibitor) - ISWRD in Parkinson's Phase 1 BIIB101 (ION464) # - Multiple System Atrophy Phase 1 BIIB122 (DNL151) * - Parkinson's Phase 1 Neuropsychiatry BIIB125 (zuranolone)* - PPD Phase 3 BIIB125 (zuranolone)* - MDD Phase 3 BIIB104 (AMPA PAM) - CIAS Phase 2 Neurovascular BIIB093 (glibenclamide IV) - LHI^ Stroke Phase 3 BIIB093 (glibenclamide IV) - Brain Contusion Phase 2 BIIB131 (TMS-007) - Acute Ischemic Stroke Phase 2 Neuropathic Pain BIIB074 (vixotrigine) - Trigeminal Neuralgia Phase 2 BIIB074 (vixotrigine) - Small Fiber Neuropathy Phase 2 Genetic Neurodevelopmental Disorders BIIB121 (UBE3A ASO) # - Angelman Syndrome Phase 1 Specialized Immunology Dapirolizumab pegol (anti-CD40L)* - SLE Phase 3 BIIB059 (anti-BDCA2) - SLE Phase 3 BIIB059 (anti-BDCA2) - CLE Phase 2 Biosimilars BYOOVIZ (referencing LUCENTIS®) * Approved** SB15 (referencing EYLEA®) * Phase 3 BIIB800 (referencing ACTEMRA®)* Phase 3 * Collaboration program **Not yet commercially available # Option agreement ^ Large Hemispheric Infarction (LHI); postpartum depression (PPD); major depressive disorder (MDD) For information about certain of our agreements with collaborators and other third-parties, please read the subsection entitled Business Relationships below and Note 2, Acquisitions , Note 18, Collaborative and Other Relationships, and Note 19, Investments in Variable Interest Entities, to our consolidated financial statements included in this report. 19 T a ble of Content s Business Relationships As part of our business strategy, we establish business relationships, including entering into licenses, joint ventures and collaborative arrangements with other companies, universities and medical research institutions, to assist in the clinical development and/or commercialization of certain of our products and product candidates and to provide support for our research programs. We also evaluate opportunities for acquiring products or rights to products and technologies that are complementary to our business from other companies, universities and medical research institutions. Below is a brief description of certain business relationships and collaborations that expand our pipeline and provide us with certain rights to existing and potential new products and technologies. For additional information on certain of these relationships, including their ongoing financial and accounting impact on our business, please read Note 18, Collaborative and Other Relationships, and Note 19, Investments in Variable Interest Entities, to our consolidated financial statements included in this report. Acorda Therapeutics, Inc. We have a collaboration and license agreement with Acorda to develop and commercialize products containing fampridine, such as FAMPYRA, in markets outside the U.S. We are responsible for all regulatory activities and the future clinical development of related products in those markets. Alkermes We have an exclusive license and collaboration agreement with Alkermes for VUMERITY, which was approved for the treatment of RMS in the U.S. in October 2019 and became commercially available in the U.S. in November 2019. During the fourth quarter of 2021 VUMERITY was approved for the treatment of RRMS in the E.U., Switzerland and the U.K. Under this agreement, we have an exclusive, worldwide license to develop and commercialize VUMERITY. Denali Therapeutics Inc. We have a collaboration and license agreement with Denali to co-develop and co-commercialize Denali’s small molecule inhibitors of LRRK2 for Parkinson’s disease. In the LRRK2 collaboration, we and Denali share responsibility and costs for global development as well as profits and losses for commercialization in the U.S. and China. Outside the U.S. and China, we are responsible for commercialization and pay Denali tiered royalties. 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: Abeta 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. Eisai Co., Ltd. We have a collaboration agreement with Eisai to jointly develop and commercialize lecanemab (BAN2401), an Eisai product candidate for the potential treatment of Alzheimer's disease. Eisai serves as the global operational and regulatory lead for lecanemab and all costs, including research, development, sales and marketing expense, are shared equally between us and Eisai. If lecanemab receives marketing approval, we and Eisai will co-promote lecanemab and share profits equally. We also have a collaboration agreement with Eisai to jointly develop and commercialize ADUHELM (aducanumab) (the ADUHELM Collaboration Agreement). Under the ADUHELM Collaboration Agreement, the two companies will co-promote ADUHELM with a region-based profit split and we lead the ongoing development and commercialization of ADUHELM. 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. Genentech, Inc. (Roche Group) We have collaboration arrangements with Genentech which entitle us to certain business and financial rights with respect to RITUXAN, RITUXAN HYCELA, GAZYVA, OCREVUS and other potential anti-CD20 therapies, including mosunetuzumab. Ionis Pharmaceuticals, Inc. We have an exclusive, worldwide option and collaboration agreement with Ionis relating to the development and commercialization of antisense therapeutics for up to three gene targets. Under a separate collaboration and license agreement with Ionis, we have an exclusive, worldwide license to develop and commercialize SPINRAZA for the treatment of SMA. We also have a 10-year exclusive collaboration agreement with Ionis to develop novel antisense oligonucleotide (ASO) drug candidates for a broad range of neurological diseases. In addition, we have research collaboration agreements with Ionis under which both companies perform discovery level research and will develop and commercialize new ASO drug candidates for the potential treatment of SMA and additional antisense 20 T a ble of Content s or other therapeutics for the potential treatment of neurological diseases. InnoCare Pharma Limited We have a collaboration and license agreement with InnoCare for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS. Orelabrutinib is currently being studied in a multi-country, placebo-controlled Phase 2 trial in relapsing-remitting MS. Under the terms of this collaboration, we have exclusive rights to orelabrutinib in the field of MS worldwide and certain autoimmune diseases outside of China (including Hong Kong, Macau and Taiwan), while InnoCare retains exclusive worldwide rights to orelabrutinib in the field of oncology and certain autoimmune diseases in China (including Hong Kong, Macau and Taiwan). 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 Alzheimer's disease, including ADUHELM (as amended, the Neurimmune Agreement). We are responsible for the development, manufacturing and commercialization of all licensed products. Samsung Bioepis Co., Ltd. We and Samsung BioLogics established a joint venture, Samsung Bioepis, to develop, manufacture and market biosimilar products. We also have an agreement with Samsung Bioepis to commercialize, over a 10-year term, 3 anti-TNF biosimilar product candidates in certain countries in Europe and, in the case of BENEPALI, Japan. Under this agreement, we are commercializing BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe. In January 2022 we entered into an agreement to sell to Samsung Biologics our equity in Samsung Bioepis. Under the terms of the proposed transaction, we would receive $1.0 billion in cash at closing and $1.3 billion to be deferred over two payments of $812.5 million due at the first anniversary and $437.5 million due at the second anniversary of the closing of the transaction. We would also be eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones. Closing of the transaction is currently anticipated in mid-2022, contingent on the effectiveness of a securities registration statement filed by Samsung Biologics and satisfaction of certain regulatory and other customary closing conditions. For additional information on the proposed transaction and our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. In December 2019 we completed a transaction with Samsung Bioepis and acquired an option to extend our existing commercial agreement with Samsung Bioepis for BENEPALI, IMRALDI and FLIXABI in certain countries in Europe. We have also secured the exclusive rights to commercialize BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, which was approved in the U.S., the E.U. and the U.K. during the third quarter of 2021. In addition to our joint venture and commercialization agreements with Samsung Bioepis, we license certain of our proprietary technology to Samsung Bioepis in connection with Samsung Bioepis' development, manufacture and commercialization of its biosimilar products. Sage Therapeutics, Inc. We have a global collaboration and license agreement with Sage to jointly develop and commercialize zuranolone 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. We and Sage share equal responsibility and costs for development as well as profits and losses for commercialization in the U.S. Outside the U.S., we are responsible for development and commercialization, excluding Japan, Taiwan and South Korea with respect to zuranolone, and will pay Sage tiered royalties. Sangamo Therapeutics, Inc. We have 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. Sangamo will perform early research activities, costs for which will be shared by the companies, and we will assume responsibility and costs beyond the early research activities. Regulatory Our current and contemplated activities and the products, technologies and processes that result from such activities are subject to substantial government regulation. 21 T a ble of Content s Regulation of Pharmaceuticals Product Approval and Post-Approval Regulation in the U.S. APPROVAL PROCESS Before new pharmaceutical products may be sold in the U.S., preclinical studies and clinical trials of the products must be conducted and the results submitted to the FDA for approval. With limited exceptions, the FDA requires companies to register both pre-approval and post-approval clinical trials and disclose clinical trial results in public databases. Failure to register a trial or disclose study results within the required time periods could result in penalties, including civil monetary penalties. Clinical trial programs must establish efficacy, determine an appropriate dose and dosing regimen and define the conditions for safe use. This is a high-risk process that requires stepwise clinical studies in which the candidate product must successfully meet predetermined endpoints. The results of the preclinical and clinical testing of a product are then submitted to the FDA in the form of a BLA or a NDA. In response to a BLA or NDA, the FDA may grant marketing approval, request additional information or deny the application if it determines the application does not provide an adequate basis for approval. Product development and receipt of regulatory approval takes a number of years, involves the expenditure of substantial resources and depends on a number of factors, including the severity of the disease in question, the availability of suitable alternative treatments, potential safety signals observed in preclinical or clinical tests and the risks and benefits of the product as demonstrated in clinical trials. The FDA has substantial discretion in the product approval process, and it is impossible to predict with any certainty whether and when the FDA will grant marketing approval. The agency may require the sponsor of a BLA or NDA to conduct additional clinical studies or to provide other scientific or technical information about the product, and these additional requirements may lead to unanticipated delays or expenses. Furthermore, even if a product is approved, the approval may be subject to limitations based on the FDA's interpretation of the existing pre-clinical and/or clinical data. The FDA has developed four distinct approaches intended to facilitate the development and expedite the regulatory review of therapeutically important drugs, especially when the drugs are the first available treatment or have advantages over existing treatments: accelerated approval, fast track, breakthrough therapy and priority review. • Accelerated Approval : The FDA may grant “accelerated approval” to products that treat serious or life-threatening illnesses and that provide meaningful therapeutic benefits to patients over existing treatments. Under this pathway, the FDA may approve a product based on surrogate endpoints or clinical endpoints other than survival or irreversible morbidity. When approval is based on surrogate endpoints or clinical endpoints other than survival or morbidity, the sponsor will be required to provide the FDA with confirmatory data post-approval to verify and describe clinical benefit. Under the FDA's accelerated approval regulations, if the FDA concludes that a drug that has been shown to be effective can be safely used only if distribution or use is restricted, it may require certain post-marketing restrictions to assure safe use. In addition, for products approved under accelerated approval, sponsors may be required to submit all copies of their promotional materials, including advertisements, to the FDA at least 30 days prior to initial dissemination. The FDA may withdraw approval if, for instance, post-marketing studies fail to verify clinical benefit, it becomes clear that restrictions on the distribution of the product are inadequate to ensure its safe use or if a sponsor fails to comply with the conditions of the accelerated approval. • Fast Track : The FDA may grant "fast track" status to products that treat a serious condition and have data demonstrating the potential to address an unmet medical need or a drug that has been designated as a qualified infectious disease product. • Breakthrough Therapy : The FDA may grant “breakthrough therapy” status to drugs designed to treat, alone or in combination with another drug or drugs, a serious or life-threatening disease or condition and for which preliminary clinical evidence suggests a substantial improvement over existing therapies based on a clinically significant endpoint. Breakthrough therapy status entitles the sponsor to earlier and more frequent meetings with the FDA regarding the development of nonclinical and clinical data and permits the FDA to offer product development or regulatory advice for the purpose of shortening the time to product approval. Breakthrough therapy status does not guarantee that a product will be eligible for priority review and does not ensure FDA approval. • Priority Review : “Priority review” only applies to applications (original or efficacy supplement) for a drug that treats a serious condition and, if approved, would provide a significant improvement in safety or effectiveness of the treatment, diagnosis or prevention of a serious condition. Priority review may also be granted for 22 T a ble of Content s any supplement that proposes a labeling change due to studies completed in response to a written request from the FDA for pediatric studies, for an application for a drug that has been designated as a qualified infectious disease product or for any application or supplement for a drug submitted with a priority review voucher. In December 2016 the FDA issued a rare pediatric disease priority review voucher to us in connection with the approval of SPINRAZA. POST-MARKETING STUDIES Regardless of the approval pathway employed, the FDA may require a sponsor to conduct additional post-marketing studies as a condition of approval to provide data on safety and effectiveness. If a sponsor fails to conduct the required studies, the FDA may withdraw its approval. In addition, if the FDA concludes that a drug that has been shown to be effective can be safely used only if distribution or use is restricted, it can mandate post-marketing restrictions to assure safe use. In such a case, the sponsor may be required to establish rigorous systems to assure use of the product under safe conditions. These systems are usually referred to as Risk Evaluation and Mitigation Strategies (REMS). The FDA can impose financial penalties for failing to comply with certain post-marketing commitments, including REMS. In addition, any changes to an approved REMS must be reviewed and approved by the FDA prior to implementation. ADVERSE EVENT REPORTING We monitor information on side effects and adverse events reported during clinical studies and after marketing approval and report such information and events to regulatory agencies. Non-compliance with the FDA's safety reporting requirements may result in civil or criminal penalties. Side effects or adverse events that are reported during clinical trials can delay, impede or prevent marketing approval. Based on new safety information that emerges after approval, the FDA can mandate product labeling changes, impose a new REMS or the addition of elements to an existing REMS, require new post-marketing studies (including additional clinical trials) or suspend or withdraw approval of the product. These requirements may affect our ability to maintain marketing approval of our products or require us to make significant expenditures to obtain or maintain such approvals. APPROVAL OF CHANGES TO AN APPROVED PRODUCT If we seek to make certain types of changes to an approved product, such as adding a new indication, making certain manufacturing changes or changing manufacturers or suppliers of certain ingredients or components, the FDA will need to review and approve such changes in advance. In the case of a new indication, we are required to demonstrate with additional clinical data that the product is safe and effective for a use other than what was initially approved. FDA regulatory review may result in denial or modification of the planned changes, or requirements to conduct additional tests or evaluations that can substantially delay or increase the cost of the planned changes. REGULATION OF PRODUCT ADVERTISING AND PROMOTION The FDA regulates all advertising and promotion activities and communications for products under its jurisdiction both before and after approval. Pursuant to FDA guidance, a company can make safety and efficacy claims either in or consistent with the product label. However, physicians may prescribe legally available drugs for uses that are not described in the drug's labeling. Such off-label prescribing is common across medical specialties, and often reflects a physician's belief that the off-label use is the best treatment for patients. The FDA does not regulate the behavior of physicians in their choice of treatments, but FDA regulations do impose stringent restrictions on manufacturers' communications regarding off-label uses. Failure to comply with applicable FDA requirements may subject a company to adverse publicity, enforcement action by the FDA, corrective advertising and the full range of civil and criminal penalties available to the government. Regulation of Combination Products Combination products are defined by the FDA to include products comprising two or more regulated components (e.g., a biologic and a device). Biologics and devices each have their own regulatory requirements, and combination products may have additional requirements. Some of our marketed products meet this definition and are regulated under this framework and similar regulations outside the U.S., and we expect that some of our pipeline product candidates may be evaluated for regulatory approval under this framework as well. In May 2017 new regulations governing medical devices (MDR) and in-vitro diagnostic medical devices (IVDR) entered into force in the E.U. The MDR became applicable in May 2021. The IVDR regulations are not expected to fully apply until May 2022. All products covered by these regulations will be required to comply with them at the end of the transitional periods. These regulations introduce new requirements, including for clinical investigation of certain classifications of medical devices, require increased regulatory scrutiny, enhance the requirements for post market surveillance and 23 T a ble of Content s vigilance and provide for greater transparency. These regulations also change the requirements for assessment of the medical device components of integral drug-device combination products, necessitating assessment of the device components under both the medical device and medicinal product regulatory regimes. Product Approval and Post-Approval Regulation Outside the U.S. We market our products in numerous jurisdictions outside the U.S. Most of these jurisdictions have product approval and post-approval regulatory processes that are similar in principle to those in the U.S. In Europe, for example, where a substantial part of our ex-U.S. efforts are focused, there are several routes for marketing approval, depending on the type of product for which approval is sought. Under the centralized procedure, a company submits a single application to the EMA. The marketing authorization application is similar to the NDA or BLA in the U.S. and is evaluated by the CHMP, the expert scientific committee of the EMA responsible for human medicines. If the CHMP determines that the marketing authorization application fulfills the requirements for quality, safety and efficacy and that the medicine has a positive benefit risk balance, it will adopt a positive opinion recommending the granting of the marketing authorization by the EC. The CHMP opinion is not binding, but is typically adopted by the EC. A MAA approved by the EC is valid in all member states of the E.U. The centralized procedure is required for all biological products, orphan medicinal products and new treatments for neurodegenerative disorders, and it is available for certain other products, including those which constitute a significant therapeutic, scientific or technical innovation. In addition to the centralized procedure, the European regulatory framework includes the following options for regulatory review and approval in the E.U. member states: • a national procedure, where the first application is made to the competent authority in one E.U. member state only; • a decentralized procedure, where applicants submit identical applications to several E.U. member states and receive simultaneous approval, if the medicine has not yet been authorized in any E.U. member state; and • a mutual recognition procedure, where applicants that have a medicine authorized in one E.U. member state can apply for mutual recognition of this authorization in other E.U. member states As in the U.S., the E.U. also has distinct approaches intended to optimize the regulatory pathways for therapeutically important drugs, including the Priority Medicines Evaluation Scheme (PRIME), accelerated assessment and conditional marketing authorization. PRIME is intended to provide additional support to medicine developers throughout the development process. Regulatory review timelines in the E.U. may be truncated under accelerated assessment for products that address an unmet medical need. In addition, conditional marketing authorizations may be granted for products in the interest of public health, where the benefit of immediate availability outweighs the risk of having less comprehensive data than normally required. Conditional marketing authorizations are valid for one year and can be renewed annually. The marketing authorization holder is required to complete specific obligations (ongoing or new studies and, in some cases, additional activities) with a view to providing comprehensive data confirming that the benefit risk balance is positive. Once comprehensive data on the product have been obtained, the marketing authorization may be converted into a standard marketing authorization. Aside from the U.S. and the E.U., there are countries in other regions where it is possible to receive an "accelerated" review whereby the national regulatory authority will commit to truncated review timelines for products that meet specific medical needs. In the E.U. there is detailed legislation on pharmacovigilance and extensive guidance on good pharmacovigilance practices. A failure to comply with the E.U. pharmacovigilance obligations may result in significant financial penalties for the marketing authorization holder. Regardless of the approval process employed, various parties share responsibilities for the monitoring, detection and evaluation of adverse events post-approval, including national competent authorities, the EMA, the EC and the marketing authorization holder. The EMA’s Pharmacovigilance Risk Assessment Committee is responsible for assessing and monitoring the safety of human medicines and makes recommendations on product safety issues. Marketing authorization holders have an obligation to inform regulatory agencies of any new information which may influence the evaluation of benefits and risks of the medicinal product concerned. In the U.S., the E.U. and other jurisdictions, regulatory agencies, including the FDA, conduct periodic inspections of NDA, BLA and marketing authorization holders to assess their compliance with pharmacovigilance obligations. 24 T a ble of Content s Good Manufacturing Practices Regulatory agencies regulate and inspect equipment, facilities and processes used in the manufacturing and testing of pharmaceutical and biologic products prior to approving a product. If, after receiving approval from regulatory agencies, a company makes a material change in manufacturing equipment, location or process, additional regulatory review and approval may be required. We also must adhere to current Good Manufacturing Practices (cGMP) and product-specific regulations enforced by regulatory agencies following product approval. The FDA, the EMA and other regulatory agencies also conduct periodic visits to re-inspect equipment, facilities and processes following the initial approval of a product. If, as a result of these inspections, it is determined that our equipment, facilities or processes do not comply with applicable regulations and conditions of product approval, regulatory agencies may seek civil, criminal or administrative sanctions or remedies against us, including significant financial penalties and the suspension of our manufacturing operations. Good Clinical Practices The FDA, the EMA and other regulatory agencies promulgate regulations and standards for designing, conducting, monitoring, auditing and reporting the results of clinical trials to ensure that the data and results are accurate and that the rights and welfare of trial participants are adequately protected (commonly referred to as current Good Clinical Practices (cGCP)). Regulatory agencies enforce cGCP through periodic inspections of trial sponsors, principal investigators and trial sites, contract research organizations (CROs) and institutional review boards. If our studies fail to comply with applicable cGCP guidelines, the clinical data generated in our clinical trials may be deemed unreliable and relevant regulatory agencies may require us to perform additional clinical trials before approving our marketing applications. Noncompliance can also result in civil or criminal sanctions. We rely on third-parties, including CROs, to carry out many of our clinical trial-related activities. Failure of such third-parties to comply with cGCP can likewise result in rejection of our clinical trial data or other sanctions. In April 2014 the EC adopted a new Clinical Trial Regulation, which was entered into force in June 2014 but will not apply until January 2022. There are transitional provisions for clinical trials which are ongoing at the date of application. Clinical trial applications may also continue to be made under the Clinical Trial Directive (the existing regulatory framework) until January 2023. All clinical trials must fully comply with the Clinical Trial Regulation by January 2025. The regulation harmonizes the procedures for assessment and governance of clinical trials throughout the E.U. and will require that information on the authorization, conduct and results of each clinical trial conducted in the E.U. be publicly available. Approval of Biosimilars The Patient Protection and Affordable Care Act (PPACA) amended the Public Health Service Act (PHSA) to authorize the FDA to approve biological products, referred to as biosimilars or follow-on biologics, that are shown to be "highly similar" to previously approved biological products based upon potentially abbreviated data packages. The biosimilar must show it has no clinically meaningful differences in terms of safety and effectiveness from the reference product, and only minor differences in clinically inactive components are allowable in biosimilar products. The approval pathway for biosimilars does, however, grant a biologics manufacturer a 12-year period of exclusivity from the date of approval of its biological product before biosimilar competition can be introduced. There is uncertainty, however, as the approval framework for biosimilars originally was enacted as part of the PPACA. There have been, and there are likely to continue to be, federal legislative and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the PPACA. If the PPACA is repealed, substantially modified or invalidated, it is unclear what, if any, impact such action would have on biosimilar regulation. A biosimilars approval pathway has been in place in the E.U. since 2003. The EMA has issued a number of scientific and product specific biosimilar guidelines, including requirements for approving biosimilars containing monoclonal antibodies. In the E.U., biosimilars are generally approved under the centralized procedure. The approval pathway allows sponsors of a biosimilar to seek and obtain regulatory approval based in part on reliance on the clinical trial data of an innovator product to which the biosimilar has been demonstrated, through comprehensive comparability studies, to be “similar.” In many cases, this allows biosimilars to be brought to market without conducting the full complement of clinical trials typically required for novel biologic drugs. Orphan Drug Act Under the U.S. Orphan Drug Act, the FDA may grant orphan drug designation to drugs or biologics intended to treat a “rare disease or condition,” which generally is a disease or condition that affects fewer than 200,000 individuals in the U.S. If a product which has an orphan drug designation subsequently receives an initial FDA approval for the indication for which it has such designation, the product is entitled to orphan exclusivity, i.e., the FDA may not approve any other applications to market the same drug for the same indication for a period of seven years 25 T a ble of Content s following marketing approval, except in certain very limited circumstances, such as if the later product is shown to be clinically superior to the orphan product. Legislation similar to the U.S. Orphan Drug Act has been enacted in other countries to encourage the research, development and marketing of medicines to treat, prevent or diagnose rare diseases. In the E.U., medicinal products that receive and maintain an orphan designation are entitled to 10 years of market exclusivity following approval, protocol assistance and access to the centralized procedure for marketing authorization. SPINRAZA has been granted orphan drug designation in the U.S., the E.U. and Japan. Regulation Pertaining to Pricing and Reimbursement In both domestic and foreign markets, sales of our products depend, to a significant extent, on the availability and amount of reimbursement by third-party payors, including governments, private health plans and other organizations. Substantial uncertainty exists regarding the pricing and reimbursement of our products, and drug prices continue to receive significant scrutiny. Governments may regulate coverage, reimbursement and pricing of our products to control cost or affect utilization of our products. Challenges to our pricing strategies, by either government or private stakeholders, could harm our business. The U.S. and foreign governments have enacted and regularly consider additional reform measures that affect health care coverage and costs. Private health plans may also seek to manage cost and utilization by implementing coverage and reimbursement limitations. Other payors, including managed care organizations, health insurers, pharmacy benefit managers, government health administration authorities and private health insurers, seek price discounts or rebates in connection with the placement of our products on their formularies and, in some cases, may impose restrictions on access, coverage or pricing of particular drugs based on perceived value. Within the U.S. • Medicaid : Medicaid is a joint federal and state program that is administered by the states for low income and disabled beneficiaries. Under the Medicaid Drug Rebate Program, we are required to pay a rebate for each unit of product reimbursed by the state Medicaid programs. The amount of the rebate is established by law and is adjusted upward if the average manufacturer price (AMP) increases more than inflation (measured by the Consumer Price Index - Urban). The rebate amount is calculated each quarter based on our report of current AMP and best price for each of our products to the Centers for Medicare & Medicaid Services (CMS). The requirements for calculating AMP and best price are complex. We are required to report any revisions to AMP or best price previously reported within a certain period, which revisions could affect our rebate liability for prior quarters. In addition, if we fail to provide information timely or we are found to have knowingly submitted false information to the government, the statute governing the Medicaid Drug Rebate Program provides for civil monetary penalties. • Medicare : Medicare is a federal program that is administered by the federal government. The program covers individuals age 65 and over as well as those with certain disabilities. Medicare Part B generally covers drugs that must be administered by physicians or other health care practitioners, are provided in connection with certain durable medical equipment or are certain oral anti-cancer drugs and certain oral immunosuppressive drugs. Medicare Part B pays for such drugs under a payment methodology based on the average sales price (ASP) of the drugs. Manufacturers, including us, are required to provide ASP information to the CMS on a quarterly basis. The manufacturer-submitted information is used to calculate Medicare payment rates. If a manufacturer is found to have made a misrepresentation in the reporting of ASP, the governing statute provides for civil monetary penalties. Medicare Part D provides coverage to enrolled Medicare patients for self-administered drugs (i.e., drugs that are not administered by a physician). Medicare Part D is administered by private prescription drug plans approved by the U.S. government. Each drug plan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the drug plan may modify from time-to-time. The prescription drug plans negotiate pricing with manufacturers and pharmacies, and may condition formulary placement on the availability of manufacturer discounts. In addition, manufacturers, including us, are required to provide to the CMS a discount of up to 70.0% on brand name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries reach the coverage gap in their drug benefits. Legislation is pending in Congress that includes significant modifications to Medicare Part B and Medicare Part D. Specifically, the Build Back Better Act includes provisions that would, among other things: 1) allow CMS to directly negotiate the prices of certain drugs paid for by Medicare and impose a significantly discounted maximum price; 26 T a ble of Content s 2) impose inflation penalties (in the form of rebates) for price increases that exceed the rate of inflation; and 3) re-design the Medicare Part D benefit in a way that increases the financial liability of manufacturers. If enacted, this legislation could harm our business. • Federal Agency Discounted Pricing : Our products are subject to discounted pricing when purchased by federal agencies via the Federal Supply Schedule (FSS). FSS participation is required for our products to be covered and reimbursed by the Veterans Administration (VA), Department of Defense, Coast Guard and Public Health Service (PHS). Coverage under Medicaid, Medicare and the PHS pharmaceutical pricing program is also conditioned upon FSS participation. FSS pricing is intended not to exceed the price that we charge our most-favored non-federal customer for a product. In addition, prices for drugs purchased by the VA, Department of Defense (including drugs purchased by military personnel and dependents through the TriCare retail pharmacy program), Coast Guard and PHS are subject to a cap on pricing equal to 76% of the non-federal average manufacturer price (non-FAMP). An additional discount applies if non-FAMP increases more than inflation (measured by the Consumer Price Index - Urban). In addition, if we fail to provide information timely or we are found to have knowingly submitted false information to the government, the governing statute provides for civil monetary penalties. • 340B Discounted Pricing : To maintain coverage of our products under the Medicaid Drug Rebate Program and Medicare Part B, we are required to extend significant discounts to certain covered entities that purchase products under Section 340B of the PHS pharmaceutical pricing program. Purchasers eligible for discounts include hospitals that serve a disproportionate share of financially needy patients, community health clinics and other entities that receive certain types of grants under the PHSA. For all of our products, we must agree to charge a price that will not exceed the amount determined under statute (the “ceiling price”) when we sell outpatient drugs to these covered entities. In addition, we may, but are not required to, offer these covered entities a price lower than the 340B ceiling price. The 340B discount formula is based on AMP and is generally similar to the level of rebates calculated under the Medicaid Drug Rebate Program. Outside the U.S. Outside the U.S., our products are paid for by a variety of payors, with governments being the primary source of payment. Governments may determine or influence reimbursement of products and may also set prices or otherwise regulate pricing. Negotiating prices with governmental authorities can delay commercialization of our products. Governments may use a variety of cost-containment measures to control the cost of products, including price cuts, mandatory rebates, value-based pricing and reference pricing (i.e., referencing prices in other countries and using those reference prices to set a price). Budgetary pressures in many countries are continuing to cause governments to consider or implement various cost-containment measures, such as price freezes, increased price cuts and rebates and expanded generic substitution and patient cost-sharing. Regulation Pertaining to Sales and Marketing We are subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws. Anti-kickback laws generally prohibit a prescription drug manufacturer from soliciting, offering, receiving or paying any remuneration to generate business, including the purchase or prescription of a particular drug. Although the specific provisions of these laws vary, their scope is generally broad and there may be no regulations, guidance or court decisions that clarify how the laws apply to particular industry practices. There is therefore a possibility that our practices might be challenged under anti-kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented, for payment to third-party payors (including Medicare and Medicaid), claims for reimbursed drugs or services that are false or fraudulent, claims for items or services not provided as claimed or claims for medically unnecessary items or services. Our activities relating to the sale and marketing of our products may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be punishable by criminal or civil sanctions, including fines and civil monetary penalties, and exclusion from federal health care programs (including Medicare and Medicaid). In the U.S., federal and state authorities are paying increased attention to enforcement of these laws within the pharmaceutical industry and private individuals have been active in alleging violations of the laws and bringing suits on behalf of the government under the federal civil False Claims Act. If we were subject to allegations concerning, or were convicted of violating, these laws, our business could be harmed. Laws and regulations have been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceutical 27 T a ble of Content s manufacturers. The laws and regulations generally limit financial interactions between manufacturers and health care providers or require disclosure to the government and public of such interactions. The laws include federal “sunshine” provisions. The sunshine provisions apply to pharmaceutical manufacturers with products reimbursed under certain government programs and require those manufacturers to disclose annually to the federal government (for re-disclosure to the public) certain payments made to physicians and certain other healthcare practitioners or to teaching hospitals. State laws may also require disclosure of pharmaceutical pricing information and marketing expenditures. Many of these laws and regulations contain ambiguous requirements. Given the lack of clarity in laws and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent federal and state laws and regulations. Outside the U.S., other countries have implemented requirements for disclosure of financial interactions with healthcare providers and additional countries may consider or implement such laws. Other Regulations Foreign Anti-Corruption We are subject to various federal and foreign laws that govern our international business practices with respect to payments to government officials. Those laws include the U.S. Foreign Corrupt Practices Act (FCPA), which prohibits U.S. companies and their representatives from paying, offering to pay, promising to pay or authorizing the payment of anything of value to any foreign government official, government staff member, political party or political candidate for the purpose of obtaining or retaining business or to otherwise obtain favorable treatment or influence a person working in an official capacity. In many countries, the health care professionals we regularly interact with may meet the FCPA's definition of a foreign government official. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect their transactions and to devise and maintain an adequate system of internal accounting controls. The laws to which we are subject also include the U.K. Bribery Act 2010 (Bribery Act), which proscribes giving and receiving bribes in the public and private sectors, bribing a foreign public official and failing to have adequate procedures to prevent employees and other agents from giving bribes. U.S. companies that conduct business in the U.K. generally will be subject to the Bribery Act. Penalties under the Bribery Act include significant fines for companies and criminal sanctions for corporate officers under certain circumstances. NIH Guidelines We seek to conduct research at our U.S. facilities in compliance with the current U.S. National Institutes of Health Guidelines for Research Involving Recombinant DNA Molecules (NIH Guidelines). By local ordinance, we are required to, among other things, comply with the NIH Guidelines in relation to our facilities in RTP, NC and are required to operate pursuant to certain permits. Other Laws Our present and future business has been and will continue to be subject to various other laws and regulations. Various laws, regulations and recommendations relating to data privacy and protection, safe working conditions, laboratory practices, the experimental use of animals and the purchase, storage, movement, import, export and use and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection with our research work are or may be applicable to our activities. Certain agreements entered into by us involving exclusive license rights may be subject to national or international antitrust regulatory control, the effect of which cannot be predicted. The extent of government regulation, which might result from future legislation or administrative action, cannot accurately be predicted. The European Parliament and the Council of the E.U. adopted a comprehensive general data privacy regulation (GDPR) in 2016 to replace the current E.U. Data Protection Directive and related country-specific legislation. The GDPR took effect in May 2018 and governs the collection and use of personal data in the E.U. The GDPR, which is wide-ranging in scope, imposes several requirements relating to the consent of the individuals to whom the personal data relates, the information provided to the individuals, the security and confidentiality of the personal data, data breach notification and the use of third-party processors in connection with the processing of the personal data. The GDPR also imposes strict rules on the transfer of personal data out of the E.U. to the U.S., provides an enforcement authority and imposes large penalties for noncompliance, including the potential for fines of up to €20.0 million or 4.0% of the annual global revenue of the infringer, whichever is greater. Manufacturing We seek to ensure an uninterrupted supply of medicines to patients around the world. To that end, we continually review our manufacturing capacity, capabilities, processes and facilities. We believe that our manufacturing facilities, together with the third-party contract manufacturing organizations we 28 T a ble of Content s outsource to, currently provide sufficient capacity for our products and to Samsung Bioepis, our joint venture that develops, manufactures and markets biosimilar products, and other strategic contract manufacturing partners. In order to support our future growth and drug development pipeline, we are expanding our large molecule production capacity by building a large-scale biologics manufacturing facility in Solothurn, Switzerland. In the second quarter of 2021 a portion of the facility received a GMP multi-product license from SWISSMEDIC. In March 2021 we announced our plans to build a new gene therapy manufacturing facility in RTP, North Carolina to support our gene therapy pipeline across multiple therapeutic areas. The new facility will be approximately 175,000 square feet and is expected to be operational by the end of 2023. Construction for this new facility began during the fourth quarter of 2021. Manufacturing Facilities Our drug substance manufacturing facility includes: Facility Drug Substance Manufactured RTP, NC AVONEX PLEGRIDY TYSABRI Other* * Other includes products manufactured for contract manufacturing partners. In addition to our drug substance manufacturing facility, we have a drug product manufacturing facility and supporting infrastructure in RTP, NC, including a parenteral facility and an oral solid dose products manufacturing facility. The parenteral facility adds capabilities and capacity for filling biologics into vials and is used for filling product candidates. The oral solid dose products facility can supplement our outsourced small molecule manufacturing capabilities, including the manufacture of TECFIDERA. We also have an oligonucleotide synthesis manufacturing facility in RTP, North Carolina. This facility gives us the capability to manufacture ASO drugs like SPINRAZA as well as our other ASO candidates currently in our clinical pipeline. In order to support our future growth and drug development pipeline, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland. In the second quarter of 2021 a portion of the facility received a GMP multi-product license from SWISSMEDIC. Genentech is responsible for all worldwide manufacturing activities for bulk RITUXAN, RITUXAN HYCELA and GAZYVA and has sourced the manufacture of certain bulk RITUXAN, RITUXAN HYCELA and GAZYVA requirements to a third party. Acorda supplies FAMPYRA to us pursuant to its supply agreement with Alkermes, Inc. and Ionis supplies the active pharmaceutical ingredient (API) for SPINRAZA. 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. Third-Party Suppliers and Manufacturers We principally use third-parties to manufacture the API and the final product for our small molecule products and product candidates, including TECFIDERA and FUMADERM, and the final drug product for our large molecule products and, to a lesser extent, product candidates. We source the majority of our fill-finish and all of our final product assembly and storage operations for our products, along with a substantial part of our label and packaging operations, to a concentrated group of third-party contract manufacturing organizations. Raw materials, delivery devices, such as syringes and auto-injectors, and other supplies required for the production of our products and product candidates are procured from various third-party suppliers and manufacturers in quantities adequate to meet our needs. Continuity of supply of such raw materials, devices and supplies is assured through inventory management and dual sourcing as appropriate. Our third-party service providers, suppliers and manufacturers may be subject to routine cGMP inspections by the FDA or comparable agencies in other jurisdictions and undergo assessment and certification by our quality management group. Environmental Matters We remain committed to reducing our environmental footprint by eliminating harmful emissions and by minimizing resources used to manufacture our products. Since 2014 we have taken responsibility for our impact on climate change by matching 100% of our electricity usage with renewable energy, credits and offsets, driving efficiency initiatives internally and working with our suppliers. Green chemistry is embraced throughout our company, continually exploring new ways to make our 29 T a ble of Content s drug development processes safer, more efficient and more sustainable while also saving resources. Our Executive Committee has responsibility for evaluating the impact of climate change on the business and overseeing actions taken by the company to limit its adverse impact on the environment. In 2020 we launched our Healthy Climate, Healthy Lives initiative, which is our 20-year, $250 million initiative to address climate, health and equity. We aim to eliminate fossil fuel emissions across our operations by 2040, engage employees and suppliers and collaborate with renowned institutions to advance the science and action to improve health outcomes. As part of our commitment, we have tied a portion of our employees' and executive officers' 2021 compensation to advancing our Environmental, Social and Governance strategy. We strive to comply in all material respects with applicable laws and regulations concerning the environment. While it is impossible to predict accurately the future costs associated with environmental compliance and potential remediation activities, compliance with environmental laws is not expected to require significant capital expenditures and has not had, and is not expected to have, a material adverse effect on our operations or competitive position. Human Capital As of December 31, 2021, we had approximately 9,610 employees worldwide. Approximately 5,645 employees were employed in the U.S. and approximately 3,965 employees were employed in foreign countries. Diversity, Equity and Inclusion At Biogen, prejudice, racism and intolerance are unacceptable. We are committed to Diversity, Equity and Inclusion (DE&I) across all aspects of our organization, including hiring, promotion and development practices. As of December 31, 2021, 25.8% of Biogen’s director-level and above positions were held by ethnic or racial minorities in the U.S. Our policies and practices are global, but the laws in many countries outside the U.S. do not permit us to collect ethnic or racial data on our employees. Globally, 47.8% of Biogen’s positions at director-level and above were held by women as of December 31, 2021. In 2020 we introduced an updated DE&I strategy that outlines actionable steps to deepen our commitment across the business, building upon a strong foundation. This plan includes a four-part strategy to build our talent and leadership pipeline, improve health outcomes for minority communities in the disease areas we treat and expand sourcing with minority-owned businesses. We plan to create greater awareness and capability in our organization through leadership accountability and transparency. To establish and progress this strategy, we rely on a cross-company governing body of employees known as the Diversity, Equity & Inclusion Strategic Council. We are honored to be recognized as a company of choice. For the fourth consecutive year, we scored 100.0% on the 2021 Disability Equality Index, which measures our policies and practices related to disability inclusion. Additionally, for the second consecutive year, we were awarded by Disability:IN North Carolina with the 2021 DI-NC Employer Award for our commitment to champion and invest in disability inclusion at the affiliate and national levels. For the eighth consecutive year, we were recognized as a Best Place to Work for LGBTQ Equality by the Human Rights Campaign, scoring 100.0% on their Corporate Equality Index. In 2021 we were also ranked in the top five of Fortune 500's Measure Up initiative, which highlights the most progressive companies on DE&I efforts. In January 2021 we shared the results of a global pay equity analysis. The analysis confirmed that fairness and equity are embedded in our compensation practices around the globe with respect to gender and additionally in the U.S. with respect to race. In 2021 we also committed to strengthen the DE&I awareness and capability of our employees. We ended 2021 with close to 90.0% of people managers trained on inclusive recruiting and hiring, and a majority of global employees trained on DE&I curriculum. Philosophy on Pay Equity We are committed to ensuring our employees receive equal pay for equal work. We establish components and ranges of compensation based on market and benchmark data. Within this context, we strive to pay all employees equitably within a reasonable range, taking into consideration factors such as role; market data; internal equity; job location; relevant experience; and individual, business unit and company performance. In addition, we are committed to providing flexible benefits designed to allow our diverse global workforce to have reward opportunities that meet their varied needs so that they are inspired to perform their best on behalf of patients and stockholders each day. We regularly review our compensation practices and analyze the equity of compensation decisions, for individual employees and our workforce as a whole. If we identify employees with pay gaps, we review and take action to attain fidelity between our stated philosophy and actions. 30 T a ble of Content s We institute measures, such as communications and trainings, to recognize, interrupt and prevent bias in hiring, performance management and compensation decisions and we provide resources to further develop managers and leaders to help them make equitable decisions about pay. Talent and Development Our employees are encouraged to take advantage of an array of professional development resources. Managers coach employees for performance, and also engage in employee development discussions to support growth and learning. We provide our employees access to over 17,000 on-demand learning modules in English, French, German, Spanish, Japanese, Portuguese and Mandarin. Additionally, we have a wide selection of courses and trainings that are offered through Biogen University, our global validated learning management system. To create and sustain a workplace as diverse and inclusive as the patients we serve, we offer programs that invest in our talent pipeline and in our current leaders, including: • Activate, Reflect and Co-Create: Preparing top talent for the rigors of executive roles. • Women’s Leadership Program: Addressing the unique challenges faced by female leaders to increase influence and impact. • Executive Leadership Retreat: Immersing leaders in topics designed to help them shape culture and build resilience. • The Partnership, Inc's BioDiversity Fellows Program: To continue to bolster our talent pipeline with a diverse mix of leaders, high potential, mid-career, underrepresented minorities participate in this program, which we helped create. Our Employee Resource Networks (ERNs) provide invaluable opportunities for employees to share knowledge and build connections. Our current ERNs include: • IGNITE: Brings together early-career professionals and their advocates. • AccessAbility: Supports employees with disabilities and employees who are caretakers of individuals with disabilities. • Biogen Veterans Network: Encourages veterans and allies of veterans to connect and support one another. • Mosaic: Fosters awareness and appreciation of different cultural backgrounds, in addition to promoting networking and development opportunities for members. • ReachOUT: Supports a best-in-class working environment for LGBTQ employees and embraces all LGBTQ employees and their allies. • Women’s Innovation Network: Creates networking, mentoring and learning opportunities for women and allies worldwide. • ourIMPACT: Advances climate, health and equity at work, in employees' personal lives and in the communities where we live and work. Creating a culture where all colleagues feel supported and valued is paramount to our corporate mission. The ongoing COVID-19 pandemic has led to unique challenges, and we are striving to ensure the health, safety and general well-being of our employees. We continue to evolve our programs to meet our employees’ health and wellness needs, which we believe is essential to attract and retain employees of the highest caliber. For example, we have refreshed our flexible working arrangement policies to allow for more flexibility around work hours to help employees balance the demands of their work and home lives, shifted many of our on-site wellness services to virtual, including virtual behavior health, nutrition, fitness and overall well-being classes and counseling, rolled out the Headspace meditation app globally at no cost, provided workshops and programming to help employees cope with stress, isolation and building resilience, along with financial planning workshops and counseling sessions, expanded our child- and back-up care services to meet the growing childcare needs of our employees and provided additional holidays and time off for recharging, voting and volunteering. Employee surveys We utilize an employee survey program to pulse employees through email and mobile apps as well as provide an opportunity for commentary and facilitate feedback to questions. The survey is designed to empower managers and leaders with anonymous information on their practices related to building culture, performance and an engaged workforce, allowing them to create plans and measure efficacy for continuous improvement. We care deeply about employee feedback and are building an analytics community across Human Resources to bring more rigor and sophistication to the collection and analysis of employee opinions. We use their perspectives to guide us to take actions that improve engagement and support and help maintain our reputation as a great place to work for all of our employees. Succession planning 31 T a ble of Content s Each year we conduct a talent review across our global enterprise that includes, among other important topics, a review of succession plans for many of our roles. To help ensure the long-term continuity of our business, we actively manage the development of talent to fill the roles that are most critical to the on-going success of our company. In addition, each year our Board of Directors reviews the succession plan for our executives. Workplace Health and Safety The well-being of our employees is a top priority, and we believe each and every employee plays a role in creating a safe and healthy workplace. Our employees have varied roles and functions, which is why we empower them to promote a safe working environment, regardless of whether work happens in the lab, in an office or in a manufacturing plant. Our policies and practices are intended to protect not only our employees, but also the surrounding communities in which we operate. In 2021 we continued to make significant progress integrating Human Performance into our Environment, Health and Safety programs. We believe that, when it comes to safety, workers are part of the solution. We encourage employees to collaboratively engage in proactive problem solving through practices such as Open Reporting and Work Observation and Risk Conversations. Additionally, our physical safety program focused on detailed evaluations of critical tasks that could expose employees to serious injury or fatality if controls are absent or not used. The actions we implement as a result of these evaluations reduce the risks associated with these essential activities and ensure our operational systems are safer and more resilient for employees. We also utilize “After Action Reviews” following the completion of a project. These reviews enable us to not only focus on areas for improvement, but also to learn and apply good practices from what goes well. By engaging and empowering our employees through such programs, we believe that we can help change how the entire industry approaches safety performance and risk management. 32 T a ble of Content s Information about our Executive Officers (as of February 3, 2022) Officer Current Position Age Year Joined Biogen Michel Vounatsos Chief Executive Officer 60 2016 Susan H. Alexander Executive Vice President, Chief Legal Officer and Secretary 65 2006 Michael R. McDonnell Executive Vice President and Chief Financial Officer 58 2020 Alphonse Galdes, Ph.D. Executive Vice President, Pharmaceutical Operations and Technology 69 1995 Ginger Gregory, Ph.D. Executive Vice President and Chief Human Resources Officer 54 2017 Chirfi Guindo Executive Vice President, Global Product Strategy and Commercialization 56 2017 Rachid Izzar Executive Vice President, Head of Alzheimer's and Dementia Business Unit 47 2019 Robin C. Kramer Senior Vice President, Chief Accounting Officer 56 2018 Michel Vounatsos Experience Mr. Vounatsos has served as our Chief Executive Officer and as a member of our Board of Directors since January 2017. Prior to that, from April 2016 to December 2016, Mr. Vounatsos served as our Executive Vice President, Chief Commercial Officer. Prior to joining Biogen, Mr. Vounatsos spent 20 years at Merck & Co., Inc. (Merck), a pharmaceutical company, where he most recently served as President, Primary Care, Customer Business Line and Merck Customer Centricity. In this role, he led Merck’s global primary care business unit, a role which encompassed Merck’s cardiology-metabolic, general medicine, women’s health and biosimilars groups and developed and instituted a strategic framework for enhancing the company’s relationships with key constituents, including the most significant providers, payors and retailers and the world’s largest governments. Mr. Vounatsos previously held leadership positions across Europe and in China for Merck. Prior to that, Mr. Vounatsos held management positions at Ciba-Geigy, a pharmaceutical company. Mr. Vounatsos currently serves on the advisory board of Tsinghua University School of Pharmaceutical Sciences, on the Supervisory Board of Liryc, the Electrophysiology and Heart Modeling Institute at the University of Bordeaux, as a member of the MIT Presidential CEO Advisory Board and as a member of NetZero International Leadership Counsel. Public Company Boards l PerkinElmer, Inc., a global scientific technology and life science research company Education l Universite Victor Segalen, Bordeaux II, France, C.S.C.T. Certificate in Medicine l HEC School of Management - Paris, M.B.A. Susan H. Alexander Experience Ms. Alexander has served as our Executive Vice President, Chief Legal Officer and Secretary since April 2018. Prior to that, Ms. Alexander served as our Executive Vice President, Chief Legal, Corporate Services and Secretary from March 2017 to March 2018, as our Executive Vice President, Chief Legal Officer and Secretary from December 2011 to March 2017 and as our Executive Vice President, General Counsel and Corporate Secretary from 2006 to December 2011. Prior to joining Biogen, Ms. Alexander served as the Senior Vice President, General Counsel and Corporate Secretary of PAREXEL International Corporation, a biopharmaceutical services company, from 2003 to January 2006. From 2001 to 2003 Ms. Alexander served as General Counsel of IONA Technologies, a software company. From 1995 to 2001 Ms. Alexander served as Counsel at Cabot Corporation, a specialty chemicals and performance materials company. Prior to that, Ms. Alexander was a partner at the law firms of Hinckley, Allen & Snyder and Fine & Ambrogne. Public Company Boards l Invacare Corporation, a medical and healthcare product company Education l Wellesley College, B.A. l Boston University School of Law, J.D. 33 T a ble of Content s Michael R. McDonnell Experience Mr. McDonnell has served as our Executive Vice President and Chief Financial Officer since August 2020. Prior to joining Biogen, Mr. McDonnell served as Executive Vice President and Chief Financial Officer of IQVIA Holdings Inc., a leading global provider of advanced analytics, technology solutions and contract research services to the life sciences industry, from December 2015 until July 2020. Prior to that, Mr. McDonnell served as the Executive Vice President and Chief Financial Officer of Intelsat, a leading global provider of satellite services, from November 2008 to December 2015, as Executive Vice President and Chief Financial Officer of MCG Capital Corporation, a publicly-held commercial finance company, from September 2004 until October 2008 and as MCG Capital Corporation’s Chief Operating Officer from August 2006 until October 2008. Before joining MCG Capital Corporation, Mr. McDonnell served as Executive Vice President and Chief Financial Officer for EchoStar Communications Corporation (f/k/a DISH Network Corporation), a direct-to-home satellite television operator, from July 2004 until August 2004 and as its Senior Vice President and Chief Financial Officer from August 2000 to July 2004. Mr. McDonnell spent 14 years at PricewaterhouseCoopers LLP, including 4 years as a partner. Mr. McDonnell is a licensed certified public accountant (CPA). Education l Georgetown University, B.S. Accounting Alphonse Galdes, Ph.D. Experience Dr. Galdes has served as our Executive Vice President, Pharmaceutical Operations and Technology since September 2019. Since joining Biogen in 1995, Dr. Galdes has held several senior executive positions, including most recently as Senior Vice President, Asset Development and Portfolio Management from November 2015 to September 2019 and Senior Vice President, Technical Development from October 2010 to November 2015. Dr. Galdes was a Rhodes Scholar at Oxford University and performed post-doctoral research work at the Department of Biological Chemistry at Harvard Medical School. Education l University of Malta, B.Sc. Chemistry and Biology l University of Malta, M.Sc. Biochemistry l Oxford University, Ph.D. Biochemistry Ginger Gregory, Ph.D. Experience Dr. Gregory has served as our Executive Vice President and Chief Human Resources Officer since July 2017. Prior to joining Biogen, Dr. Gregory served as Executive Vice President and Chief Human Resources Officer at Shire PLC, a global specialty biopharmaceutical company, from February 2014 to April 2017. Prior to that, Dr. Gregory held executive-level human resources positions for several multinational companies across a variety of industries, including Dunkin’ Brands Group Inc., a restaurant holding company, where she served as Chief Human Resource Officer, Novartis AG, a pharmaceutical company, where she was the division head of Human Resources for Novartis Vaccines and Diagnostics, Novartis Consumer Health and Novartis Institutes of BioMedical Research and Novo Nordisk A/S, a pharmaceutical company, where she served as Senior Vice President, Corporate People & Organization at the company’s headquarters in Copenhagen, Denmark. Earlier in her career, Dr. Gregory held a variety of human resources generalist and specialist positions at BMS, a pharmaceutical company, and served as a consultant with Booz Allen & Hamilton, an information technology consulting company, in the area of organization change and effectiveness. Education l University of Massachusetts, B.A. Psychology l The George Washington University, Ph.D. Psychology 34 T a ble of Content s Chirfi Guindo Experience Mr. Guindo has served as our Executive Vice President, Global Product Strategy and Commercialization since February 2019. Prior to that, Mr. Guindo served as our Executive Vice President and Head of Global Marketing, Market Access and Customer Innovation from November 2017 to February 2019. Prior to joining Biogen, Mr. Guindo spent 27 years in the global pharmaceutical industry and held several leadership positions at Merck, a pharmaceutical company, in Canada, the U.S., France, Africa and the Netherlands. He worked in several disciplines including Finance, Sales & Marketing, General Management and Global Strategy/Product Development in specialty, acute and hospital care. Most recently Mr. Guindo was Vice President and Managing Director and President and Managing Director of Merck Canada from October 2014 to November 2017. From January 2011 to October 2014 he was Vice President and General Manager, Global HIV Franchise at Merck. Education l Ecole Central de Paris (France), Engineering l Stern School of Business, New York University, M.B.A. Finance/Economics Rachid Izzar Experience Mr. Izzar has served as our Executive Vice President, Head of Alzheimer’s Disease and Dementia Business Unit since July 2021. Prior to that Mr. Izzar served as our President for the Intercontinental Region, which includes Latin America, Australia, Asia, Japan, the Middle East and Africa, Turkey and Russia, and the Global Biogen Biosimilars Unit. Prior to joining Biogen, Mr. Izzar was a Country President for AstraZeneca in France, where his responsibilities included leadership for commercial and manufacturing operations. He held numerous roles at his time with AstraZeneca, including the position of Global Vice President of the Cardiovascular Franchise where he contributed significantly to the development of the franchise within the North American subsidiary, as well as in Europe and China. Prior to that, Mr. Izzar was Vice President Strategic Transformation, also, China Portfolio for CEO based in Shanghai and Vice President Commercial International covering China, Australia, Brazil, Russia, America Latin, Asia, Turkey, the Middle East and Africa. Education l University of Sherbrooke, Masters of Business Administration l Harvard Business School, Enterprise Executive Transformation Program Robin C. Kramer Experience Ms. Kramer has served as our Senior Vice President, Chief Accounting Officer since December 2020. Prior to that, Ms. Kramer served as our Vice President, Chief Accounting Officer from November 2018 to December 2020. Prior to joining Biogen, Ms. Kramer served as the Senior Vice President and Chief Accounting Officer of Hertz Global Holdings, Inc., a car rental company, from May 2014 to November 2018. Prior to that, Ms. Kramer was an audit partner at Deloitte & Touche LLP (Deloitte), a professional services firm, from 2007 to 2014, including serving in Deloitte's National Office Accounting Standards and Communications Group from 2007 to 2010. From 2005 to 2007 Ms. Kramer served as Chief Accounting Officer of Fisher Scientific International, Inc., a laboratory supply and biotechnology company, and from 2004 to 2005 Ms. Kramer served as Director, External Reporting, Accounting and Control for the Gillette Company, a personal care company. Ms. Kramer also held partner positions in the public accounting firms of Ernst & Young LLP and Arthur Anderson LLP. Ms. Kramer is a licensed CPA in Massachusetts. She is a member of the Massachusetts Society of CPAs and the American Institute of CPAs. Ms. Kramer currently serves on the board of directors of Samsung Bioepis and on the board of directors of the Center for Women and Enterprise. Ms. Kramer previously served as a Board Member for the Massachusetts State Board of Accountancy from September 2011 to December 2015 and Probus Insurance Company Europe DAC from 2016 to 2018. Public Company Boards l Armata Pharmaceuticals, Inc., a biotechnology company Education l Salem State University, B.B.A. Accounting 35 T a ble of Content s Available Information Our principal executive offices are located at 225 Binney Street, Cambridge, MA 02142 and our telephone number is (617) 679-2000. Our website address is www.biogen.com. We make available free of charge through the Investors section of our website our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission. We include our website address in this report only as an inactive textual reference and do not intend it to be an active link to our website. The contents of our website are not incorporated into this report. 36 T a ble of Content s ITEM 1A. RISK FACTORS Risks Related to Our Business We are substantially dependent on revenue from our products. Our revenue depends upon continued sales of our products as well as the financial rights we have in our anti-CD20 therapeutic programs. A significant portion of our revenue is concentrated on sales of our products in increasingly competitive markets and in markets affected directly and indirectly by the COVID-19 pandemic. Any of the following negative developments relating to any of our products or any of our anti-CD20 therapeutic programs may adversely affect our revenue and results of operations or could cause a decline in our stock price: • the introduction or greater acceptance of competing products, including new originator therapies, generics, prodrugs and biosimilars of existing products and products approved under abbreviated regulatory pathways; • safety or efficacy issues; • limitations and additional pressures on product pricing or price increases, including those resulting from governmental or regulatory requirements; increased competition, including from generic or biosimilar versions of our products; or changes in, or implementation of, reimbursement policies and practices of payors and other third-parties; • adverse legal, administrative, regulatory or legislative developments; • our ability to maintain a positive reputation among patients, healthcare providers and others, which may be impacted by our pricing and reimbursement decisions; or • the inability or reluctance of patients to receive a diagnosis, prescription or administration of our products or a decision to prescribe and administer competitive therapies as a direct or indirect result of the COVID-19 pandemic. ADUHELM is in the early stages of commercial launch in the U.S. In addition to risks associated with new product launches and the other factors described in these Risk Factors, our ability to successfully commercialize ADUHELM may be adversely affected due to: • the lack of readiness of healthcare providers to initiate treatment as well as our ability to successfully identify eligible patients based on the information included in ADUHELM’s label; • concern regarding the accelerated approval of ADUHELM and its data; • our ability to obtain and maintain reimbursement for ADUHELM; • the lack of market acceptance of ADUHELM; • the effectiveness of our commercial strategy for marketing ADUHELM; • delays in the manufacturing, distribution and supply of ADUHELM; • the approval of other new products for the same or similar indications; and • our ability to maintain a positive reputation among patients, healthcare providers and others in the Alzheimer’s disease community, which may be impacted by pricing and reimbursement decisions relating to ADUHELM. As part of the accelerated approval, we will conduct a confirmatory trial to verify the clinical benefit of ADUHELM in patients with Alzheimer's disease. The FDA may withdraw approval if, among other things, the confirmatory trial fails to verify clinical benefit, ADUHELM's benefit-risk is no longer positive or we fail to comply with the conditions of the accelerated approval. Our long-term success depends upon the successful development of new products and additional indications for our existing products. Our long-term success will depend upon the successful development of new products from our research and development activities or our licenses or acquisitions from third-parties, including our commercialization agreements with Samsung Bioepis, as well as additional indications for our existing products. Product development is very expensive and involves a high degree of uncertainty and risk and may not be successful. Only a small number of research and development programs result in the commercialization of a product. 37 T a ble of Content s It is difficult to predict the success and the time and cost of product development of novel approaches for the treatment of diseases. The development of novel approaches for the treatment of diseases, including development efforts in new modalities such as those based on the antisense oligonucleotide platform and gene therapy, may present additional challenges and risks, including obtaining approval from regulatory authorities that have limited experience with the development of such therapies. Clinical trial data are subject to differing interpretations and even if we view data as sufficient to support the safety, effectiveness and/or approval of an investigational therapy, regulatory authorities may disagree and may require additional data, limit the scope of the approval or deny approval altogether. Furthermore, the approval of a product candidate by one regulatory agency does not mean that other regulatory agencies will also approve such product candidate. Success in preclinical work or early stage clinical trials does not ensure that later stage or larger scale clinical trials will be successful. Clinical trials may indicate that our product candidates lack efficacy, have harmful side effects, result in unexpected adverse events or raise other concerns that may significantly reduce the likelihood of regulatory approval. This may result in terminated programs, significant restrictions on use and safety warnings in an approved label, adverse placement within the treatment paradigm or significant reduction in the commercial potential of the product candidate. Even if we could successfully develop new products or indications, we may make a strategic decision to discontinue development of a product candidate or indication if, for example, we believe commercialization will be difficult relative to the standard of care or we prefer to pursue other opportunities in our pipeline. Sales of new products or products with additional indications may not meet investor expectations. If we fail to compete effectively, our business and market position would suffer. The biopharmaceutical industry and the markets in which we operate are intensely competitive. We compete in the marketing and sale of our products, the development of new products and processes, the acquisition of rights to new products with commercial potential and the hiring and retention of personnel. We compete with biotechnology and pharmaceutical companies that have a greater number of products on the market and in the product pipeline, substantially greater financial, marketing, research and development and other resources and other technological or competitive advantages. Our products continue to face increasing competition from the introduction of new originator therapies, generics, prodrugs and biosimilars of existing products and products approved under abbreviated regulatory pathways. Some of these products are likely to be sold at substantially lower prices than our branded products. The introduction of such products as well as other lower-priced competing products has reduced, and may in the future, significantly reduce both the price that we are able to charge for our products and the volume of products we sell, which will negatively impact our revenue. For instance, demand and price for TECFIDERA declined significantly as a result of multiple TECFIDERA generic entrants entering the U.S. market in 2020. In addition, in some markets, when a generic or biosimilar version of one of our products is commercialized, it may be automatically substituted for our product and significantly reduce our revenue in a short period of time. Our ability to compete, maintain and grow our business may also be adversely affected due to a number of factors, including: • the introduction of other products, including products that may be more efficacious, safer, less expensive or more convenient alternatives to our products, including our own products and products of our collaborators; • the off-label use by physicians of therapies indicated for other conditions to treat patients; • patient dynamics, including the size of the patient population and our ability to identify, attract and maintain new and current patients to our therapies; • the reluctance of physicians to prescribe, and patients to use, our products without additional data on the efficacy and safety of such products; • damage to physician and patient confidence in any of our products, generic or biosimilars of our products or any other product from the same class as one of our products, or to our sales and reputation as a result of label changes, pricing and reimbursement decisions or adverse experiences or events that may occur with patients treated with our products or generic or biosimilars of our products; • inability to obtain appropriate pricing and reimbursement for our products compared to our competitors in key international markets; or 38 T a ble of Content s • our ability to obtain and maintain patent, data or market exclusivity for our products. Our business may be adversely affected if we do not successfully execute or realize the anticipated benefits of our strategic and growth initiatives. The successful execution of our strategic and growth initiatives may depend upon internal development projects, commercial initiatives and external opportunities, which may include the acquisition and in-licensing of products, technologies and companies or the entry into strategic alliances and collaborations. While we believe we have a number of promising programs in our pipeline, failure or delay of internal development projects to advance or difficulties in executing on our commercial initiatives could impact our current and future growth, resulting in additional reliance on external development opportunities for growth. Supporting the further development of our existing products and potential new products in our pipeline will require significant capital expenditures and management resources, including investments in research and development, sales and marketing, manufacturing capabilities and other areas of our business. We have made, and may continue to make, significant operating and capital expenditures for potential new products prior to regulatory approval with no assurance that such investment will be recouped, which may adversely affect our financial condition, business and operations. The availability of high quality, fairly valued external product development is limited and the opportunity for their acquisition is highly competitive. As such, we are not certain that we will be able to identify suitable candidates for acquisition or if we will be able to reach agreement. We may fail to initiate or complete transactions for many reasons, including failure to obtain regulatory or other approvals as well as disputes or litigation. Furthermore, we may not be able to achieve the full strategic and financial benefits expected to result from transactions, or the benefits may be delayed or not occur at all. We may also face additional costs or liabilities in completed transactions that were not contemplated prior to completion. Any failure in the execution of a transaction, in the integration of an acquired asset or business or in achieving expected synergies could result in slower growth, higher than expected costs, the recording of asset impairment charges and other actions which could adversely affect our business, financial condition and results of operations. Sales of our products depend, to a significant extent, on adequate coverage, pricing and reimbursement from third-party payors, which are subject to increasing and intense pressure from political, social, competitive and other sources. Our inability to obtain and maintain adequate coverage, or a reduction in pricing or reimbursement, could have an adverse effect on our business, reputation, revenue and results of operations. Sales of our products depend, to a significant extent, on adequate coverage, pricing and reimbursement from third-party payors. When a new pharmaceutical product is approved, the availability of government and private reimbursement for that product may be uncertain, as is the pricing and amount for which that product will be reimbursed. Pricing and reimbursement for our products may be adversely affected by a number of factors, including: • changes in, and implementation of, federal, state or foreign government regulations or private third-party payors’ reimbursement policies; • pressure by employers on private health insurance plans to reduce costs; • consolidation and increasing assertiveness of payors seeking price discounts or rebates in connection with the placement of our products on their formularies and, in some cases, the imposition of restrictions on access or coverage of particular drugs or pricing determined based on perceived value; • our ability to recieve reimbursement for our products; and • our value-based contracting program pursuant to which we aim to tie the pricing of our products to their clinical values by either aligning price to patient outcomes or adjusting price for patients who discontinue therapy for any reason, including efficacy or tolerability concerns. Our ability to set the price for our products varies significantly from country to country and, as a result, so can the price of our products. Certain countries set prices by reference to the prices in other countries where our products are marketed. Our inability to obtain and maintain adequate prices in a particular country may not only limit the revenue from our products within that country but may also adversely affect our ability to secure acceptable prices in existing and potential new markets, which may limit market growth. This may create the opportunity for 39 T a ble of Content s third-party cross-border trade or influence our decision to sell or not to sell a product, thus adversely affecting our geographic expansion plans and revenue. Drug prices are under significant scrutiny in the markets in which our products are prescribed. We expect drug pricing and other health care costs to continue to be subject to intense political and societal pressures on a global basis. Competition from current and future competitors may negatively impact our ability to maintain pricing and our market share. New products marketed by our competitors could cause our revenue to decrease due to potential price reductions and lower sales volumes. Additionally, the introduction of generic or biosimilar versions of our products, follow-on products, prodrugs or products approved under abbreviated regulatory pathways may significantly reduce the price that we are able to charge for our products and the volume of products we sell. Many payors continue to adopt benefit plan changes that shift a greater portion of prescription costs to patients, including more limited benefit plan designs, higher patient co-pay or co-insurance obligations and limitations on patients' use of commercial manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs). Significant consolidation in the health insurance industry has resulted in a few large insurers and pharmacy benefit managers exerting greater pressure in pricing and usage negotiations with drug manufacturers, significantly increasing discounts and rebates required of manufacturers and limiting patient access and usage. Further consolidation among insurers, pharmacy benefit managers and other payors would increase the negotiating leverage such entities have over us and other drug manufacturers. Additional discounts, rebates, coverage or plan changes, restrictions or exclusions as described above could have a material adverse effect on sales of our affected products. Our failure to obtain or maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business, reputation, revenue and results of operations. We depend on relationships with collaborators, joint venture partners and other third-parties for revenue, and for the development, regulatory approval, commercialization and marketing of certain of our products and product candidates, which are outside of our full control. We rely on a number of collaborative, joint venture and other third-party relationships for revenue and the development, regulatory approval, commercialization and marketing of certain of our products and product candidates. We also outsource certain aspects of our regulatory affairs and clinical development relating to our products and product candidates to third-parties. Reliance on third-parties subjects us to a number of risks, including: • we may be unable to control the resources our collaborators, joint venture partners or third-parties devote to our programs, products or product candidates; • disputes may arise under an agreement, including with respect to the achievement and payment of milestones, payment of development or commercial costs, ownership of rights to technology developed, and the underlying agreement may fail to provide us with significant protection or may fail to be effectively enforced if the collaborators, joint ventures partners or third-parties fail to perform; • the interests of our collaborators, joint venture partners or third-parties may not always be aligned with our interests, and such parties may not pursue regulatory approvals or market a product in the same manner or to the same extent that we would, which could adversely affect our revenue, or may adopt tax strategies that could have an adverse effect on our business, results of operations or financial condition; • third-party relationships require the parties to cooperate, and failure to do so effectively could adversely affect product sales or the clinical development or regulatory approvals of product candidates under joint control, could result in termination of the research, development or commercialization of product candidates or could result in litigation or arbitration; • any failure on the part of our collaborators, joint venture partners or third-parties to comply with applicable laws, including tax laws, regulatory requirements and/or applicable contractual obligations or to fulfill any responsibilities they may have to protect and enforce any intellectual property rights underlying our products could have an adverse effect on our revenue as well as involve us in possible legal proceedings; and • any improper conduct or actions on the part of our collaborators, joint venture partners or third-parties could subject us to civil or criminal investigations and monetary and injunctive penalties, impact the accuracy and timing of our financial reporting and/or adversely impact our ability to conduct business, our operating results and our reputation. 40 T a ble of Content s Certain officers and affiliates of our joint venture partner, Samsung BioLogics, are currently subject to ongoing criminal proceedings that may impact its operations and business or divert the attention of the Samsung Bioepis management team from its ongoing operations. In addition, as Samsung Bioepis is a privately-held entity, our ability to liquidate our investment may be limited and we may realize significantly less than the value of such investment. Given these risks, there is considerable uncertainty regarding the success of our current and future collaborative efforts. If these efforts fail, our product development or commercialization of new products could be delayed, revenue from products could decline and/or we may not realize the anticipated benefits of these arrangements. Our results of operations may be adversely affected by current and potential future healthcare reforms. In the U.S., federal and state legislatures, health agencies and third-party payors continue to focus on containing the cost of health care. Legislative and regulatory proposals, enactments to reform health care insurance programs and increasing pressure from social sources could significantly influence the manner in which our products are prescribed and purchased. For example, provisions of the Patient Protection and Affordable Care Act (PPACA) have resulted in changes in the way health care is paid for by both governmental and private insurers, including increased rebates owed by manufacturers under the Medicaid Drug Rebate Program, annual fees and taxes on manufacturers of certain branded prescription drugs, the requirement that manufacturers participate in a discount program for certain outpatient drugs under Medicare Part D and the expansion of the number of hospitals eligible for discounts under Section 340B of the Public Health Service Act. These changes have had and are expected to continue to have a significant impact on our business. We may face uncertainties as a result of efforts to repeal, substantially modify or invalidate some or all of the provisions of the PPACA. There is no assurance that the PPACA, as currently enacted or as amended in the future, will not adversely affect our business and financial results, and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business. There is increasing public attention on the costs of prescription drugs and we expect drug pricing and other health care costs to continue to be subject to intense political and societal pressures on a global basis. For example, two committees of the U.S. House of Representatives are investigating the approval and price of ADUHELM. In addition, there have been, and are expected to continue to be, legislative proposals to address prescription drug pricing. Some of these proposals could have significant effects on our business, including an executive order issued in September 2020 to test a “most favored nation” model for Part B and Part D drugs that tie reimbursement rates to international drug pricing metrics. These actions and the uncertainty about the future of the PPACA and healthcare laws may put downward pressure on pharmaceutical pricing and increase our regulatory burdens and operating costs. There is also significant economic pressure on state budgets, including as a result of the COVID-19 pandemic, that may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for our drugs. In recent years, some states have considered legislation and ballot initiatives that would control the prices of drugs, including laws to allow importation of pharmaceutical products from lower cost jurisdictions outside the U.S. and laws intended to impose price controls on state drug purchases. State Medicaid programs are increasingly requesting manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplemental rebates are not being paid. Government efforts to reduce Medicaid expense may lead to increased use of managed care organizations by Medicaid programs. This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding limitation on prices and reimbursement for our products. In the E.U. and some other international markets, the government provides health care at low cost to consumers and regulates pharmaceutical prices, patient eligibility or reimbursement levels to control costs for the government-sponsored health care system. Many countries have announced or implemented measures, and may in the future implement new or additional measures, to reduce health care costs to limit the overall level of government expenditures. These measures vary by country and may include, among other things, patient access restrictions, suspensions on price increases, prospective and possible retroactive price reductions and other recoupments and increased mandatory discounts or rebates, recoveries of past price increases and greater importation of drugs from lower-cost countries. These measures have negatively impacted our revenue and may continue to adversely affect our revenue and results of operations in the future. Our success in commercializing biosimilars is subject to risks and uncertainties inherent in the development, manufacture and commercialization of biosimilars. If we are unsuccessful in such activities, our business may be adversely affected. 41 T a ble of Content s The development, manufacture and commercialization of biosimilar products require specialized expertise and are very costly and subject to complex regulation. Our success in commercializing biosimilars is subject to a number of risks, including: • Reliance on Third-Parties. We are dependent, in part, on the efforts of Samsung Bioepis, collaboration partners and other third-parties over whom we have limited or no control in the development and manufacturing of biosimilars products. If these third-parties fail to perform successfully, our biosimilar product development or commercialization of biosimilar products could be delayed, revenue from biosimilar products could decline and/or we may not realize the anticipated benefits of these arrangements; • Regulatory Compliance. Biosimilar products may face regulatory hurdles or delays due to the evolving and uncertain regulatory and commercial pathway of biosimilars products in certain jurisdictions; • Intellectual Property and Regulatory Challenges. Biosimilar products may face extensive patent clearances, patent infringement litigation, injunctions or regulatory challenges, which could prevent the commercial launch of a product or delay it for many years or result in imposition of monetary damages, penalties or other civil sanctions and damage our reputation; • Failure to Gain Market and Patient Acceptance. Market success of biosimilar products will be adversely affected if patients, physicians and/or payors do not accept biosimilar products as safe and efficacious products offering a more competitive price or other benefit over existing therapies; • Ability to Provide Adequate Supply. Manufacturing biosimilars is complex. If we encounter any manufacturing or supply chain difficulties we may be unable to meet higher than anticipated demand. We are dependent on a third-party for the manufacture of our biosimilar products and such third-party may not perform its obligations in a timely and cost-effective manner or in compliance with applicable regulations and may be unable or unwilling to increase production capacity commensurate with demand for our existing or future biosimilar products; and • Competitive Challenges. Biosimilar products face significant competition, including from innovator products and biosimilar products offered by other companies. Local tendering processes may restrict biosimilar products from being marketed and sold in some jurisdictions. The number of competitors in a jurisdiction, the timing of approval and the ability to market biosimilar products successfully in a timely and cost-effective manner are additional factors that may impact our success and/or the success of Samsung Bioepis in this business area. Risks Related to Intellectual Property If we are unable to obtain and maintain adequate protection for our data, intellectual property and other proprietary rights, our business may be harmed. Our success, including our long-term viability and growth, depends, in part, on our ability to obtain and defend patent and other intellectual property rights, including certain regulatory forms of exclusivity, that are important to the commercialization of our products and product candidates. Patent protection and/or regulatory exclusivity in the U.S. and other important markets remains uncertain and depends, in part, upon decisions of the patent offices, courts, administrative bodies and lawmakers in these countries. We may fail to obtain or preserve patent and other intellectual property rights, including certain regulatory forms of exclusivity, or the protection we obtain may not be of sufficient breadth and degree to protect our commercial interests in all countries where we conduct business, which could result in financial, business or reputational harm to us or could cause a decline or volatility in our stock price. In addition, settlements of such proceedings often result in reducing the period of patent and other protections, resulting in a reduction in revenue from affected products. In many markets, including the U.S., manufacturers may be allowed to rely on the safety and efficacy data of the innovator's product and do not need to conduct clinical trials before marketing a competing version of a product after there is no longer patent or regulatory exclusivity. In such cases, manufacturers often charge significantly lower prices and a major portion of the company's revenue may be reduced in a short period of time. In addition, manufacturers of generics and biosimilars may choose to launch or attempt to launch their products before the expiration of our patent or other intellectual property protections. Furthermore, our products may be determined to infringe patents or other intellectual property rights held by third-parties. Legal proceedings, administrative challenges or other types of proceedings are and may in the future be necessary to determine the validity, scope or non-infringement of certain patent rights claimed by third-parties to be pertinent to the manufacture, use or sale of our products. Such proceedings are unpredictable and are often 42 T a ble of Content s protracted and expensive. Negative outcomes of such proceedings could hinder or prevent us from manufacturing and marketing our products, require us to seek a license for the infringed product or technology or result in the assessment of significant monetary damages against us that may exceed amounts, if any, accrued in our financial statements. A failure to obtain necessary licenses for an infringed product or technology could prevent us from manufacturing or selling our products. Furthermore, payments under any licenses that we are able to obtain would reduce our profits from the covered products and services. Any of these circumstances could result in financial, business or reputational harm to us or could cause a decline or volatility in our stock price. Risks Related to Development, Clinical Testing and Regulation of Our Products and Product Candidates Successful preclinical work or early stage clinical trials does not ensure success in later stage trials, regulatory approval or commercial viability of a product. Positive results in a clinical trial may not be replicated in subsequent or confirmatory trials. Additionally, success in preclinical work or early stage clinical trials does not ensure that later stage or larger scale clinical trials will be successful or that regulatory approval will be obtained. Even if later stage clinical trials are successful, regulatory authorities may delay or decline approval of our product candidates. Regulatory authorities may disagree with our view of the data, require additional studies or disagree with our trial design or endpoints. Regulatory authorities may also fail to approve the facilities or processes used to manufacture a product candidate, our dosing or delivery methods or companion devices. Regulatory authorities may grant marketing approval that is more restricted than anticipated, including limiting indications to narrow patient populations and the imposition of safety monitoring, educational requirements, requiring confirmatory trials and risk evaluation and mitigation strategies. For example, as part of the accelerated approval, we will conduct a confirmatory trial to verify the clinical benefit of ADUHELM in patients with Alzheimer's disease. The occurrence of any of these events could result in significant costs and expense, have an adverse effect on our business, financial condition and results of operations and/or cause our stock price to decline or experience periods of volatility. Clinical trials and the development of biopharmaceutical products is a lengthy and complex process. If we fail to adequately manage our clinical activities, our clinical trials or potential regulatory approvals may be delayed or denied. Conducting clinical trials is a complex, time-consuming and expensive process. Our ability to complete clinical trials in a timely fashion depends on a number of key factors, including protocol design, regulatory and institutional review board approval, patient enrollment rates and compliance with current Good Clinical Practices. If we or our third-party clinical trial providers or third-party CROs do not successfully carry out these clinical activities, our clinical trials or the potential regulatory approval of a product candidate may be delayed or denied. We have opened clinical trial sites and are enrolling patients in a number of countries where our experience is limited. In most cases, we use the services of third-parties to carry out our clinical trial related activities and rely on such parties to accurately report their results. Our reliance on third-parties for these activities may impact our ability to control the timing, conduct, expense and quality of our clinical trials. One CRO has responsibility for a substantial portion of our activities and reporting related to our clinical trials and if such CRO does not adequately perform, many of our trials may be affected. We may need to replace our CROs, which may result in the delay of the affected trials or otherwise adversely affect our efforts to obtain regulatory approvals and commercialize our product candidates. Adverse safety events or restrictions on use and safety warnings for our products can negatively affect our business, product sales and stock price. Adverse safety events involving our marketed products, generic or biosimilar versions of our marketed products or products from the same class as one of our products may have a negative impact on our business. Discovery of safety issues with our products could create product liability and could cause additional regulatory scrutiny and requirements for additional labeling or safety monitoring, withdrawal of products from the market and/or the imposition of fines or criminal penalties. Adverse safety events may also damage physician, patient and/or investor confidence in our products and our reputation. Any of these could result in adverse impacts on our results of operations. Regulatory authorities are making greater amounts of stand-alone safety information directly available to the public through periodic safety update reports, patient registries and other reporting requirements. The reporting of adverse safety events involving our products or products similar to ours and public rumors about such events may increase claims against us and may also cause our product sales to decline or our stock price to experience periods of volatility. 43 T a ble of Content s Restrictions on use or safety warnings that may be required to be included in the label of our products may significantly reduce expected revenue for those products and require significant expense and management time. The illegal distribution and sale by third-parties of counterfeit or unfit versions of our products or stolen products could have a negative impact on our reputation and business. Third-parties might illegally distribute and sell counterfeit or unfit versions of our products, which do not meet our rigorous manufacturing, distribution and testing standards. A patient who receives a counterfeit or unfit drug may be at risk for a number of dangerous health consequences. Our reputation and business could suffer harm as a result of counterfeit or unfit drugs sold under our brand name. Inventory that is stolen from warehouses, plants or while in-transit, and that is subsequently improperly stored and sold through unauthorized channels, could adversely impact patient safety, our reputation and our business. The increasing use of social media platforms presents new risks and challenges. Social media is increasingly being used to communicate about our products and the diseases our therapies are designed to treat. Social media practices in the biopharmaceutical industry continue to evolve and regulations relating to such use are not always clear and creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media channels to comment on the effectiveness of a product or to report an alleged adverse event. When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend the company or the public's legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our products. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on social media. We may also encounter criticism on social media regarding our company, management, product candidates or products. The immediacy of social media precludes us from having real-time control over postings made regarding us via social media, whether matters of fact or opinion. Our reputation could be damaged by negative publicity or if adverse information concerning us is posted on social media platforms or similar mediums, which we may not be able to reverse. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face restrictive regulatory actions or incur other harm to our business. Risks Related to Our Operations A breakdown or breach of our technology systems could subject us to liability or interrupt the operation of our business. We are increasingly dependent upon technology systems and data to operate our business. The COVID-19 pandemic has caused us to modify our business practices in ways that heighten this dependence, including changing the requirement that most of our office-based employees in the U.S. and our other key markets work from the office. As a result, we are increasingly dependent upon our technology systems to operate our business and our ability to effectively manage our business depends on the security, reliability and adequacy of our technology systems and data, which includes use of cloud technologies, including Software as a Service (SaaS), Platform as a Service (PaaS) and Infrastructure as a Service (IaaS). Breakdowns, invasions, corruptions, destructions and/or breaches of our technology systems, including our cloud technologies, and/or unauthorized access to our data and information could subject us to liability, negatively impact our business operations, and/or require replacement of technology and/or ransom payments. Our technology systems, including our cloud technologies, continue to increase in multitude and complexity, increasing our vulnerability when breakdowns, malicious intrusions and random attacks occur. Data privacy or security breaches also pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, patients, customers or other business partners, may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect, when they impact vendors, customers or companies, including vendors, suppliers and other companies in our supply chain. They are often carried out by motivated, well-resourced, skilled and persistent actors, including nation states, organized crime groups, “hacktivists” and employees or contractors acting with careless or malicious intent. Cyber-attacks include deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, the use of social engineering and other means to affect the confidentiality, integrity and availability of our technology systems and data. Cyber-attacks also include manufacturing, hardware or software supply chain attacks, which could cause a delay in the manufacturing of products or products produced for contract manufacturing or lead to a data privacy or security breach. Our key business partners face similar risks and any security breach of their systems could adversely affect our security posture. In addition, our increased use of cloud technologies heightens these and other operational risks, and any failure by cloud or other technology service 44 T a ble of Content s providers to adequately safeguard their systems and prevent cyber-attacks could disrupt our operations and result in misappropriation, corruption or loss of confidential or propriety information. While we continue to build and improve our systems and infrastructure, including our business continuity plans, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, operational or reputational harm to us, loss of competitive advantage or loss of consumer confidence. Our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches. Regulators are imposing new data privacy and security requirements, including new and greater monetary fines for privacy violations. For example, the E.U.’s General Data Protection Regulation established regulations regarding the handling of personal data, and provides an enforcement authority and imposes large penalties for noncompliance. New U.S. data privacy and security laws, such as the California Consumer Privacy Act (CCPA), and others that may be passed, similarly introduce requirements with respect to personal information, and non-compliance with the CCPA may result in liability through private actions (subject to statutorily defined damages in the event of certain data breaches) and enforcement. Failure to comply with these current and future laws, policies, industry standards or legal obligations or any security incident resulting in the unauthorized access to, or acquisition, release or transfer of personal information may result in governmental enforcement actions, litigation, fines and penalties or adverse publicity and could cause our customers to lose trust in us, which could have a material adverse effect on our business and results of operations. Management and other personnel changes may disrupt our operations, and we may have difficulty retaining personnel or attracting and retaining qualified replacements on a timely basis for the management and other personnel who may leave the Company. Changes in management, other personnel and our overall retention rate may disrupt our business, and any such disruption could adversely affect our operations, programs, growth, financial condition or results of operations. New members of management may have different perspectives on programs and opportunities for our business, which may cause us to focus on new opportunities or reduce or change emphasis on our existing programs. Our success is dependent upon our ability to attract and retain qualified management and key personnel in a highly competitive environment. Qualified individuals are in high demand, and we may incur significant costs to attract or retain them. We may face difficulty in attracting and retaining talent for a number of reasons, including management changes, the underperformance or discontinuation of one or more marketed or late stage programs, recruitment by competitors or changes in the overall labor market. In addition, changes in our organizational structure or in our flexible working arrangements could impact employees' productivity and morale as well as our ability to attract, retain and motivate employees. We cannot ensure that we will be able to hire or retain the personnel necessary for our operations or that the loss of any personnel will not have a material impact on our financial condition and results of operations. If we fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased costs, penalties and a loss of business. Our activities, and the activities of our collaborators, distributors and other third-party providers, are subject to extensive government regulation and oversight in the U.S. and in foreign jurisdictions, and are subject to change and evolving interpretations, which could require us to incur substantial costs associated with compliance or to alter one or more of our business practices. The FDA and comparable foreign agencies directly regulate many of our most critical business activities, including the conduct of preclinical and clinical studies, product manufacturing, advertising and promotion, product distribution, adverse event reporting, product risk management and our compliance with good practice quality guidelines and regulations. Our interactions with physicians and other health care providers that prescribe or purchase our products are also subject to government regulation designed to prevent fraud and abuse in the sale and use of products and place significant restrictions on the marketing practices of health care companies. Health care companies are facing heightened scrutiny of their relationships with health care providers and have been the target of lawsuits and investigations alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of health care business, submission of false claims for government reimbursement, antitrust violations or violations related to environmental matters. There is also enhanced scrutiny of company-sponsored patient assistance programs, including insurance premium and co-pay assistance programs and donations to third-party charities that provide such assistance. The U.S. government has challenged some of our donations to third-party charities that provide patient assistance. If we, or our vendors or 45 T a ble of Content s donation recipients, are found to fail to comply with relevant laws, regulations or government guidance in the operation of these programs, we could be subject to significant fines or penalties. Risks relating to compliance with laws and regulations may be heightened as we continue to expand our global operations and enter new therapeutic areas with different patient populations, which may have different product distribution methods, marketing programs or patient assistance programs from those we currently utilize or support. Conditions and regulations governing the health care industry are subject to change, with possible retroactive effect, including: • new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or judicial decisions, related to health care availability, pricing or marketing practices, compliance with employment practices, method of delivery, payment for health care products and services, compliance with health information and data privacy and security laws and regulations, tracking and reporting payments and other transfers of value made to physicians and teaching hospitals, extensive anti-bribery and anti-corruption prohibitions, product serialization and labeling requirements and used product take-back requirements; • changes in the FDA and foreign regulatory approval processes or perspectives that may delay or prevent the approval of new products and result in lost market opportunity; • government shutdowns or relocations may result in delays to the review and approval process, slowing the time necessary for new drug candidates to be reviewed and/or approved, which may adversely affect our business; • requirements that provide for increased transparency of clinical trial results and quality data, such as the EMA's clinical transparency policy, which could impact our ability to protect trade secrets and competitively-sensitive information contained in approval applications or could be misinterpreted leading to reputational damage, misperception or legal action, which could harm our business; and • changes in FDA and foreign regulations that may require additional safety monitoring, labeling changes, restrictions on product distribution or use or other measures after the introduction of our products to market, which could increase our costs of doing business, adversely affect the future permitted uses of approved products or otherwise adversely affect the market for our products. Violations of governmental regulation may be punishable by criminal and civil sanctions, including fines and civil monetary penalties and exclusion from participation in government programs, including Medicare and Medicaid, as well as against executives overseeing our business. We could also be required to repay amounts we received from government payors or pay additional rebates and interest if we are found to have miscalculated the pricing information we submitted to the government. In addition, legal proceedings and investigations are inherently unpredictable, and large judgments or settlements sometimes occur. While we believe that we have appropriate compliance controls, policies and procedures in place to comply with the laws or regulations of the jurisdictions in which we operate, there is a risk that acts committed by our employees, agents, distributors, collaborators or third-party providers might violate such laws or regulations. Whether or not we have complied with the law, an investigation or litigation related to alleged unlawful conduct could increase our expense, damage our reputation, divert management time and attention and adversely affect our business. Our sales and operations are subject to the risks of doing business internationally. We are increasing our presence in international markets, subjecting us to many risks that could adversely affect our business and revenue. There is no guarantee that our efforts and strategies to expand sales in international markets will succeed. Emerging market countries may be especially vulnerable to periods of global and local political, legal, regulatory and financial instability and may have a higher incidence of corruption and fraudulent business practices. Certain countries may require local clinical trial data as part of the drug registration process in addition to global clinical trials, which can add to overall drug development and registration timelines. We may also be required to increase our reliance on third-party agents and unfamiliar operations and arrangements previously utilized by companies we collaborate with or acquire in emerging markets. Our sales and operations are subject to the risks of doing business internationally, including: • the impact of public health epidemics, such as the COVID-19 pandemic, on the global economy and the delivery of healthcare treatments; • less favorable intellectual property or other applicable laws; • the inability to obtain necessary foreign regulatory approvals of products in a timely manner; 46 T a ble of Content s • limitations and additional pressures on our ability to obtain and maintain product pricing or receive price increases, including those resulting from governmental or regulatory requirements; • additional complexity in manufacturing internationally; • the inability to successfully complete subsequent or confirmatory clinical trials in countries where our experience is limited; • longer payment and reimbursement cycles and uncertainties regarding the collectability of accounts receivable; • fluctuations in foreign currency exchange rates that may adversely impact our revenue, net income and value of certain of our investments; • the imposition of governmental controls; • diverse data privacy and protection requirements; • increasingly complex standards for complying with foreign laws and regulations that may differ substantially from country to country and may conflict with corresponding U.S. laws and regulations; • the far-reaching anti-bribery and anti-corruption legislation in the United Kingdom (U.K.), including the U.K. Bribery Act 2010, and elsewhere and escalation of investigations and prosecutions pursuant to such laws; • compliance with complex import and export control laws; • changes in tax laws; and • the imposition of tariffs or embargoes and other trade restrictions. In addition, our international operations are subject to regulation under U.S. law. For example, the U.S. Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies and their representatives from paying, offering to pay, promising to pay or authorizing the payment of anything of value to any foreign government official, government staff member, political party or political candidate for the purpose of obtaining or retaining business or to otherwise obtain favorable treatment or influence a person working in an official capacity. In many countries, the health care professionals we regularly interact with may meet the FCPA's definition of a foreign government official. Failure to comply with domestic or foreign laws could result in various adverse consequences, including possible delay in approval or refusal to approve a product, recalls, seizures or withdrawal of an approved product from the market, disruption in the supply or availability of our products or suspension of export or import privileges, the imposition of civil or criminal sanctions, the prosecution of executives overseeing our international operations and damage to our reputation. Any significant impairment of our ability to sell products outside of the U.S. could adversely impact our business and financial results. In addition, while we believe that we have appropriate compliance controls, policies and procedures in place to comply with the FCPA, there is a risk that acts committed by our employees, agents, distributors, collaborators or third-party providers might violate the FCPA and we might be held responsible. If our employees, agents, distributors, collaborators or third-party providers are found to have engaged in such practices, we could suffer severe penalties and may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. We are building a large-scale biologics manufacturing facility, which will result in the incurrence of significant investment with no assurance that such investment will be recouped. In order to support our future growth and drug development pipeline, we are expanding our large molecule production capacity by building a large-scale biologics manufacturing facility in Solothurn, Switzerland with no assurance that the additional capacity will be required or this investment will be recouped. If we are unable to fully utilize our manufacturing facilities, our business may be harmed. Charges resulting from excess capacity may continue to occur and would have a negative effect on our financial condition and results of operations. Although a portion of the Solothurn facility received a GMP multi-product license from SWISSMEDIC in May 2021, the manufacturing of a product or product candidate at the Solothurn facility must be approved by the applicable regulatory agencies, including the FDA. There can be no assurance that the regulatory authorities will approve the Solothurn facility for the manufacturing of a product or a product candidate. If we do not receive the necessary regulatory approvals of the Solothurn facility or if our future growth and drug development plans increase, we may not have sufficient large-scale manufacturing capacity to meet our long-term manufacturing requirements. 47 T a ble of Content s Manufacturing issues could substantially increase our costs, limit supply of our products and/or reduce our revenue. The process of manufacturing our products is complex, highly regulated and subject to numerous risks, including: • Risks of Reliance on Third-Parties and Single Source Providers. We rely on third-party suppliers and manufacturers for many aspects of our manufacturing process for our products and product candidates. In some cases, due to the unique manner in which our products are manufactured, we rely on single source providers of raw materials and manufacturing supplies. These third-parties are independent entities subject to their own unique operational and financial risks that are outside of our control. These third-parties may not perform their obligations in a timely and cost-effective manner or in compliance with applicable regulations, and they may be unable or unwilling to increase production capacity commensurate with demand for our existing or future products. Finding alternative providers could take a significant amount of time and involve significant expense due to the specialized nature of the services and the need to obtain regulatory approval of any significant changes to our suppliers or manufacturing methods. We cannot be certain that we could reach agreement with alternative providers or that the FDA or other regulatory authorities would approve our use of such alternatives. Furthermore, factors such as the COVID-19 pandemic, weather events, labor or raw material shortages and other supply chain disruptions could result in difficulties and delays in manufacturing our products, which could have an adverse impact on our results in operations or result in product shortages. • Global Bulk Supply Risks. We rely on our manufacturing facilities for the production of drug substance for our large molecule products and product candidates. Our global bulk supply of these products and product candidates depends on the uninterrupted and efficient operation of these facilities, which could be adversely affected by equipment failures, labor or raw material shortages, public health epidemics, natural disasters, power failures, cyber-attacks and many other factors. • Risks Relating to Compliance with current GMP (cGMP). We and our third-party providers are generally required to maintain compliance with cGMP and other stringent requirements and are subject to inspections by the FDA and other regulatory authorities to confirm compliance. Any delay, interruption or other issues that arise in the manufacture, fill-finish, packaging or storage of our products as a result of a failure of our facilities or operations or those of third-parties to receive regulatory approval or pass any regulatory agency inspection could significantly impair our ability to develop and commercialize our products. Significant noncompliance could also result in the imposition of monetary penalties or other civil or criminal sanctions and damage our reputation. • Risk of Product Loss. The manufacturing process for our products is extremely susceptible to product loss due to contamination, oxidation, equipment failure or improper installation or operation of equipment or vendor or operator error. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in our products or manufacturing facilities, we may need to close our manufacturing facilities for an extended period of time to investigate and remediate the contaminant. • Risk Relating to Government Actions . We and/or our third-party providers may be required by the U.S. federal government to manufacture medical supplies needed to treat COVID-19 patients under the Defense Production Act or other acts or orders of government entities, which may result in delays in the manufacturing and supply of our products. Any adverse developments affecting our manufacturing operations or the operations of our third-party suppliers and manufacturers may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of our products. We may also have to take inventory write-offs and incur other charges and expense for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Such developments could increase our manufacturing costs, cause us to lose revenue or market share as patients and physicians turn to competing therapeutics, diminish our profitability or damage our reputation. In addition, although we have business continuity plans to reduce the potential for manufacturing disruptions or delays and reduce the severity of a disruptive event, there is no guarantee that these plans will be adequate, which could adversely affect our business and operations. The ongoing COVID-19 pandemic may, directly or indirectly, adversely affect our business, results of operations and financial condition. Our business has and could continue to be adversely affected, directly or indirectly, by the ongoing COVID-19 pandemic. National, state and local governments have implemented and may continue to implement safety 48 T a ble of Content s precautions. These measures may disrupt normal business operations and may have significant negative impacts on businesses and financial markets worldwide. We continue to monitor our operations and applicable government recommendations, and we have made modifications to our normal operations because of the COVID-19 pandemic, including limiting travel and working from home. We have also suspended the vast majority of our in-person interactions by our customer-facing professionals in healthcare settings. This limits our ability to market our products and educate physicians, which, in turn, could have an adverse effect on our ability to compete in the marketing and sales of our products. Changes in flexible working arrangements could impact employee retention, employees' productivity and morale, strain our technology resources and introduce operational risks. Additionally, the risk of cyber-attacks or other privacy or data security incidents may be heightened as a result of our moving increasingly towards a remote working environment, which may be less secure and more susceptible to hacking attacks. The COVID-19 pandemic could affect the health and availability of our workforce as well as those of the third-parties we rely on. Furthermore, delays and disruptions experienced by our collaborators, joint venture partners or other third-parties due to the COVID-19 pandemic could adversely impact the ability of such parties to fulfill their obligations, which could affect product sales or the clinical development or regulatory approvals of product candidates under joint control. Our ability to continue our existing clinical trials or to initiate new clinical trials has been and may continue to be adversely affected, directly or indirectly, by the COVID-19 pandemic. Restrictions on travel and/or transport of clinical materials as well as diversion of hospital staff and resources to COVID-19 infected patients could disrupt trial operations and recruitment, possibly resulting in a slowdown in enrollment and/or deviations from or disruptions in key clinical trial activities, such as clinical trial site monitoring. These challenges may lead to difficulties in meeting protocol-specified procedures. We may need to make certain adjustments to the operation of clinical trials in an effort to minimize risks to trial data integrity during the COVID-19 pandemic. In addition, the impact of the COVID-19 pandemic on the operations of the FDA and other health authorities may delay potential approvals of our product candidates. In response to the COVID-19 pandemic, legislation has been enacted aimed at providing emergency assistance and health care for individuals, families and businesses and broadly supporting the U.S. economy. Additional state and federal healthcare reform measures may be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressures and have a financial impact on our business that we cannot predict. While it is not possible at this time to estimate the entirety of the impact that the COVID-19 pandemic will have on our business, operations, employees, customers, suppliers or collaboration partners, continued spread of COVID-19, measures taken by governments, actions taken to protect employees and the broad impact of the pandemic on all business activities may materially and adversely affect our business, supply chain and distribution systems, results of operations and financial condition. Risks Related to Holding Our Common Stoc k Our operating results are subject to significant fluctuations. Our quarterly revenue, expense and net income (loss) have fluctuated in the past and are likely to fluctuate significantly in the future due to the risks described in these Risk Factors as well as the timing of charges and expense that we may take. We have recorded, or may be required to record, charges that include: • the cost of restructurings or other initiatives to streamline our operations and reallocate resources; • impairments with respect to investments, fixed assets and long-lived assets, including in-process research and development (IPR&D) and other intangible assets; • inventory write-downs for failed quality specifications, recurring charges for excess or obsolete inventory and charges for inventory write-downs relating to product suspensions, expirations or recalls; • changes in the fair value of contingent consideration or our equity investments; • bad debt expense and increased bad debt reserves; • outcomes of litigation and other legal or administrative proceedings, regulatory matters and tax matters; • payments in connection with acquisitions, divestitures and other business development activities and under license and collaboration agreements; 49 T a ble of Content s • failure to meet certain contractual commitments; and • the impact of public health epidemics, such as the COVID-19 pandemic, on employees, the global economy and the delivery of healthcare treatments. Our revenue and certain assets and liabilities are also subject to foreign currency exchange rate fluctuations due to the global nature of our operations. Our efforts to mitigate the impact of fluctuating currency exchange rates may not be successful. As a result, currency fluctuations among our reporting currency, the U.S. dollar, and other currencies in which we do business will affect our operating results, often in unpredictable ways. Our net income may also fluctuate due to the impact of charges we may be required to take with respect to foreign currency hedge transactions. In particular, we may incur higher than expected charges from early termination of a hedge relationship. Our operating results during any one period do not necessarily suggest the anticipated results of future periods. Our investments in properties may not be fully realized. We own or lease real estate primarily consisting of buildings that contain research laboratories, office space and manufacturing operations. We may decide to consolidate or co-locate certain aspects of our business operations or dispose of one or more of our properties, some of which may be located in markets that are experiencing high vacancy rates and decreasing property values. If we determine that the fair value of any of our owned properties is lower than their book value, we may not realize the full investment in these properties and incur significant impairment charges or additional depreciation when the expected useful lives of certain assets have been shortened due to the anticipated closing of facilities. If we decide to fully or partially vacate a property, we may incur significant cost, including facility closing costs, employee separation and retention expense, lease termination fees, rent expense in excess of sublease income and impairment of leasehold improvements and accelerated depreciation of assets. Any of these events may have an adverse impact on our results of operations. Our investment portfolio is subject to market, interest and credit risk that may reduce its value. We maintain a portfolio of marketable securities for investment of our cash as well as investments in equity securities of certain biotechnology companies. Changes in the value of our investment portfolio could adversely affect our earnings. The value of our investments may decline due to, among other things, increases in interest rates, downgrades of the bonds and other securities in our portfolio, negative company-specific news, biotechnology market sentiment, instability in the global financial markets that reduces the liquidity of securities in our portfolio, declines in the value of collateral underlying the securities in our portfolio and other factors. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio or sell investments for less than our acquisition cost. Although we attempt to mitigate these risks through diversification of our investments and continuous monitoring of our portfolio's overall risk profile, the value of our investments may nevertheless decline. There can be no assurance that we will continue to repurchase shares or that we will repurchase shares at favorable prices. From time to time our Board of Directors authorizes share repurchase programs. The amount and timing of share repurchases are subject to capital availability and our determination that share repurchases are in the best interest of our shareholders and are in compliance with all respective laws and our applicable agreements. Our ability to repurchase shares will depend upon, among other factors, our cash balances and potential future capital requirements for strategic transactions, our results of operations, our financial condition and other factors beyond our control that we may deem relevant. A reduction in repurchases under, or the completion of, our share repurchase programs could have a negative effect on our stock price. We can provide no assurance that we will repurchase shares at favorable prices, if at all. We may not be able to access the capital and credit markets on terms that are favorable to us. We may seek access to the capital and credit markets to supplement our existing funds and cash generated from operations for working capital, capital expenditure and debt service requirements and other business initiatives. The capital and credit markets are experiencing, and have in the past experienced, extreme volatility and disruption, which leads to uncertainty and liquidity issues for both borrowers and investors. In the event of adverse market conditions, we may be unable to obtain capital or credit market financing on favorable terms. Changes in credit ratings issued by nationally recognized credit rating agencies could also adversely affect our cost of financing and the market price of our securities. 50 T a ble of Content s Our indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business. Our indebtedness, together with our significant contingent liabilities, including milestone and royalty payment obligations, could have important consequences to our business; for example, such obligations could: • increase our vulnerability to general adverse economic and industry conditions; • limit our ability to access capital markets and incur additional debt in the future; • require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes, including business development, research and development and mergers and acquisitions; and • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, thereby placing us at a disadvantage compared to our competitors that have less debt. Some of our collaboration agreements contain change in control provisions that may discourage a third-party from attempting to acquire us. Some of our collaboration agreements include change in control provisions that could reduce the potential acquisition price an acquirer is willing to pay or discourage a takeover attempt that could be viewed as beneficial to shareholders. Upon a change in control, some of these provisions could trigger reduced milestone, profit or royalty payments to us or give our collaboration partner rights to terminate our collaboration agreement, acquire operational control or force the purchase or sale of the programs that are the subject of the collaboration. General Risk Factors Our effective tax rate fluctuates, and we may incur obligations in tax jurisdictions in excess of accrued amounts. As a global biopharmaceutical company, we are subject to taxation in numerous countries, states and other jurisdictions. As a result, our effective tax rate is derived from a combination of applicable tax rates, including withholding taxes, in the various places that we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of such places. Our effective tax rate may be different than experienced in the past or our current expectations due to many factors, including changes in the mix of our profitability from country to country, the results of examinations and audits of our tax filings (including those related to the impact of the Tax Cuts and Jobs Act of 2017), adjustments to the value of our uncertain tax positions, interpretations by tax authorities or other bodies with jurisdiction, the result of tax cases, changes in accounting for income taxes and changes in tax laws and regulations either prospectively or retrospectively. Our inability to secure or sustain acceptable arrangements with tax authorities and future changes in the tax laws, among other things, may result in tax obligations in excess of amounts accrued in our financial statements. The enactment of some or all of the recommendations set forth or that may be forthcoming in the Organization for Economic Cooperation and Development’s project on “Base Erosion and Profit Shifting” (BEPS) by tax authorities and economic blocs in the countries in which we operate, could unfavorably impact our effective tax rate. These initiatives focus on common international principles for the entitlement to taxation of global corporate profits and minimum global tax rates. Our business involves environmental risks, which include the cost of compliance and the risk of contamination or injury. Our business and the business of several of our strategic partners involve the controlled use of hazardous materials, chemicals, biologics and radioactive compounds. Although we believe that our safety procedures for handling and disposing of such materials comply with state, federal and foreign standards, there will always be the risk of accidental contamination or injury. If we were to become liable for an accident, or if we were to suffer an extended facility shutdown, we could incur significant costs, damages and penalties that could harm our business. Manufacturing of our products and product candidates also requires permits from government agencies for water supply and wastewater discharge. If we do not obtain appropriate permits, including permits for sufficient quantities of water and wastewater, we could incur significant costs and limits on our manufacturing volumes that could harm our business. ITEM 1B. UNRESOLVED STAFF COMMENTS None. 51 T a ble of Content s ITEM 2. PROPERTIES Below is a summary of our owned and leased properties as of December 31, 2021. Massachusetts In Cambridge, MA we own approximately 508,000 square feet of real estate space, consisting of a building that houses a research laboratory and a cogeneration plant totaling approximately 263,000 square feet and a building that contains research, development and quality laboratories totaling approximately 245,000 square feet. In addition, we lease a total of approximately 1,157,000 square feet in Massachusetts, which is summarized as follows: • 800,000 square feet in Cambridge, MA, which is comprised of offices for our corporate headquarters and other administrative and development functions and laboratories, of which 289,000 square feet is subleased by multiple companies for general office space, laboratories and manufacturing facilities; and • 357,000 square feet of office space in Weston, MA, of which 174,000 square feet is subleased through the remaining term of our lease agreement. Our Massachusetts lease agreements expire at various dates through the year 2028. North Carolina In RTP, NC we own approximately 1,040,000 square feet of real estate space, which is summarized as follows: • 357,000 square feet of laboratory and office space; • 206,000 square foot multi-purpose facility, including an ASO manufacturing suite and administrative space; • 175,000 square feet related to a large-scale biologics manufacturing facility; • 105,000 square feet related to a small-scale biologics manufacturing facility; • 84,000 square feet of warehouse space and utilities; • 70,000 square feet related to a parenteral fill-finish facility; and • 43,000 square feet related to a large-scale purification facility. In addition, we lease approximately 65,000 square feet of warehouse space and 103,000 square feet of office space in Durham, NC. Our North Carolina lease agreements expire at various dates through the year 2031. In March 2021 we announced our plans to build a new gene therapy manufacturing facility in RTP, NC to support our gene therapy pipeline across multiple therapeutic areas. The new facility will be 175,000 square feet and is expected to be operational by the end of 2023, with an estimated total investment of $200.0 million. Construction for this new facility began during the fourth quarter of 2021. Switzerland In order to support our future growth and drug development pipeline, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland. 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 the second quarter of 2021 a portion of the facility received a GMP multi-product license from SWISSMEDIC. Other International We lease office space in Baar, Switzerland, our international headquarters; the U.K.; Germany; France; Japan; Canada and numerous other countries. Our international lease agreements expire at various dates through the year 2031. ITEM 3. LEGAL PROCEEDINGS For a discussion of legal matters as of December 31, 2021, please read Note 20, Litigation, to our consolidated financial statements included in this report, which is incorporated into this item by reference. 52 T a ble of Content s ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 53 T a ble of Content s PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market and Stockholder Information Our common stock trades on The Nasdaq Global Select Market under the symbol “BIIB.” As of February 2, 2022, there were approximately 479 shareholders of record of our common stock. Dividends We have not paid cash dividends since our inception. While we historically have not paid cash dividends and do not have a current intention to pay cash dividends, we continually review our capital allocation strategies, including, among other things, payment of cash dividends, share repurchases and acquisitions. Issuer Purchases of Equity Securities The following table summarizes our common stock repurchase activity during the fourth quarter of 2021: Period Total Number of Shares Purchased (#) Average Price Paid per Share ($) Total Number of Shares Purchased as Part of Publicly Announced Programs (#) Approximate Dollar Value of Shares That May Yet Be Purchased Under Our Programs ($ in millions) October 2021 — $ — — $ 2,800.0 November 2021 — $ — — $ 2,800.0 December 2021 — $ — — $ 2,800.0 Total (1) — $ — (1) There were no share repurchases during the fourth quarter of 2021. 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 6.0 million and 1.6 million shares of our common stock at a cost of approximately $1.8 billion and $400.0 million during the years ended December 31, 2021 and 2020, respectively. Approximately $2.8 billion remained available under our 2020 Share Repurchase Program as of December 31, 2021. 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. All share repurchases under our 2018 Share Repurchase Program were retired. Under our 2018 Share Repurchase Program, we repurchased and retired approximately 8.9 million shares of our common stock at a cost of approximately $2.1 billion during the year ended December 31, 2019. 54 T a ble of Content s Performance Graph The performance graph below compares the five-year cumulative total stockholder return on our common stock, the Nasdaq Pharmaceutical Index, the S&P 500 Index and the Nasdaq Biotechnology Index. On February 1, 2017, we completed the spin-off of our hemophilia business, Bioverativ Inc. (Bioverativ), as an independent, publicly traded company. In connection with the spin-off, each Biogen shareholder received one share of Bioverativ common stock for every two shares of Biogen common stock they owned. For additional information on the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off , to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018. The performance graph below assumes the investment of $100.00 on December 31, 2016, in our common stock and each of the three indexes, with dividends being reinvested. Our stock prices have been adjusted for the effect of the spin-off of our hemophilia business. The five-year cumulative total stockholder return for Biogen does not reflect the reinvestment by Biogen shareholders of the distribution they received in connection with the spin-off of our hemophilia business or any subsequent increase or decrease in value of Bioverativ stock subsequent to the spin-off. The stock price performance in the graph below is not necessarily indicative of future price performance. 2016 2017 2018 2019 2020 2021 Biogen Inc. $100.00 $121.79 $115.04 $113.44 $93.61 $91.72 Nasdaq Pharmaceutical Index $100.00 $119.12 $128.60 $147.25 $162.74 $202.43 S&P 500 Index $100.00 $121.83 $116.49 $153.17 $181.35 $233.41 Nasdaq Biotechnology Index $100.00 $121.66 $110.88 $138.72 $175.38 $175.41 The information included under the heading Performance Graph is “furnished” and not “filed” for purposes of Section 18 of the Securities Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed to be “soliciting material” subject to Regulation 14A or incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934. 55 T a ble of Content s ITEM 6. RESERVED ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our consolidated financial statements and the accompanying notes beginning on page F-1 of this report. For our discussion of the year ended December 31, 2020, compared to the year ended December 31, 2019, please read Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the year ended December 31, 2020. Executive Summary Introduction Biogen is a global biopharmaceutical company focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies. We have a leading portfolio of medicines to treat multiple sclerosis (MS), have introduced the first approved treatment for spinal muscular atrophy (SMA) and are providing the first and only approved treatment to address a defining pathology of Alzheimer’s disease. We also commercialize biosimilars of advanced biologics and focus on advancing our pipeline in neuroscience and specialized immunology. Lastly, we are focused on accelerating our efforts in digital health to support our commercial and pipeline programs while also creating opportunities for potential digital therapeutics. 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, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; ADUHELM for the treatment of Alzheimer's disease; and FUMADERM for the treatment of severe plaque psoriasis. We have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, CLL and other conditions; RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of PPMS and RMS; and other potential anti-CD20 therapies, including mosunetuzumab, pursuant to our collaboration arrangements with Genentech, a wholly- owned member of the Roche Group. For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. 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, our joint venture with 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. We have also secured the exclusive rights to commercialize BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, which was approved in the U.S., the E.U. and the U.K. during the third quarter of 2021. For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. We seek to ensure an uninterrupted supply of medicines to patients around the world. To that end, we continually review our manufacturing capacity, capabilities, processes and facilities. In order to support our future growth and drug development pipeline, we are expanding our large molecule production capacity by building a large-scale biologics manufacturing facility in Solothurn, Switzerland. In the second quarter of 2021 a portion of the facility received a GMP multi-product license from SWISSMEDIC. We believe that the Solothurn facility will support our anticipated near-term needs for the manufacturing of ADUHELM and other biologic assets. In addition, we believe that the Solothurn site may provide us with the ability to further expand if we need additional large scale manufacturing capacity to support future clinical and commercial manufacturing requirements. If we are unable to fully utilize our manufacturing facilities, due to lower than forecasted demand for our products, we will incur excess capacity charges which will have a negative effect on our financial condition and results of operations. Our revenue depends upon continued sales of our products as well as the financial rights we have in our anti-CD20 therapeutic programs, and, unless we develop, acquire rights to and/or commercialize new products and technologies, we will be substantially dependent on sales from our products and our financial rights in our anti-CD20 therapeutic programs for many years. 56 T a ble of Content s In the longer term, our revenue growth will depend upon the successful clinical development, regulatory approval and launch of new commercial products as well as additional indications for our existing products, our ability to obtain and maintain patents and other rights related to our marketed products, assets originating from our research and development efforts and/or successful execution of external business development opportunities. Business Environment For a detailed discussion on our business environment, please read Item 1. Business, included in this report. For additional information on our competition and pricing risks that could negatively impact our product sales, please read Item 1A. Risk Factors, included in this report. ADUHELM (aducanumab) U.S. In June 2021 the FDA granted accelerated approval of ADUHELM, which we are developing and commercializing in collaboration with Eisai, based on reduction in amyloid beta plaques observed in patients treated with ADUHELM. As part of the accelerated approval, we will conduct a confirmatory trial to verify the clinical benefit of ADUHELM in patients with Alzheimer’s disease. The FDA may withdraw approval if, among other things, the confirmatory trial fails to verify clinical benefit of ADUHELM, ADUHELM's benefit-risk is no longer positive or we fail to comply with the conditions of the accelerated approval. The U.S. ADUHELM product label states that treatment with ADUHELM should be initiated in patients with mild cognitive impairment or mild dementia stage of disease, the population which was studied in clinical trials. We expect patient uptake will be gradual and we do not expect all eligible patients will be treated with ADUHELM for a variety of reasons, including appropriate patient selection criteria, a complex diagnostic and care pathway, the lack of readiness of healthcare providers and institutions to initiate treatment, concern regarding the accelerated approval of ADUHELM and its data and the ability to obtain and maintain adequate reimbursement for ADUHELM. In January 2022 the Centers for Medicare and Medicaid Services (CMS) released a proposed NCD decision memorandum, stating the proposed NCD would cover FDA approved monoclonal antibodies that target amyloid for the treatment of Alzheimer's disease for people with Medicare only if they are enrolled in qualifying clinical trials. We expect a final Medicare NCD by the second quarter of 2022, which should clarify Medicare reimbursement for the class of antibodies directed against amyloid. If the final NCD is not broader than the proposed NCD, our future operating results may be negatively impacted. Under our collaboration agreement with Eisai (ADUHELM Collaboration Agreement), we and Eisai will co-promote ADUHELM with a region-based profit split, with Eisai reimbursing us for 45.0% of development and commercialization costs incurred by the collaboration for the advancement of ADUHELM in the U.S. Shipments of ADUHELM commenced during the second quarter of 2021. We have made, and may continue to make, commercial, medical and infrastructure investments in support of activities associated with the launch of ADUHELM in the U.S. Rest of World In October 2020 the EMA accepted for review the Marketing Authorization Application for aducanumab and in December 2020 the MHLW accepted for review the Japanese NDA for aducanumab. In December 2021 the CHMP of the EMA adopted a negative opinion on the MAA for aducanumab in Europe. We are seeking a re-examination of the opinion by the CHMP. If we do not receive regulatory approval or are unable to successfully commercialize aducanumab in other jurisdictions, our financial condition, business and operations may be adversely affected. TECFIDERA In 2020 U.S. federal courts in West Virginia and Delaware entered judgments in favor of the defendants in patent infringement proceedings relating to TECFIDERA Orange-Book listed patents. We appealed both decisions. In late 2021 the U.S. Court of Appeals for the Federal Circuit (Federal Circuit) affirmed the judgment of the West Virginia federal court. The appeals in the Delaware cases were stayed and we expect will remain so until the decision in the West Virginia case becomes final. Multiple TECFIDERA generic entrants are now in the U.S. market and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and is expected to continue to have a substantial and increasing negative impact on our U.S. TECFIDERA revenue in the future. In May 2021 the European General Court annulled the EMA's decision not to validate applications for approval of TECFIDERA generics on the basis that the EMA conducted the wrong assessment when determining TECFIDERA's entitlement to regulatory data and marketing protection. Our Company, the EMA and the EC have each appealed the General Court’s decision as wrongly decided and the appeal is pending. 57 T a ble of Content s In November 2021 the CHMP of the EMA issued an ad hoc opinion referencing the General Court’s decision which concluded that "the totality of the available data cannot establish that [monoethyl fumarate] exerts a clinically relevant therapeutic contribution within FUMADERM." The EC will decide TECFIDERA’s entitlement to regulatory data and market protection. If data and market protection is not upheld, we could face generic competition in the E.U. as early as the first half of 2022, which would have an adverse impact on our TECFIDERA sales in the E.U. and our results of operations. For additional information, please read the discussion under Results of Operations - Product Revenue - Multiple Sclerosis (MS) - Fumarate below. Business Update Regarding COVID-19 The COVID-19 pandemic continues to present a substantial public health and economic challenge around the world. 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, expense, reserves and allowances, the supply chain, manufacturing, clinical trials, research and development costs and employee-related costs, 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 are monitoring the demand for our products, including the duration and degree to which we may see delays in starting new patients on a product due to hospitals diverting the resources that are necessary to administer certain of our products to care for COVID-19 patients, including products, such as TYSABRI and SPINRAZA, that are administered in a physician's office or hospital setting. We may also see reduced demand for immunosuppressant therapies during the COVID-19 pandemic. While we are currently continuing the clinical trials we have underway in sites across the globe, COVID-19 precautions have impacted the timeline for some of our clinical trials and these precautions may, directly or indirectly, have a further impact on timing in the future. To help mitigate the impact of the COVID-19 pandemic to our clinical trials, we are pursuing innovative approaches such as remote monitoring, remote patient visits and supporting home infusions. These alternative measures have resulted in an immaterial increase to the cost of the clinical trials underway. Factors such as the COVID-19 pandemic, adverse weather events, labor or raw material shortages and other supply chain disruptions could result in product shortages or other difficulties and delays in manufacturing our products. For additional information on the various risks posed by the COVID-19 pandemic, please read Item 1A. Risk Factors included in this report. 58 T a ble of Content s Financial Highlights Diluted earnings per share attributable to Biogen Inc. were $10.40 for 2021, representing a decrease of 58.1% as compared to $24.80 in the same period in 2020. As described below under Results of Operations , our net income and diluted earnings per share attributable to Biogen Inc. for the year ended December 31, 2021, compared to the year ended December 31, 2020, reflects the following: Revenue • Total revenue was $10,981.7 million for 2021, representing a $2,462.9 million, or 18.3%, decrease compared to $13,444.6 million in 2020. • Product revenue, net totaled $8,846.9 million for 2021, representing a $1,845.3 million, or 17.3%, decrease compared to $10,692.2 million in 2020. This decrease was primarily due to a $1,735.4 million, or 22.2%, decrease in MS product revenue and a $147.0 million, or 7.2%, decrease in SPINRAZA product revenue, partially offset by a $35.3 million, or 4.4%, increase in revenue from our biosimilar business. ◦ The decrease in MS product revenue was primarily due to a decrease in U.S. TECFIDERA demand as a result of multiple TECFIDERA generic entrants in the U.S. market. ◦ The decrease in SPINRAZA revenue was primarily due to a decrease in demand as a result of increased competition in the U.S. and Germany as well as a decrease in pricing in the U.S. and rest of world markets, partially offset by an increase in sales volumes in Latin America and certain distributor markets. • Revenue from anti-CD20 therapeutic programs totaled $1,658.5 million for 2021, representing a $319.3 million, or 16.1%, decrease compared to $1,977.8 million in 2020. This decrease was primarily due to a $480.2 million, or 45.5%, decrease in RITUXAN revenue, partially offset by a $146.3 million, or 17.3%, increase in royalty revenue on sales of OCREVUS. Sales of RITUXAN have been adversely affected by the onset of biosimilar competition. • Other revenue totaled $476.3 million for 2021, representing a $298.3 million, or 38.5%, decrease from $774.6 million in 2020. ◦ The decrease in other revenue was primarily due to higher contract manufacturing revenue in 2020, resulting from $346.2 million in revenue related to the delivery of the license for certain of our manufacturing-related intellectual property to a contract manufacturing customer. Expense • Total cost and expense was $8,141.0 million for 2021, representing a $753.5 million, or 8.5%, decrease compared to $8,894.5 million in 2020. This decrease was primarily due to a $1,489.7 million, or 37.3%, decrease in research and development expense. ◦ The decrease in research and development expense was primarily due to $1,893.3 million in upfront payments recognized in 2020 in connection with our collaborations with Sangamo, Denali and Sage, partially offset by a $125.0 million upfront payment recognized in connection with our collaboration with InnoCare in 2021. ◦ The decrease was partially offset by a $304.5 million, or 16.9%, increase in cost of sales, which was primarily driven by $164.0 million of charges associated with inventory and purchase commitments in excess of forecasted demand related to ADUHELM during 2021 as well as higher impairment charges recorded during 2021 as compared to 2020. As described below under Financial Condition, Liquidity and Capital Resources : • We generated $3,639.9 million of net cash flow from operations for 2021. • Cash, cash equivalents and marketable securities totaled approximately $4,694.5 million as of December 31, 2021. • We repurchased and retired approximately 6.0 million shares of our common stock at a cost of approximately $1.8 billion during 2021 under our 2020 Share Repurchase Program. Approximately $2.8 billion remained available under our 2020 Share Repurchase Program as of December 31, 2021. Acquisitions, Collaborative and Other Relationships For additional information on our acquisitions, collaborative and other relationships discussed below, 59 T a ble of Content s please read Note 2, Acquisitions , Note 18, Collaborative and Other Relationships, and Note 19, Investments in Variable Interest Entities , to our consolidated financial statements included in this report. Bio-Thera Solutions In April 2021 we entered into a commercialization and license agreement to develop, manufacture and commercialize BAT1806, a Phase 3 clinical stage anti-interleukin-6 (IL-6) receptor monoclonal antibody that is a proposed biosimilar referencing ACTEMRA. In connection with this agreement, we made an upfront payment of $30.0 million to Bio-Thera Solutions. InnoCare Pharma Limited In July 2021 we entered into a collaboration and license agreement with InnoCare for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS. In connection with this agreement, we made an upfront payment of $125.0 million to InnoCare. For additional information on our collaboration arrangement with InnoCare, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. Mosunetuzumab In January 2022 we exercised our option with Genentech to participate in the joint development and commercialization of mosunetuzumab, a late-stage bispecific antibody in development for B-cell non-Hodgkin’s lymphoma and other therapeutic areas. In connection with this exercise, we recorded a $30.0 million option exercise fee payable to Genentech in December 2021. BIIB115 Option Exercise In December 2021 we exercised our option with Ionis and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB115, a preclinical investigational ASO in development for SMA. In connection with this option exercise, we made an opt-in payment of $60.0 million to Ionis. Samsung Bioepis - Biogen's Joint Venture with Samsung BioLogics In January 2022 we entered into an agreement to sell to Samsung Biologics our equity in Samsung Bioepis. Under the terms of the proposed transaction, we would receive $1.0 billion in cash at closing and $1.3 billion to be deferred over two payments of $812.5 million due at the first anniversary and $437.5 million due at the second anniversary of the closing of the transaction. We would also be eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones. Closing of the transaction is currently anticipated in mid-2022, contingent on the effectiveness of a securities registration statement filed by Samsung Biologics and satisfaction of certain regulatory and other customary closing conditions. For additional information on the proposed transaction and our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Other Key Developments Exchange Offer In February 2021 we completed our Exchange Offer of our tendered 2045 Senior Notes for our 2051 Senior Notes and cash, and an offer to purchase our tendered 2045 Senior Notes for cash. For additional information on our Exchange Offer, please read Note 12, Indebtedness , to our consolidated financial statements included in this report. North Carolina Gene Therapy Manufacturing Facility In March 2021 we announced our plans to build a new gene therapy manufacturing facility in RTP, NC to support our gene therapy pipeline across multiple therapeutic areas. The new facility will be 175,000 square feet and is expected to be operational by the end of 2023, with an estimated total investment of approximately $200.0 million. Construction for this new facility began during the fourth quarter of 2021. Solothurn, Switzerland Manufacturing Facility In May 2021 we announced that a portion of our Solothurn manufacturing facility received a GMP multi-product license from SWISSMEDIC. For additional information on our Solothurn manufacturing facility, please read Note 10, Property, Plant and Equipment , to our consolidated financial statements included in this report. BIIB125 (zuranolone) In June 2021 we and Sage announced positive Phase 3 results for BIIB125 (zuranolone) for the potential treatment of MDD and PPD. In October 2021 we and Sage announced our plan to submit an NDA to the FDA for zuranolone in the second half of 2022, with rolling submission expected to start in early 2022. The planned initial submission package will seek approval of zuranolone for MDD, and an additional filing for PPD is anticipated in the first half of 2023. 60 T a ble of Content s For additional information on our collaboration arrangement with Sage, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. Lecanemab (BAN2401) In June 2021 the FDA granted Breakthrough Therapy designation for lecanemab, an anti-amyloid antibody for the potential treatment of Alzheimer's disease, which we are developing in collaboration with Eisai. In September 2021 Eisai initiated a rolling submission to the FDA of a BLA for lecanemab. The BLA is being submitted under the accelerated approval pathway and is primarily based on clinical, biomarker and safety data from the Phase 2b clinical trial in people with early Alzheimer's disease and confirmed amyloid pathology. BYOOVIZ (ranibizumab-nuna) In September 2021 we and Samsung Bioepis announced that the FDA has approved BYOOVIZ (ranibizumab-nuna), a biosimilar referencing LUCENTIS for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, and myopic choroidal neovascularization. In addition to the U.S. approval, BYOOVIZ was approved in the E.U. and the U.K. during the third quarter of 2021. BIIB067 (tofersen) In October 2021 we announced topline results from our pivotal Phase 3 VALOR study of BIIB067 (tofersen), an investigational antisense drug being evaluated for people with SOD1 ALS, indicating that the primary endpoint was not met. We are engaging with regulators and other key stakeholders to determine potential next steps. RESULTS OF OPERATIONS Revenue Revenue is summarized as follows: For the Years Ended December 31, % Change $ Change 2021 vs. 2020 2020 vs. 2019 2021 vs. 2020 2020 vs. 2019 (In millions, except percentages) 2021 2020 2019 Product revenue, net: United States $ 3,805.7 $ 5,900.1 $ 6,713.8 (35.5) % (12.1) % $ (2,094.4) $ (813.7) Rest of world 5,041.2 4,792.1 4,666.0 5.2 2.7 249.1 126.1 Total product revenue, net 8,846.9 10,692.2 11,379.8 (17.3) (6.0) (1,845.3) (687.6) Revenue from anti-CD20 therapeutic programs 1,658.5 1,977.8 2,290.4 (16.1) (13.6) (319.3) (312.6) Other revenue 476.3 774.6 707.7 (38.5) 9.5 (298.3) 66.9 Total revenue $ 10,981.7 $ 13,444.6 $ 14,377.9 (18.3) % (6.5) % $ (2,462.9) $ (933.3) 61 T a ble of Content s Product Revenue Product revenue is summarized as follows: For the Years Ended December 31, % Change $ Change 2021 vs. 2020 2020 vs. 2019 2021 vs. 2020 2019 vs. 2018 (In millions, except percentages) 2021 2020 2019 Multiple Sclerosis (MS): Fumarate (1) $ 2,362.3 $ 3,905.4 $ 4,438.2 (39.5) % (12.0) % $ (1,543.1) $ (532.8) Interferon (2) 1,566.1 1,877.5 2,101.8 (16.6) (10.7) (311.4) (224.3) TYSABRI 2,063.1 1,946.1 1,892.2 6.0 2.8 117.0 53.9 FAMPYRA 105.2 103.1 97.1 2.0 6.2 2.1 6.0 Subtotal: MS 6,096.7 7,832.1 8,529.3 (22.2) (8.2) (1,735.4) (697.2) Spinal Muscular Atrophy: SPINRAZA 1,905.1 2,052.1 2,097.0 (7.2) (2.1) (147.0) (44.9) Alzheimer's disease: ADUHELM (3) 3.0 — — nm — 3.0 — Biosimilars: BENEPALI 498.3 481.6 486.2 3.5 (0.9) 16.7 (4.6) IMRALDI 233.4 216.3 184.0 7.9 17.6 17.1 32.3 FLIXABI 99.4 97.9 68.1 1.5 43.8 1.5 29.8 Subtotal: Biosimilars 831.1 795.8 738.3 4.4 7.8 35.3 57.5 Other: FUMADERM 11.0 12.2 15.2 (9.8) (19.7) (1.2) (3.0) Total product revenue, net $ 8,846.9 $ 10,692.2 $ 11,379.8 (17.3) % (6.0) % $ (1,845.3) $ (687.6) (1) Fumarate includes TECFIDERA and VUMERITY. VUMERITY became commercially available in the E.U. during the fourth quarter of 2021. (2) Interferon includes AVONEX and PLEGRIDY. (3) In June 2021 the FDA granted accelerated approval of ADUHELM, which became commercially available in the U.S. during the second quarter of 2021. For additional information, please read Note 18, Collaborative and Other Relationships - Eisai Co., Ltd. - ADUHELM Collaboration Agreement, to our consolidated financial statements included in this report. nm Not meaningful 62 T a ble of Content s Multiple Sclerosis (MS) Fumarate Fumarate revenue includes sales from TECFIDERA and VUMERITY. During the fourth quarter of 2021 VUMERITY was approved for the treatment of RRMS in the E.U., Switzerland and the U.K. For 2021 compared to 2020, the 60.3% decrease in U.S. Fumarate revenue was primarily due to a decrease in TECFIDERA demand as a result of multiple TECFIDERA generic entrants entering the U.S. market. The decrease was partially offset by an increase in VUMERITY sales volumes in the U.S. For 2021 compared to 2020, the 9.4% increase in rest of world Fumarate revenue was primarily due to an increase in TECFIDERA sales volumes of 6.2%. In 2020 U.S. federal courts in West Virginia and Delaware entered judgments in favor of the defendants in patent infringement proceedings relating to TECFIDERA Orange-Book listed patents. We appealed both decisions. In late 2021 the Federal Circuit affirmed the judgment of the West Virginia federal court. The appeals in the Delaware cases were stayed and we expect will remain so until the decision in the West Virginia case becomes final. Multiple TECFIDERA generic entrants are now in the U.S. market and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and is expected to continue to have a substantial and increasing negative impact on our U.S. TECFIDERA revenue in the future. In May 2021 the European General Court annulled the EMA's decision not to validate applications for approval of TECFIDERA generics on the basis that the EMA conducted the wrong assessment when determining TECFIDERA's entitlement to regulatory data and marketing protection. Our Company, the EMA and the EC have each appealed the General Court’s decision as wrongly decided and the appeal is pending. In November 2021 the CHMP of the EMA issued an ad hoc opinion referencing the General Court’s decision which concluded that "the totality of the available data cannot establish that [monoethyl fumarate] exerts a clinically relevant therapeutic contribution within FUMADERM." The EC will decide TECFIDERA’s entitlement to regulatory data and market protection. If data and market protection is not upheld, we could face generic competition in the E.U. as early as the first half of 2022, which would have an adverse impact on our TECFIDERA sales in the E.U. and our results of operations. For additional information, please read Note 20, Litigation, to our consolidated financial statements included in this report. We expect that TECFIDERA revenue will continue to decline in 2022, compared to 2021, as a result of increasing generic competition. We expect an increase in VUMERITY sales volumes in 2022, compared to 2021, mostly driven by demand growth, including the continued launch of VUMERITY in the E.U. Interferon For 2021 compared to 2020, the 22.8% decrease in U.S. Interferon revenue was primarily due to a decrease in Interferon sales volumes of 18.7%. The net decline in sales volumes reflects the continued decline of the Interferon market as patients transition to other higher efficacy and oral MS therapies. 63 T a ble of Content s For 2021 compared to 2020, the 3.5% decrease in rest of world Interferon revenue was primarily due to a decrease in Interferon sales volumes of 3.8%. We expect that Interferon revenue will continue to decline in both the U.S. and rest of world markets in 2022, compared to 2021, as a result of increasing competition from other MS products, including biosimilars, and further pricing reductions in certain European markets. TYSABRI For 2021 compared to 2020, the 4.1% increase in U.S. TYSABRI revenue was primarily due to an increase in pricing, partially offset by a decrease in sales volumes. For 2021 compared to 2020, the 8.4% increase in rest of world TYSABRI revenue was primarily due to favorable volume impacts, partially offset by decreases in pricing. We anticipate TYSABRI revenue to be relatively flat on a global basis in 2022, compared to 2021, despite increasing competition from additional treatments for MS. We expect to continue to face price reductions in certain European markets. Spinal Muscular Atrophy SPINRAZA For 2021 compared to 2020, the 25.4% decrease in U.S. SPINRAZA revenue was primarily due to a decrease in sales volumes of 24.2%, resulting from increased competition. For 2021 compared to 2020, the 4.2% increase in rest of world SPINRAZA revenue was primarily due to an increase in sales volumes, particularly in Latin America and certain distributor markets. These increases were offset by lower volumes resulting from increased competition in certain established markets, particularly Germany. We face competition from a gene therapy product and an oral product. In 2022 we expect that SPINRAZA revenue will be subject to increased competition, likely resulting in continued patient discontinuations and a lower rate of new patient starts, combined with the impact of loading dose dynamics, as patients transition to dosing once every four months, and lower prices in certain rest of world countries. For additional information on our collaboration arrangements with Ionis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. 64 T a ble of Content s Alzheimer's Disease ADUHELM In June 2021 the FDA granted accelerated approval of ADUHELM, which became commercially available in the U.S. during the second quarter of 2021. We expect minimal sales of ADUHELM in 2022. For additional information on our collaboration arrangements with Eisai, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. Biosimilars BENEPALI, IMRALDI and FLIXABI During the third quarter of 2021 BYOOVIZ, a biosimilar referencing LUCENTIS, was approved in the U.S., the E.U and the U.K. For 2021 compared to 2020, the 4.4% increase in biosimilar revenue was primarily due to the favorable impact of higher volumes and foreign currency exchange, partially offset by decreases in pricing in certain markets. We anticipate a slight decline in revenue from our biosimilars business in 2022 compared to 2021, despite the launch of BYOOVIZ in the U.S. and an anticipated modest increase in sales volume in 2022, as we continue to face price reductions in certain markets. For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Revenue from Anti-CD20 Therapeutic Programs Genentech (Roche Group) Our share of RITUXAN, including RITUXAN HYCELA, and GAZYVA collaboration operating profits in the U.S. and other revenue from anti-CD20 therapeutic programs are summarized in the table below. For purposes of this discussion, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN. 65 T a ble of Content s Biogen’s Share of Pre-tax Profits in the U.S. for RITUXAN and GAZYVA The following table provides a summary of amounts comprising our share of pre-tax profits in the U.S. for RITUXAN and GAZYVA: For the Years Ended December 31, (In millions) 2021 2020 2019 Product revenue, net $ 2,032.0 $ 3,334.1 $ 4,747.4 Cost and expense 291.8 433.0 622.7 Pre-tax profits in the U.S. $ 1,740.2 $ 2,901.1 $ 4,124.7 Biogen's share of pre-tax profits $ 647.7 $ 1,080.2 $ 1,542.4 For 2021 compared to 2020, the decrease in U.S. product revenue, net was primarily due to a decrease in sales volumes of RITUXAN in the U.S. of 38.8%, primarily due to the onset of competition from multiple biosimilar products. For 2021 compared to 2020, product revenue, net also reflects an increase in GAZYVA sales volumes of 8.5%. For 2021 compared to 2020, the decrease in collaboration cost and expense was primarily due to lower cost of sales, distribution costs and selling and marketing expense related to RITUXAN. We are aware of several other anti-CD20 molecules, including biosimilar products, that have been approved and are competing with RITUXAN and GAZYVA in the oncology and other markets. In November 2019, January 2020 and January 2021 biosimilar products referencing RITUXAN were launched in the U.S. and are being offered at lower prices. This competition has had a significant adverse impact on the pre-tax profits of our collaboration arrangements with Genentech, as the sales of RITUXAN have decreased substantially compared to prior periods. We expect that biosimilar competition will continue to increase as these products capture additional market share and that this will have a significant adverse impact on our co-promotion profits in the U.S. in future years. Other Revenue from Anti-CD20 Therapeutic Programs Other revenue from anti-CD20 therapeutic programs consist of royalty revenue on sales of OCREVUS and our share of pre-tax co-promotion profits from RITUXAN in Canada. For 2021 compared to 2020, the increase in other revenue from anti-CD20 therapeutic programs was primarily due to sales growth of OCREVUS. Royalty revenue recognized on sales of OCREVUS for the years ended December 31, 2021, 2020 and 2019, totaled $991.7 million, $845.4 million and $687.5 million, respectively. OCREVUS royalty revenue is 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 revenue 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 collaboration arrangements with Genentech, including information regarding the pre-tax profit-sharing formula and its impact on future revenue from anti-CD20 therapeutic programs, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Other Revenue Other revenue is summarized as follows: For the Years Ended December 31, % Change $ Change 2021 vs. 2020 2020 vs. 2019 2021 vs. 2020 2020 vs. 2019 (In millions, except percentages) 2021 2020 2019 Revenue from collaborative and other relationships $ 20.7 $ 21.6 $ 106.2 (4.2) % (79.7) % $ (0.9) $ (84.6) Other royalty and corporate revenue 455.6 753.0 601.5 (39.5) 25.2 (297.4) 151.5 Total other revenue $ 476.3 $ 774.6 $ 707.7 (38.5) % 9.5 % $ (298.3) $ 66.9 Revenue from Collaborative and Other Relationships Revenue from collaborative and other relationships primarily includes royalty revenue on biosimilar products from Samsung Bioepis. For additional information on our collaborative arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. 66 T a ble of Content s Other Royalty and Corporate Revenue We receive royalties from net sales on products related to patents that we have out-licensed and we record other corporate revenue primarily from amounts earned under contract manufacturing agreements. For 2021 compared to 2020, the decrease in other corporate revenue was primarily due to higher contract manufacturing revenue during the year ended December 31, 2020, resulting from $346.2 million in revenue related to the delivery of the license for certain of our manufacturing-related intellectual property to a contract manufacturing customer. For additional information, please read Note 4, Revenue, to our consolidated financial statements included in this report. Reserves for Discounts and Allowances Revenue from product sales is recorded net of reserves established for applicable discounts and allowances, including those associated with the implementation of pricing actions in certain international markets where we operate. 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). These estimates reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment. Reserves for discounts, contractual adjustments and returns that reduced gross product revenue are summarized as follows: For the years ended December 31, 2021, 2020 and 2019, reserves for discounts and allowances as a percentage of gross product revenue were 28.6%, 27.1% and 24.3%, respectively. Discounts Discounts include trade term discounts and wholesaler incentives. For 2021 compared to 2020, the decrease in discounts was primarily driven by a decrease in gross sales. Contractual Adjustments Contractual adjustments primarily relate to Medicaid and managed care rebates in the U.S., pharmacy rebates, co-payment (copay) assistance, Veterans Administration, 340B discounts, specialty pharmacy program fees and other government rebates or applicable allowances. For 2021 compared to 2020, the decrease in contractual adjustments was primarily driven by lower TECFIDERA sales in the U.S., resulting in lower Medicaid, managed care and government rebates, partially offset by managed care rebates in the U.S. from VUMERITY sales. Returns Product return reserves are established for returns made by wholesalers. In accordance with contractual terms, wholesalers are permitted to return product for reasons such as damaged or expired product. The majority of wholesaler returns are due to product expiration. Provisions for product returns are 67 T a ble of Content s recognized in the period the related revenue is recognized, resulting in a reduction to product sales. For 2021 compared to 2020, return reserves were relatively consistent. For additional information on our revenue reserves, please read Note 4, Revenue, to our consolidated financial statements included in this report. Cost and Expense A summary of total cost and expense is as follows: For the Years Ended December 31, % Change $ Change 2021 vs. 2020 2020 vs. 2019 2021 vs. 2020 2020 vs. 2019 (In millions, except percentages) 2021 2020 2019 Cost of sales, excluding amortization and impairment of acquired intangible assets $ 2,109.7 $ 1,805.2 $ 1,955.4 16.9 % (7.7) % $ 304.5 $ (150.2) Research and development 2,501.2 3,990.9 2,280.6 (37.3) 75.0 (1,489.7) 1,710.3 Selling, general and administrative 2,674.3 2,504.5 2,374.7 6.8 5.5 169.8 129.8 Amortization and impairment of acquired intangible assets 881.3 464.8 489.9 89.6 (5.1) 416.5 (25.1) Collaboration profit (loss) sharing 7.2 232.9 241.6 (96.9) (3.6) (225.7) (8.7) (Gain) loss on divestiture of Hillerød, Denmark manufacturing operations — (92.5) 55.3 nm nm 92.5 (147.8) (Gain) loss on fair value remeasurement of contingent consideration (50.7) (86.3) (63.7) (41.3) 35.5 35.6 (22.6) Acquired in-process research and development 18.0 75.0 — (76.0) nm (57.0) 75.0 Restructuring charges — — 1.5 nm nm — (1.5) Total cost and expense $ 8,141.0 $ 8,894.5 $ 7,335.3 (8.5) % 21.3 % $ (753.5) $ 1,559.2 nm Not meaningful Cost of Sales, Excluding Amortization and Impairment of Acquired Intangible Assets Cost of sales, as a percentage of total revenue, were 19.2%, 13.4% and 13.6% for the years ended December 31, 2021, 2020 and 2019, respectively. Product Cost of Sales For 2021 compared to 2020, the increase in product cost of sales was primarily due to product mix and higher cost of sales associated with contract manufacturing agreements. The increase was also due to the write-off of ADUHELM inventory during the year ended December 31, 2021, as discussed below. Inventory amounts written down as a result of excess, obsolescence or unmarketability totaled $167.6 million, $26.6 million and $52.2 million for the years ended December 31, 2021, 2020 and 2019, respectively. During the fourth quarter of 2021 we recorded approximately $164.0 million of charges associated with inventory and purchase commitments in excess of forecasted demand related to ADUHELM, which was recognized in cost of sales within our consolidated statements of income. In addition, we recognized the expected share of these charges from Eisai's 45.0% share in collaboration profit (loss) sharing within our consolidated statements of income. As of December 31, 2021, we had approximately $223.0 million of inventory related to ADUHELM. We may record additional write-downs of ADUHELM inventory if the final NCD is not broader than the proposed NCD. For additional information, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. Royalty Cost of Sales For 2021 compared to 2020, the increase in royalty cost of sales was primarily due to higher 68 T a ble of Content s royalties payable on higher sales of TYSABRI and VUMERITY. Research and Development We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities. A significant amount of our research and development costs consist of indirect costs incurred in support of overall research and development activities and non-specific programs, including activities that benefit multiple programs, such as management costs, as well as depreciation, information technology and facility-based expenses. These costs are considered other research and 69 T a ble of Content s development costs in the table above and are not allocated to a specific program or stage. Research and development expense incurred in support of our marketed products includes costs associated with product lifecycle management activities including, if applicable, costs associated with the development of new indications for existing products. Late stage programs are programs in Phase 3 development or in registration stage. Early stage programs are programs in Phase 1 or Phase 2 development. Research and discovery represents costs incurred to support our discovery research and translational science efforts. Costs are reflected in the development stage based upon the program status when incurred. Therefore, the same program could be reflected in different development stages in the same year. For several of our programs, the research and development activities are part of our collaborative and other relationships. Our costs reflect our share of the total costs incurred. For 2021 compared to 2020, the decrease in research and development expense was primarily due to approximately $1,084.0 million, $601.3 million and $208.0 million in upfront payments recognized upon the closing of our collaborations with Sage, Denali and Sangamo, respectively, in 2020. This decrease was partially offset by approximately $125.0 million in an upfront payment recognized upon the closing of our collaboration with InnoCare in the third quarter of 2021, the development of zuranolone for the potential treatment of MDD and PPD, the development of BIIB124 (SAGE-324) for the potential treatment of essential tremor, which we are developing in collaboration with Sage, and closeout costs associated with BIIB111 (timrepigene emparvovec) and BIIB112 (cotoretigene). In 2021 we recorded upfront payments related to our new collaborations as part of research and development expense. Excluding upfront payments, we expect our core research and development expense to increase in 2022, driven by continued investment in our pipeline. We intend to continue committing significant resources to targeted research and development opportunities where there is a significant unmet need and where a drug candidate has the potential to be highly differentiated. Milestone and Upfront Expense Research and development expense for 2021 includes: • $125.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with InnoCare in the third quarter of 2021; • $60.0 million charge to research and development expense upon the exercise of our option under our collaboration agreement with Ionis to develop and commercialize BIIB115, a preclinical investigational ASO in development for SMA; • $30.0 million charge to research and development expense related to the option exercise fee payable to Genentech to jointly develop and commercialize mosunetuzumab, a late-stage bispecific antibody in development for B-cell non-Hodgkin's lymphoma and other therapeutic areas; and • $30.0 million charge to research and development expense in connection with the upfront payment associated with entering into a commercialization and license agreement with Bio-Thera to develop, manufacture and commercialize BAT1806, a proposed biosimilar referencing ACTEMRA. Research and development expense for 2020 includes: • $1,084.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Sage in the fourth quarter of 2020; • $601.3 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Denali in the third quarter of 2020; and • $208.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Sangamo in the second quarter of 2020. The upfront payments associated with these collaborations are classified as research and development expense as the programs they relate to had not achieved regulatory approval as of the payment date. For additional information about these collaboration arrangements, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Early Stage Programs For 2021 compared to 2020, the decrease in spending related to our early stage programs was primarily due to a decrease in costs associated with: • the discontinuation of opicinumab (anti-LINGO) in MS; 70 T a ble of Content s • the discontinuation of BIIB054 (cinpanemab) in Parkinson's disease and the discontinuation of gosuranemab (BIIB092) in Alzheimer's disease; • the advancement of dapirolizumab pego, an anti-CD40L pegylated Fab that we are developing in collaboration with UCB, for the potential treatment of SLE into late stage; and • the advancement of BIIB059 (anti-BDCA2) for the potential treatment of SLE into late stage. These decreases were partially offset by an increase in costs associated with: • an increase in spending in the development of BIIB124 for the potential treatment of essential tremor; • an increase in spending in the development of BIIB122 (DNL151) for the potential treatment of Parkinson's disease, which we are developing in collaboration with Denali; and • an increase in spending in the development of BIIB135 (orelabrutinib) for the potential treatment of MS. Late Stage Programs For 2021 compared to 2020, the increase in spending associated with our late stage programs was primarily due to: • an increase in spending in the development of zuranolone for the potential treatment of MDD and PPD; • the advancement of dapirolizumab pegol for the potential treatment of SLE into late stage; • the advancement of BIIB059 for the potential treatment of SLE into late stage; • an increase in spending related to our option exercise with Genentech to jointly develop and commercialize mosunetuzumab, a late-stage bispecific antibody in development for B-cell non-Hodgkin's lymphoma and other therapeutic areas; • an increase in spending related to lecanemab; and • close out costs related to BIIB111. These increases were partially offset by a decrease in costs associated with the advancement of ADUHELM from late stage to marketed. Marketed Programs For 2021 compared to 2020, the increase in spending associated with our marketed programs was primarily due to an increase in costs associated with: • the advancement of ADUHELM from late stage to marketed upon the accelerated approval of ADUHELM in the U.S. In March 2019 Eisai initiated a global Phase 3 trial for the development of lecanemab in early Alzheimer's disease. Under our collaboration arrangement, Eisai serves as the global operational and regulatory lead for lecanemab and all costs, including research, development, sales and marketing expense, are shared equally between us and Eisai. For additional information on our collaboration arrangements with Eisai, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. Selling, General and Administrative For 2021 compared to 2020, the increase in selling, general and administrative expense was primarily due to an increase in personnel in support of the launch of ADUHELM in the U.S. Beginning in the second quarter of 2021, reimbursement from Eisai for its share of U.S. ADUHELM selling, general and administrative expense is recognized in collaboration profit (loss) sharing in our consolidated statements of income. In 2022 we expect selling, general and administrative costs to decrease as we plan to implement cost-reduction measures with a significant portion expected to be realized in 2022. 71 T a ble of Content s Amortization and Impairment of Acquired Intangible Assets Our amortization expense is based on the economic consumption and impairment of intangible assets. Our most significant amortizable intangible assets are related to our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products and other programs acquired through business combinations. For the year ended December 31, 2021, amortization and impairment of acquired intangible assets reflects the impact of a $365.0 million impairment charge related to BIIB111, a $220.0 million impairment charge related to BIIB112 and a $44.3 million impairment charge related to vixotrigine (BIIB074) for the potential treatment of trigeminal neuralgia (TGN). 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, a $75.4 million impairment charge related to BIIB054 and a $19.3 million impairment charge related to one of our other IPR&D intangible assets. Amortization of acquired intangible assets, excluding impairment charges, totaled $252.0 million, $255.1 million and $274.0 million for the years ended December 31, 2021, 2020 and 2019, respectively. We monitor events and expectations regarding product performance. If new information indicates that the assumptions underlying our most recent analysis are substantially different than those utilized in our current estimates, our analysis would be updated and may result in a significant change in the anticipated lifetime revenue of the relevant products. The occurrence of an adverse event could substantially increase the amount of amortization expense related to our acquired intangible assets as compared to previous periods or our current expectations, which may result in a significant negative impact on our future results of operations. 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. 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. Overall, the value of our acquired IPR&D assets is dependent upon several variables, including estimates of future revenue and the effects of competition, our ability to secure sufficient pricing in a competitive market, our ability to confirm safety and efficacy based on data from clinical trials and regulatory feedback, the level of anticipated development costs and the probability and timing of successfully advancing a particular research program from one clinical trial phase to the next. We are continually reevaluating our estimates concerning these and other variables, including our life cycle management strategies, research and development priorities and development risk, changes in program and portfolio economics and related impact of foreign currency exchange rates and economic trends and evaluating industry and company data regarding the productivity of clinical research and the development process. Changes in our estimates may result in a significant change to our valuation of our IPR&D assets. Vixotrigine 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 and for the potential treatment of diabetic painful neuropathy (DPN), another form of neuropathic pain. We have engaged with the FDA regarding the design of the Phase 3 studies of vixotrigine for the potential treatment of TGN and DPN and are now performing an additional clinical trial of vixotrigine. The performance of this additional clinical trial delayed the initiation of the Phase 3 studies of vixotrigine for the potential treatment of TGN, and, as a result, we recognized an impairment charge of $44.3 million related to vixotrigine for the potential treatment of TGN during the first quarter of 2021. As of December 31, 2021, the carrying value associated with the remaining IPR&D asset for DPN was $132.7 million and the fair value of this asset was not significantly in excess of its carrying value. 72 T a ble of Content s BIIB111 and BIIB112 During the fourth quarter of 2020 we recognized an impairment charge of $115.0 million related to BIIB111 as a result of third-party manufacturing delays that impacted the timing and increased the costs associated with advancing BIIB111 through Phase 3 development. During the second quarter of 2021 we announced that our Phase 3 STAR study of BIIB111 and our Phase 2/3 XIRIUS study of BIIB112 did not meet their primary endpoints. In the third quarter of 2021 we suspended further development on these programs based on the decision by management as part of its strategic review process. For the year ended December 31, 2021, we recognized an impairment charge of $365.0 million related to BIIB111 and an impairment charge of $220.0 million related to BIIB112, reducing the remaining book values of these IPR&D intangible assets to zero. In addition, for the year ended December 31, 2021 , as a result of our decision to suspend further development of BIIB111 and BIIB112, we recognized charges of approximately $39.1 million related to our manufacturing arrangements and other costs that we expect to incur as a result of suspending these programs, which were recorded as research and development expense in our consolidated statements of income. For additional information on the amortization and impairment of our acquired intangible assets, please read Note 6, Intangible Assets and Goodwill , to our consolidated financial statements included in this report. Collaboration Profit (Loss) Sharing Collaboration profit (loss) sharing primarily includes Samsung Bioepis' 50.0% share of the profit or loss related to our biosimilars commercial agreement with Samsung Bioepis and, beginning in the second quarter of 2021, Eisai's 45.0% share of income and expense in the U.S. related to the ADUHELM Collaboration Agreement. For the years ended December 31, 2021 , 2020 and 2019 we recognized net profit-sharing expense of $285.4 million, $266.5 million and $241.6 million, respectively, to reflect Samsung Bioepis’ 50.0% sharing of the net collaboration profits. For the year ended December 31, 2021, we recognized net profit-sharing income o f $233.2 million t o ref lect Eisai's 45.0% share of loss related to the ADUHELM Collaboration Agreement. We also recognized net profit-sharing income of $45.0 million to reflect Eisai's 45.0% share of the $100.0 million milestone payment made to Neurimmune related to the launch of ADUHELM in the U.S. 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 payment made to Neurimmune related to the completed submission of the BLA for the approval of ADUHELM to the FDA. For additional information on our collaboration arrangements with Samsung Bioepis and Eisai, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. 73 T a ble of Content s (Gain) Loss on Divestiture of Hillerød, Denmark Manufacturing Operations In March 2019 we entered into a share purchase agreement with FUJIFILM to sell all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark. The transaction closed in August 2019. 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. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures , to our consolidated financial statements included in this report. (Gain) Loss on Fair Value Remeasurement of Contingent Consideration Consideration payable for certain of our business combinations includes future payments that are contingent upon the occurrence of a particular event or events. We record an obligation for such contingent consideration payments at fair value on the acquisition date. We then revalue our contingent consideration obligations each reporting period. Changes in the fair value of our contingent consideration obligations, other than changes due to payments, are recognized as a (gain) loss on fair value remeasurement of contingent consideration in our consolidated statements of income. The gain on fair value remeasurement of contingent consideration for 2021 was primarily due to reductions in the probability of technical and regulatory success and delays in the expected timing of the achievement of certain remaining developmental milestones related to our vixotrigine programs. The gain on fair value remeasurement of contingent consideration for 2020 was primarily due to the remeasurement of the contingent consideration associated with our BIIB054 program as well as changes in the 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 additional information on our IPR&D intangible assets, please read Note 6, Intangible Assets and Goodwill , to our consolidated financial statements included in this report. Acquired In-Process Research and Development BIIB118 Acquisition In March 2020 we acquired BIIB118 (CK1 inhibitor) for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases from Pfizer Inc. (Pfizer). 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 74 T a ble of Content s recorded as acquired IPR&D in our consolidated statements of income as BIIB118 has not yet reached technological feasibility. For additional information on our acquisition of BIIB118, please read Note 2, Acquisitions , to our consolidated financial statements included in this report. Other Income (Expense), Net For 2021 compared to 2020, the change in other income (expense), net primarily reflects net unrealized losses on our holdings in equity securities. For the year ended December 31, 2021, net unrealized losses and realized gains on our holdings in equity securities were approximately $831.4 million and $10.3 million, respectively, compared to net unrealized and realized gains of $681.8 million and $12.1 million, respectively, in 2020. The net unrealized losses recognized during the year ended December 31, 2021, primarily reflect decreases in the aggregate fair value of our investments in Denali, Sage, Sangamo and Ionis common stock of approximately $819.6 million. For the year ended December 31, 2021, net interest expense was $242.6 million, compared to $180.5 million in 2020. This increase was primarily due to a lower amount of interest being capitalized to capital projects in 2021, compared to 2020, due to a portion of our Solothurn facility being placed in service in 2021 and lower interest income earned on our investments in 2021, compared to 2020. On April 30, 2020, we issued our senior unsecured notes for an aggregate principal amount of $3.0 billion (2020 Senior Notes). We expect a moderate increase in interest expense in 2022, compared to 2021, primarily due to lower interest being capitalized as a result of assets being placed into service during 2021. For additional information on our 2020 Senior Notes, please read Note 12, Indebtedness , to our consolidated financial statements included in this report. Income Tax Provision Our effective tax rate fluctuates from year to year due to the global nature of our operations. The factors that most significantly impact our effective tax rate include changes in tax laws, variability in the allocation of our taxable earnings among multiple jurisdictions, the amount and characterization of our research and development expense, the levels of certain deductions and credits, acquisitions and licensing transactions. For the year ended December 31, 2021, compared to 2020, the decrease in our effective tax rate, excluding the impact of the Neurimmune deferred tax asset, as discussed below, was primarily due to the change in the territorial mix of our profitability, which included the adverse effect of generic competition for TECFIDERA in the U.S. market, the tax impacts of the BIIB111 and BIIB112 impairment charges and the impact of the non-cash tax effects of changes in the value of our equity investments, where we recorded net unrealized losses in 2021 and net unrealized gains in 2020. Our 2020 effective tax rate also reflected an 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. In addition, for the year ended December 31, 2021, compared to 2020, the decrease in our effective tax rate was significantly impacted by a current year deferred tax benefit in Switzerland resulting from the accelerated approval of ADUHELM by the FDA in the U.S., recognized during the second 75 T a ble of Content s quarter of 2021. We recorded a net deferred tax asset of approximately $490.0 million during the second quarter of 2021. The net deferred tax asset is comprised of approximately $945.0 million of gross deferred tax asset, reduced by approximately $455.0 million of unrecognized tax benefit. During the fourth quarter of 2021 we recorded a valuation allowance of approximately $390.0 million related to this deferred tax asset. The deferred tax benefit relates to Neurimmune's tax basis in ADUHELM, the realization of which is dependent on future sales of ADUHELM and approval of the Swiss cantonal tax authorities, with an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc. For additional information on our collaboration arrangement with Neurimmune, please read Note 19, Investments in Variable Interest Entities , to our consolidated financial statements included in this report. For additional information on our income taxes please read Note 16, Income Taxes , to our consolidated financial statements included in this report. Accounting for Uncertainty in Income Taxes For additional information on our uncertain tax positions and income tax rate reconciliation for 2021, 2020 and 2019, please read Note 16, Income Taxes, to our consolidated financial statements included in this report. Equity in (Income) Loss of Investee, Net of Tax 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. In June 2018 we exercised our option under our joint venture agreement to increase our ownership percentage in Samsung Bioepis from approximately 5.0% to approximately 49.9%. The share purchase transaction was completed in November 2018. As of December 31, 2021, our ownership percentage remained at approximately 49.9%. We recognize our share of the results of operations related to our investment in Samsung Bioepis under the equity method of accounting one quarter in arrears when the results of the entity become available, which is reflected as equity in (income) loss of investee, net of tax in our consolidated statements of income. We recognize amortization on certain basis differences resulting from our November 2018 investment. Certain officers and affiliates of our joint venture partner, Samsung BioLogics, are 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. For the year ended December 31, 2021, we recognized net income on our investment of $34.9 million, reflecting our share of Samsung Bioepis' operating profits, net of tax totaling $64.6 million offset by amortization of basis differences totaling $29.7 million. For the year ended December 31, 2020, we recognized net income on our investment of $5.3 million, reflecting our share of Samsung Bioepis' operating profits, net of tax totaling $45.3 million offset by amortization of basis differences totaling $40.0 million. Net income on our investment for the year ended December 31, 2021, reflects a $31.2 million benefit related to the release of a valuation allowance on deferred tax assets associated with Samsung Bioepis. The valuation allowance was released in the second quarter of 2021 based on a consideration of the positive and negative evidence, including the historic earnings of Samsung Bioepis. For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report. 76 T a ble of Content s Noncontrolling Interests, Net of Tax Our consolidated financial statements include the financial results of our variable interest entity, Neurimmune, as we determined that we are the primary beneficiary. For 2021 the change in net income (loss) attributable to noncontrolling interests, net of tax, was primarily due to the recognition of a current year deferred tax benefit associated with the accelerated approval of ADUHELM by the FDA in the U.S. During the second quarter of 2021 we recorded a net deferred tax asset of approximately $490.0 million related to Neurimmune's tax basis in ADUHELM, the realization of which is dependent on future sales of ADUHELM and approval of the Swiss cantonal tax authorities. During the fourth quarter of 2021 we recorded a valuation allowance of approximately $390.0 million related to this deferred tax asset. There is an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc. For 2021 the change in net income (loss) attributable to noncontrolling interests, net of tax, was also due to the $100.0 million milestone payment to Neurimmune related to the launch of ADUHELM in the U.S. during the second quarter of 2021. For 2020 the change in net income (loss) attributable to noncontrolling interests, net of tax, was primarily due to the $75.0 million milestone payment to Neurimmune related to the completed submission of the BLA for the approval of ADUHELM to the FDA. For additional information on our collaboration agreement with Neurimmune, please read Note 19, Investments in Variable Interest Entities, to our consolidated financial statements included in this report. For additional information on our income taxes please read Note 16, Income Taxes , to our consolidated financial statements included in this report. 77 T a ble of Content s FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Our financial condition is summarized as follows: As of December 31, % Change (In millions, except percentages) 2021 2020 2021 vs. 2020 Financial assets: Cash and cash equivalents $ 2,261.4 $ 1,331.2 69.9 % Marketable securities — current 1,541.1 1,278.9 20.5 Marketable securities — non-current 892.0 772.1 15.5 Total cash, cash equivalents and marketable securities $ 4,694.5 $ 3,382.2 38.8 % Borrowings: Current portion of notes payable $ 999.1 $ — nm Notes payable 6,274.0 7,426.2 (15.5) Total borrowings $ 7,273.1 $ 7,426.2 (2.1) % Working Capital: Current assets $ 7,856.5 $ 6,887.1 14.1 % Current liabilities (4,298.2) (3,742.2) 14.9 Total working capital $ 3,558.3 $ 3,144.9 13.1 % nm Not meaningful For the year ended December 31, 2021, certain significant cash flows were as follows: • $3.6 billion in net cash flow provided by operating activities, which reflected an upfront payment of $125.0 million made in connection with entering into our collaboration with InnoCare and recognized as research and development expense; • $1.8 billion used for share repurchases; • $170.0 million used in connection with our Exchange Offer; • $258.1 million used for purchases of property, plant and equipment; • $247.9 million in total net payments for income taxes; and • $100.0 million milestone payment to Neurimmune. For the year ended December 31, 2020, certain significant cash flows were as follows: • $4.2 billion in net cash flows provided by operating activities, which reflected $1.9 billion of upfront payments and the premium on stock purchases made in connection with entering into our collaborations with Sage, Denali and Sangamo and recognized as research and development expense; • $6.7 billion used for share repurchases; • $3.0 billion in proceeds received from the issuance of our 2020 Senior Notes; • $1.5 billion payment made for the redemption of our 2.90% Senior Notes due September 15, 2020, prior to their maturity; • $906.7 million in total net payments for income taxes; • $441.0 million used to purchase Sage common stock; • $423.7 million used to purchase Denali common stock; • $141.8 million used to purchase Sangamo common stock; and • $424.8 million used for purchases of property, plant and equipment. Overview We have historically financed our operating and capital expenditures primarily through cash flow earned through our operations. We expect our operating expenditures, particularly those related to research and development, clinical trials, commercialization of new products and international expansion to continue to grow. However, we expect to continue funding our current and planned operating requirements primarily through our cash flow earned from our operations as well as our existing cash resources. We believe generic competition for TECFIDERA in the U.S. will continue to reduce our cash flow from operations in 2022 and will have a significant adverse impact on our future cash flow 78 T a ble of Content s from operations. Additionally, in 2022 we will repay or refinance $1.0 billion related to our 3.625% Senior Note due September 15, 2022. We believe that our existing funds, when combined with cash generated from operations and our access to additional financing resources, if needed, are sufficient to satisfy our operating, working capital, strategic alliance, milestone payment, capital expenditure and debt service requirements for the foreseeable future. In addition, we may choose to opportunistically return cash to shareholders and pursue other business initiatives, including acquisition and licensing activities. We may, from time to time, also seek additional funding through a combination of new collaborative agreements, strategic alliances and additional equity and debt financings or from other sources should we identify a significant new opportunity . For additional information on certain risks that could negatively impact our financial position or future results of operations, please read Item 1A. R isk Factors and Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in this report. Cash, Cash Equivalents and Marketable Securities Until required for another use in our business, we typically invest our cash reserves in bank deposits, certificates of deposit, commercial paper, corporate notes, U.S. and foreign government instruments, overnight reverse repurchase agreements and other interest-bearing marketable debt instruments in accordance with our investment policy. It is our policy to mitigate credit risk in our cash reserves and marketable securities by maintaining a well-diversified portfolio that limits the amount of exposure as to institution, maturity and investment type. As of December 31, 2021, we had cash, cash equivalents and marketable securities totaling approximately $4.7 billion compared to approximately $3.4 billion as of December 31, 2020. The change in cash, cash equivalents and marketable securities at December 31, 2021, from December 31, 2020, was primarily due to net cash flow provided by operating activities, partially offset by cash used for share repurchases and capital expenditures, cash payments made in connection with our Exchange Offer and a milestone payment made to Neurimmune. Investments and other assets in our consolidated balance sheet as of December 31, 2021 and 2020, include the carrying value of our investment in Samsung Bioepis of $599.9 million and $620.2 million, respectively. As Samsung Bioepis is a privately-held entity, our ability to liquidate our investment in Samsung Bioepis may be limited and we may realize significantly less than the value of such investment. The investment is also subject to foreign currency exchange fluctuations. In connection with our collaboration with Sangamo, we purchased approximately 24 million shares of Sangamo common stock in April 2020. As of December 31, 2021 and 2020, the fair value of this investment was $173.7 million and $333.7 million, respectively. In connection with our collaboration with Denali, we purchased approximately 13 million shares of Denali common stock in September 2020. As of December 31, 2021 and 2020, the fair value of this investment was $550.7 million and $935.7 million, respectively. In connection with our collaboration with Sage, we purchased approximately 6.2 million shares of Sage common stock in December 2020. As of December 31, 2021 and 2020, the fair value of this investment was $231.9 million and $433.9 million, respectively. Our investment in Ionis common stock had a fair value of $87.5 million and $249.1 million as of December 31, 2021 and 2020, respectively. The decrease was partially due to the sale of a portion of our investment in Ionis common stock during the first quarter of 2021. For additional information on our collaboration arrangements with Samsung Bioepis, Sangamo, Denali, Sage and Ionis, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. Borrowings In February 2021 we completed our Exchange Offer, consisting of the following: • $624.6 million aggregate principal amount of our 2045 Senior Notes was exchanged for $700.7 million aggregate principal amount of our 2051 Senior Notes and approximately $151.8 million of aggregate cash payments; and • $8.9 million aggregate principal amount of our 2045 Senior Notes was redeemed for approximately $12.1 million of aggregate cash payments, excluding accrued and unpaid interest. In April 2020 we issued our 2020 Senior Notes for an aggregate principal amount of $3.0 billion, consisting of the following: • $1.5 billion aggregate principal amount of 2.25% Senior Notes due May 1, 2030; and 79 T a ble of Content s • $1.5 billion aggregate principal amount of 3.15% Senior Notes due May 1, 2050. The following is a summary of our currently outstanding senior secured notes issued in 2015 (2015 Senior Notes): • $1.0 billion aggregate principal amount of 3.625% Senior Notes due September 15, 2022; • $1.75 billion aggregate principal amount of 4.05% Senior Notes due September 15, 2025; and • $1.12 billion aggregate principal amount of 5.20% Senior Notes due September 15, 2045. Our 2020 Senior Notes and our 2015 Senior Notes were issued at a discount, which are amortized as additional interest expense over the period from issuance through maturity. For a summary of the fair values of our outstanding borrowings as of December 31, 2021 and 2020, please read Note 7, Fair Value Measurements, to our consolidated financial statements included in this report. 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. As of December 31, 2021 and 2020, we had no outstanding borrowings and were in compliance with all covenants under this facility. Working Capital Working capital is defined as current assets less current liabilities. Working capital was $3.6 billion and $3.1 billion as of December 31, 2021 and 2020, respectively. The change in working capital reflects an increase in total current assets of approximately $969.4 million and an increase in total current liabilities of approximately $556.0 million. The increase in total current assets was primarily driven by an increase in net cash, cash equivalents and marketable securities, due to net cash flow provided by operating activities, partially offset by cash used for share repurchases and capital expenditures, cash payments made in connection with our Exchange Offer and a milestone payment made to Neurimmune. The increase in total current liabilities was primarily due to the reclassification of $1.0 billion of our Senior Notes due September 15, 2022, to current liabilities from notes payable, as these Senior Notes are due within one year. This increase was partially offset by a reduction in accounts payable as well as accrued expense and other, which was primarily related to decreases in the accrual of contingent payments, the accrual for employee compensation and benefits and the fair values of derivative liabilities. Share Repurchase Programs In October 2020 our Board of Directors authorized our 2020 Share Repurchase Program, which is a program to repurchase up to $5.0 billion of our common stock. 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 6.0 million and 1.6 million shares of our common stock at a cost of approximately $1.8 billion and $400.0 million during the years ended December 31, 2021 and 2020, respectively. Approximately $2.8 billion remained available under our 2020 Share Repurchase Program as of December 31, 2021. In December 2019 our Board of Directors authorized our December 2019 Share Repurchase Program, which was a program to repurchase up to $5.0 billion of our common stock that 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 our March 2019 Share Repurchase Program, which was a program to repurchase up to $5.0 billion of our common stock that 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 our 2018 Share Repurchase Program, which was a program to repurchase up to $3.5 billion of our common stock that was completed as of June 30, 2019. All share repurchases under our 2018 Share Repurchase Program were retired. Under our 2018 Share Repurchase Program, we repurchased and retired approximately 8.9 million shares of our common stock at a cost of approximately $2.1 billion during the year ended December 31, 2019. 80 T a ble of Content s Cash Flow The following table summarizes our cash flow activity: For the Years Ended December 31, % Change 2021 vs. 2020 2020 vs. 2019 (In millions, except percentages) 2021 2020 2019 Net cash flow provided by operating activities $ 3,639.9 $ 4,229.8 $ 7,078.6 (13.9) % (40.2) % Net cash flow provided by (used in) investing activities (563.7) (608.6) 470.5 7.4 (229.4) Net cash flow used in financing activities (2,086.2) (5,272.7) (5,860.4) 60.4 10.0 nm Not meaningful Operating Activities Cash flow from operating activities represents the cash receipts and disbursements related to all of our activities other than investing and financing activities. We expect cash provided from operating activities will continue to be our primary source of funds to finance operating needs and capital expenditures for the foreseeable future. Operating cash flow is derived by adjusting our net income for: • non-cash operating items such as depreciation and amortization, impairment charges, unrealized gain (loss) on strategic investments, acquired IPR&D and share-based compensation; • changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations; and • changes in the fair value of contingent payments associated with our acquisitions of businesses and payments related to collaborations. For 2021 compared to 2020, the decrease in net cash flow provided by operating activities was primarily due to lower net income. Net income in 2020 reflected approximately $1,084.0 million, $601.3 million and $208.0 million of upfront payments made in connection with entering into our collaborations with Sage, Denali and Sangamo, respectively. Investing Activities For 2021 compared to 2020, the decrease in net cash flow used in investing activities was primarily due to the purchases of the common stock of Sangamo, Denali and Sage totaling $1.0 billion during 2020 as well as higher capital expenditures and acquisitions of IPR&D and other intangible assets in 2020, partially offset by higher net proceeds received from the sale of marketable securities in 2020 as compared to the current year. Financing Activities For 2021 compared to 2020, the decrease in net cash flow used in financing activities was primarily due to the greater number of shares repurchased in 2020 as compared to the comparative period in 2021, partially offset by cash used in connection with our Exchange Offer and a milestone payment to Neurimmune in 2021. 81 T a ble of Content s Contractual Obligations and Off-Balance Sheet Arrangements Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2021, excluding amounts related to uncertain tax positions, funding commitments, contingent development, regulatory and commercial milestone payments, contingent payments and contingent consideration related to our business combinations, as described below. Payments Due by Period (In millions) Total Less than 1 Year 1 to 3 Years 3 to 5 Years After 5 Years Non-cancellable operating leases (1)(2) $ 321.1 $ 71.7 $ 112.8 $ 71.3 $ 65.3 Long-term debt obligations (3) 11,580.3 1,259.9 465.4 2,126.8 7,728.2 Purchase and other obligations (4) 982.9 230.1 509.1 239.2 4.5 Defined benefit obligation 132.4 — — — 132.4 Total contractual obligations $ 13,016.7 $ 1,561.7 $ 1,087.3 $ 2,437.3 $ 7,930.4 (1) We lease properties and equipment for use in our operations. Amounts reflected within the table above detail future minimum rental commitments under non-cancelable operating leases as of December 31 for each of the periods presented. In addition to the minimum rental commitments, these leases may require us to pay additional amounts for taxes, insurance, maintenance and other operating expenses. (2) Obligations are presented net of sublease income expected to be received for our vacated small-scale biologics manufacturing facility in Cambridge, MA, the vacated portion of our Weston, MA facility and other facilities throughout the world. (3) Long-term debt obligations are related to our 2015 Senior Notes and our 2020 Senior Notes, including principal and interest payments. (4) Purchase and other obligations include $633.0 million related to the remaining payments on a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax) and $10.8 million related to the fair value of net liabilities on derivative contracts. Royalty Payments TYSABRI We are obligated to make contingent payments of 18.0% on annual worldwide net sales of TYSABRI up to $2.0 billion and 25.0% on annual worldwide net sales of TYSABRI that exceed $2.0 billion. Royalty payments are recognized as cost of sales in our consolidated statements of income. SPINRAZA We make royalty payments on annual worldwide net sales of SPINRAZA using a tiered royalty rate between 11.0% and 15.0%, which are recognized as cost of sales in our consolidated statements of income. VUMERITY In October 2019 the FDA approved VUMERITY for the treatment of RMS. During the fourth quarter of 2021 VUMERITY was approved for the treatment of RRMS in the E.U., Switzerland and the U.K. Under our agreement with Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc (Alkermes), we make royalty payments to Alkermes on worldwide net sales of VUMERITY using a royalty rate of 15.0%, which are recorded as cost of sales in our consolidated statements of income. 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 sales of VUMERITY that is manufactured by us or our designee. For additional information on our collaboration arrangement with Alkermes, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. Contingent Consideration related to Business Combinations In connection with our acquisition of Convergence Pharmaceuticals Ltd. we agreed to make additional payments based upon the achievement of certain milestone events. We recognized the contingent consideration liabilities associated with this acquisition at their fair value on the acquisition date and revalue these obligations each reporting period. We may pay up to approximately $400.0 million in remaining milestones related to this acquisition. Contingent Development, Regulatory and Commercial Milestone Payments Based on our development plans as of December 31, 2021, we could trigger potential future milestone payments to third-parties of up to approximately $10.0 billion, including approximately $2.0 billion in development milestones, approximately 82 T a ble of Content s $900.0 million in regulatory milestones and approximately $7.1 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. Because the achievement of these milestones was not considered probable as of December 31, 2021, such contingencies have not been recorded in our financial statements. 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. If certain clinical and commercial milestones are met, we may pay up to $133.9 million in milestones in 2022 under our current agreements. Additionally, if aducanumab receives regulatory approval in the jurisdictions where we have submitted filings, we may pay up to $100.0 million in additional milestones to Neurimmune, which includes $50.0 million if launched in three or more countries in the E.U. and $50.0 million if launched in Japan. Milestones payable to Neurimmune are shared expenses under the ADUHELM Collaboration Agreement. For additional information on our collaboration arrangements with Eisai, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report. For additional information on our collaboration arrangement with Neurimmune, please read Note 19, Investments in Variable Interest Entities , to our consolidated financial statements included in this report. Other Funding Commitments As of December 31, 2021, we have several ongoing clinical studies in various clinical trial stages. Our most significant clinical trial expenditures are to CROs. The contracts with CROs are generally cancellable, with notice, at our option. We recorded accrued expense of approximately $27.3 million in our consolidated balance sheets for expenditures incurred by CROs as of December 31, 2021. We have approximately $676.1 million in cancellable future commitments based on existing CRO contracts as of December 31, 2021. 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 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. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures , to our consolidated financial statements included in this report. 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, 2021, we have approximately $106.8 million of liabilities associated with uncertain tax positions. As of December 31, 2021 and 2020, we have accrued income tax liabilities of approximately $633.0 million and $697.0 million, respectively, under the Transition Toll Tax. Of the amounts accrued as of December 31, 2021, approximately $72.7 million is expected to be paid within one year. The Transition Toll Tax will be paid in installments over an eight--year period, which started in 2018, and will not accrue interest. Other Off-Balance Sheet Arrangements We do not have any relationships with entities often referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We consolidate variable interest entities if we are the primary beneficiary. New Accounting Standards For a discussion of new accounting standards please read Note 1, Summary of Significant Accounting Policies, to our consolidated financial statements included in this report. Legal Matters For a discussion of legal matters as of December 31, 2021, please read Note 20, Litigation, to our consolidated financial statements included in this report. Critical Accounting Policies and Estimates The preparation of our consolidated financial statements, which have been prepared in accordance 83 T a ble of Content s with accounting principles generally accepted in the U.S. (U.S. GAAP), requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenue and expense and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and assumptions. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense. Actual results may differ from these estimates. Other significant accounting policies are outlined in Note 1, Summary of Significant Accounting Policies , to our consolidated financial statements included in this report. Revenue Recognition We recognize revenue 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 revenue following the five-step model prescribed under Financial Accounting Standards Board (FASB) Accounting Standards Codification 606, Revenue from Contracts with Customers : (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligations. Product Revenue 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. These customers subsequently resell our products to health care providers and patients. In addition, we enter into arrangements with health care providers and payors that provide for government-mandated or privately-negotiated discounts and allowances related to our products. Product revenue is recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial. Reserves for Discounts and Allowances Product revenue is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserve established for these variable consideration components do not differ materially fro our historical practices. Product revenue reserves, which are classified as a reduction in product revenue, are generally characterized in the following categories: 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). Our estimates of reserves established for variable consideration are calculated based upon a consistent application of our methodology utilizing the expected value method. These estimates reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment. As of December 31, 2021, a 10.0% change in our discounts, contractual adjustments and reserves would have resulted in a decrease of our pre-tax earnings by approximately $359.7 million. 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 revenue. To the extent we can demonstrate a separable benefit and fair value for these services we classify these payments in selling, general and administrative expense in our consolidated statements of income. 84 T a ble of Content s For additional information on our revenue, please read Note 4, Revenue , to our consolidated financial statements included in this report. Inventory At each reporting period we review our inventories for excess or obsolescence and write-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. The determination of obsolete or excess inventory, requires management to make estimates based on assumptions about the future demand of our products, product expiration dates, estimated future sales and our general future plans. If customer demand subsequently differs from our forecasts, requirements for inventory write-offs that differ from our estimates may become necessary. Although we believe that the assumptions we use in estimating inventory write-downs are reasonable, no assurance can be given that significant future changes in these assumptions or changes in future events and market conditions could result in different estimates. During the fourth quarter of 2021 we wrote-off approximately $120.0 million of inventory in excess of forecasted demand related to ADUHELM. As of December 31, 2021, we had approximately $223.0 million of inventory related to ADUHELM. We may record additional write-downs of ADUHELM inventory if the final NCD is not broader than the proposed NCD. Acquired Intangible Assets, including IPR&D When we purchase a business, the acquired IPR&D is measured at fair value, capitalized as an intangible asset and tested for impairment at least annually, as of October 31, until commercialization, after which time the IPR&D is amortized over its estimated useful life. If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, the acquired IPR&D is expensed on its acquisition date. Future costs to develop these assets are recorded to research and development expense as they are incurred. We have acquired, and expect to continue to acquire, intangible assets through the acquisition of biotechnology companies or through the consolidation of variable interest entities. These intangible assets primarily consist of technology associated with human therapeutic products and IPR&D product candidates. When significant identifiable intangible assets are acquired, we generally engage an independent third-party valuation firm to assist in determining the fair values of these assets as of the acquisition date. Management will determine the fair value of less significant identifiable intangible assets acquired. Discounted cash flow models are typically used in these valuations, and these models require the use of significant estimates and assumptions including but not limited to: • estimating the timing of and expected costs to complete the in-process projects; • projecting regulatory approvals; • estimating future cash flow from product sales resulting from completed products and in process projects; and • developing appropriate discount rates and probability rates by project. We believe the fair values assigned to the intangible assets acquired are based upon reasonable estimates and assumptions given available facts and circumstances as of the acquisition dates. If these projects are not successfully developed, the sales and profitability of the company may be adversely affected in future periods. Additionally, the value of the acquired intangible assets may become impaired. No assurance can be given that the underlying assumptions used to estimate expected project sales, development costs or profitability, or the events associated with such projects, will transpire as estimated. Impairment and Amortization of Long-lived Assets Long-lived assets to be held and used include property, plant and equipment as well as intangible assets, including IPR&D and trademarks. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We review our intangible assets with indefinite lives for impairment annually, as of October 31, and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. When performing our impairment assessment, we calculate the fair value using the same methodology as described above under Acquired Intangible Assets, including IPR&D . If the carrying value of our acquired IPR&D exceeds its fair value, then the intangible asset is written down to its fair value. Changes in estimates and assumptions used in determining the fair value of our acquired IPR&D could result in an impairment. Impairments are recorded within amortization and impairment of acquired intangible assets in our consolidated statements of income. Based on our most recent impairment assessment we incurred impairment charges of approximately $629.3 million for the year ended December 31, 2021, mainly related to the discontinuation of IPR&D programs. For additional 85 T a ble of Content s information on our impairments, Note 6, Intangible Assets and Goodwill , to our consolidated financial statements included in this report. Our most significant intangible assets are our acquired and in-licensed rights and patents. Acquired and in-licensed rights and patents primarily relate to our acquisition of all remaining rights to TYSABRI from Elan. 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 revenue generated from the products underlying the related intangible assets. An analysis of the anticipated lifetime revenue 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 revenue of our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products. For additional information on the impairment charges related to our long-lived assets during 2021, 2020 and 2019, please read Note 6, Intangible Assets and Goodwill, to our consolidated financial statements included in this report. Contingent Consideration We record contingent consideration resulting from a business combination at its fair value on the acquisition date. Each reporting period thereafter, we revalue the remaining obligations and record increases or decreases in their fair value as an adjustment to contingent consideration expense in our consolidated statements of income. Changes in the fair value of our contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates and achievement and timing of any cumulative sales-based and development milestones or changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval. These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market. Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period. Accordingly, changes in assumptions described above, could have a material impact on the amount of contingent consideration expense we record in any given period. Income Taxes We prepare and file income tax returns based on our interpretation of each jurisdiction’s tax laws and regulations. In preparing our consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. Upon our election in the fourth quarter of 2018 to record deferred taxes for global intangible low-taxed income (GILTI), we have included amounts related to GILTI taxes within temporary difference. Significant management judgment is required in assessing the realizability of our deferred tax assets. In performing this assessment, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial accounting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income and the effects of tax planning strategies. In the event that actual results differ from our estimates, we adjust our estimates in future periods and we may need to establish a valuation allowance, which could materially impact our consolidated financial position and results of operations. We account for uncertain tax positions using a “more likely than not” threshold for recognizing and resolving uncertain tax positions. We evaluate uncertain tax positions on a quarterly basis and consider various factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, information obtained during in process audit activities and changes in facts or circumstances related to a tax position. We adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished, through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the “more likely than not” threshold or the liability becomes effectively settled through the examination process. We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals and administrative reviews, we have no plans to appeal or litigate any aspect of the tax position and we believe that it is highly unlikely that the taxing authority would examine or re-examine the related tax 86 T a ble of Content s position. We also accrue for potential interest and penalties related to unrecognized tax benefits in income tax expense. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We are subject to certain risks that may affect our results of operations, cash flow and fair values of assets and liabilities, including volatility in foreign currency exchange rates, interest rate movements and equity price exposure as well as changes in economic conditions in the markets in which we operate as a result of the COVID-19 pandemic. We manage the impact of foreign currency exchange rates and interest rates through various financial instruments, including derivative instruments such as foreign currency forward contracts, interest rate lock contracts and interest rate swap contracts. We do not enter into financial instruments for trading or speculative purposes. The counterparties to these contracts are major financial institutions, and there is no significant concentration of exposure with any one counterparty. Foreign Currency Exchange Risk Our results of operations are subject to foreign currency exchange rate fluctuations due to the global nature of our operations. As a result, our consolidated financial position, results of operations and cash flow can be affected by market fluctuations in foreign currency exchange rates, primarily with respect to the Euro, British pound sterling, Canadian dollar, Swiss franc, Japanese yen and South Korean won. While the financial results of our global activities are reported in U.S. dollars, the functional currency for most of our foreign subsidiaries is their respective local currency. Fluctuations in the foreign currency exchange rates of the countries in which we do business will affect our operating results, often in ways that are difficult to predict. In particular, as the U.S. dollar strengthens versus other currencies, the value of the non-U.S. revenue will decline when reported in U.S. dollars. The impact to net income as a result of a strengthening U.S. dollar will be partially mitigated by the value of non-U.S. expense, which will also decline when reported in U.S. dollars. As the U.S. dollar weakens versus other currencies, the value of the non-U.S. revenue and expense will increase when reported in U.S. dollars. We have established revenue and operating expense hedging and balance sheet risk management programs to protect against volatility of future foreign currency cash flows and changes in fair value caused by volatility in foreign currency exchange rates. During the second quarter of 2018 the International Practices Task Force of the Center for Audit Quality categorized Argentina as a country with a projected three-year cumulative inflation rate greater than 100.0%, which indicated that Argentina’s economy is highly inflationary. This categorization did not have a material impact on our results of operations or financial position as of December 31, 2021, and is not expected to have a material impact on our results of operations or financial position in the future. Revenue and Operating Expense Hedging Program Our foreign currency hedging program is designed to mitigate, over time, a portion of the impact resulting from volatility in exchange rate changes on revenue and operating expense. We use foreign currency forward contracts to manage foreign currency risk, with the majority of our forward contracts used to hedge certain forecasted revenue and operating expense transactions denominated in foreign currencies in the next 15 months. We do not engage in currency speculation. For a more detailed disclosure of our revenue and operating expense hedging program, please read Note 9, Derivative Instruments, to our consolidated financial statements included in this report. Our ability to mitigate the impact of foreign currency exchange rate changes on revenue and net income diminishes as significant foreign currency exchange rate fluctuations are sustained over extended periods of time. In particular, devaluation or significant deterioration of foreign currency exchange rates are difficult to mitigate and likely to negatively impact earnings. The cash flow from these contracts are reported as operating activities in our consolidated statements of cash flow. Balance Sheet Risk Management Hedging Program We also use forward contracts to mitigate the foreign currency exposure related to certain balance sheet items. The primary objective of our balance sheet risk management program is to mitigate the exposure of foreign currency denominated net monetary assets and liabilities of foreign affiliates. In these instances, we principally utilize currency forward contracts. We have not elected hedge accounting for the balance sheet related items. The cash flow from these contracts are reported as operating activities in our consolidated statements of cash flow. The following quantitative information includes the impact of currency movements on forward contracts used in our revenue, operating expense and balance sheet hedging programs. As of December 31, 2021 and 2020, a hypothetical adverse 10.0% movement in foreign currency exchange rates compared to the U.S. dollar across all maturities 87 T a ble of Content s would result in a hypothetical decrease in the fair value of forward contracts of approximately $333.1 million and $458.2 million, respectively. The estimated fair value change was determined by measuring the impact of the hypothetical exchange rate movement on outstanding forward contracts. Our use of this methodology to quantify the market risk of such instruments is subject to assumptions and actual impact could be significantly different. The quantitative information about market risk is limited because it does not take into account all foreign currency operating transactions. Net Investment Hedge Program Our net investment hedging program is designed to mitigate currency fluctuations between the U.S. dollar and the South Korean won as a result of our approximately 49.9% ownership interest in Samsung Bioepis. We entered into foreign currency forward contracts to hedge changes in the spot rate over the next 10 months. As of December 31, 2021 and 2020, a hypothetical adverse 10.0% movement would result in a hypothetical decrease in fair value of approximately $58.7 million and $56.9 million, respectively. The estimated fair value was determined by measuring the impact of the hypothetical spot rate movement on outstanding forward contracts. We plan to unwind our foreign currency forward contracts in conjunction with the closing of our proposed sale of our ownership interest in Samsung Bioepis to Samsung Biologics. Closing of the transaction is currently anticipated in mid-2022, contingent on the effectiveness of a securities registration statement filed by Samsung Biologics and satisfaction of certain regulatory and other customary closing conditions. Interest Rate Risk Our investment portfolio includes cash equivalents and short-term investments. The fair value of our marketable securities is subject to change as a result of potential changes in market interest rates. The potential change in fair value for interest rate sensitive instruments has been assessed on a hypothetical 100 basis point adverse movement across all maturities. As of December 31, 2021 and 2020, we estimate that such hypothetical 100 basis point adverse movement would result in a hypothetical loss in fair value of approximately $14.3 million and $13.2 million, respectively, to our interest rate sensitive instruments. The fair values of our investments were determined using third-party pricing services or other market observable data. Credit Risk Financial instruments that potentially subject us to concentrations of credit risk include cash and cash equivalents, investments, derivatives and accounts receivable. We attempt to minimize the risks related to cash and cash equivalents and investments by investing in a broad and diverse range of financial instruments. We have established guidelines related to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. Our investment portfolio is maintained in accordance with our investment policy, which defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. We minimize credit risk resulting from derivative instruments by choosing only highly rated financial institutions as counterparties. We operate in certain countries where weakness in economic conditions, including as a result of the COVID-19 pandemic, can result in extended collection periods. We continue to monitor these conditions, including the volatility associated with international economies and the relevant financial markets, and assess their possible impact on our business. To date, we have not experienced any significant losses with respect to the collection of our accounts receivable. We believe that our allowance for doubtful accounts was adequate as of December 31, 2021 and 2020. Equity Price Risk Our strategic investment portfolio includes investments in equity securities of certain biotechnology companies. While we are holding such securities, we are subject to equity price risk, and this may increase the volatility of our income in future periods due to changes in the fair value of equity investments. We may sell such equity securities based on our business considerations, which may include limiting our price risk. Changes in the fair value of these equity securities are impacted by the volatility of the stock market and changes in general economic conditions, among other factors. The potential change in fair value for equity price sensitive instruments has been assessed on a hypothetical 10.0% adverse movement. As of December 31, 2021 and 2020, a hypothetical adverse 10.0% movement would result in a hypothetical decrease in fair value of approximately $104.8 million and $188.8 million, respectively. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information required by this Item 8 is contained on pages F-1 through F-78 of this report and is incorporated herein by reference. 88 T a ble of Content s ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. ITEM 9A. CONTROLS AND PROCEDURES Disclosure Controls and Procedures and Internal Control over Financial Reporting Controls and Procedures 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, 2021. 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 U.S. Securities and Exchange Commission'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. 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. Changes in Internal Control over Financial Reporting There were no changes in our internal control over financial reporting during the quarter ended December 31, 2021, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that: • pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets; • provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and • provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control — Integrated Framework. Based on our assessment, our management has concluded that, as of December 31, 2021, 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, 2021, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein. 89 T a ble of Content s ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable. 90 T a ble of Content s PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information concerning our executive officers is set forth under the heading Information about our Executive Officers in Item 1 of this report. The text of our code of business conduct, which includes the code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions, is posted on our website, www.biogen.com, under the “ Corporate Governance ” subsection of the “ Investors ” section of the site. We intend to make all required disclosures regarding any amendments to, or waivers from, provisions of our code of business conduct at the same location of our website. The response to the remainder of this item is incorporated by reference from the discussion responsive thereto in the sections entitled “ Proposal 1 - Election of Directors,” “Corporate Governance at Biogen” and “ Miscellaneous - Stockholder Proposals ” contained in the proxy statement for our 2022 annual meeting of stockholders. ITEM 11. EXECUTIVE COMPENSATION The response to this item is incorporated by reference from the discussion responsive thereto in the sections entitled “ Executive Compensation Matters ” and “Corporate Governance at Biogen” contained in the proxy statement for our 2022 annual meeting of stockholders. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The response to this item is incorporated by reference from the discussion responsive thereto in the sections entitled “Stock Ownership” and “Equity Compensation Plan Information” contained in the proxy statement for our 2022 annual meeting of stockholders. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The response to this item is incorporated by reference from the discussion responsive thereto in the sections entitled “ Certain Relationships and Related Person Transactions ” and “Corporate Governance at Biogen ” contained in the proxy statement for our 2022 annual meeting of stockholders. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The response to this item is incorporated by reference from the discussion responsive thereto in the section entitled “ Proposal 2 - Ratification of the Selection of our Independent Registered Public Accounting Firm ” contained in the proxy statement for our 2022 annual meeting of stockholders. 91 T a ble of Content s PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES a. (1) Consolidated Financial Statements: The following financial statements are filed as part of this report: 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 Flow F-5 Consolidated Statements of Equity F-6 Notes to Consolidated Financial Statements F-9 Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) F-77 Certain totals may not sum due to rounding. (2) Exhibits The exhibits listed on the Exhibit Index beginning on page 93, which is incorporated herein by reference, are filed or furnished as part of this report or are incorporated into this report by reference. (3) Financial Statement Schedules Schedules are omitted because they are not applicable, or are not required, or because the information is included in the consolidated financial statements and notes thereto. ITEM 16. FORM 10-K SUMMARY Not applicable. 92 T a ble of Content s EXHIBIT INDEX Exhibit No. Description 2.1† Asset Purchase Agreement among Biogen Idec International Holding Ltd., Elan Pharma International Limited and Elan Pharmaceuticals, Inc., dated as of February 5, 2013. Filed as Exhibit 2.1 to our Current Report on Form 8-K/A filed on February 12, 2013. 2.2 Separation Agreement between Biogen Inc. and Bioverativ Inc. dated as of January 31, 2017. Filed as Exhibit 2.1 to our Current Report on Form 8-K filed on February 2, 2017. 3.1 Amended and Restated Certificate of Incorporation, as amended. Filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. 3.2 Certificate of Amendment to the Certificate of Incorporation. Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on March 27, 2015. 3.3 Certificate of Amendment of Biogen Inc.'s Amended and Restated Certificate of Incorporation, as amended. Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on June 8, 2021. 3.4 Fourth Amended and Restated Bylaws. 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. and U.S. 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. 4.2 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. 4.3 Indenture between Biogen Inc. and U.S. Bank National Association, dated as of September 15, 2015. Filed as Exhibit 4.1 to our Current Report on Form 8-K filed on September 16, 2015. 4.4 First Supplemental Indenture between Biogen Inc. and U.S. Bank National Association, dated September 15, 2015. Filed as Exhibit 4.2 to our Current Report on Form 8-K filed on September 16, 2015. 4.5 Third Supplemental Indenture, dated February 16, 2021, between Biogen Inc. and U.S. Bank National Association. Filed as Exhibit 4.2 to our Current Report on Form 8-K filed on February 16, 2021. 4.6 Form of 3.250% Senior Notes due 2051, in the form of a Global Note bearing a private placement legend. Filed as Exhibit 4.3 to our Current Report on Form 8-K filed on February 16, 2021. 4.7 Form of 3.250% Senior Notes due 2051, in the form of a Global Note bearing a Regulation S legend. Filed as Exhibit 4.4 to our Current Report on Form 8-K filed on February 16, 2021. 4.8+ Description of Securities. 4.9 Registration Rights Agreement, dated February 16, 2021, between Biogen Inc. and Deutsche Bank Securities Inc. and Citigroup Global Markets, Inc. with respect to the 3.250% Senior Notes due 2051. Filed as Exhibit 4.5 to our Current Report on Form 8-K filed on February 16, 2021. 10.1 Credit Agreement between Biogen Inc., Bank of America, N.A., Goldman Sachs Bank USA and other lenders party thereto, dated August 28, 2015. Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 1, 2015. 10.2 Credit Agreement, dated as of January 28, 2020, among Biogen Inc., Bank of America, N.A., as administrative agent, swing ling lender and the L/C issuer, and the other lenders party thereto. Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on February 3, 2020. 10.3† Second Amended and Restated Collaboration Agreement between Biogen Idec Inc. and Genentech, Inc., dated as of October 18, 2010. Filed as Exhibit 10.5 to our Annual Report on Form 10-K for the year ended December 31, 2010. 10.4† Letter Agreement regarding GA101 financial terms between Biogen Idec Inc. and Genentech, Inc., dated October 18, 2010. Filed as Exhibit 10.6 to our Annual Report on Form 10-K for the year ended December 31, 2010. 10.5 Settlement and License Agreement, dated January 17, 2017, between Biogen Swiss Manufacturing GmbH, Biogen International Holdings ltd., Forward Pharma A/S and other parties thereto. 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. Filed as Appendix B to our Definitive Proxy Statement on Schedule 14A filed on April 26, 2017. 10.7* Form of restricted stock unit award agreement under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. 10.8* Form of market stock unit award agreement under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. 10.9* Form of performance unit award agreement under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. 10.10* Form of cash-settled performance unit award agreement under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.5 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. 93 T a ble of Content s Exhibit No. Description 10.11* Form of performance stock units award agreement (cash-settled) under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.10 to our Annual Report on Form 10-K for the year ended December 31, 2017. 10.12* Form of performance stock units award agreement under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.11 to our Annual Report on Form 10-K for the year ended December 31, 2017. 10.13* Form of performance stock units award agreement under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018. 10.14* Form of performance stock units award agreement (cash settled) under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018. 10.15* Form of restricted stock unit award agreement (2018 one-time transition grant) under the Biogen Inc. 2017 Omnibus Equity Plan. Filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2018. 10.16* Form of market stock unit award agreement under the Biogen Inc. 2017 Omnibus Equity Plan (for grants commencing in July 2019). Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. 10.17* Form of performance stock units award agreement under the Biogen Inc. 2017 Omnibus Equity Plan (for grants commencing in July 2019). Filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. 10.18* Form of performance stock units award agreement (cash settled) under the Biogen Inc. 2017 Omnibus Equity Plan (for grants commencing in July 2019). Filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. 10.19* Biogen Idec Inc. 2008 Amended and Restated Omnibus Equity Plan. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. 10.20* Form of performance unit award agreement under the Biogen Idec Inc. 2008 Omnibus Equity Plan. Filed as Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. 10.21* Form of market stock unit award agreement under the Biogen Idec Inc. 2008 Omnibus Equity Plan. Filed as Exhibit 10.3 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. 10.22* Form of restricted stock unit award agreement under the Biogen Idec Inc. 2008 Omnibus Equity Plan. Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on August 1, 2008. 10.23* Form of nonqualified stock option award agreement under the Biogen Idec Inc. 2008 Omnibus Equity Plan. Filed as Exhibit 10.2 to our Current Report on Form 8-K filed on August 1, 2008. 10.24* Form of cash-settled performance shares award agreement under the Biogen Idec Inc. 2008 Omnibus Equity Plan. 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. Filed as Appendix A to our Definitive Proxy Statement on Schedule 14A filed on April 30, 2015. 10.27* Biogen Idec Inc. 2008 Performance-Based Management Incentive Plan. 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, as amended. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021. 10.29* Biogen Idec Inc. Voluntary Executive Supplemental Savings Plan, as amended and restated effective January 1, 2004. Filed as Exhibit 10.13 to our Annual Report on Form 10-K for the year ended December 31, 2003. 10.30* Biogen Idec Inc. Supplemental Savings Plan, as amended. Filed as Exhibit 10.23 to our Annual Report on Form 10-K for the year ended December 31, 2015. 10.31* Biogen Idec Inc. Voluntary Board of Directors Savings Plan, as amended. 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. Executive Vice President, as amended effective June 19, 2019. Filed as Exhibit 10.4 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019. 10.33* Biogen Inc. Executive Severance Policy - U.S. Executive Vice President, as amended 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). Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019. 94 T a ble of Content s Exhibit No. Description 10.35* Form of indemnification agreement for directors and executive officers. Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on June 7, 2011. 10.36* Employment Agreement between Biogen Inc. and Michel Vounatsos dated December 18, 2016 and effective as of January 6, 2017. 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. Filed as Exhibit 10.41 to our Annual Report on Form 10-K for the year ended December 31, 2020. 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 Joint Venture Agreement, dated December 6, 2011 , by and between Samsung BioLogics Co., Ltd. and Biogen Therapeutics Inc. (f/k/a Biogen Idec Therapeutics Inc.), as amended February 28, 2012, September 29, 2014, and February 20, 2019. Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. 21+ Subsidiaries. 23+ Consent of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm. 31.1+ Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2+ Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1++ Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101++ The following materials from Biogen Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flow, (v) the Consolidated Statements of Equity and (vi) Notes to Consolidated Financial Statements. * Management contract or compensatory plan or arrangement. † Confidential treatment has been granted or requested with respect to portions of this exhibit. + Filed herewith. ++ Furnished herewith. 95 T a ble of Content s SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BIOGEN INC. By: / S / M ICHEL V OUNATSOS Michel Vounatsos Chief Executive Officer Date: February 3, 2022 96 T a ble of Content s 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 3, 2022 Michel Vounatsos / S / M ICHAEL R. M C D ONNELL Executive Vice President and Chief Financial Officer (principal financial officer) February 3, 2022 Michael R. McDonnell / S / R OBIN C. K RAMER Senior Vice President, Chief Accounting Officer (principal accounting officer) February 3, 2022 Robin C. Kramer / S / S TELIOS P APADOPOULOS Director and Chairman of the Board of Directors February 3, 2022 Stelios Papadopoulos / S / A LEXANDER J . D ENNER Director February 3, 2022 Alexander J. Denner / S / C AROLINE D. D ORSA Director February 3, 2022 Caroline D. Dorsa / S / M ARIA C. F REIRE Director February 3, 2022 Maria C. Freire / S / W ILLIAM A. H AWKINS Director February 3, 2022 William A. Hawkins /S/ W ILLIAM D. J ONES Director February 3, 2022 William D. Jones / S / N ANCY L. L EAMING Director February 3, 2022 Nancy L. Leaming / S / J ESUS B. M ANTAS Director February 3, 2022 Jesus B. Mantas / S / R ICHARD C . M ULLIGAN Director February 3, 2022 Richard C. Mulligan / S / B RIAN S. P OSNER Director February 3, 2022 Brian S. Posner / S / E RIC K. R OWINSKY Director February 3, 2022 Eric K. Rowinsky / S / S TEPHEN A. S HERWIN Director February 3, 2022 Stephen A. Sherwin 97 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED 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 Flow F-5 Consolidated Statements of Equity F-6 Notes to Consolidated Financial Statements F-9 Report of Independent Registered Public Accounting Firm (PCAOB ID 238) F-77 F-1 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) For the Years Ended December 31, 2021 2020 2019 Revenue: Product, net $ 8,846.9 $ 10,692.2 $ 11,379.8 Revenue from anti-CD20 therapeutic programs 1,658.5 1,977.8 2,290.4 Other 476.3 774.6 707.7 Total revenue 10,981.7 13,444.6 14,377.9 Cost and expense: Cost of sales, excluding amortization and impairment of acquired intangible assets 2,109.7 1,805.2 1,955.4 Research and development 2,501.2 3,990.9 2,280.6 Selling, general and administrative 2,674.3 2,504.5 2,374.7 Amortization and impairment of acquired intangible assets 881.3 464.8 489.9 Collaboration profit (loss) sharing 7.2 232.9 241.6 (Gain) loss on divestiture of Hillerød, Denmark manufacturing operations — ( 92.5 ) 55.3 (Gain) loss on fair value remeasurement of contingent consideration ( 50.7 ) ( 86.3 ) ( 63.7 ) Acquired in-process research and development 18.0 75.0 — Restructuring charges — — 1.5 Total cost and expense 8,141.0 8,894.5 7,335.3 Income from operations 2,840.7 4,550.1 7,042.6 Other income (expense), net ( 1,095.5 ) 497.4 83.3 Income before income tax expense and equity in loss of investee, net of tax 1,745.2 5,047.5 7,125.9 Income tax (benefit) expense 52.5 992.3 1,158.0 Equity in (income) loss of investee, net of tax ( 34.9 ) ( 5.3 ) 79.4 Net income 1,727.6 4,060.5 5,888.5 Net income (loss) attributable to noncontrolling interests, net of tax 171.5 59.9 — Net income attributable to Biogen Inc. $ 1,556.1 $ 4,000.6 $ 5,888.5 Net income per share: Basic earnings per share attributable to Biogen Inc. $ 10.44 $ 24.86 $ 31.47 Diluted earnings per share attributable to Biogen Inc. $ 10.40 $ 24.80 $ 31.42 Weighted-average shares used in calculating: Basic earnings per share attributable to Biogen Inc. 149.1 160.9 187.1 Diluted earnings per share attributable to Biogen Inc. 149.6 161.3 187.4 See accompanying notes to these consolidated financial statements. F-2 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) For the Years Ended December 31, 2021 2020 2019 Net income attributable to Biogen Inc. $ 1,556.1 $ 4,000.6 $ 5,888.5 Other comprehensive income: Unrealized gains (losses) on securities available for sale, net of tax ( 3.6 ) ( 2.8 ) 8.2 Unrealized gains (losses) on cash flow hedges, net of tax 232.8 ( 186.8 ) ( 26.9 ) Gains (losses) on net investment hedges, net of tax 34.0 ( 33.6 ) 21.6 Unrealized gains (losses) on pension benefit obligation, net of tax 21.5 ( 33.5 ) ( 1.5 ) Currency translation adjustment ( 92.4 ) 92.9 103.8 Total other comprehensive income (loss), net of tax 192.3 ( 163.8 ) 105.2 Comprehensive income attributable to Biogen Inc. 1,748.4 3,836.8 5,993.7 Comprehensive income (loss) attributable to noncontrolling interests, net of tax 172.1 60.9 ( 0.4 ) Comprehensive income $ 1,920.5 $ 3,897.7 $ 5,993.3 See accompanying notes to these consolidated financial statements. F-3 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In millions, except per share amounts) As of December 31, 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 2,261.4 $ 1,331.2 Marketable securities 1,541.1 1,278.9 Accounts receivable, net 1,549.4 1,913.8 Due from anti-CD20 therapeutic programs 412.3 413.5 Inventory 1,351.5 1,068.6 Other current assets 740.8 881.1 Total current assets 7,856.5 6,887.1 Marketable securities 892.0 772.1 Property, plant and equipment, net 3,416.4 3,411.5 Operating lease assets 375.4 433.3 Intangible assets, net 2,221.3 3,084.3 Goodwill 5,761.1 5,762.1 Deferred tax asset 1,415.1 1,369.5 Investments and other assets 1,939.5 2,899.0 Total assets $ 23,877.3 $ 24,618.9 LIABILITIES AND EQUITY Current liabilities: Current portion of notes payable $ 999.1 $ — Taxes payable 174.7 142.0 Accounts payable 589.2 454.9 Accrued expense and other 2,535.2 3,145.3 Total current liabilities 4,298.2 3,742.2 Notes payable 6,274.0 7,426.2 Deferred tax liability 694.5 1,032.8 Long-term operating lease liabilities 330.4 402.0 Other long-term liabilities 1,320.5 1,329.6 Total liabilities 12,917.6 13,932.8 Commitments, contingencies and guarantees (Notes 21 and 22) Equity: Biogen Inc. shareholders’ equity Preferred stock, par value $ 0.001 per share — — Common stock, par value $ 0.0005 per share 0.1 0.1 Additional paid-in capital 68.2 — Accumulated other comprehensive loss ( 106.7 ) ( 299.0 ) Retained earnings 13,911.7 13,976.3 Treasury stock, at cost; 23.8 million and 23.8 million shares, respectively ( 2,977.1 ) ( 2,977.1 ) Total Biogen Inc. shareholders’ equity 10,896.2 10,700.3 Noncontrolling interests 63.5 ( 14.2 ) Total equity 10,959.7 10,686.1 Total liabilities and equity $ 23,877.3 $ 24,618.9 See accompanying notes to these consolidated financial statements. F-4 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW (In millions) For the Years Ended December 31, 2021 2020 2019 Cash flow from operating activities: Net income $ 1,727.6 $ 4,060.5 $ 5,888.5 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation and amortization 487.7 457.2 464.7 Impairment of intangible assets 629.3 209.7 215.9 Excess and obsolescence charges related to inventory 167.6 26.6 52.2 Acquired in-process research and development 18.0 75.0 — Share-based compensation 238.6 198.3 182.3 Contingent consideration ( 50.7 ) ( 86.3 ) ( 63.7 ) (Gain)/loss on divestiture of Hillerød, Denmark manufacturing operations — ( 92.5 ) 55.3 Deferred income taxes ( 426.8 ) 149.0 67.1 (Gain) loss on strategic investments 826.8 ( 681.8 ) ( 147.3 ) (Gain) loss on equity method investment ( 34.9 ) ( 3.3 ) 77.4 Other 202.2 104.6 86.9 Changes in operating assets and liabilities, net: Accounts receivable 324.8 2.8 68.8 Due from anti-CD20 therapeutic programs 1.2 176.7 ( 63.3 ) Inventory ( 462.4 ) ( 316.3 ) ( 19.2 ) Accrued expense and other current liabilities ( 95.4 ) 154.2 240.2 Income tax assets and liabilities 230.8 ( 67.5 ) 16.1 Other changes in operating assets and liabilities, net ( 144.5 ) ( 137.1 ) ( 43.3 ) Net cash flow provided by operating activities 3,639.9 4,229.8 7,078.6 Cash flow from investing activities: Purchases of property, plant and equipment ( 258.1 ) ( 424.8 ) ( 514.5 ) Proceeds from sales and maturities of marketable securities 3,405.4 7,299.4 6,007.0 Purchases of marketable securities ( 3,808.7 ) ( 6,397.7 ) ( 5,252.6 ) Contingent consideration paid related to Fumapharm AG acquisition — — ( 300.0 ) Acquisition of Nightstar Therapeutics plc, net of cash acquired — — ( 744.4 ) 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 divestiture of Hillerød, Denmark manufacturing operations 28.1 — 923.7 Acquired in-process research and development ( 18.0 ) ( 75.0 ) — Acquisitions of intangible assets ( 18.8 ) ( 52.0 ) ( 155.0 ) Proceeds from sales of strategic investments 93.5 74.9 479.3 Other 12.9 ( 26.9 ) 27.0 Net cash flow (used in) provided by investing activities ( 563.7 ) ( 608.6 ) 470.5 Cash flow from financing activities: Purchase of treasury stock ( 1,800.0 ) ( 6,679.1 ) ( 5,868.3 ) Payments related to issuance of stock for share-based compensation arrangements, net ( 0.7 ) ( 4.6 ) — Repayments of borrowings and premiums paid on debt exchange ( 170.0 ) — — Proceeds from borrowings — 2,967.4 — Repayments of borrowings — ( 1,500.0 ) — Net (distribution) contribution to noncontrolling interest ( 94.4 ) ( 71.0 ) 4.3 Other ( 21.1 ) 14.6 3.6 Net cash flow used in financing activities ( 2,086.2 ) ( 5,272.7 ) ( 5,860.4 ) Net increase (decrease) in cash and cash equivalents 990.0 ( 1,651.5 ) 1,688.7 Effect of exchange rate changes on cash and cash equivalents ( 59.8 ) 69.0 0.4 Cash and cash equivalents, beginning of the year 1,331.2 2,913.7 1,224.6 Cash and cash equivalents, end of the year $ 2,261.4 $ 1,331.2 $ 2,913.7 See accompanying notes to these consolidated financial statements. F-5 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY (In millions) Preferred stock Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings Treasury stock Total Biogen Inc. shareholders’ equity Noncontrolling interests Total equity Shares Amount Shares Amount Shares Amount 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 Net income — — — — — — 1,556.1 — — 1,556.1 171.5 1,727.6 Other comprehensive income (loss), net of tax — — — — — 192.3 — — — 192.3 0.6 192.9 Distribution to noncontrolling interest — — — — — — — — — — ( 100.0 ) ( 100.0 ) Capital contribution from noncontrolling interest — — — — — — — — — — 5.6 5.6 Repurchase of common stock pursuant to the 2020 Share Repurchase Program, at cost — — — — — — — ( 6.0 ) ( 1,800.0 ) ( 1,800.0 ) — ( 1,800.0 ) Retirement of common stock pursuant to the 2020 Share Repurchase Program, at cost — — ( 6.0 ) — ( 231.9 ) — ( 1,568.1 ) 6.0 1,800.0 — — — Issuance of common stock under stock option and stock purchase plans — — 0.2 — 54.4 — — — — 54.4 — 54.4 Issuance of common stock under stock award plan — — 0.4 — ( 2.4 ) — ( 52.6 ) — — ( 55.0 ) — ( 55.0 ) Compensation expense related to share-based payments — — — — 246.6 — — — — 246.6 — 246.6 Other — — — — 1.5 — — — — 1.5 — 1.5 Balance, December 31, 2021 — $ — 170.8 $ 0.1 $ 68.2 $ ( 106.7 ) $ 13,911.7 ( 23.8 ) $ ( 2,977.1 ) $ 10,896.2 $ 63.5 $ 10,959.7 See accompanying notes to these consolidated financial statements. F-6 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY - (Continued) (In millions) Preferred stock Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings Treasury stock Total Biogen Inc. shareholders’ equity Noncontrolling interests Total equity 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 ) 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 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 See accompanying notes to these consolidated financial statements. F-7 T a ble of Content s BIOGEN INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EQUITY - (Continued) (In millions) Preferred stock Common stock Additional paid-in capital Accumulated other comprehensive loss Retained earnings Treasury stock Total Biogen Inc. shareholders’ equity Noncontrolling interests Total equity 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 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 ) Retirement of common stock pursuant to the 2018 Share Repurchase Program, at cost — — ( 8.9 ) — ( 110.5 ) — ( 2,036.9 ) 8.9 2,147.4 — — — Issuance of common stock under stock option and stock purchase plans — — 0.2 — 40.8 — — — — 40.8 — 40.8 Issuance of common stock under stock award plan — — 0.4 — — — ( 53.8 ) — — ( 53.8 ) — ( 53.8 ) Compensation expense related to share-based payments — — — — 191.2 — — — — 191.2 — 191.2 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 See accompanying notes to these consolidated financial statements. F-8 Table of Contents BIOGEN INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES References in these notes to "Biogen," the "company," "we," "us" and "our" refer to Biogen Inc. and its consolidated subsidiaries. Business Overview Biogen is a global biopharmaceutical company focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies. We have a leading portfolio of medicines to treat multiple sclerosis (MS), have introduced the first approved treatment for spinal muscular atrophy (SMA) and are providing the first and only approved treatment to address a defining pathology of Alzheimer’s disease. We also commercialize biosimilars of advanced biologics and focus on advancing our pipeline in neuroscience and specialized immunology. Lastly, we are focused on accelerating our efforts in digital health to support our commercial and pipeline programs while also creating opportunities for potential digital therapeutics. 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, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; ADUHELM for the treatment of Alzheimer's disease; and FUMADERM for the treatment of severe plaque psoriasis. 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; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of primary progressive MS (PPMS) and relapsing MS (RMS); and other potential anti-CD20 therapies, including mosunetuzumab, pursuant to our collaboration arrangements with Genentech, Inc. (Genentech), a wholly-owned member of the Roche Group. 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 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. We have also secured the exclusive rights to commercialize BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, which was approved in the U.S., the E.U. and the U.K. during the third quarter of 2021. For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements. Consolidation Our consolidated financial statements reflect our financial statements, those of our wholly-owned subsidiaries and those of certain variable interest entities where we are the primary beneficiary. For consolidated entities where we own or are exposed to less than 100.0 % of the economics, we record net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Intercompany balances and transactions are eliminated in consolidation. In determining whether we are the primary beneficiary of a variable interest entity, we apply a qualitative approach that determines whether we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. We continuously assess whether we are the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in us consolidating or deconsolidating one or more of our collaborators or partners. Use of Estimates The preparation of our consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenue and expense and related F-9 Table of Contents BIOGEN INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and assumptions. We base our estimates on historical experience and on various other assumptions that we believe are rea