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Item 7. Management’s Discussion and Analysis

2022-02-03 compared with 2021-02-03 · 492 added, 445 removed, 371 unchanged (72% of the section changed)

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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.

Our core growth areas include MS and neuroimmunology;

Alzheimer's disease and dementia;

neuromuscular disorders, including SMA and ALS;

movement disorders, including Parkinson's disease;

ophthalmology;

and neuropsychiatry.

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

acute neurology;

and neuropathic pain.

In addition, we commercialize biosimilars of advanced biologics.

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.

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SPINRAZA for the treatment of SMA;

ADUHELM for the treatment of Alzheimer's disease;

and FUMADERM for the treatment of severe plaque psoriasis.

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OCREVUS for the treatment of PPMS and RMS;

and other potential anti-CD20 therapies pursuant to our collaboration arrangements with Genentech.

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 and have an option to acquire exclusive rights to commercialize these products in China.

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

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.

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 our patients around the world.

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, which we expect to be partially operational during the first half of 2021.

We believe that the Solothurn manufacturing facility will provide us with the ability to further expand if our future growth and drug development plans increase.

Our revenues depend 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.

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.

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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.

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For additional information on our competition and pricing risks that could negatively impact our product sales, please read Item 1A.

Risk Factors and Item 7A.

Quantitative and Qualitative Disclosures About Market Risk included in this report.

In June 2020 and September 2020 judgments were entered in favor of the defendants in the patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Hatch-Waxman Act in West Virginia and Delaware.

We have appealed the judgments in both actions.

For additional information, please read Note 20, Litigation, to our consolidated financial statements included in this report.

Risk Factors, included in this report.

ADUHELM (aducanumab)

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.

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.

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.

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 significantly reduced our TECFIDERA revenues during the year ended December 31, 2020, and is expected to have a substantial negative impact on our TECFIDERA revenues for as long as there is generic competition.

For additional information, please read the discussion under Results of Operations - Product Revenues - Multiple Sclerosis (MS) - Fumarate below.

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.

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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 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.

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.

For example, our Phase 3 study of BIIB093 for LHI, a severe form of ischemic stroke, has been delayed as this study involves administration of BIIB093 in an acute hospital setting.

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.

Quantitative and Qualitative Disclosures About Market Risk and Item 1A.

Risk Factors included in this report.

Effective January 31, 2020, the U.K.

ceased to be a member state of the E.U., a process known as Brexit, and began a transition period, which expired on December 31, 2020.

In December 2020 the U.K.

agreed on a trade and cooperation agreement, under which the E.U.

will now form two separate markets governed by two distinct regulatory and legal regimes.

The trade and cooperation agreement covers the general objectives and framework of the relationship between the U.K.

and the E.U., including as it relates to trade, transport and visas.

Notably, under the trade and cooperation agreement, U.K.

service suppliers no longer benefit from automatic access to the entire E.U.

single market, U.K.

goods no longer benefit from the free movement of goods and there is no longer the free movement of people between the U.K.

Depending on the application of the terms of the trade and cooperation agreement, we could face new regulatory costs and challenges.

We do not expect Brexit to have a material impact on our consolidated results of operations as less than 4.0% of our total product revenues in 2020, 2019 and 2018 were derived from U.K.

However, we cannot predict the direction Brexit-related developments will take nor the impact of those developments on our European operations and the economies of the markets where we operate.

Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the U.K.

determines which E.U.

laws to replace or replicate, including U.K.

competition laws.

Therefore, we will continue to monitor for developments in this area and assess any potential impacts on our business and results of operations.

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Financial Highlights

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for the year ended December 31, 2021, compared to the year ended December 31, 2020, reflects the following:

• Total revenues were $13,444.6 million for 2020, representing a decrease of 6.5% as compared to $14,377.9 million in 2019.

• Product revenues, net totaled $10,692.2 million for 2020, representing a decrease of 6.0% as compared to $11,379.8 million in 2019.

This decrease was primarily due to a $697.2 million, or 8.2%, decrease in MS product revenues and a $44.9 million, or 2.1%, decrease in revenues from SPINRAZA, partially offset by a $57.5 million, or 7.8%, increase in revenues from our biosimilar business.

Product revenues, net, compared to the same period in 2019, further reflects the unfavorable impact of foreign currency exchange of $111.6 million.

◦ The decrease in MS product revenues was primarily due to a decrease in TECFIDERA demand and price as a result of multiple TECFIDERA generic entrants entering the U.S.

market during the year ended December 31, 2020.

• Revenues from anti-CD20 therapeutic programs totaled $1,977.8 million for 2020, representing a decrease of 13.6% as compared to $2,290.4 million in 2019.

This decrease was primarily due to a $490.7 million, or 31.7%, decrease in RITUXAN revenues, partially offset by a $157.9 million, or 23.0%, increase in royalty revenues on sales of OCREVUS.

Sales of RITUXAN have been adversely affected primarily by the onset of biosimilars competition in the U.S.

• Other revenues totaled $774.6 million for 2020, representing an increase of 9.5% over $707.7 million in 2019.

This increase was due to higher contract manufacturing revenues, primarily resulting from $346.2 million in revenues related to the delivery of the license for certain of our manufacturing-related intellectual property to a contract manufacturing customer.

• Total cost and expenses were $8,894.5 million for 2020, representing an increase of 21.3% from $7,335.3 million in 2019.

This increase was primarily due to a $1,710.3 million, or 75.0%, increase in research and development expense.

◦ The increase in research and development expense was primarily due to $1,893.3 million in charges recognized in connection with upfront payments associated with entering into our collaborations with Sangamo, Denali and Sage.

This increase was partially offset by:

◦ a 5.1% decrease in amortization and impairment of acquired intangible assets;

◦ a $92.5 million gain recognized in 2020 associated with the divestiture of our Hillerød, Denmark manufacturing operations.

• 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.

◦ 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.

• 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 $4,229.8 million of net cash flows from operations for 2020.

• 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 22.4 million shares of our common stock at a cost of approximately $6.7 billion during 2020 under our 2020, December 2019 and March 2019 Share Repurchase Programs.

• 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, 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.

BIIB118 Acquisition

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

We are developing BIIB118 for the potential treatment of ISWRD in Parkinson’s disease and plan to develop

BIIB118 for the potential treatment of sundowning in Alzheimer's disease.

For additional information on our acquisition of BIIB118, please read Note 2, Acquisitions, to our consolidated financial statements included in this report .

Sangamo Therapeutics, Inc.

In April 2020 we closed 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.

For additional information on our collaboration arrangement with Sangamo, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

Denali Therapeutics Inc.

In October 2020 we closed 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 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.

For additional information on our collaboration arrangement with Denali, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

Sage Therapeutics, Inc.

In December 2020 we closed 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.

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.

For additional information on our acquisitions, collaborative and other relationships discussed below,

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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

Aducanumab (AB mAb)

In July 2020 we completed the submission of a BLA for the approval of aducanumab to the FDA.

In August 2020 the FDA accepted the BLA and granted Priority Review with a PDUFA action date on March 7, 2021.

In November 2020 the FDA held a virtual meeting of the Advisory Committee to review data supporting the BLA for aducanumab and to vote on questions presented at the meeting.

A majority of the Advisory Committee members voted against each of the questions presented at the meeting.

In January 2021 the FDA extended the review period for the BLA for aducanumab by three months.

The updated PDUFA action date is June 7, 2021.

As part of the ongoing review, we submitted a response to an information request by the FDA, including additional analyses and clinical data, which the FDA considered a Major Amendment to the application that will require additional time for review.

In October 2020 the EMA accepted for review the MAA for aducanumab.

In December 2020 the Ministry of Health, Labor and Welfare accepted for review the Japanese New Drug Application for aducanumab.

2020 Share Repurchase Program

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.

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.

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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.

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

Revenues are summarized as follows:

Revenue is summarized as follows:

For the Years Ended December 31, % Change $ Change

(In millions, except percentages) 2021 2020 2019

Product revenues, net:

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 revenues, net 10,692.2 11,379.8 10,886.8 (6.0) 4.5 (687.6) 493.0

Revenues from anti-CD20 therapeutic programs 1,977.8 2,290.4 1,980.2 (13.6) 15.7 (312.6) 310.2

Other revenues 774.6 707.7 585.9 9.5 20.8 66.9 121.8

Total revenues $ 13,444.6 $ 14,377.9 $ 13,452.9 (6.5) % 6.9 % $ (933.3) $ 925.0

Product Revenues

Product revenues are summarized as follows:

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)

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Product Revenue

Product revenue is summarized as follows:

For the Years Ended December 31, % Change $ Change

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Multiple Sclerosis (MS):

Fumarate* $ 3,905.4 $ 4,438.2 $ 4,274.1 (12.0) % 3.8 % $ (532.8) $ 164.1

$ 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

ZINBRYTA — — 1.4 — nm — (1.4)

MS product revenues 7,832.1 8,529.3 8,595.2 (8.2) (0.8) (697.2) (65.9)

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:

3.0 — — nm — 3.0 —

BENEPALI 498.3 481.6 486.2 3.5 (0.9) 16.7 (4.6)

IMRALDI 216.3 184.0 16.7 17.6 nm 32.3 167.3

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

Biosimilar product revenues 795.8 738.3 545.1 7.8 35.4 57.5 193.2

Biosimilars 831.1 795.8 738.3 4.4 7.8 35.3 57.5

FUMADERM 11.0 12.2 15.2 (9.8) (19.7) (1.2) (3.0)

Total product revenues, net $ 10,692.2 $ 11,379.8 $ 10,886.8 (6.0) % 4.5 % $ (687.6) $ 493.0

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 U.S.

in November 2019.

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

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Multiple Sclerosis (MS)

Fumarate revenues include sales from TECFIDERA and VUMERITY.

In October 2019 the FDA approved VUMERITY for the treatment of RMS and VUMERITY became commercially available in the U.S.

in November 2019.

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 revenues was primarily due to a decrease in TECFIDERA demand and price as a result of multiple TECFIDERA generic entrants entering the U.S.

market during the year ended December 31, 2020.

This decrease was partially offset by an increase of approximately $60.0 million in VUMERITY sales, which became commercially available in the U.S.

in November 2019.

For 2020 compared to 2019, the 3.3% increase in rest of world Fumarate revenues was primarily due to an increase in TECFIDERA sales volumes of 8.6%, partially offset by pricing reductions in certain European countries and the unfavorable impact of foreign currency exchange.

The increase in volumes was primarily due to continued strong patient growth in our E.U.

direct markets, including Italy, Spain and the U.K., as well as growth in Japan and Brazil.

We have appealed the judgments in both actions.

For additional information, please read Note 20, Litigation, to our consolidated financial statements included in this report.

Fumarate revenue was primarily due to a decrease in TECFIDERA demand as a result of multiple TECFIDERA generic entrants entering the U.S.

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%.

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.

We anticipate an increase in TECFIDERA sales volume in rest of world in 2021, compared to 2020, notwithstanding the increasing competition from additional treatments for MS and potential disruptions due, directly or indirectly, to the COVID-19 pandemic.

We expect an increase in VUMERITY sales volume in the U.S., mostly driven by the continued launch of VUMERITY.

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.

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.

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.

For 2021 compared to 2020, the 22.8% decrease in U.S.

Interferon revenues was primarily due to a decrease in Interferon sales volumes of 12.0%.

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.

For 2020 compared to 2019, the 10.5% decrease in rest of world Interferon revenues was primarily due to a decrease in Interferon sales volumes of 7.1%, which negatively impacted comparative revenue of $48.1 million.

We expect that Interferon revenues will continue to decline in both the U.S.

and rest of world markets in 2021, compared to 2020, as a result of increasing

competition from our other MS products as well as other treatments for MS, including biosimilars, and pricing reductions in certain European markets.

For 2020, 2019 and 2018 U.S.

AVONEX revenues totaled $1,083.4 million, $1,202.1 million and $1,420.2 million, respectively.

For 2020, 2019 and 2018 rest of world AVONEX revenues totaled $408.5 million, $463.8 million and $495.3 million, respectively.

For 2020, 2019 and 2018 U.S.

PLEGRIDY revenues totaled $190.1 million, $224.5 million and $248.1 million, respectively.

For 2020, 2019 and 2018 rest of world PLEGRIDY revenues totaled $195.5 million, $211.4 million and $199.4 million, respectively.

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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.

For 2021 compared to 2020, the 4.1% increase in U.S.

TYSABRI revenues was primarily due to an increase in TYSABRI sales volume of 1.0% and price increases, partially offset by higher discounts and allowance rates.

For 2020 compared to 2019, rest of world TYSABRI revenues remained flat, with stable volume and pricing.

We anticipate TYSABRI sales volume to modestly increase on a global basis in 2021, compared to 2020, despite increasing competition from additional treatments for MS, including OCREVUS.

We believe that some TYSABRI infusions may be delayed due, directly or indirectly, to the

COVID-19 pandemic.

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 (SMA)

Spinal Muscular Atrophy

For 2021 compared to 2020, the 25.4% decrease in U.S.

SPINRAZA revenues was primarily due to a decrease in sales volumes of 15.0%, resulting from increased competition as well as lower loading and maintenance doses due to the impact of site of care closures as a result of the COVID-19 pandemic.

For 2020 compared to 2019, the 8.7% increase in rest of world SPINRAZA revenues was primarily due to a net increase in sales volumes of 16.8%, which was reflective of the impact of a shift from loading to maintenance doses and the impact of site of care closures as a result of the COVID-19 pandemic.

This increase was partially lower net prices and the unfavorable impact of foreign currency exchange.

In 2021 we expect that SPINRAZA revenues will be subject to increased competition resulting in higher 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.

We believe that some SPINRAZA doses may continue to be delayed due, directly or indirectly, to the COVID-19 pandemic.

We face competition from a gene therapy product that was approved in the U.S.

and a new oral product that was approved in the U.S.

and has been accepted for review in the E.U.

We expect that we will experience competition from both products in additional jurisdictions in the future.

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.

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.

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Alzheimer's Disease

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.

BENEPALI, IMRALDI and FLIXABI

For 2020 compared to 2019, the 7.8% increase in biosimilar revenues was primarily due to higher sales volumes and a favorable foreign currency impact, partially offset by the unfavorable impact of price decreases.

In 2021 we expect modest to moderate revenue growth for our biosimilars business depending on the impact of the COVID-19 pandemic.

We expect growth to be primarily driven by the continued launch of IMRALDI in Europe, partially offset by price reductions in certain European countries.

In December 2019 we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilars, SB11, a proposed ranibizumab biosimilar referencing LUCENTIS, and SB15, a proposed aflibercept biosimilar referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia.

In October 2020 the EMA accepted for review the MAA for SB11 and in November 2020 the FDA accepted the BLA for SB11.

We also acquired an option to extend our existing commercial agreement with Samsung Bioepis for BENEPALI, IMRALDI and FLIXABI in certain countries in

Europe and obtained an option to acquire exclusive rights to commercialize these products in China.

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.

Revenues from Anti-CD20 Therapeutic Programs

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 revenues from anti-CD20 therapeutic programs are summarized in the table below.

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.

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Biogen’s Share of Pre-tax Profits in the U.S.

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(In millions) 2021 2020 2019

Product revenues, net $ 3,334.1 $ 4,747.4 $ 4,484.3

Cost and expenses 433.0 622.7 669.6

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.

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For 2021 compared to 2020, the decrease in U.S.

product revenues, net was primarily due to a decrease in sales volumes of RITUXAN in the U.S.

of 26.7%, due to the onset of competition from multiple biosimilars, and we believe RITUXAN was adversely impacted by the COVID-19 pandemic.

For 2020 compared to 2019, product revenues, net also reflects increases in GAZYVA sales volumes of 24.7%.

For 2020 compared to 2019, the decrease in collaboration costs and expenses was primarily due to lower cost of sales on RITUXAN.

We are aware of several other anti-CD20 molecules, including biosimilar products, that have recently been approved and are expected to compete with RITUXAN and GAZYVA in the oncology market.

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 adversely affected the pre-tax profits of our collaboration arrangements with Genentech and could have a significant adverse affect on our co-promotion profits in the U.S.

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 Revenues from Anti-CD20 Therapeutic Programs

Other revenues from anti-CD20 therapeutic programs consist of royalty revenues on sales of

OCREVUS and our share of pre-tax co-promotion profits from RITUXAN in Canada.

For 2020 compared to 2019, the increase in other revenues from anti-CD20 therapeutic programs was primarily due to sales growth of OCREVUS.

Royalty revenues recognized on sales of OCREVUS for the years ended December 31, 2020, 2019 and 2018, totaled $845.4 million, $687.5 million and $478.3 million, respectively.

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

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

For additional information on our collaboration arrangements with Genentech, including information regarding the pre-tax profit-sharing formula and its impact on future revenues from anti-CD20 therapeutic programs, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

Other Revenues

Other revenues are summarized as follows:

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

(In millions, except percentages) 2021 2020 2019

Revenues from collaborative and other relationships $ 21.6 $ 106.2 $ 87.8 (79.7) % 21.0 % $ (84.6) $ 18.4

Other royalty and corporate revenues 753.0 601.5 498.1 25.2 20.8 151.5 103.4

Total other revenues $ 774.6 $ 707.7 $ 585.9 9.5 % 20.8 % $ 66.9 $ 121.8

Revenues from Collaborative and Other Relationships

Revenues from collaborative and other relationships primarily include revenues from our technical development services and manufacturing agreements with Samsung Bioepis and royalty revenues on biosimilar products from Samsung Bioepis.

Following the divestiture of our Hillerød, Denmark manufacturing operations in August 2019, FUJIFILM Corporation (FUJIFILM) assumed responsibility for the manufacture of clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis.

We no longer recognize revenues for the manufacturing

completed after the Hillerød, Denmark manufacturing operations divestiture date under our technical development services and manufacturing agreements with Samsung Bioepis.

For the years ended December 31, 2020 and 2019, we recognized $20.9 million and $106.2 million, respectively, related to the services described above provided to Samsung Bioepis.

For additional information on our collaborative and other relationships, including revenues recognized under our technical development services and manufacturing agreements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

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.

Other Royalty and Corporate Revenues

We receive royalties from net sales on products related to patents that we have out-licensed and we record other corporate revenues primarily from amounts earned under contract manufacturing agreements.

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

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

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

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

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

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

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

The value allocated to the manufacturing services was based on expected

demand for supply and the fair value of comparable manufacturing and development services.

For 2020 compared to 2019, the increase in other royalty and corporate revenues was due to higher contract manufacturing revenues, primarily resulting from $346.2 million in revenues related to the delivery of the license for certain of our manufacturing-related intellectual property to a contract manufacturing customer, as discussed above.

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.

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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

Revenues from product sales are 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.

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).

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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 revenues are summarized as follows:

For the years ended December 31, 2020, 2019 and 2018, reserves for discounts and allowances as

a percentage of gross product revenues were 27.1%, 24.3% and 23.7%, respectively.

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 include trade term discounts and wholesaler incentives.

For 2020 compared to 2019, the increase in discounts was primarily driven by an increase in gross biosimilar sales in our international markets as well as increases in discount percentages in certain countries.

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, pharmacy rebates, co-payment (copay) assistance, VA and PHS discounts, specialty pharmacy program fees and other government rebates or applicable allowances.

For 2020 compared to 2019, the increase in contractual adjustments was primarily due to higher pharmacy rebates and governmental rebates in the

as well as higher governmental rebates and allowances in the rest of world, due in part to an increase in SPINRAZA sales volumes worldwide.

Product return reserves are established for returns expected to be made by wholesalers.

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.

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 recognized in the period the related revenues are recognized, resulting in a reduction to product sales.

Provisions for product returns are

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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, Revenues, to our consolidated financial statements included in this report.

Cost and Expenses

A summary of total cost and expenses is as follows:

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

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(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 75.0 — 112.5 nm nm 75.0 (112.5)

Restructuring charges — 1.5 12.0 nm (87.5) (1.5) (10.5)

Total cost and expenses $ 8,894.5 $ 7,335.3 $ 7,564.3 21.3 % (3.0) % $ 1,559.2 $ (229.0)

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 revenues, were 13.4%, 13.6% and 13.5% for the years ended December 31, 2020, 2019 and 2018, respectively.

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 2020 compared to 2019, the decrease in product cost of sales was primarily due to lower cost of sales from contract manufacturing agreements, primarily resulting from the sale of hemophilia inventory, with a cost basis of $173.5 million, to Bioverativ in the first quarter of 2019 and FUJIFILM assuming responsibility for the manufacture of clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis during the third quarter of 2019.

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

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 2020 compared to 2019, the decrease in royalty cost of sales was primarily due to lower royalties payable on lower sales of AVONEX and SPINRAZA.

For 2021 compared to 2020, the increase in royalty cost of sales was primarily due to higher

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royalties payable on higher sales of TYSABRI and VUMERITY.

Research and Development

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These costs are considered other research and

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development costs in the table above and are not allocated to a specific program or stage.

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Our costs reflect our share of the total costs incurred.

For 2020 compared to 2019, the increase in research and development expense was primarily due to 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.

In 2020 we recorded significant 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 2021, driven by continued investment in our pipeline, including significant investments related to the new assets in the Sage collaboration.

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.

At December 31, 2020, we capitalized approximately $93.8 million of pre-launch inventory for aducanumab.

If aducanumab does not receive regulatory approval in the U.S., we would expense this inventory as research and development expense and, under the terms of the Aducanumab Collaboration Agreement, Eisai would reimburse us for 45.0% of the costs.

Milestone and Upfront Expenses

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;

• $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;

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• $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.

Research and development expense for 2019 includes:

• $63.0 million charge to research and development expense in connection with our agreement with Samsung Bioepis to secure the exclusive rights to commercialize two potential ophthalmology biosimilar products;

• $45.0 million charge to research and development expense upon the exercise of our option to obtain a worldwide, exclusive, royalty-bearing license from Ionis to develop and commercialize BIIB080 (tau ASO) for the potential treatment of Alzheimer's disease.

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.

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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 gosuranemab in progressive supraneuclear palsy;

• the advancement of toferson in ALS into late stage;

• the discontinuation of the Phase 2b study of BG00011 for the potential treatment of idiopathic pulmonary fibrosis (IPF).

• the discontinuation of opicinumab (anti-LINGO) in MS;

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• 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;

• 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:

• spending in the development of BIIB112 (RPGR gene therapy) in XLRP;

• spending in the development of BIIB080 in Alzheimer's disease;

• spending in the development of gosuranemab in Alzheimer's disease.

• 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;

• an increase in spending in the development of BIIB135 (orelabrutinib) for the potential treatment of MS.

Late Stage Programs

For 2020 compared to 2019, the decrease in spending associated with our late stage programs was primarily due to:

• a decrease in spending related to the discontinuation of the global Phase 3 trials of aducanumab, net of reimbursement from our collaboration partner Eisai in the first quarter of 2019;

• a decrease in spending related to the discontinuation of the global Phase 3 trials, MISSION AD1 and MISSION AD2, of elenbecestat (development code:

E2609) in patients with early Alzheimer's disease in the third quarter of 2019;

• a decrease in spending related to VUMERITY, which was approved by the FDA in the fourth quarter of 2019.

These decreases were partially offset by an increase in spending due to the advancement of toferson in ALS into late stage, an increase in spending related to BAN2401 in early Alzheimer's disease, our EMBARK redosing study for aducanumab and BIIB111 (timrepigene emparvovec) in CHM.

In the first quarter of 2019, as a result of the decision to discontinue the Phase 3 EMERGE and ENGAGE trials following a futility analysis, we accrued approximately $45.0 million related to the termination of clinical trials and research and development contracts net of the expected 45.0% Eisai reimbursement of development costs incurred by the collaboration for the advancement of aducanumab.

In July 2020 we completed the submission of a BLA for the approval of aducanumab to the FDA.

In August 2020 the FDA accepted the BLA and granted Priority Review with a PDUFA action date on March 7, 2021.

In January 2021 the FDA extended the review period for the BLA for aducanumab by three months.

The updated PDUFA action date is June 7, 2021.

In March 2019 Eisai initiated a global Phase 3 trial for the development of BAN2401 in early Alzheimer's disease.

Under our collaboration arrangement, Eisai serves as the global operational and regulatory lead for BAN2401 and all costs, including research, development, sales and marketing expenses, are shared equally between us and Eisai.

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 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;

• 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 2020 compared to 2019, the increase in selling, general and administrative expenses was primarily due to increased commercial and medical investments in support of pre-launch activities associated with the potential regulatory approval of aducanumab.

In 2021 we expect selling, general and administrative costs, including headcount and commercial infrastructure, to significantly increase as we support activities associated with the potential regulatory approvals of aducanumab in the U.S.

and rest of world markets.

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.

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Amortization and Impairment of Acquired Intangible Assets

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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, 2020, amortization and impairment of acquired intangible assets reflects the impact of a $115.0 million impairment charge related to BIIB111, which was obtained as part of our acquisition of Nightstar Therapeutics plc (NST), 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.

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

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.

For 2020 compared to 2019, the decrease in amortization of acquired intangible assets, excluding impairment charges, was primarily due to a lower rate of amortization for acquired intangible assets.

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 revenues 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.

may result in a significant negative impact on our future results of operations.

IPR&D Related to Business Combinations

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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 revenues 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.

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.

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

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

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

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

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

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

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

In the periods since we acquired vixotrigine (BIIB074), there have been numerous delays in the initiation of Phase 3 studies for the potential treatment of trigeminal neuralgia (TGN) as we engaged with the FDA regarding the design of the Phase 3 studies and awaited data and insights from mid-stage clinical trials of vixotrigine in other indications that have since been completed.

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

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

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.

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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.

For 2020, 2019 and 2018 we recognized a net profit-sharing expense of $266.5 million, $241.6 million and $187.4 million, respectively, to reflect Samsung Bioepis’ 50.0% sharing of the net collaboration profits.

For the year ended 2020, we also recognized net profit-sharing income of $33.8 million to reflect Eisai's 45.0% share of the $75.0 million milestone expense related to the completed submission of the BLA for the approval of aducanumab to the FDA.

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.

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(Gain) Loss on Divestiture of Hillerød, Denmark Manufacturing Operations

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The transaction closed in August 2019.

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

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

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

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

During the 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.

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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 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.

The gain on fair value remeasurement of contingent consideration for 2019 was primarily due to the discontinuation of the Phase 2b study of BG00011 for the potential treatment of IPF as well as changes in the probability and expected timing of achievement of certain developmental milestones, a decrease in interest rates used to revalue our contingent consideration liabilities and the passage of time.

For 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.

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BIIB118 Acquisition

In March 2020 we acquired BIIB118 from Pfizer for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases.

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

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.

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

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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 2020 compared to 2019, the change in other income (expense), net primarily reflects an increase in our net unrealized gains on our holdings in equity securities, partially offset by higher interest expense.

For the year ended December 31, 2020, net unrealized and realized gains on our holdings in equity securities were approximately $681.8 million and $12.1 million, respectively, compared to net unrealized and realized gains of $150.1 million and $50.0 million in 2019.

The net unrealized gains recognized during the year ended December 31, 2020, primarily reflects an increase in the fair value of Denali and Sangamo common stock of approximately $703.9 million.

For the year ended December 31, 2020, net interest expense was $180.5 million as compared to $67.4 million in 2019.

This increase was primarily due to additional borrowings in 2020 and lower interest income earned on our investments in 2020 as compared to 2019.

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 interest expense will increase in 2021, as our 2020 Senior Notes will be outstanding for the entire year.

For additional information on our 2020 Senior Notes, please read Note 12, Indebtedness , to our consolidated financial statements included in this report.

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 expenses, the levels of

certain deductions and credits, acquisitions and licensing transactions.

For the year ended December 31, 2020, as compared to 2019, the increase in our effective tax rate was primarily due to the income tax expense related to the establishment of a valuation allowance against certain net deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., partially offset by the benefit recognized on the effective settlement of certain tax matters.

Additionally, our 2019 effective tax rate benefited from an internal reorganization of certain intellectual property rights and the enactment of a new taxing regime in the country and certain cantons of Switzerland, partially offset by tax expense related to the divestiture of our Hillerød, Denmark manufacturing operations.

Although we recognized a loss on the divestiture of our Hillerød, Denmark manufacturing operations, the divestiture required us to write-off certain deferred tax assets and resulted in a taxable gain in certain jurisdictions.

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

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

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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

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In February 2012 we entered into a joint venture agreement with Samsung BioLogics establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar products.

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%.

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.

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We recognize amortization on certain basis differences resulting from our November 2018 investment.

The former chief executive officer (the incumbent chairman of the board) and the chief financial officer of our joint venture partner, Samsung BioLogics, are currently subject to ongoing criminal proceedings that we continue to monitor.

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, 2020, equity in (income) loss of investee, net of tax reflects our share of income totaling $45.3 million and amortization of basis differences totaling $40.0 million.

For the year ended December 31, 2019, equity in (income) loss of investee, net of tax reflects our share of losses totaling $1.2 million and amortization of basis differences totaling $78.2 million.

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.

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Noncontrolling Interests, Net of Tax

For 2020 net income (loss) attributable to noncontrolling interests, net of tax, was primarily due to the $75.0 million milestone payment related to the completed submission of the BLA for the approval of aducanumab to the FDA.

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.

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.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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For the year ended December 31, 2021, 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 expenses;

• $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;

• $3.0 billion in proceeds received from the issuance of our 2020 Senior Notes;

• $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;

• $100.0 million milestone payment to Neurimmune.

For the year ended December 31, 2020, certain significant cash flows were as follows:

• $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;

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• $424.8 million used for purchases of property, plant and equipment.

For the year ended December 31, 2019, certain significant cash flows were as follows:

• $7.1 billion in net cash flows provided by operating activities;

• $5.9 billion used for share repurchases;

• $1.1 billion in total net payments for income taxes;

• $923.7 million in proceeds received on the divestiture of our Hillerød, Denmark manufacturing operations, including the sale of raw materials that were remaining at the Hillerød facility on the closing date of this transaction;

• $744.4 million payment made for our acquisition of NST, net of cash acquired;

• $514.5 million used for purchases of property, plant and equipment;

• $479.3 million in proceeds received on sales of strategic investments;

• $300.0 million for the final contingent payment made to former shareholders of Fumapharm AG and holders of their rights;

• $155.0 million in payments made to Alkermes following the FDA's approval of VUMERITY.

We have historically financed our operating and capital expenditures primarily through cash flows earned through our operations.

On April 30, 2020, we issued our 2020 Senior Notes for an aggregate principal amount of $3.0 billion.

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 flows earned from our operations as well as our existing cash resources and proceeds received from the issuance of our 2020 Senior Notes.

Generic competition for TECFIDERA in the U.S.

has begun and we believe that this competition will reduce our cash flow from operations in 2021 and will have a significant adverse impact on our future cash flows from operations.

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.

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

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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 .

In July 2020 we completed the submission of a BLA for the approval of aducanumab to the FDA.

In August 2020 the FDA accepted the BLA and granted Priority Review with a PDUFA action date on March 7, 2021.

In January 2021 the FDA extended the review period for the BLA for aducanumab by three months.

The updated PDUFA action date is June 7, 2021.

If we do not receive regulatory approval or are unable to successfully commercialize aducanumab, our financial condition, business and operations may be adversely affected.

For additional information on certain risks that could negatively impact our financial position or future results of operations, please read Item 1A.

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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.

In March 2020 there was a severe liquidity crisis in the capital markets, particularly with respect to securities with maturities of less than one year, due to the COVID-19 pandemic.

This issue impacted pricing of securities in our portfolio as we attempted to decrease our marketable securities level and increase cash, leading to approximately $8.2 million in realized losses for the year ended December 31, 2020.

We believe that actions taken by the U.S.

Federal Reserve to enhance liquidity have stabilized the capital markets for the time being.

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 net decrease in cash, cash equivalents and marketable securities at December 31, 2020, from December 31, 2019, was primarily due to cash used for share repurchases, the redemption of our 2.90% Senior Notes due September 15, 2020, upfront payments and stock purchases totaling $2.9 billion made in connection with entering into our collaborations with Sage, Denali and Sangamo and net purchases of property, plant and equipment, partially offset by cash flows from operations and net proceeds from the issuance of our 2020 Senior Notes.

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.

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, 2020, the fair value of this investment was $333.7 million.

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, 2020, the fair value of this investment was $935.7 million.

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, 2020, the fair value of this investment was $433.9 million.

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.

For additional information on our collaboration arrangements with Ionis, Samsung Bioepis, Sangamo, Denali and Sage, please read Note 18, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

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.

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;

• $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;

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

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• $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 and are amortized as additional interest expense over the period from issuance through maturity.

In May 2020 we redeemed our 2.90% Senior Notes due September 15, 2020, with an aggregate principal amount of $1.5 billion.

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.

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

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

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

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 $3.1 billion and $3.5 billion as of December 31, 2020 and December 31, 2019, respectively.

The change in working capital reflects a decrease in total current assets of approximately $1.5 billion and a decrease in total current liabilities of approximately $1.1 billion.

The decrease in total current assets was primarily driven by a decrease in net cash, cash equivalents and marketable securities due to cash used for share repurchases, the redemption of our 2.90% Senior Notes due September 15, 2020, upfront payments and stock purchases totaling $2.9 billion made in connection with entering into our collaborations with Sage, Denali and Sangamo and net purchases of property, plant and equipment, partially offset by cash flows from operations and net proceeds from the issuance of our 2020 Senior Notes.

The net decrease in current liabilities was primarily due to the redemption of our 2.90% Senior Notes due September 15, 2020, which were classified within current liabilities as of December 31, 2019, partially offset by an increase in accrued expenses and other.

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

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

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

In December 2019 our Board of Directors authorized 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.

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.

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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 and 4.3 million shares of our common stock at a cost of approximately $2.1 billion and $1.4 billion during the years ended December 31, 2019 and 2018, respectively.

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.

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The following table summarizes our cash flow activity:

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(In millions, except percentages) 2021 2020 2019

Net cash flows provided by operating activities $ 4,229.8 $ 7,078.6 $ 6,187.7 (40.2) % 14.4 %

Net cash flows provided by (used in) investing activities (608.6) 470.5 (2,046.3) (229.4) % nm

Net cash flows used in financing activities (5,272.7) (5,860.4) (4,472.0) 10.0 (31.0)

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 flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing 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.

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• 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;

• 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;

• changes in the fair value of contingent payments associated with our acquisitions of businesses and payments related to collaborations.

For 2020 compared to 2019, the decrease in net cash flows provided by operating activities was primarily due to lower net income as well as increases in certain working capital asset balances.

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.

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 2020 compared to 2019, the increase in net cash flows 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 and proceeds of $923.7 million received in 2019 related to the divestiture of our Hillerød, Denmark manufacturing operations, partially offset by higher proceeds received from the sale of investments as compared to the prior year.

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 2020 compared to 2019, the decrease in net cash flows used in financing activities was primarily due to the net proceeds received from the issuance of our 2020 Senior Notes offset by a higher amount spent on shares repurchased in 2020 as compared to the comparative period in 2019 and the redemption of our 2.90% Senior Notes due September 15, 2020.

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.

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Contractual Obligations and Off-Balance Sheet Arrangements

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Royalty Payments

In 2013 we acquired from Elan Pharma International Ltd.

(Elan), an affiliate of Elan Corporation plc, full ownership of all remaining rights to TYSABRI that we did not already own or control.

Under the acquisition agreement, we are obligated to make contingent payments to Elan of 18.0% on annual worldwide net sales up to $2.0 billion and 25.0% on annual worldwide net sales that exceed $2.0 billion.

Royalty payments to Elan and other third

parties are recognized as cost of sales in our consolidated statements of income.

Elan was acquired by Perrigo Company plc (Perrigo) in December 2013 and Perrigo subsequently sold its rights to these payments to a third-party effective January 2017.

In 2016 we exercised our option to develop and commercialize SPINRAZA from Ionis.

Under our agreement with Ionis, we make royalty payments to Ionis on annual worldwide net sales of SPINRAZA

using a tiered royalty rate between 11.0% and 15.0%, which are recognized as cost of sales in our consolidated statements of income.

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.

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.

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.

In October 2019 the FDA approved VUMERITY for the treatment of RMS.

Under our agreement with Alkermes, we make royalty payments to Alkermes on worldwide net commercial sales of VUMERITY using a royalty rate of 15.0%, which are recorded as cost of sales in our consolidated statements of income.

Royalties payable on net commercial sales of VUMERITY are subject, under certain circumstances, to tiered minimum annual payment requirements for a period of five years following FDA approval.

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.

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we agreed to make additional payments based upon the achievement of certain milestone events.

We recognized the contingent consideration liabilities associated with these transactions 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 these acquisitions.

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, 2020, we could trigger potential future milestone payments to third parties of up to approximately $10.2 billion, including approximately $1.9 billion in development milestones, approximately $1.3 billion in regulatory milestones and approximately $7.0 billion in commercial milestones, as part of our various collaborations, including licensing and development programs.

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

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$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.

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 $200.0 million in milestones to Neurimmune in 2021, which includes $100.0 million if launched in the U.S., $50.0 million if launched in three or more countries within the E.U.

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 Aducanumab Collaboration Agreement with Eisai.

During the second quarter of 2020, we paid Neurimmune $75.0 million upon the completed submission of the BLA for the approval of aducanumab to the FDA, which was recognized as a charge to noncontrolling interests for the year ended December 31, 2020.

In addition, for the year ended December 31, 2020, we recognized net profit-sharing income of $33.8 million to reflect Eisai's 45.0% share of the $75.0 million milestone expense.

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.

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The contracts with CROs are generally cancellable, with notice, at our option.

We recorded accrued expenses of approximately $21.7 million in our consolidated balance sheet for expenditures incurred by CROs as of December 31, 2020.

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.

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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.

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

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As of December 31, 2021, we have approximately $106.8 million of liabilities associated with uncertain tax positions.

As of December 31, 2020 and 2019, included in other long-term liabilities we have accrued approximately $697.0 million, respectively, under a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax).

Of the amounts accrued as of December 31, 2020, $62.0 million is expected to be paid within one year.

The Transition Toll Tax will be paid over an eight--year period, which started in 2018, and does not accrue interest.

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

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Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S.

GAAP), requires us to make estimates, judgments and assumptions that may affect the

reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities.

On an ongoing basis we evaluate our estimates, judgments and methodologies.

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 revenues and expenses.

The preparation of our consolidated financial statements, which have been prepared in accordance

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with accounting principles generally accepted in the 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.

Actual results may differ from these estimates.

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Revenue Recognition

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

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

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;

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(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenues when (or as) we satisfy the performance obligation.

Product Revenues

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.

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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 revenues are recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer.

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 revenues are 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 reserves established for these variable consideration components do not differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenues, are generally characterized in the following categories:

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.

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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 cumulative revenues recognized will not occur in a future period.

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.

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

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

For additional information on our revenues, please read Note 4, Revenues , to our consolidated financial statements included in this report.

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.

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.

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For additional information on our revenue, please read Note 4, Revenue , to our consolidated financial statements included in this report.

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.

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.

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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:

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 flows from product sales resulting from completed products and in process projects;

• estimating future cash flow from product sales resulting from completed products and in process projects;

• developing appropriate discount rates and probability rates by project.

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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 and Accounting for Goodwill

Long-lived Assets Other than Goodwill

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.

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 the estimates and assumptions used in determining the fair value of our acquired IPR&D could result in an impairment.

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.

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

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.

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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 revenues generated from the products underlying the related intangible assets.

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

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.

Goodwill relates largely to amounts that arose in connection with the merger of Biogen, Inc.

and IDEC Pharmaceuticals Corporation in 2003 and amounts that were paid in connection with the acquisition of Fumapharm AG.

Our goodwill balances represent the difference between the purchase price and the fair value of the identifiable tangible and intangible net assets when accounted for using the purchase method of accounting.

We assess our goodwill balance within our single reporting unit annually, as of October 31, and whenever events or changes in circumstances indicate the carrying value of goodwill may not be

recoverable to determine whether any impairment in this asset may exist and, if so, the extent of such impairment.

We compare the fair value of our reporting unit to its carrying value.

If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of our reporting unit, we would record an impairment loss equal to the difference.

We completed our required annual impairment test in the fourth quarters of 2020, 2019 and 2018 and determined in each of those periods that the carrying value of goodwill was not impaired.

In each year, the fair value of our reporting unit, which includes goodwill, was significantly in excess of the carrying value of our reporting unit.

Contingent Consideration

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Accordingly, changes in assumptions described above, could have a material impact on the amount of contingent consideration expense we record in any given period.

We prepare and file income tax returns based on our interpretation of each jurisdiction’s tax laws and regulations.

We prepare and file income tax returns based on our interpretation of each jurisdiction’s tax laws and

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.

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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.

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.

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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 position.

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We also accrue for potential interest and penalties related to unrecognized tax benefits in income tax expense.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis