What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-03 compared with 2021-02-03 · 811 added, 879 removed, 2045 unchanged (45% of the section changed)

12 unchanged sentences

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting.

Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Internal control over financial

reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S.

Our internal control over financial reporting includes those policies and procedures that:

9 unchanged sentences

The effectiveness of our internal control over financial reporting as of December 31, 2021, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein.

T a ble of Content s

OTHER INFORMATION

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not Applicable.

T a ble of Content s

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

11 unchanged sentences

The response to this item is incorporated by reference from the discussion responsive thereto in the section entitled “ Proposal 2 - Ratification of the Selection of our Independent Registered Public Accounting Firm ” contained in the proxy statement for our 2022 annual meeting of stockholders.

T a ble of Content s

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

5 unchanged sentences

Consolidated Balance Sheets F-4

Consolidated Statements of Cash Flows F-5

Consolidated Statements of Cash Flow F-5

Consolidated Statements of Equity F-6

Notes to Consolidated Financial Statements F-9

Report of Independent Registered Public Accounting Firm F-79

Report of Independent Registered Public Accounting Firm (PCAOB ID 238 )

Certain totals may not sum due to rounding.

4 unchanged sentences

Not applicable.

T a ble of Content s

EXHIBIT INDEX

9 unchanged sentences

Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on March 27, 2015.

3.3 Certificate of Amendment of Biogen Inc.'s Amended and Restated Certificate of Incorporation, as amended.

Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on June 8, 2021.

3.4 Fourth Amended and Restated Bylaws.

10 unchanged sentences

Filed as Exhibit 4.2 to our Current Report on Form 8-K filed on September 16, 2015.

4.5 Third Supplemental Indenture, dated February 16, 2021, between Biogen Inc.

Bank National Association.

Filed as Exhibit 4.2 to our Current Report on Form 8-K filed on February 16, 2021.

4.6 Form of 3.250% Senior Notes due 2051, in the form of a Global Note bearing a private placement legend.

Filed as Exhibit 4.3 to our Current Report on Form 8-K filed on February 16, 2021.

4.7 Form of 3.250% Senior Notes due 2051, in the form of a Global Note bearing a Regulation S legend.

Filed as Exhibit 4.4 to our Current Report on Form 8-K filed on February 16, 2021.

4.8+ Description of Securities.

4.9 Registration Rights Agreement, dated February 16, 2021, between Biogen Inc.

and Deutsche Bank Securities Inc.

and Citigroup Global Markets, Inc.

with respect to the 3.250% Senior Notes due 2051.

Filed as Exhibit 4.5 to our Current Report on Form 8-K filed on February 16, 2021.

10.1 Credit Agreement between Biogen Inc., Bank of America, N.A., Goldman Sachs Bank USA and other lenders party thereto, dated August 28, 2015.

25 unchanged sentences

Filed as Exhibit 10.5 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.

T a ble of Content s

10.11* Form of performance stock units award agreement (cash-settled) under the Biogen Inc.

50 unchanged sentences

10.28* Biogen Inc.

2019 Form of Performance-Based Management Incentive Plan.

Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.

2019 Form of Performance-Based Management Incentive Plan, as amended.

Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.

10.29* Biogen Idec Inc.

13 unchanged sentences

Executive Severance Policy - U.S.

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

Executive Vice President, as amended effective July 13, 2020.

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

1 unchanged sentence

Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019.

T a ble of Content s

10.35* Form of indemnification agreement for directors and executive officers.

14 unchanged sentences

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

Filed as Exhibit 10.41 to our Annual Report on Form 10-K for the year ended December 31, 2020.

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

3 unchanged sentences

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

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

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

10.44 Joint Venture Agreement, dated December 6, 2011 , by and between Samsung BioLogics Co., Ltd.

and Biogen Therapeutics Inc.

(f/k/a Biogen Idec Therapeutics Inc.), as amended February 28, 2012, September 29, 2014, and February 20, 2019.

Filed as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

21+ Subsidiaries.

4 unchanged sentences

101++ The following materials from Biogen Inc.’s Annual Report on Form 10-K for the year ended December 31, 2021, formatted in iXBRL (Inline Extensible Business Reporting Language):

(i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, (v) the Consolidated Statements of Equity and (vi) Notes to Consolidated Financial Statements.

(i) the Consolidated Statements of Income, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flow, (v) the Consolidated Statements of Equity and (vi) Notes to Consolidated Financial Statements.

* Management contract or compensatory plan or arrangement.

2 unchanged sentences

++ Furnished herewith.

T a ble of Content s

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

3 unchanged sentences

February 3, 2022

T a ble of Content s

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

14 unchanged sentences

Director February 3, 2022

/ S / M ARIA C.

Director February 3, 2022

/ S / W ILLIAM A.

Director February 3, 2022

/S/ W ILLIAM D.

Director February 3, 2022

/ S / N ANCY L.

4 unchanged sentences

Director February 3, 2022

/ S / R OBERT W.

Director February 3, 2021

/ S / B RIAN S.

4 unchanged sentences

Director February 3, 2022

T a ble of Content s

AND SUBSIDIARIES

3 unchanged sentences

Consolidated Balance Sheets F-4

Consolidated Statements of Cash Flows F-5

Consolidated Statements of Cash Flow F-5

Consolidated Statements of Equity F-6

Notes to Consolidated Financial Statements F-9

Report of Independent Registered Public Accounting Firm F-80

Report of Independent Registered Public Accounting Firm (PCAOB ID 238) F-77

T a ble of Content s

AND SUBSIDIARIES

4 unchanged sentences

Product, net $ 8,846.9 $ 10,692.2 $ 11,379.8

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

Revenue from anti-CD20 therapeutic programs 1,658.5 1,977.8 2,290.4

Other 476.3 774.6 707.7

Total revenues 13,444.6 14,377.9 13,452.9

Cost and expenses:

Total revenue 10,981.7 13,444.6 14,377.9

Cost and expense:

Cost of sales, excluding amortization and impairment of acquired intangible assets 2,109.7 1,805.2 1,955.4

7 unchanged sentences

Restructuring charges — — 1.5

Total cost and expenses 8,894.5 7,335.3 7,564.3

Total cost and expense 8,141.0 8,894.5 7,335.3

Income from operations 2,840.7 4,550.1 7,042.6

1 unchanged sentence

Income before income tax expense and equity in loss of investee, net of tax 1,745.2 5,047.5 7,125.9

Income tax expense 992.3 1,158.0 1,425.6

Income tax (benefit) expense 52.5 992.3 1,158.0

Equity in (income) loss of investee, net of tax ( 34.9 ) ( 5.3 ) 79.4

14 unchanged sentences

See accompanying notes to these consolidated financial statements.

T a ble of Content s

AND SUBSIDIARIES

17 unchanged sentences

See accompanying notes to these consolidated financial statements.

T a ble of Content s

AND SUBSIDIARIES

23 unchanged sentences

Accounts payable 589.2 454.9

Accrued expenses and other 3,145.3 2,765.8

Accrued expense and other 2,535.2 3,145.3

Total current liabilities 4,298.2 3,742.2

13 unchanged sentences

23.8 million and 23.8 million shares, respectively

( 2,977.1 ) ( 2,977.1 )

Total Biogen Inc.

4 unchanged sentences

See accompanying notes to these consolidated financial statements.

T a ble of Content s

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

CONSOLIDATED STATEMENTS OF CASH FLOW

(In millions)

1 unchanged sentence

2021 2020 2019

Cash flows from operating activities:

Cash flow from operating activities:

Net income $ 1,727.6 $ 4,060.5 $ 5,888.5

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

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

Depreciation and amortization 487.7 457.2 464.7

Impairment of intangible assets 629.3 209.7 215.9

Excess and obsolescence charges related to inventory 167.6 26.6 52.2

Acquired in-process research and development 18.0 75.0 —

1 unchanged sentence

Contingent consideration ( 50.7 ) ( 86.3 ) ( 63.7 )

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

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

Deferred income taxes ( 426.8 ) 149.0 67.1

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

Loss on equity method investment ( 3.3 ) 77.4 —

(Gain) loss on strategic investments 826.8 ( 681.8 ) ( 147.3 )

(Gain) loss on equity method investment ( 34.9 ) ( 3.3 ) 77.4

Other 202.2 104.6 86.9

3 unchanged sentences

Inventory ( 462.4 ) ( 316.3 ) ( 19.2 )

Accrued expenses and other current liabilities 154.2 240.2 465.5

Accrued expense and other current liabilities ( 95.4 ) 154.2 240.2

Income tax assets and liabilities 230.8 ( 67.5 ) 16.1

Other changes in operating assets and liabilities, net ( 144.5 ) ( 137.1 ) ( 43.3 )

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

Cash flows from investing activities:

Net cash flow provided by operating activities 3,639.9 4,229.8 7,078.6

Cash flow from investing activities:

Purchases of property, plant and equipment ( 258.1 ) ( 424.8 ) ( 514.5 )

Proceeds from sales and maturities of marketable securities 3,405.4 7,299.4 6,007.0

2 unchanged sentences

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

Purchase of Ionis Pharmaceuticals, Inc.

stock — — ( 462.9 )

Purchase of Sangamo Therapeutics, Inc.

4 unchanged sentences

stock — ( 441.0 ) —

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

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

Proceeds from divestiture of Hillerød, Denmark manufacturing operations 28.1 — 923.7

Acquired in-process research and development ( 18.0 ) ( 75.0 ) —

Acquisitions of intangible assets ( 18.8 ) ( 52.0 ) ( 155.0 )

Investment in Samsung Bioepis — — ( 676.6 )

Proceeds from sales of strategic investments 93.5 74.9 479.3

Other 12.9 ( 26.9 ) 27.0

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

Cash flows from financing activities:

Net cash flow (used in) provided by investing activities ( 563.7 ) ( 608.6 ) 470.5

Cash flow from financing activities:

Purchase of treasury stock ( 1,800.0 ) ( 6,679.1 ) ( 5,868.3 )

Payments related to issuance of stock for share-based compensation arrangements, net ( 0.7 ) ( 4.6 ) —

Repayments of borrowings and premiums paid on debt exchange ( 170.0 ) — —

Proceeds from borrowings — 2,967.4 —

Repayments of borrowings — ( 1,500.0 ) —

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

Contingent consideration payments — — ( 58.2 )

Net (distribution) contribution to noncontrolling interest ( 94.4 ) ( 71.0 ) 4.3

Other ( 21.1 ) 14.6 3.6

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

Net cash flow used in financing activities ( 2,086.2 ) ( 5,272.7 ) ( 5,860.4 )

Net increase (decrease) in cash and cash equivalents 990.0 ( 1,651.5 ) 1,688.7

3 unchanged sentences

See accompanying notes to these consolidated financial statements.

T a ble of Content s

AND SUBSIDIARIES

17 unchanged sentences

Retirement of common stock pursuant to the 2020 Share Repurchase Program, at cost — — ( 6.0 ) — ( 231.9 ) — ( 1,568.1 ) 6.0 1,800.0 — — —

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

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

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

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

Issuance of common stock under stock option and stock purchase plans — — 0.2 — 54.4 — — — — 54.4 — 54.4

4 unchanged sentences

See accompanying notes to these consolidated financial statements.

T a ble of Content s

AND SUBSIDIARIES

13 unchanged sentences

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

See accompanying notes to these consolidated financial statements.

T a ble of Content s

AND SUBSIDIARIES

13 unchanged sentences

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

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

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

Repurchase of common stock pursuant to the 2018 Share Repurchase Program, at cost — — — — — — — ( 4.3 ) ( 1,352.6 ) ( 1,352.6 ) — ( 1,352.6 )

Retirement of common stock pursuant to the 2018 Share Repurchase Program, at cost — — ( 4.3 ) — ( 92.8 ) — ( 1,259.8 ) 4.3 1,352.6 — — —

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

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

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

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

3 unchanged sentences

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

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

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

7 unchanged sentences

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 multiple sclerosis (MS) and neuroimmunology;

Alzheimer’s disease and dementia;

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

1 unchanged sentence

SPINRAZA for the treatment of SMA;

ADUHELM for the treatment of Alzheimer's disease;

and FUMADERM for the treatment of severe plaque psoriasis.

3 unchanged sentences

OCREVUS for the treatment of primary progressive MS (PPMS) and relapsing MS (RMS);

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

and other potential anti-CD20 therapies, including mosunetuzumab, pursuant to our collaboration arrangements with Genentech, Inc.

(Genentech), a wholly-owned member of the Roche Group.

3 unchanged sentences

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

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

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

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 these consolidated financial statements.

1 unchanged sentence

Our consolidated financial statements reflect our financial statements, those of our wholly-owned subsidiaries and those of certain variable interest entities where we are the primary beneficiary.

For consolidated entities where we own or are exposed to less than 100.0 % of the economics, we record net income (loss) attributable to noncontrolling interests in our consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties.

For consolidated entities where we own or are exposed to less than 100.0 % of the economics, we record net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties.

Intercompany balances and transactions are eliminated in consolidation.

In determining whether we are the primary beneficiary of a variable interest entity, we apply a qualitative approach that determines whether we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity.

These considerations impact the way we account for our existing collaborative relationships and other arrangements.

We continuously assess whether we are the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in us consolidating or deconsolidating one or more of our collaborators or partners.

Use of Estimates

The preparation of our consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenue and expense and related

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Use of Estimates

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.

disclosure of contingent assets and liabilities.

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

Actual results may differ from these estimates.

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

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

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

Revenue Recognition

In May 2014 the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2014-09, Revenue from Contracts with Customers (Topic 606) , which supersedes all existing revenue recognition requirements, including most industry specific guidance.

This standard requires a company to recognize revenues when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services.

This standard became effective for us on January 1, 2018, and was adopted using the modified retrospective method.

The adoption of this standard as of January 1, 2018, did not change our 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 the FASB Accounting Standards Codification (ASC) 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 the FASB Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers :

(i) identify contract(s) with a customer;

2 unchanged sentences

(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.

2 unchanged sentences

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.

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

discounts, contractual adjustments and returns.

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

is payable to a party other than our customer).

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

These estimates reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.

The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the cumulative revenues recognized will not occur in a future period.

Actual amounts may ultimately differ from our estimates.

3 unchanged sentences

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

Our liability for Medicaid rebates consists of estimates for claims that a state will make for the current quarter, claims for prior quarters that have been estimated for which an invoice has not been received, invoices received for claims from the prior quarters that have not been paid and an estimate of potential claims that will be made for inventory that exists in the distribution channel at period end.

1 unchanged sentence

The wholesaler charges us for the difference between what the wholesaler pays for the products and the ultimate selling price to the qualified healthcare providers.

Rebate and chargeback reserves are established in the same period as the related revenue is recognized, resulting in a reduction in product revenue and accounts receivable.

Rebate and chargeback reserves are established in the same period as the related revenue is recognized, resulting in a reduction of product revenue and a reduction in the net accounts receivable.

Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider from the wholesaler, and we generally issue credits for such amounts within a few weeks of the wholesaler notifying us about the resale.

1 unchanged sentence

• Managed care rebates represent our estimated obligations to third-parties, primarily pharmacy benefit managers.

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

3 unchanged sentences

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

• Other governmental rebates, non-U.S.

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

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

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

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

2 unchanged sentences

Historical rates of return are determined for each product and are adjusted for known or expected changes in the marketplace specific to each product.

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.

Revenues from Anti-CD20 Therapeutic Programs

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

distribution services, which are generally reflected as a reduction of revenue.

To the extent we can demonstrate a separable benefit and fair value for these services we classify these payments in selling, general and administrative expense in our consolidated statements of income.

Revenue from Anti-CD20 Therapeutic Programs

Our collaboration with Genentech is within the scope of ASC 808, Collaborative Agreements , which provides guidance on the presentation and disclosure of collaborative arrangements.

For purposes of this footnote, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN.

Our share of the pre-tax co-promotion profits on RITUXAN and GAZYVA and royalty revenues on the sale of OCREVUS resulted from an exchange of a license.

As we do not have future performance obligations under the license or collaboration agreement, revenues are recognized as the underlying sales occur.

Revenues from anti-CD20 therapeutic programs consist of:

Our share of the pre-tax co-promotion profits on RITUXAN and GAZYVA and royalty revenue on the sale of OCREVUS resulted from an exchange of a license.

As we do not have future performance obligations under the license or collaboration agreement, revenue is recognized as the underlying sales occur.

Revenue from anti-CD20 therapeutic programs consist of:

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

for RITUXAN and GAZYVA;

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

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

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

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

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

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

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

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

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

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

Differences between actual and estimated royalty 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 relationship with Genentech, please read Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

Other Revenues

Royalty Revenues

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

Other Revenue

Royalty Revenue

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

Collaborative and Other Relationships

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

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

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

Our development and commercialization arrangements with Genentech and Samsung Bioepis represent collaborative arrangements as each party is an active participant in one or more joint operating activities and is exposed to significant risks and rewards of these arrangements.

These arrangements resulted from an exchange of a license and utilize the sales and usage based royalty exception.

Therefore, revenues relating to royalties or profit-sharing amounts received are recognized as the underlying sales occur.

Therefore, revenue relating to royalties or profit-sharing amounts received is recognized as the underlying sales occur.

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

Other Corporate Revenues

We record other corporate revenues primarily from amounts earned under contract manufacturing agreements.

Revenues under contract manufacturing agreements are recognized when the customer obtains control of the product, which may occur at a point in time or over time depending on the terms and conditions of the agreement.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Corporate Revenue

We record other corporate revenue primarily from amounts earned under contract manufacturing agreements.

Revenue under contract manufacturing agreements is recognized when the customer obtains control of the product, which may occur at a point in time or over time depending on the terms and conditions of the agreement.

Fair Value Measurements

11 unchanged sentences

Other Assets and Liabilities

The carrying amounts reflected in our consolidated balance sheets for current accounts receivable, due from anti-CD20 therapeutic programs, other current assets, accounts payable and accrued expenses and other, approximate fair value due to their short-term maturities.

The carrying amounts reflected in our consolidated balance sheets for current accounts receivable, due from anti-CD20 therapeutic programs, other current assets, accounts payable and accrued expense and other, approximate fair value due to their short-term maturities.

Cash and Cash Equivalents

1 unchanged sentence

As of December 31, 2021 and 2020, cash equivalents were comprised of money market funds, commercial paper, overnight reverse repurchase agreements and other debt securities with maturities less than 90 days from the date of purchase.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accounts Receivable

1 unchanged sentence

We do not adjust our receivables for the effects of a significant financing component at contract inception if we expect to collect the receivables in one year or less from the time of sale.

In countries where we have experienced a pattern of payments extending beyond our contractual payment term and we expect to collect receivables greater than one year from the time of sale, we have assessed whether the customer has a significant financing component and discounted our receivables and reduced related revenues over the period of time that we estimate those amounts will be paid using the country’s market-based borrowing rate for such period.

In countries where we have experienced a pattern of payments extending beyond our contractual payment term and we expect to collect receivables greater than one year from the time of sale, we have assessed whether the customer has a significant financing component and discounted our receivables and reduced related revenue over the period of time that we estimate those amounts will be paid using the country’s market-based borrowing rate for such period.

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

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

We accrete interest

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

14 unchanged sentences

Marketable Equity Securities and Venture Capital Funds

Our marketable equity securities are recorded at fair market value and, beginning January 1, 2018, unrealized gains and losses are included in other income (expense), net in our consolidated statements of income.

Prior to January 1, 2018, unrealized gains and losses were included in accumulated other comprehensive income (loss) in equity, net of related tax effects.

Our marketable equity securities are recorded at fair market value and unrealized gains and losses are included in other income (expense), net in our consolidated statements of income.

Our marketable equity securities represent investments in publicly traded equity securities and are included in investments and other assets in our consolidated balance sheets.

Our investments in venture capital funds are recorded at net asset value, which approximates fair value, and, beginning January 1, 2018, unrealized gains and losses are included in other income (expense), net in our consolidated statements of income.

Prior to January 1, 2018, these investments were accounted for under the cost method of accounting.

Our investments in venture capital funds are recorded at net asset value, which approximates fair value, and unrealized gains and losses are included in other income (expense), net in our consolidated statements of income.

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Non-Marketable Equity Securities

6 unchanged sentences

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For available-for-sale debt securities with unrealized losses, management performs an analysis to assess whether we intend to sell or whether we would more likely than not be required to sell the security before the expected recovery of the amortized cost basis.

19 unchanged sentences

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

We expense previously capitalized costs related to pre-approval

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

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

Obsolescence and Unmarketable Inventory

4 unchanged sentences

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

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

Amounts written-down due to unmarketable inventory are charged to cost of sales in our consolidated statements of income.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment

17 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In February 2016 the FASB issued ASU No.

2016-02, Leases (Topic 842) , a new standard issued to increase transparency and comparability among organizations related to their leasing activities.

This standard established a right-of-use model that requires all lessees to recognize right-of-use assets and lease liabilities on their balance sheet that arise from leases as well as provide disclosures with respect to certain qualitative and quantitative information related to a company's leasing arrangements to meet the objective of allowing users of financial statements to assess the amount, timing and uncertainty of cash flows arising from leases.

The FASB subsequently issued the following amendments to ASU 2016-02 that have the same effective date and transition date:

2018-01, Leases (Topic 842):

Land Easement Practical Expedient for Transition to Topic 842 , ASU No.

2018-10, Codification Improvements to Topic 842, Leases , ASU No.

2018-11, Leases (Topic 842):

Targeted Improvements , ASU No.

2018-20, Narrow-Scope Improvement for Lessors , and ASU No.

2019-01, Leases (Topic 842):

Codification Improvements .

We adopted these amendments with ASU 2016-02 (collectively, the new leasing standards) effective January 1, 2019.

We adopted the new leasing standards using the modified retrospective transition approach, as of January 1, 2019, with no restatement of prior periods or cumulative adjustment to retained earnings.

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

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

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

The adoption of the new leasing standards did not have an impact on our consolidated statements of income.

We determine if an arrangement is a lease at contract inception.

8 unchanged sentences

For certain equipment leases, such as vehicles, we apply a portfolio approach to effectively account for the operating lease assets and liabilities.

Our operating leases are reflected in operating lease assets, accrued expenses and other and in long-term operating lease liabilities in our consolidated balance sheets.

Our operating leases are reflected in operating lease assets, accrued expense and other and in long-term operating lease liabilities in our consolidated balance sheets.

Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.

We also have real estate lease agreements which are subleased to third-parties.

Operating leases for which we are the sublessor are included in accrued expenses and other and other long-term liabilities in our consolidated balance sheets.

We recognize sublease income on a straight-line basis over the lease term in our consolidated statements of income.

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

Operating leases for which we are the sublessor are included in accrued expense and other and other long-term liabilities in our consolidated

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

balance sheets.

We recognize sublease income on a straight-line basis over the lease term in our consolidated statements of income.

For additional information on our leases, please read Note 11, Leases , to these consolidated financial statements.

Intangible Assets

1 unchanged sentence

Our intangible assets are recorded at fair value at the time of their acquisition and are stated in our consolidated balance sheets net of accumulated amortization and impairments, if applicable.

Intangible assets related to acquired and in-licensed rights and patents, developed technology and out-licensed patents are amortized over their estimated useful lives using the economic consumption method if anticipated future revenues can be reasonably estimated.

The straight-line method is used when revenues cannot be reasonably estimated.

The straight-line method is used when revenue cannot be reasonably estimated.

Amortization is recorded within amortization and impairment of acquired intangible assets in our consolidated statements of income.

4 unchanged sentences

and IDEC Pharmaceuticals Corporation in 2003.

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

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.

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

3 unchanged sentences

Acquired IPR&D represents the fair value assigned to research and development assets that have not reached technological feasibility.

The value assigned to acquired IPR&D is determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting revenues from the projects and discounting the net cash flows to present value.

The revenues and costs projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing a new drug.

The value assigned to acquired IPR&D is determined by estimating the costs to develop the acquired technology into commercially viable products, estimating the resulting revenue from the projects and discounting the net cash flow to present value.

The revenue and cost projections used to value acquired IPR&D are, as applicable, reduced based on the probability of success of developing a new drug.

Additionally, the projections consider the relevant market sizes and growth factors, expected trends in technology and the nature and expected timing of new product introductions by us and our competitors.

The rates utilized to discount the net cash flows to their present value are commensurate with the stage of development of the projects and uncertainties in the economic estimates used in the projections.

The rates utilized to discount the net cash flow to their present value are commensurate with the stage of development of the projects and uncertainties in the economic estimates used in the projections.

Upon the acquisition of IPR&D, we complete an assessment of whether our acquisition constitutes the purchase of a single asset or a group of assets.

We consider multiple factors in this assessment, including the nature of the technology acquired, the presence or absence of separate cash flows, the development process and stage of completion, quantitative significance and our rationale for entering into the transaction.

We consider multiple factors in this assessment, including the nature of the technology acquired, the presence or absence of separate cash flow, the development process and stage of completion, quantitative significance and our rationale for entering into the transaction.

If we acquire a business as defined under applicable accounting standards, then the acquired IPR&D is capitalized as an intangible asset.

If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, then 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.

Future costs to develop these assets are recorded to research and development expense in our consolidated statements of income as they are incurred.

When performing our impairment assessment, we calculate the fair value using the same methodology as described above.

If the carrying value of our acquired IPR&D exceeds its fair value, then the intangible asset is written down to its fair value.

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

Impairments are recorded within amortization and impairment of acquired intangible assets in our consolidated statements of income.

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

Changes in estimates and assumptions used in determining the fair value of our

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

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

6 unchanged sentences

Long-lived assets to be held and used, including property, plant and equipment, and definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets or asset group may not be recoverable.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.

In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their fair values.

Determination of recoverability is based on an estimate of undiscounted future cash flow resulting from the use of the asset and its eventual disposition.

In the event that such cash flow is not expected to be sufficient to recover the carrying amount of the assets, the assets are written-down to their fair values.

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

5 unchanged sentences

Changes in the fair value of our contingent consideration obligations are recognized in our consolidated statements of income.

Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flows and reserves associated with products upon commercialization, changes in the assumed achievement or timing of any cumulative sales-based and development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval.

Changes in the fair value of the contingent consideration obligations can result from changes to one or multiple inputs, including adjustments to the discount rates, changes in the amount or timing of expected expenditures associated with product development, changes in the amount or timing of cash flow and reserves associated with products upon commercialization, changes in the assumed achievement or timing of any cumulative sales-based and development milestones, changes in the probability of certain clinical events and changes in the assumed probability associated with regulatory approval.

Discount rates in our valuation models represent a measure of the credit risk associated with settling the liability.

7 unchanged sentences

Changes in the fair value of our derivative instruments are recognized each period in current earnings or accumulated other comprehensive income (loss), depending on whether the derivative instrument is designated as part of a hedge transaction and, if so, the type of hedge transaction.

We classify the cash flows from these instruments in the same category as the cash flows from the hedged items.

We classify the cash flow from these instruments in the same category as the cash flow from the hedged items.

We do not hold or issue derivative instruments for trading or speculative purposes.

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

6 unchanged sentences

We hedge the changes in the spot exchange rate in accumulated other comprehensive income (loss) and exclude changes to the forward rate and amortize the forward points in other income (expense), net in our consolidated statements of income over the term of the contract.

We classify the cash flows from these instruments in the same category as the cash flows from the hedged items.

We classify the cash flow from these instruments in the same category as the cash flow from the hedged items.

For additional information on our derivative instruments and hedging activities, please read Note 9, Derivative Instruments , to these consolidated financial statements.

6 unchanged sentences

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

dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income, a separate component of equity.

dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income (loss), as a separate component of equity.

For subsidiaries where the functional currency of the assets and liabilities differ from the local currency, non-monetary assets and liabilities are translated at the rate of exchange in effect on the date assets were acquired while monetary assets and liabilities are translated at current rates of exchange as of the balance sheet date.

28 unchanged sentences

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

Research and Development Expenses

Research and development expenses consist of expenses incurred in performing research and development activities, which include compensation and benefits, facilities and overhead expenses, clinical trial expenses and fees paid to contract research organizations (CROs), clinical supply and manufacturing expenses, write-offs of inventory that was previously capitalized in anticipation of product launch and determined to no longer be realizable and other outside expenses and upfront fees and milestones paid to third-party collaborators.

Research and development expenses are expensed as incurred.

Research and Development Expense

Research and development expense consists of expenses incurred in performing research and development activities, which include compensation and benefits, facilities and overhead expense, clinical trial expense and fees paid to contract research organizations (CROs), clinical supply and manufacturing expense, write-offs of inventory that was previously capitalized in anticipation of product launch and determined to no longer be realizable and other outside expense and upfront fees and milestones paid to third-party collaborators.

Research and development expense is expensed as incurred.

Upfront and milestone payments made to third-party collaborators are expensed as incurred up to the point of regulatory approval.

4 unchanged sentences

We record payments received from our collaborative partners for their share of the development costs as a reduction of research and development expense, except as discussed in Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

Because an initial indication has been approved for both RITUXAN and GAZYVA, expenses incurred by Genentech in the ongoing development of RITUXAN and GAZYVA are not recorded as research and development expense, but rather reduce our share of profits recorded as a component of revenues from anti-CD20 therapeutic programs.

For collaborations with commercialized products, if we are the principal, we record revenues and the corresponding operating costs in their respective line items in our consolidated statements of income.

Because an initial indication has been approved for both RITUXAN and GAZYVA, expense incurred by Genentech in the ongoing development of RITUXAN and GAZYVA are not recorded as research and development expense, but rather reduce our share of profits recorded as a component of revenue from anti-CD20 therapeutic programs.

For collaborations with commercialized products, if we are the principal, we record revenue and the corresponding operating costs in their respective line items in our consolidated statements of income.

If we are not the principal, we record operating costs as a reduction of revenue.

Selling, General and Administrative Expenses

Selling, general and administrative expenses are primarily comprised of compensation and benefits associated with sales and marketing, finance, human resources, legal, information technology and other administrative personnel, outside marketing, advertising and legal expenses and other general and administrative costs.

Selling, General and Administrative Expense

Selling, general and administrative expense is primarily comprised of compensation and benefits associated with sales and marketing, finance, human resources, legal, information technology and other administrative personnel, outside marketing, advertising and legal expense and other general and administrative costs.

Advertising costs are expensed as incurred.

9 unchanged sentences

The income tax consequences from the intra-entity transfers of inventory within our consolidated group, both current and deferred, are recorded as a prepaid tax or deferred charge and recognized through our consolidated statements of income when the inventory is sold to a third-party.

In October 2016 the FASB issued ASU No.

2016-16, Income Taxes (Topic 740):

Intra-Entity Transfer of Assets Other Than Inventory .

This standard eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory.

As a result, the income tax consequences from the intra-entity transfer of an asset other than inventory and associated changes to deferred taxes will be recognized when the transfer occurs.

We adopted this standard on January 1, 2018, using the modified retrospective method, through a cumulative-effect adjustment to retained earnings as of that date.

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

In the fourth quarter of 2018, when we elected to begin recognizing deferred taxes on the GILTI tax calculation, we recorded an additional deferred tax liability of $ 0.4 billion with a corresponding reduction to our retained earnings as these differences are related to intra-entity transactions.

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

The income tax consequences from the intra-entity transfer of assets other than inventory and associated changes to deferred taxes are recognized when the transfer occurs.

We account for uncertain tax positions using a “more likely than not” threshold for recognizing and resolving uncertain tax positions.

We evaluate uncertain tax positions on a quarterly basis and consider various factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, information obtained during in process audit activities and changes in facts or circumstances related to a tax position.

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

We also accrue for potential interest and penalties related to unrecognized tax benefits in income tax (benefit) expense in our consolidated statements of income.

Contingencies

15 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Credit Losses

In June 2016 the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date of January 1, 2020.

These standards require that credit losses be reported using an expected losses model rather than the incurred losses model that is currently used, and establishes additional disclosures related to credit risks.

For available-for-sale debt securities with unrealized losses, these standards now require allowances to be recorded instead of reducing the amortized cost of the investment.

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

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

Debt Securities

In March 2017 the FASB issued ASU No.

2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20):

Premium Amortization on Purchased Callable Debt Securities .

This standard amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period to the earliest call date.

This standard became effective for us on January 1, 2019, and was adopted using a modified retrospective transition approach.

The adoption of this standard did not result in a significant adjustment to our marketable debt securities.

Fair Value Measurements

In August 2018 the FASB issued ASU No.

2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement .

This standard modifies certain disclosure requirements on fair value measurements.

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

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

Derivative Instruments and Hedging Activities

In October 2018 the FASB issued ASU No.

2018-16, Derivatives and Hedging (Topic 815):

Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes.

This standard permits use of the OIS rate based on the SOFR as a U.S.

benchmark interest rate for hedge accounting purposes under ASC 815, Derivatives and Hedging .

This standard became effective for us on January 1, 2019, and did not have an impact on our consolidated results of operations or financial position.

Collaborative Arrangements

In November 2018 the FASB issued ASU No.

2018-18, Collaborative Arrangements (Topic 808):

Clarifying the Interaction between Topic 808 and Topic 606.

This standard makes targeted improvements for collaborative arrangements as follows:

• Clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account.

In those situations, all the guidance in ASC 606 should be applied, including recognition, measurement, presentation and disclosure requirements;

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

In December 2019 the FASB issued Accounting Standards Update No.

2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This standard removes certain exceptions to the general principles in Topic 740 and simplifies certain other aspects of the accounting for income taxes.

This standard became effective for us on January 1, 2021, and did not have a material impact on our consolidated financial statements and related disclosures.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

A retrospective transition approach is required for either all contracts or only for contracts that are not completed at the date of initial application of ASC 606, with a cumulative adjustment to opening retained earnings, as of January 1, 2018.

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

BIIB118 Acquisition

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

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.

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

4 unchanged sentences

As a result of this acquisition, we added two mid- to late-stage clinical assets, as well as preclinical programs, in ophthalmology.

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

These assets included BIIB111 (timrepigene emparvovec), for the potential treatment of choroideremia, and BIIB112 (cotoretigene toliparvovec), for the potential treatment of X-linked retinitis pigmentosa.

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

In addition, we paid $ 4.6 million in cash for equity compensation, which is attributable to pre-combination services and is reflected as a component of the total purchase price paid.

In addition, we paid $ 4.6 million in cash for equity compensation, which was attributable to pre-combination services and was reflected as a component of the total purchase price paid.

The fair value of equity compensation attributable to the post-combination service period was $ 26.2 million, of which $ 18.4 million was recognized as a charge to selling, general and administrative expense with the remaining $ 7.8 million as a charge to research and development expense in our consolidated statements of income.

4 unchanged sentences

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

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

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

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

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

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

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

Subsequent to June 7, 2019, the acquisition date, our results of operations include the results of operations of NST.

BIIB100 Acquisition

In January 2018 we acquired BIIB100 (XP01 inhibitor) from Karyopharm Therapeutics Inc.

(Karyopharm).

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

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

We accounted for this transaction as an asset acquisition as the value being acquired primarily relates to a single asset.

In connection with the closing of this transaction, we made an upfront payment of $ 10.0 million to Karyopharm, which was recorded as acquired IPR&D in our consolidated statements of income as BIIB100 had not yet reached technological feasibility.

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

BIIB104 Acquisition

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

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

AMPA receptors mediate fast excitatory synaptic transmission in the central nervous system, a process which can be disrupted in a number of neurological and psychiatric diseases, including schizophrenia.

We accounted for this transaction as an asset acquisition as the value being acquired primarily relates to a single asset.

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

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

BIIB110 Acquisition

In July 2018 we acquired BIIB110 (ActRIIA/B ligand trap) and ALG-802 from AliveGen Inc.

BIIB110 and ALG-802 represent novel ways of targeting the myostatin pathway.

We initially plan to study BIIB110 in multiple neuromuscular indications, including SMA and ALS.

We accounted for this transaction as an asset acquisition as the value being acquired primarily relates to a single asset.

In connection with the closing of this transaction, we made an upfront payment of $ 27.5 million to AliveGen, which was recorded as acquired IPR&D in our consolidated statements of income as BIIB110 had not yet reached technological feasibility.

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

Goodwill that is tax deductible for GILTI purposes was approximately $ 60.9 million.

There is no remaining book value associated with either BIIB111 or BIIB112 as of December 31, 2021, as we have fully impaired both of these IPR&D assets.

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

Divestiture of Hillerød, Denmark Manufacturing Operations

17 unchanged sentences

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

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

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

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.

3 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Product Revenues

Revenues by product are summarized as follows:

Product Revenue

Revenue by product are summarized as follows:

For the Years Ended December 31,

7 unchanged sentences

Multiple Sclerosis (MS):

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

$ 1,089.5 $ 1,272.8 $ 2,362.3 $ 2,742.0 $ 1,163.4 $ 3,905.4 $ 3,312.0 $ 1,126.2 $ 4,438.2

Interferon (2)

983.1 583.0 1,566.1 1,273.5 604.0 1,877.5 1,426.6 675.2 2,101.8

TYSABRI 1,142.2 920.9 2,063.1 1,096.8 849.3 1,946.1 1,041.8 850.4 1,892.2

FAMPYRA — 105.2 105.2 — 103.1 103.1 — 97.1 97.1

ZINBRYTA — — — — — — — 1.4 1.4

MS 3,214.8 2,881.9 6,096.7 5,112.3 2,719.8 7,832.1 5,780.4 2,748.9 8,529.3

1 unchanged sentence

SPINRAZA 587.9 1,317.2 1,905.1 787.8 1,264.3 2,052.1 933.4 1,163.6 2,097.0

Alzheimer's disease:

3.0 — 3.0 — — — — — —

BENEPALI — 498.3 498.3 — 481.6 481.6 — 486.2 486.2

3 unchanged sentences

FUMADERM — 11.0 11.0 — 12.2 12.2 — 15.2 15.2

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

Total product revenue $ 3,805.7 $ 5,041.2 $ 8,846.9 $ 5,900.1 $ 4,792.1 $ 10,692.2 $ 6,713.8 $ 4,666.0 $ 11,379.8

(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.

We recognized revenues from two wholesalers accounting for 30.5 % and 15.3 % of gross product revenues in 2020, 30.0 % and 17.2 % of gross product revenues in 2019 and 32.0 % and 18.4 % of gross product revenues in 2018, respectively.

(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 these consolidated financial statements.

We recognized revenue from two wholesalers accounting for 28.8 % and 10.1 % of gross product revenue in 2021, 30.5 % and 15.3 % of gross product revenue in 2020 and 30.0 % and 17.2 % of gross product revenue in 2019, respectively.

As of December 31, 2021, two wholesale distributors individually accounted for approximately 21.9 % and 10.2 % of net accounts receivable associated with our product sales, as compared to 21.1 % and 8.5 % as of December 31, 2020, respectively.

6 unchanged sentences

Adjustments relating to prior years ( 4.0 ) ( 96.1 ) ( 3.3 ) ( 103.4 )

Payments/returns relating to sales in current year ( 635.1 ) ( 2,426.1 ) — ( 3,061.2 )

Payments/returns relating to sales in prior years ( 128.3 ) ( 763.0 ) ( 19.2 ) ( 910.5 )

Payments/credits relating to sales in current year ( 599.3 ) ( 2,283.1 ) ( 0.4 ) ( 2,882.8 )

Payments/credits relating to sales in prior years ( 137.1 ) ( 902.9 ) ( 15.1 ) ( 1,055.1 )

Ending balance $ 137.7 $ 759.6 $ 38.0 $ 935.3

7 unchanged sentences

Adjustments relating to prior years ( 1.0 ) ( 54.0 ) 1.3 ( 53.7 )

Payments/returns relating to sales in current year ( 535.5 ) ( 2,242.9 ) ( 0.2 ) ( 2,778.6 )

Payments/returns relating to sales in prior years ( 127.7 ) ( 576.0 ) ( 20.4 ) ( 724.1 )

Payments/credits relating to sales in current year ( 635.1 ) ( 2,426.1 ) — ( 3,061.2 )

Payments/credits relating to sales in prior years ( 128.3 ) ( 763.0 ) ( 19.2 ) ( 910.5 )

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

5 unchanged sentences

Adjustments relating to prior years 0.3 ( 54.1 ) 5.5 ( 48.3 )

Payments/returns relating to sales in current year ( 551.7 ) ( 1,887.6 ) ( 1.1 ) ( 2,440.4 )

Payments/returns relating to sales in prior years ( 109.1 ) ( 506.3 ) ( 31.5 ) ( 646.9 )

Payments/credits relating to sales in current year ( 535.5 ) ( 2,242.9 ) ( 0.2 ) ( 2,778.6 )

Payments/credits relating to sales in prior years ( 127.7 ) ( 576.0 ) ( 20.4 ) ( 724.1 )

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

3 unchanged sentences

Reduction of accounts receivable $ 133.2 $ 195.4

Component of accrued expenses and other 1,080.6 1,001.1

Component of accrued expense and other 802.1 1,080.6

Total revenue-related reserves $ 935.3 $ 1,276.0

Revenues from Anti-CD20 Therapeutic Programs

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

Revenue from Anti-CD20 Therapeutic Programs

Revenue from anti-CD20 therapeutic programs is summarized in the table below.

For purposes of this footnote, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN.

3 unchanged sentences

for RITUXAN and GAZYVA $ 647.7 $ 1,080.2 $ 1,542.4

Other revenues from anti-CD20 therapeutic programs 897.6 748.0 548.3

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

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

Other revenue from anti-CD20 therapeutic programs 1,010.8 897.6 748.0

Total revenue from anti-CD20 therapeutic programs $ 1,658.5 $ 1,977.8 $ 2,290.4

Approximately 15.1 %, 14.7 % and 15.9 % of our total revenue in 2021, 2020 and 2019, respectively, was derived from our collaboration arrangements with Genentech.

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

1 unchanged sentence

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Revenues

Other revenues are summarized as follows:

Other Revenue

Other revenue is summarized as follows:

For the Years Ended December 31,

(In millions) 2021 2020 2019

Revenues from collaborative and other relationships:

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

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

Other royalty and corporate revenues:

Revenue from collaborative and other relationships:

Revenue earned under our technical development agreement, manufacturing services agreements and royalty revenue on biosimilar products with Samsung Bioepis $ 20.7 $ 20.9 $ 106.2

Other revenue from collaborative and other relationships — 0.7 —

Other royalty and corporate revenue:

Royalty 27.9 33.9 17.0

Other corporate 427.7 719.1 584.5

Total other revenues $ 774.6 $ 707.7 $ 585.9

Other corporate revenues primarily reflect amounts earned under contract manufacturing agreements with our strategic customers, including Bioverativ Inc.

Total other revenue $ 476.3 $ 774.6 $ 707.7

Other corporate revenue primarily reflects amounts earned under contract manufacturing agreements with our strategic customers, including Bioverativ Inc.

(Bioverativ).

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

During the years ended December 31, 2021, 2020 and 2019, we recognized $ 18.2 million, $ 48.6 million and $ 383.2 million, respectively, in revenue under the manufacturing and supply agreement with Bioverativ entered into in connection with the spin-off of our hemophilia business.

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

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

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

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

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

The second payment became due upon the first anniversary of the regulatory approval and was received during the second quarter of 2021.

The third payment is due on the second anniversary of the regulatory approval.

Other corporate revenue for the year ended December 31, 2020, reflects $ 346.2 million related to the delivery of the license for certain of our manufacturing-related intellectual property under the amended agreement, as 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.

8 unchanged sentences

Total inventory $ 1,351.5 $ 1,068.6

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

Inventory amounts written down as a result of excess, obsolescence or unmarketability are charged to cost of sales, and totaled $ 167.6 million, $ 26.6 million and $ 52.2 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Upon review of the ADUHELM inventory it was determined that a portion of the inventory will not be consumed prior to product expiration based on our latest estimates of forecasted demand.

During the fourth quarter of 2021

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Divestiture of Hillerød, Denmark Manufacturing Operations

In August 2019 we completed the sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM.

This transaction included the sale of $ 14.0 million of work in process inventory.

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

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

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

we wrote-off approximately $ 120.0 million of inventory in excess of forecasted demand related to ADUHELM, which was recognized in cost of sales within our consolidated statements of income.

As of December 31, 2021, we had approximately $ 223.0 million of inventory related to ADUHELM.

For additional information please read Note 18, Collaborative and Other Relationships , to these consolidated financial statements.

INTANGIBLE ASSETS AND GOODWILL

6 unchanged sentences

Completed technology 4 - 28 years

$ 7,413.1 $ ( 5,388.5 ) $ 2,024.6 $ 7,394.3 $ ( 5,136.5 ) $ 2,257.8

In-process research and development Indefinite until commercialization

132.7 — 132.7 762.5 — 762.5

Trademarks and trade names Indefinite

64.0 — 64.0 64.0 — 64.0

Total intangible assets $ 7,609.8 $ ( 5,388.5 ) $ 2,221.3 $ 8,220.8 $ ( 5,136.5 ) $ 3,084.3

Amortization and Impairments

Amortization and impairments of acquired intangible assets totaled $ 464.8 million, $ 489.9 million and $ 747.3 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Amortization and impairment of acquired intangible assets totaled $ 881.3 million, $ 464.8 million and $ 489.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

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.

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

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

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

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

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

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 (cinpanemab) and a $ 19.3 million impairment charge related to one of our other IPR&D intangible assets.

For the year ended December 31, 2019, amortization and 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 (STX-100) for the potential treatment of idiopathic pulmonary fibrosis (IPF), which was discontinued in the third quarter of 2019.

Completed Technology

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

IPR&D Related to Business Combinations

2 unchanged sentences

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

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

The carrying value associated with our IPR&D assets as of December 31, 2021, relates to the IPR&D programs we acquired in connection with our acquisition of Convergence Pharmaceuticals Holdings Ltd.

(Convergence).

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

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

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

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 DPN, another form of neuropathic pain.

We have engaged with the U.S.

Food and Drug Administration (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.

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.

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.

2 unchanged sentences

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

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

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

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

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

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

Estimated Future Amortization of Intangible Assets

7 unchanged sentences

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

Increase to goodwill — 117.5

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

Other ( 1.0 ) 4.3

45 unchanged sentences

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

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

(Sangamo) common stock, Denali Therapeutics Inc.

(Denali) common stock and Sage Therapeutics, Inc.

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

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

(Sangamo), Denali Therapeutics Inc.

(Denali) and Sage Therapeutics, Inc.

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

The holding period restrictions for a portion of our Sangamo investment expired during the second quarter of 2021.

The fair value of this portion of our Sangamo investment was a Level 1 measurement as of December 31, 2021.

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

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

(Ionis) common stock acquired in June 2018.

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

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

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

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

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

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

The following tables summarize the significant unobservable inputs in the fair value measurement of our contingent consideration obligations as of December 31, 2021 and 2020:

As of December 31, 2021

2 unchanged sentences

Expected timing of achievement of development milestones 2023 to 2027 —

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

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

As of December 31, 2020

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

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

Expected timing of achievement of development milestones 2021 to 2025 —

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

In addition, we apply various probabilities of technological and regulatory success, ranging from 10.9 % to certain probability as of December 31, 2021, to the valuation models to estimate the fair values of our contingent consideration obligations.

Nonrecurring Fair Value Measurements

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

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

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

As of December 31, 2020

(In millions) Beginning Book Value Impairment Ending Book Value

BIIB111 intangible asset $ 480.0 $ ( 115.0 ) $ 365.0

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

For the year ended December 31, 2021, we recorded impairment charges of $ 365.0 million related to BIIB111 and $ 220.0 million related to BIIB112.

As a result, the remaining book values associated with these programs were reduced to zero .

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

6 unchanged sentences

4.050 % Senior Notes due September 15, 2025

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

1,895.2 2,003.1

2.250 % Senior Notes due May 1, 2030

1,475.9 1,557.2

5.200 % Senior Notes due September 15, 2045 (1)

1,463.0 2,365.1

3.150 % Senior Notes due May 1, 2050

1,457.7 1,536.4

3.250 % Senior Notes due February 15, 2051 (1)

Total $ 8,004.7 $ 8,515.9

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

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

(1) In February 2021 we completed a private offer to exchange (Exchange Offer) our tendered 5.200 % Senior Notes due September 15, 2045 (2045 Senior Notes), whereby approximately $ 624.6 million of our 2045 Senior Notes were exchanged for approximately $ 700.7 million of a new series of 3.250 % Senior Notes due February 15, 2051 (2051 Senior Notes).

For additional information on our Exchange Offer, please read Note 12, Indebtedness , to these consolidated financial statements.

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

7 unchanged sentences

Changes in fair value ( 50.7 ) ( 86.3 )

Payments and other — —

Fair value, end of year $ 209.1 $ 259.8

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

As of December 31, 2021 and 2020, approximately $ 209.1 million and $ 110.3 million, respectively, of the fair value of our total contingent consideration obligations was reflected as a component of other long-term liabilities in our consolidated balance sheets with the remaining balance reflected as a component of accrued expense and other.

For the year ended December 31, 2021, changes in the fair value of our contingent consideration obligations were 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.

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

2 unchanged sentences

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

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

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

8 unchanged sentences

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

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

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

Acquired IPR&D

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

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

In connection with our acquisition of NST, we recognized $ 480.0 million and $ 220.0 million of acquired IPR&D intangible assets for BIIB111 and BIIB112, respectively.

During the fourth quarter of 2020 we recognized an impairment charge of $ 115.0 million related to BIIB111.

During the third quarter of 2021 we suspended further development on these programs and recognized an impairment charge of $ 365.0 million related to BIIB111 and an impairment charge of $ 220.0 million related to BIIB112, reducing the fair value of these IPR&D intangible assets to zero .

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

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

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

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

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

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

During the third quarter of 2018 we recognized impairment charges related to certain IPR&D assets associated with our vixotrigine program totaling $ 189.3 million.

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

15 unchanged sentences

(In millions) Amortized

Marketable debt securities:

Corporate debt securities:

8 unchanged sentences

Total marketable debt securities $ 2,435.9 $ 0.4 $ ( 3.2 ) $ 2,433.1

Marketable equity securities:

Marketable equity securities, current $ 33.9 $ 9.9 $ — $ 43.8

Marketable equity securities, non-current 1,133.1 151.0 ( 279.4 ) 1,004.7

Total marketable equity securities $ 1,167.0 $ 160.9 $ ( 279.4 ) $ 1,048.5

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2020

(In millions) Amortized

Marketable debt securities:

Corporate debt securities:

8 unchanged sentences

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

Marketable equity securities:

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Total marketable equity securities $ 1,239.5 $ 749.7 $ ( 14.9 ) $ 1,974.3

Summary of Contractual Maturities:

20 unchanged sentences

Strategic Investments

As of December 31, 2020 and 2019, our strategic investment portfolio was comprised of investments totaling $ 2,024.6 million and $ 393.9 million, respectively, which are included in investments and other assets in our consolidated balance sheets.

As of December 31, 2021 and 2020, our strategic investment portfolio was comprised of investments totaling $ 1,110.3 million and $ 2,024.6 million, respectively, which are included in other current assets and investments and other assets in our consolidated balance sheets.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

The decrease in our strategic investment portfolio for the year ended December 31, 2021, was primarily due to decreases in the fair value of our investments in Denali, Ionis Pharmaceuticals, Inc.

(Ionis), Sage and Sangamo common stock.

Sage Therapeutics, Inc.

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

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

In connection with the closing of this transaction in December 2020 we purchased $ 650.0 million of Sage common stock, or approximately 6.2 million shares at approximately $ 104.14 per share, which are subject to transfer restrictions.

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

1 unchanged sentence

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

Denali Therapeutics Inc.

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

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

As part of this collaboration we purchased $ 465.0 million of Denali common stock in September 2020, or approximately 13 million shares at approximately $ 34.94 per share, which are subject to transfer restrictions.

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

1 unchanged sentence

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

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

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

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

1 unchanged sentence

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

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

In connection with the closing of this transaction in April 2020 we purchased $ 225.0 million of Sangamo common stock, or approximately 24 million shares at approximately $ 9.21 per share, of which approximately 12 million shares remain subject to transfer restrictions as of December 31, 2021.

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

1 unchanged sentence

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

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

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

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

2 unchanged sentences

The share purchase transaction was completed in November 2018 and, upon closing, we paid 759.5 billion South Korean won ($ 676.6 million) to Samsung BioLogics.

As of December 31, 2020 and 2019, the carrying value of our investment in Samsung Bioepis totaled 673.8 billion South Korean won ($ 620.2 million) and 670.8 billion South Korean won ($ 580.2 million), respectively, which is classified as a component of investments and other assets within our consolidated balance sheets.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2021 and 2020, the carrying value of our equity method investment in Samsung Bioepis totaled 713.3 billion South Korean won ($ 599.9 million) and 673.8 billion South Korean won ($ 620.2 million), respectively, which is classified as a component of investments and other assets within our consolidated balance sheets.

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

1 unchanged sentence

Foreign Currency Forward Contracts - Hedging Instruments

Due to the global nature of our operations, portions of our revenues and operating expenses are recorded in currencies other than the U.S.

The value of revenues and operating expenses measured in U.S.

Due to the global nature of our operations, portions of our revenue and operating expense are recorded in currencies other than the U.S.

The value of revenue and operating expense measured in U.S.

dollars is therefore subject to changes in foreign currency exchange rates.

In order to mitigate these changes, we use foreign currency forward contracts to lock in exchange rates associated with a portion of our forecasted international revenues and operating expenses.

In order to mitigate these changes, we use foreign currency forward contracts to lock in exchange rates associated with a portion of our forecasted international revenue and operating expense.

Foreign currency forward contracts in effect as of December 31, 2021 and 2020, had durations of 1 to 15 months and 1 to 24 months, respectively.

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

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

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

Notional Amount

3 unchanged sentences

British pound 166.2 250.6

Japanese yen 72.7 —

Canadian dollar 59.9 —

Total foreign currency forward contracts $ 2,126.8 $ 3,229.7

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

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

The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity is summarized as follows:

For the Years Ended December 31,

(In millions) 2021 2020 2019

Unrealized gains $ 60.8 $ — $ 6.9

Unrealized (losses) ( 7.0 ) ( 212.5 ) ( 6.4 )

Net unrealized gains (losses) $ 53.8 $ ( 212.5 ) $ 0.5

We expect the net unrealized gains of $ 53.8 million to be settled over the next 15 months, of which $ 48.2 million of these unrealized gains are expected to be settled over the next 12 months, with any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenue or operating expense.

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

1 unchanged sentence

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the Years Ended December 31,

4 unchanged sentences

Location 2021 2020 2019 Location 2021 2020 2019

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

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

Revenue $ ( 60.0 ) $ 18.3 $ 118.6 Revenue $ ( 8.4 ) $ ( 9.9 ) $ 2.9

Operating expense ( 0.8 ) 3.3 ( 3.3 ) Operating expense — — 0.2

Interest Rate Contracts - Hedging Instruments

1 unchanged sentence

Interest Rate Swap Contracts

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

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

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

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

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

Net Investment Hedges - Hedging Instruments

8 unchanged sentences

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

The pre-tax portion

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity reflected net gains of $ 10.6 million and net losses of $ 21.2 million as of December 31, 2021 and 2020, respectively.

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

The pre-tax portion of the fair value of the forward points that were included in accumulated other comprehensive income (loss) in total equity reflected gains of $ 0.2 million and $ 2.9 million as of December 31, 2020 and 2019, respectively.

The pre-tax portion of the fair value of the forward points that were included in accumulated other comprehensive income (loss) in total equity reflected net losses of $ 3.6 million and net gains of $ 0.2 million as of December 31, 2021 and 2020, respectively.

The following table summarizes the effect of our net investment hedges in our consolidated financial statements:

11 unchanged sentences

We have not elected hedge accounting for these transactions.

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The aggregate notional amount of these outstanding foreign currency forward contracts was $ 1,268.0 million and $ 1,158.0 million as of December 31, 2021 and 2020, respectively.

Net losses of $ 43.3 million, net gains of $ 30.1 million and net losses of $ 5.9 million related to these contracts were recorded as a component of other income (expense), net for the years ended December 31, 2021, 2020 and 2019, respectively.

Summary of Derivative Instruments

6 unchanged sentences

Asset derivative instruments Other current assets $ 66.2 $ —

Liability derivative instruments Accrued expenses and other 157.1 2.0

Investments and other assets 5.5 —

Liability derivative instruments Accrued expense and other 6.6 157.1

Other long-term liabilities — 35.7

1 unchanged sentence

Asset derivative instruments Other current assets 4.1 —

Liability derivative instruments Accrued expenses and other 19.7 —

Fair Value Hedging Instruments

Liability derivative instruments Accrued expenses and other — 2.3

Liability derivative instruments Accrued expense and other — 19.7

Other Derivative Instruments:

Asset derivative instruments Other current assets 5.1 20.5

Liability derivative instruments Accrued expenses and other 4.7 2.4

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Liability derivative instruments Accrued expense and other 4.2 4.7

PROPERTY, PLANT AND EQUIPMENT

17 unchanged sentences

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

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

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

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

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

Divestiture of Hillerød, Denmark Manufacturing Operations

In August 2019 we completed the sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM.

This transaction included $ 631.5 million of property, plant and equipment, which was primarily comprised of $ 312.5 million for buildings and $ 287.3 million for machinery and equipment.

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

Upon completion, this facility will include 393,000 square feet

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

related to a large-scale biologics manufacturing facility, 290,000 square feet of warehouse, utilities and support space and 51,000 square feet of administrative space.

As of December 31, 2021 and 2020, we had approximately $ 677.0 million and $ 1.8 billion, respectively, capitalized as construction in progress related to this facility.

In the second quarter of 2021, a portion of the facility received a Good Manufacturing Practice multi-product license from the Swiss Agency for Therapeutic Products, resulting in approximately $ 1.2 billion of fixed assets being placed in service during the second quarter of 2021.

We lease real estate, including laboratory and office space, and certain equipment.

Our leases have remaining lease terms ranging from less than one year to ten years .

Our leases have remaining lease terms ranging from less than one year to nine years .

Certain leases include one or more options to renew, exercised at our sole discretion, with renewal terms that can extend the lease term from one year to six years .

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

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

All of our leases qualify as operating leases.

3 unchanged sentences

Operating lease assets Operating lease assets $ 375.4 $ 433.3

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

Current operating lease liabilities Accrued expense and other $ 89.1 $ 83.2

Non-current operating lease liabilities Long-term operating lease liabilities 330.4 402.0

10 unchanged sentences

Net lease cost $ 97.9 $ 92.4

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

As these costs are generally variable in nature, they are not included in the measurement of the operating lease asset and related lease liability.

9 unchanged sentences

Weighted average discount rate 2.9 % 2.9 %

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

As of December 31,

7 unchanged sentences

3.625 % Senior Notes due September 15, 2022

$ — $ 1,495.8

Current portion of notes payable $ 999.1 $ —

2 unchanged sentences

4.050 % Senior Notes due September 15, 2025

1,742.9 1,741.2

2.250 % Senior Notes due May 1, 2030

1,492.0 1,491.1

5.200 % Senior Notes due September 15, 2045 (1)

1,099.9 1,723.4

3.150 % Senior Notes due May 1, 2050

1,473.2 1,472.6

3.250 % Senior Notes due February 15, 2051 (1)

Non-current portion of notes payable $ 6,274.0 $ 7,426.2

(1) In February 2021 we completed our Exchange Offer of our tendered 2045 Senior Notes, whereby approximately $ 624.6 million of our 2045 Senior Notes were exchanged for approximately $ 700.7 million of our 2051 Senior Notes.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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.

An aggregate principal amount of approximately $ 624.6 million of our 2045 Senior Notes was exchanged for an aggregate principal amount of approximately $ 700.7 million of our 2051 Senior Notes and aggregate cash payments of approximately $ 151.8 million.

Our Exchange Offer has been accounted for as a debt modification;

as such, the cash component has been reflected as additional debt discount and is amortized as an adjustment to interest expense over the term of our 2051 Senior Notes.

In addition, we redeemed an aggregate principal amount of approximately $ 8.9 million of our 2045 Senior Notes for aggregate cash payments of approximately $ 12.1 million, excluding accrued and unpaid interest.

The redemption has been accounted for as a debt extinguishment;

as such, we recognized a pre-tax charge of $ 3.2 million upon the extinguishment of such 2045 Senior Notes.

This charge, which was recognized in interest expense in other income (expense), net in our consolidated statements of income for the year ended December 31, 2021, reflects the payment of an early call premium and the write-off of the remaining unamortized original debt issuance costs and discount balances associated with such 2045 Senior Notes.

Upon settlement, we also made aggregate cash payments of approximately $ 13.8 million to settle all accrued and unpaid interest from the last interest payment date on our 2045 Senior Notes that were exchanged or redeemed.

We incurred approximately $ 6.1 million of costs associated with our Exchange Offer, which was recognized in interest expense in other income (expense), net in our consolidated statements of income for the year ended December 31, 2021.

2020 Senior Notes

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

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

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

7 unchanged sentences

2015 Senior Notes

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

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

• $ 1.12 billion aggregate principal amount of 5.20 % Senior Notes due September 15, 2045, valued at 99.294 % of par.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

16 unchanged sentences

(In millions) As of December 31, 2021

2022 $ 1,000.0

2027 and thereafter 4,817.3

3 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

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

No shares of Preferred Stock were issued and outstanding during 2021, 2020 and 2019.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table describes the number of shares authorized, issued and outstanding of our common stock as of December 31, 2021, 2020 and 2019:

6 unchanged sentences

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.

Under our 2020 Share Repurchase Program, we repurchased and retired approximately 6.0 million and 1.6 million shares of our common stock at a cost of approximately $ 1.8 billion and $ 400.0 million during the years ended December 31, 2021 and 2020, respectively.

Approximately $ 2.8 billion remained available under our 2020 Share Repurchase Program as of December 31, 2021.

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

6 unchanged sentences

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.

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

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

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

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.

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Income (Loss)

7 unchanged sentences

Balance, December 31, 2021 $ ( 2.2 ) $ 53.8 $ 25.5 $ ( 44.8 ) $ ( 139.0 ) $ ( 106.7 )

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

December 31, 2020

8 unchanged sentences

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

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

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

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

2 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

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

(In millions) Income Statement Location Amounts Reclassified from

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income (Loss)

For the Years Ended December 31,

2 unchanged sentences

Income tax benefit (expense) 0.8 1.7 ( 0.9 )

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

Operating expenses 3.3 ( 3.3 ) 0.2

Gains (losses) on cash flow hedges Revenue ( 60.0 ) 18.3 118.6

Operating expense ( 0.8 ) 3.3 ( 3.3 )

Other income (expense) 0.2 0.3 0.3

2 unchanged sentences

Total reclassifications, net of tax $ ( 58.2 ) $ 18.2 $ 125.6

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

EARNINGS PER SHARE

Basic and diluted earnings per share are calculated as follows:

Basic and diluted shares outstanding used in our earnings per share calculation are calculated as follows:

For the Years Ended December 31,

12 unchanged sentences

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

SHARE-BASED PAYMENTS

7 unchanged sentences

Capitalized share-based compensation costs ( 8.0 ) ( 6.2 ) ( 8.9 )

Share-based compensation expense included in total cost and expenses 205.1 216.5 170.1

Share-based compensation expense included in total cost and expense 250.8 205.1 216.5

Income tax effect ( 46.7 ) ( 33.5 ) ( 35.7 )

1 unchanged sentence

$ 204.1 $ 171.6 $ 180.8

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes share-based compensation expense associated with each of our share-based compensation programs:

11 unchanged sentences

Capitalized share-based compensation costs ( 8.0 ) ( 6.2 ) ( 8.9 )

Share-based compensation expense included in total cost and expenses $ 205.1 $ 216.5 $ 170.1

Share-based compensation expense included in total cost and expense $ 250.8 $ 205.1 $ 216.5

As of December 31, 2021, unrecognized compensation cost related to unvested share-based compensation was approximately $ 235.5 million, net of estimated forfeitures.

14 unchanged sentences

In June 2015 our shareholders approved an amendment to extend the term of the 2006 Directors Plan until June 2025.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In June 2017 our shareholders approved the 2017 Omnibus Equity Plan for share-based awards to our employees.

4 unchanged sentences

We have not made any awards pursuant to the 2008 Omnibus Equity Plan since our shareholders approved the 2017 Omnibus Equity Plan, and do not intend to make any awards pursuant to the 2008 Omnibus Equity Plan in the future, except that unused shares under the 2008 Omnibus Equity Plan have been carried over for use under the 2017 Omnibus Equity Plan.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options

2 unchanged sentences

Options granted under all plans are exercisable at a price per share not less than the fair market value of the underlying common stock on the date of grant.

As of December 31, 2020, all outstanding options were exercisable.

The following table summarizes our stock option activity:

Shares Weighted Average

Exercise Price

Outstanding at December 31, 2019 12,000 $ 58.46

Exercised ( 12,000 ) 58.46

Cancelled — —

Outstanding at December 31, 2020 — $ —

The total intrinsic values of options exercised in 2020, 2019 and 2018 totaled $ 2.9 million, $ 4.2 million and $ 4.0 million, respectively.

All outstanding options were exercised as of December 31, 2020.

The total intrinsic values of options exercised in 2020 and 2019 totaled $ 2.9 million and $ 4.2 million, respectively.

The following table summarizes the amount of tax benefit realized for stock options and cash received from the exercise of stock options:

9 unchanged sentences

The number of MSUs granted represents the target number of units that are eligible to be earned based on the attainment of certain market-based criteria involving our stock price.

The number of MSUs earned is calculated at each annual

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

anniversary from the date of grant over the respective vesting periods, resulting in multiple performance periods.

The number of MSUs earned is calculated at each annual anniversary from the date of grant over the respective vesting periods, resulting in multiple performance periods.

Accordingly, additional MSUs may be issued or currently outstanding MSUs may be cancelled upon final determination of the number of awards earned.

13 unchanged sentences

This valuation methodology utilizes several key assumptions, the 30 calendar day average closing stock price on the date of grant for MSUs, expected volatility of our stock price, risk-free rates of return and expected dividend yield.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The assumptions used in our valuation are summarized as follows:

3 unchanged sentences

Range of expected stock price volatility 54.8 % - 61.6 %

37.8 % - 44.1 %

31.2 % - 33.6 %

Range of risk-free interest rates 0.06 % - 0.21 %

1.41 % - 1.48 %

2.46 % - 2.53 %

30 calendar day average stock price on grant date $ 262.23 - $ 360.31

$ 257.83 - $ 325.40

$ 228.59 - $ 331.18

Weighted-average per share grant date fair value $ 358.77 $ 398.61 $ 378.08

8 unchanged sentences

Since no shares are issued, these awards do not dilute equity.

The following table summarizes our CSPU activity:

Unvested at December 31, 2019 13,000

Vested ( 13,000 )

Unvested at December 31, 2020 —

The cash paid in settlement of CSPUs vested in 2020, 2019 and 2018 totaled $ 3.8 million, $ 10.6 million and $ 15.1 million, respectively.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

All remaining CSPUs were fully vested as of December 31, 2020.

The cash paid in settlement of CSPUs vested in 2020 and 2019 totaled $ 3.8 million and $ 10.6 million, respectively.

Performance-vested Restricted Stock Units (PUs)

5 unchanged sentences

PUs settling in cash are based on the 30 calendar day average closing stock price through each vesting date once the actual vested and earned number of units is known.

The following table summarizes our PU activity:

Unvested at December 31, 2019 11,000

Vested ( 11,000 )

Unvested at December 31, 2020 —

All PUs that vested in 2020, 2019 and 2018 were settled in cash totaling $ 3.4 million, $ 10.4 million and $ 17.0 million, respectively.

All remaining PUs were fully vested as of December 31, 2020.

All PUs that vested in 2020 and 2019 were settled in cash totaling $ 3.4 million and $ 10.4 million, respectively.

Performance Stock Units (PSUs)

6 unchanged sentences

Accordingly, additional PSUs may be issued or currently outstanding PSUs may be cancelled upon final determination of the number of units earned.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes our PSUs that settle in stock activity:

2 unchanged sentences

110,000 276.61

Vested ( 56,000 ) 316.66

Forfeited ( 13,000 ) 287.55

6 unchanged sentences

The vesting of these awards is subject to the respective employee’s continued employment.

The number of PSUs granted represents the target number of units that are eligible to be earned based on the

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

achievement of three annual performance measures established when the performance objectives are defined, which will be at the beginning of each year and will end on December 31 of such year.

The number of PSUs granted represents the target number of units that are eligible to be earned based on the achievement of three annual performance measures established when the performance objectives are defined, which will be at the beginning of each year and will end on December 31 of such year.

Participants may ultimately earn between zero and 200.0 % of the target number of PSUs granted based on the degree of achievement of the applicable performance metric.

14 unchanged sentences

Shares of our common stock will be delivered to the director upon vesting and are not subject to any withholding taxes.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes our RSU activity:

13 unchanged sentences

The following table summarizes our ESPP activity:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the Years Ended December 31,

20 unchanged sentences

Total income tax expense $ 52.5 $ 992.3 $ 1,158.0

The Tax Cuts and Jobs Act of 2017 (2017 Tax Act) resulted in significant changes to the U.S.

corporate income tax system.

These changes include a federal statutory rate reduction from 35.0% to 21.0%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation.

The 2017 Tax Act also transitions international taxation from a worldwide system to a modified territorial system, which has the effect of subjecting certain earnings of our foreign subsidiaries and collaborations to immediate U.S.

taxation as GILTI or Subpart F income, includes a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax) and base erosion prevention measures on U.S.

earnings and reduces the effective tax rate on income that comes from U.S.

exports, called Foreign Derived Intangible Income.

These changes became effective in 2018.

During the year ended December 31, 2018, we recognized a net reduction of $ 34.6 million in our estimated Transition Toll Tax, an expense of $ 12.7 million to remeasure our deferred tax balances, an expense of $ 135.8 million related to establishing deferred taxes for GILTI and an expense of $ 11.0 million to reflect other aspects of the 2017 Tax Act.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Transition Toll Tax

The 2017 Tax Act eliminated the deferral of U.S.

income tax on the historical unrepatriated earnings by imposing the Transition Toll Tax.

The Tax Cuts and Jobs Act of 2017 eliminated the deferral of U.S.

income tax on the historical unrepatriated earnings by imposing the one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax).

The Transition Toll Tax was assessed on our share of our foreign corporations' accumulated foreign earnings that were not previously taxed.

Earnings in the form of cash and cash equivalents were taxed at a rate of 15.5 % and all other earnings were taxed at a rate of 8.0 %.

As of December 31, 2020 and 2019, we have accrued income tax liabilities of $ 697.0 million under the Transition Toll Tax.

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2021 and 2020, we have accrued income tax liabilities of $ 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.

Unremitted Earnings

5 unchanged sentences

tax liability, if these differences reverse, would be between $ 300.0 million and $ 400.0 million as of December 31, 2021.

Coronavirus Aid, Relief and Economic Security Act

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was signed into law in the U.S.

in March 2020.

The CARES Act adjusted a number of provisions of the tax code, including the calculation and eligibility of certain deductions and the treatment of net operating losses and tax credits.

The enactment of the CARES Act did not result in any material adjustments to our income tax provision for the year ended December 31, 2020, or to our net deferred tax assets as of December 31, 2020.

In June 2020 and September 2020 judgments were entered in favor of the defendants in the patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, in West Virginia and Delaware.

We have appealed the judgments in both actions.

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.

For additional information, please read Note 20, Litigation , to these consolidated financial statements.

1 unchanged sentence

market and have deeply discounted prices compared to TECFIDERA.

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

As of December 31, 2020, we have assessed the realizability of our deferred tax assets that are dependent on future expected sales of TECFIDERA in the U.S.

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.

As of December 31, 2020, we assessed the realizability of our deferred tax assets that are dependent on future expected sales of TECFIDERA in the U.S.

and reduced the net value of certain deferred tax assets by approximately $ 1.7 billion and reduced the net value of deferred tax liabilities associated with GILTI and tax credits by approximately $ 1.6 billion.

For the year ended December 31, 2020, the income tax expense associated with these reductions was approximately $ 90.3 million.

We continue to assess the realizability of these deferred tax assets and have recorded an increase in these deferred tax assets of approximately $ 108.5 million and an increase in these deferred tax liabilities of approximately $ 103.9 million for the year ended December 31, 2021.

AND SUBSIDIARIES

8 unchanged sentences

Intangibles, net 1,477.5 1,546.0

Neurimmune's tax basis in ADUHELM 475.8 —

Net operating loss 1,973.0 2,080.3

9 unchanged sentences

Total deferred tax liabilities $ ( 1,805.3 ) $ ( 1,941.5 )

The change in the valuation allowance between December 31, 2020 and 2019, was primarily related to the establishment of a valuation allowance against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above.

The change in the valuation allowance between December 31, 2021 and 2020, was primarily related to the establishment of a valuation allowance against the deferred tax asset related to Neurimmune SubOne AG's (Neurimmune) tax basis in ADUHELM, as discussed below, and the adjustment of a valuation against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above.

In addition to deferred tax assets and liabilities, we have recorded deferred charges related to intra-entity sales of inventory.

As of December 31, 2021 and 2020, the total deferred charges were $ 39.6 million and $ 142.2 million, respectively.

As of December 31, 2021 and 2020, the carrying value of our investment in Samsung Bioepis totaled 713.3 billion South Korean won ($ 599.9 million) and 673.8 billion South Korean won ($ 620.2 million), respectively, which is classified as a component of investments and other assets within our consolidated balance sheets.

As of December 31, 2021, we have not recorded deferred taxes related to this investment as it is not apparent that the basis difference will reverse in the foreseeable future.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation between the U.S.

5 unchanged sentences

Taxes on foreign earnings ( 10.5 ) ( 3.3 ) ( 4.5 )

Credits and net operating loss utilization ( 1.2 ) ( 1.1 ) ( 0.9 )

Tax credits ( 3.8 ) ( 1.2 ) ( 1.1 )

Purchased intangible assets ( 1.6 ) 0.7 0.4

3 unchanged sentences

GILTI 1.3 1.3 1.5

tax reform — — 2.1

Swiss tax reform — — ( 0.8 )

Neurimmune tax impacts ( 5.3 ) ( 0.1 ) —

Other 1.1 ( 0.8 ) 0.1

1 unchanged sentence

Changes in Tax Rate

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

Additionally, our 2019 effective tax rate benefited from

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

an internal reorganization of certain intellectual property rights and the enactment of a new taxing regime in the country and certain cantons of Switzerland, which we refer to as Swiss Tax Reform, partially offset by tax expense related to the divestiture of our Hillerød, Denmark manufacturing operations.

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 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, as discussed below.

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 these consolidated financial statements.

For the year ended December 31, 2020, 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 deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S., as discussed above, and partially offset by the benefit recognized on the effective settlement of certain tax matters.

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

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

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

As a result of the 2019 internal reorganization of certain intellectual property rights, we recorded a deferred tax asset of $ 754.1 million and a deferred tax liability of $ 603.3 million as of December 31, 2019.

For the year ended December 31, 2019, as compared to 2018, the decrease in our effective tax rate was primarily due to the combination of the internal reorganization of certain intellectual property rights and the impact of the Swiss Tax Reform.

This decrease was partially offset by a $ 68.9 million tax expense related to the divestiture of our subsidiary that owned our Hillerød, Denmark manufacturing operations.

We also had a higher effective tax rate in 2018 resulting from the unfavorable effects of the 2017 Tax Act and our sale of inventory, the tax effect of which had been included within prepaid taxes at January 1, 2018, at a higher effective tax rate than the 2018 statutory tax rate.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Tax Attributes

As of December 31, 2021, we had net operating losses and general business credit carry forwards for U.S.

federal income tax purposes of approximately $ 0.6 million and $ 1.3 million, respectively, which begin to expire in 2026.

federal income tax purposes of approximately $ 0.6 million and $ 4.8 million, respectively, which begin to expire in 2022 and 2027, respectively.

state income tax purposes, we had research and investment credit carry forwards of approximately $ 147.6 million that begin to expire in 2022.

8 unchanged sentences

(In millions) 2021 2020 2019

Beginning balance at January 1, $ 129.9 $ 114.2 $ 66.8

Beginning balance $ 75.7 $ 129.9 $ 114.2

Additions based on tax positions related to the current period 4.2 1.5 5.3

3 unchanged sentences

Settlement refund (payment) ( 4.4 ) ( 35.9 ) 3.6

Ending balance ar December 31, $ 75.7 $ 129.9 $ 114.2

Ending balance $ 563.4 $ 75.7 $ 129.9

During the year ended December 31, 2021, we increased our gross unrecognized tax benefits by approximately $ 455.0 million, related to a deferred tax asset for Swiss tax purposes for Neurimmune's tax basis in ADUHELM, as discussed above.

This unrecognized tax benefit was recorded as a reduction to the gross deferred tax asset, resulting in the net deferred tax asset, as discussed above, and not as a separate liability on our consolidated balance sheets.

Our 2020 activity reflects the impact of the effective settlement of certain tax matters.

6 unchanged sentences

income tax examinations for years before 2012.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Internal Revenue Service and other national tax authorities routinely examine our intercompany transfer pricing with respect to intellectual property related transactions and it is possible that they may disagree with one or more positions we have taken with respect to such valuations.

1 unchanged sentence

We recognize potential interest and penalties related to unrecognized tax benefits in income tax expense.

In 2020, 2019 and 2018 we recognized a net interest and penalty expense of $ 1.0 million, $ 4.7 million and $ 2.2 million, respectively.

During the years ended December 31, 2021, 2020 and 2019 we recognized total interest and penalty expense of $ 2.7 million, $ 1.0 million and $ 4.7 million, respectively.

We have accrued $ 24.8 million and $ 21.2 million for the payment of interest and penalties as of December 31, 2021 and 2020, respectively.

Federal and State Uncertain Tax Positions

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

It is reasonably possible that we will adjust the value of our uncertain tax positions related to certain transfer pricing, collaboration matters and other issues as we receive additional information from various taxing authorities, including reaching settlements with such authorities.

We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could decrease by up to approximately $ 25.0 million in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations.

Accounting for Bioverativ Spin-off

On February 1, 2017, in connection with the spin-off of our hemophilia business, we distributed all of the then outstanding shares of Bioverativ common stock to Biogen shareholders pursuant to a separation agreement.

In March 2018 Bioverativ was acquired by Sanofi S.A.

(Sanofi) and is now an indirect wholly-owned subsidiary of Sanofi.

The spin-off of our hemophilia business was intended to qualify for tax-free treatment to Biogen and its shareholders under the Internal Revenue Code.

Our 2017 tax return position remains open to audit.

Bioverativ and Sanofi agreed to indemnify us for certain potential liabilities that may arise.

We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could decrease by up to approximately $ 475.0 million, including approximately $ 455.0 million related to the unrecognized tax benefits related to Neurimmune's tax basis in ADUHELM, as discussed above, in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations.

OTHER CONSOLIDATED FINANCIAL STATEMENT DETAIL

9 unchanged sentences

These amounts, net of tax benefit, were accounted for as increases to goodwill in accordance with the accounting standard applicable to business combinations when we acquired Fumapharm AG.

In connection with the construction of our large-scale biologics manufacturing facility in Solothurn, Switzerland, we accrued charges related to processing equipment and engineering services of approximately $ 12.4 million and $ 50.0 million in our consolidated balance sheets as of December 31, 2020 and 2019, respectively.

For additional information on the construction of our manufacturing facility in Solothurn, Switzerland, please read Note 10, Property, Plant and Equipment, to these consolidated financial statements.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Other Income (Expense), Net

9 unchanged sentences

Gain (loss) on investments, net, as reflected in the table above, relate to debt securities, equity securities of certain biotechnology companies, venture capital funds where the underlying investments are in equity securities of certain biotechnology companies and non-marketable equity securities.

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

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

The following table summarizes our gain (loss) on investments, net that relates to our equity securities held as of December 31, 2021, 2020 and 2019:

2 unchanged sentences

Net gains (losses) recognized during the period on equity securities $ ( 821.1 ) $ 693.9 $ 200.1

Net gains (losses) recognized on equity securities sold during the period and on capital distributions 12.1 50.0 ( 0.6 )

Net gains (losses) realized during the period and on equity securities 10.3 12.1 50.0

Unrealized gains (losses) recognized during the period on equity securities $ ( 831.4 ) $ 681.8 $ 150.1

Accrued Expenses and Other

Accrued expenses and other consists of the following:

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Accrued Expense and Other

Accrued expense and other consists of the following:

As of December 31,

1 unchanged sentence

Revenue-related reserves for discounts and allowances $ 802.1 $ 1,080.6

Collaboration expenses 389.9 281.6

Collaboration expense 324.7 389.9

Employee compensation and benefits 345.1 333.8

3 unchanged sentences

Other 817.8 791.4

Total accrued expenses and other $ 3,145.3 $ 2,765.8

Total accrued expense and other $ 2,535.2 $ 3,145.3

Other Long-term Liabilities

Other long-term liabilities were $ 1,329.6 million and $ 1,348.9 million as of December 31, 2020 and 2019, respectively, and include accrued income taxes totaling $ 709.9 million and $ 803.3 million, respectively.

Other long-term liabilities were $ 1,320.5 million and $ 1,329.6 million as of December 31, 2021 and 2020, respectively, and included accrued income taxes totaling $ 664.5 million and $ 709.9 million, respectively.

COLLABORATIVE AND OTHER RELATIONSHIPS

1 unchanged sentence

Terms of the various collaboration agreements may require us to make milestone payments upon the achievement of certain product research and development objectives and pay royalties on future sales, if any, of commercial products resulting from the collaboration.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Depending on the collaborative arrangement, we may record funding receivable or payable balances with our collaboration partners, based on the nature of the cost-sharing mechanism and activity within the collaboration.

6 unchanged sentences

OCREVUS for the treatment of PPMS and RMS;

and other potential anti-CD20 therapies pursuant to our collaboration arrangements with Genentech, a wholly-owned member of the Roche Group.

and other potential anti-CD20 therapies, including mosunetuzumab, pursuant to our collaboration arrangements with Genentech, a wholly-owned member of the Roche Group.

For purposes of this footnote, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN.

5 unchanged sentences

We have co-exclusively licensed our rights to develop, commercialize and market RITUXAN in Canada.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Roche Group and its sub-licensees maintain sole responsibility for the development, manufacture and commercialization of GAZYVA in the U.S.

We recognize our share of the development and commercialization expenses of GAZYVA as a reduction of our share of pre-tax profits in revenues from anti-CD20 therapeutic programs.

We recognize our share of the development and commercialization expense of GAZYVA as a reduction of our share of pre-tax profits in revenue from anti-CD20 therapeutic programs.

Commercialization of GAZYVA impacts our percentage of the co-promotion profits for RITUXAN, as summarized in the table below.

9 unchanged sentences

Genentech cannot develop OCREVUS in CLL, non-Hodgkin's lymphoma or rheumatoid arthritis.

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

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

OCREVUS royalty revenue was 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.

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, which was recognized in research and development expense in our consolidated statements of income.

We also recorded a charge of approximately $ 20.0 million to reimburse Genentech for our 30.0 % of the costs incurred in developing this product candidate during 2021, which was recognized in research and development expense in our consolidated statements of income.

Under our collaboration with Genentech, we will be responsible for 30.0 % of development costs for mosunetuzumab prior to FDA approval and will be entitled to 30.0 % - 37.5 % of mosunetuzumab co-promotion operating profits and losses in the U.S.

based on certain events and low single-digit royalties on sales of mosunetuzumab outside the U.S.

Profit-sharing Formulas

RITUXAN Profit Share

Our current pretax co-promotion profit-sharing formula for RITUXAN provides for a 30.0 % share on the first $ 50.0 million of co-promotion operating profits earned each calendar year.

RITUXAN and Mosunetuzumab Profit Share

Our current pretax co-promotion profit-sharing formula for RITUXAN and mosunetuzumab provides for a 30.0 % share on the first $ 50.0 million of co-promotion operating profits earned each calendar year.

Our share of annual co-promotion profits in excess of $ 50.0 million varies, as summarized in the table below, upon the following events:

Until GAZYVA First Non-CLL FDA Approval 40.0 %

After GAZYVA First Non-CLL FDA Approval until First GAZYVA Threshold Date 39.0 %

After First GAZYVA Threshold Date until Second GAZYVA Threshold Date 37.5 %

After Second GAZYVA Threshold Date 35.0 %

First Non-CLL GAZYVA FDA Approval means the FDA’s first approval of GAZYVA in an indication other than CLL.

First GAZYVA Threshold Date means the earlier of (i) the date of the First Non-CLL GAZYVA FDA approval if U.S.

6 unchanged sentences

in excess of $ 50.0 million for the years ended December 31, 2021, 2020 and 2019, was 37.5 %.

In addition, should the FDA approve an anti-CD20 product other than OCREVUS or GAZYVA that is acquired or developed by Genentech and subject to the collaboration agreement, our share of the co-promotion operating profits would be between 30.0 % and 37.5 % based on certain events.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition, should the FDA approve mosunetuzumab or any other anti-CD20 product other than OCREVUS or GAZYVA that is acquired or developed by Genentech and subject to the collaboration agreement, the above table would no longer apply and our share of the co-promotion operating profits of RITUXAN and the new product would be between 30.0 % and 37.5 % based on certain events.

GAZYVA Profit Share

1 unchanged sentence

Our share of annual profits in excess of $ 50.0 million varies, as summarized in the table below, upon the following events:

Until First GAZYVA Threshold Date 39.0 %

After First GAZYVA Threshold Date until Second GAZYVA Threshold Date 37.5 %

1 unchanged sentence

Our share of GAZYVA pre-tax profits in excess of $ 50.0 million for the years ended December 31, 2021, 2020 and 2019, was 37.5 %.

In November 2017 the FDA approved GAZYVA in combination with chemotherapy, followed by GAZYVA alone, for people with previously untreated advanced follicular lymphoma.

Revenues from Anti-CD20 Therapeutic Programs

Revenues from anti-CD20 therapeutic programs are summarized as follows:

Revenue from Anti-CD20 Therapeutic Programs

Revenue from anti-CD20 therapeutic programs is summarized as follows:

For the Years Ended December 31,

1 unchanged sentence

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

for RITUXAN and GAZYVA, including the reimbursement of selling and development expenses $ 1,080.2 $ 1,542.4 $ 1,431.9

Other revenues from anti-CD20 therapeutic programs 897.6 748.0 548.3

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

Prior to regulatory approval, we record our share of the expenses incurred by the collaboration for the development of anti-CD20 products in research and development expense in our consolidated statements of income.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

After an anti-CD20 product is approved, we record our share of the development expenses related to that product as a reduction of our share of pre-tax profits in revenues from anti-CD20 therapeutic programs.

for RITUXAN and GAZYVA $ 647.7 $ 1,080.2 $ 1,542.4

Other revenue from anti-CD20 therapeutic programs 1,010.8 897.6 748.0

Total revenue from anti-CD20 therapeutic programs $ 1,658.5 $ 1,977.8 $ 2,290.4

Prior to regulatory approval, we record our share of the expense incurred by the collaboration for the development of anti-CD20 products in research and development expense in our consolidated statements of income.

After an anti-CD20 product is approved, we record our share of the development expense related to that product as a reduction of our share of pre-tax profits in revenue from anti-CD20 therapeutic programs.

Ionis Pharmaceuticals, Inc.

8 unchanged sentences

Ionis is eligible to receive up to $ 130.0 million in additional milestone payments upon the achievement of certain regulatory milestones as well as royalties on future sales if we successfully develop the product candidate after option exercise.

Upon entering into this agreement, we made an upfront payment of $ 30.0 million to Ionis and agreed to make potential additional payments, prior to licensing, of up to $ 10.0 million based on the development of the selected product candidate as well as a mark-up of the cost estimate of the Phase 1 and Phase 2 trials.

During 2015 we recognized this $ 10.0 million developmental milestone upon the selection of BIIB080 (tau ASO), which is currently in Phase 1 development for the potential treatment of Alzheimer's disease.

In December 2019 we exercised our option with Ionis and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB080.

In December 2019 we exercised our option with Ionis and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB080 (tau ASO), which is currently in Phase 1 development for the potential treatment of Alzheimer's disease.

In connection with the option exercise, we made a payment of $ 45.0 million to Ionis, which was recorded as research and development expense in our consolidated statements of income.

Future payments may include additional milestone payments of up to $ 155.0 million and royalties on future sales in the low- to mid-teens if we successfully develop the product candidate after option exercise.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

2018 Ionis Agreement

5 unchanged sentences

We recorded an asset of $ 462.9 million in investments and other assets in our consolidated balance sheets reflecting the fair value of the Ionis common stock as of the purchase date and a charge of $ 162.1 million to research and development expense in our consolidated statements of income in the second quarter of 2018 reflecting the premium paid for the Ionis common stock.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our investment in Ionis common stock is remeasured each reporting period.

3 unchanged sentences

We may pay development milestones to Ionis of up to $ 125.0 million or $ 270.0 million for each program, depending on the indication plus an annual license fee, as well as royalties on potential net commercial sales.

During the years ended December 31, 2020 and 2019, we incurred milestones of $ 11.3 million and $ 30.0 million, respectively, related to the advancement of neurological targets identified under the 2018 Ionis Agreement.

During the years ended December 31, 2021, 2020 and 2019, we incurred milestones of $ 22.5 million, $ 11.3 million and $ 30.0 million, respectively, related to the advancement of neurological targets identified under this agreement, which were recorded as research and development expense in our consolidated statements of income.

2017 SMA Collaboration Agreement

3 unchanged sentences

Upon commercialization, we may also pay Ionis up to $ 800.0 million in additional performance-based milestone payments and tiered royalties on potential net sales of such therapies.

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, which was recorded as research and development expense in our consolidated statements of income.

2013 Long-term Strategic Research Agreement

1 unchanged sentence

Under this agreement, Ionis performs research on a set of neurological targets identified within the agreement.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Ionis is eligible to receive milestone payments, license fees and royalty payments for all product candidates developed through this collaboration, with the specific amount dependent upon the modality of the product candidate advanced by us under the terms of the agreement.

5 unchanged sentences

In December 2018 we exercised our option with Ionis and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB067 (tofersen), an investigational treatment for ALS with superoxide dismutase 1 (SOD1) mutations.

In connection with the option exercise, we made a payment of $ 35.0 million to Ionis, which was recorded as research and development in our consolidated statements of income.

In connection with the option exercise, we made a payment of $ 35.0 million to Ionis, which was recorded as research and development expense in our consolidated statements of income.

Future payments may include potential post-licensing milestone payments of up to $ 55.0 million and royalties in the low- to mid-teen percentages on potential annual worldwide net sales.

We are solely responsible for the costs and expenses related to the development, manufacturing and commercialization of tofersen following the option exercise.

We are solely responsible for the costs and expense related to the development, manufacturing and commercialization of tofersen following the option exercise.

During the years ending December 31, 2021, 2020 and 2019, we incurred milestones of $ 10.0 million, $ 28.0 million and $ 20.0 million, respectively, related to the advancement of programs under this agreement, which were recorded as research and development expense in our consolidated statements of income.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Eisai Co., Ltd.

BAN2401 Collaboration

We have a collaboration agreement with Eisai to jointly develop and commercialize BAN2401, a monoclonal antibody that targets amyloid beta aggregates, and elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor, two Eisai product candidates for the potential treatment of Alzheimer's disease (the BAN2401 Collaboration).

Lecanemab Collaboration

We have a collaboration agreement with Eisai to jointly develop and commercialize lecanemab (BAN2401), an anti-amyloid antibody, and elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor, two Eisai product candidates for the potential treatment of Alzheimer's disease (the Lecanemab Collaboration).

In September 2019 we and Eisai discontinued the global Phase 3 studies of elenbecestat in early Alzheimer's disease.

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

If BAN2401 receives marketing approval, we and Eisai will co-promote BAN2401 and share profits equally.

In addition, the BAN2401 Collaboration provides both parties with certain rights and obligations in the event of a change in control of either party.

The BAN2401 Collaboration also provided Eisai with an option to jointly develop and commercialize aducanumab (Aducanumab Option) and an option to jointly develop and commercialize one of our anti-tau monoclonal antibodies (Anti-Tau Option).

In October 2017 Eisai exercised its Aducanumab Option and we entered into a new collaboration agreement for the joint development and commercialization of aducanumab (the Aducanumab Collaboration Agreement).

Eisai serves as the global operational and regulatory lead for lecanemab and all costs, including research, development, sales and marketing expense, are shared equally between us and Eisai.

If lecanemab receives marketing approval, we and Eisai will co-promote lecanemab and share profits equally.

In addition, the Lecanemab Collaboration provides both parties with certain rights and obligations in the event of a change in control of either party.

The Lecanemab Collaboration also provided Eisai with an option to jointly develop and commercialize ADUHELM (aducanumab) (ADUHELM Option), and an option to jointly develop and commercialize one of our anti-tau monoclonal antibodies (Anti-Tau Option).

In October 2017 Eisai exercised its ADUHELM Option and we entered into a new collaboration agreement for the joint development and commercialization of ADUHELM (aducanumab) (the ADUHELM Collaboration Agreement).

Eisai may exercise the Anti-Tau Option after completion of the Phase 1 clinical trial of such anti-tau monoclonal antibody.

1 unchanged sentence

Eisai has not yet exercised its Anti-Tau Option.

A summary of development and sales and marketing expenses related to the BAN2401 Collaboration is as follows:

For the Years Ended December 31,

(In millions) 2020 2019 2018

Total development expense incurred by the collaboration related to the advancement of BAN2401 and elenbecestat $ 219.3 $ 348.7 $ 232.0

Biogen's share of BAN2401 and elenbecestat development expense reflected in research and development expense in our consolidated statements of income 109.6 174.3 116.0

Total sales and marketing expense incurred by the collaboration 9.8 32.4 10.7

Biogen's share of BAN2401 and elenbecestat sales and marketing expense reflected in selling, general and administrative expense in our consolidated statements of income 4.9 16.2 5.4

Aducanumab Collaboration Agreement

Under the Aducanumab Collaboration Agreement, we and Eisai will co-promote aducanumab with a region-based profit split and we lead the ongoing development of aducanumab.

In March 2019, based on a pre-specified futility analysis, we discontinued the global Phase 3 trials, EMERGE and ENGAGE, designed to evaluate the efficacy and safety of aducanumab in patients with early Alzheimer's disease.

A new analysis of a larger dataset from these trials, conducted in scientific collaboration with the FDA, showed that the Phase 3 EMERGE study met its pre-specified primary and secondary endpoints.

In the first quarter of 2019, as a result of the decision to discontinue the Phase 3 EMERGE and ENGAGE trials following the futility analysis, we accrued and subsequently paid approximately $ 45.0 million related to the termination of various clinical trials and research and development contracts net of the expected 45.0 % Eisai reimbursement of development costs incurred under the Aducanumab Collaboration Agreement.

In October 2019 we and Eisai announced that we plan to pursue regulatory approval for aducanumab in the U.S.

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

For the period through March 31, 2018, we were responsible for 100.0 % of development costs incurred by the collaboration for the advancement of aducanumab (aducanumab development expense).

For the period April 1, 2018 through December 31, 2018, Eisai reimbursed us for 15.0 % of aducanumab development expense incurred and beginning January 1, 2019, is reimbursing us for 45.0 % of aducanumab development expense incurred.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the year ended December 31, 2020, we recognized net profit-sharing income of $ 33.8 million to reflect Eisai's 45.0 % share of the $ 75.0 million milestone expense related to the submission of the BLA for the approval of aducanumab to the FDA.

Upon commercialization, both companies will co-promote aducanumab with a region-based profit split.

We will receive a 55.0 % share of the potential profits (losses) in the U.S., a 68.5 % share of the potential profits (losses) in the European Union (E.U.) and a 20.0 % share of the potential profits (losses) in Japan and Asia, excluding China and South Korea.

The two companies will continue to share equally in the potential profits (losses) in rest of world markets.

Sales and marketing expense incurred before commercialization are shared in proportion to the same region-based profit split that will be utilized to co-promote aducanumab.

A summary of development, sales and marketing and milestone expense related to the Aducanumab Collaboration Agreement is as follows:

A summary of development and sales and marketing expense related to the Lecanemab Collaboration is as follows:

For the Years Ended December 31,

(In millions) 2021 2020 2019

Total aducanumab development expense $ 152.0 $ 179.4 $ 264.8

Biogen's share of aducanumab development expense reflected in research and development expense in our consolidated statements of income 83.6 98.7 234.6

Total aducanumab sales and marketing expense incurred by the collaboration 353.0 27.4 50.6

Biogen's share of aducanumab sales and marketing expense reflected in selling, general and administrative expense in our consolidated statements of income 193.7 15.1 27.3

Total aducanumab collaboration third party milestone expense 75.0 — —

Eisai's share of aducanumab milestone expense reflected in collaboration profit sharing in our consolidated statements of income 33.8 — —

Total development expense incurred by the collaboration related to the advancement of lecanemab and elenbecestat $ 323.0 $ 219.3 $ 348.7

Biogen's share of lecanemab and elenbecestat development expense reflected in research and development expense in our consolidated statements of income 161.5 109.6 174.3

Total sales and marketing expense incurred by the Lecanemab Collaboration 27.2 9.8 32.4

Biogen's share of lecanemab and elenbecestat sales and marketing expense reflected in selling, general and administrative expense in our consolidated statements of income 13.6 4.9 16.2

ADUHELM Collaboration Agreement

Under the ADUHELM Collaboration Agreement, we lead the ongoing development of ADUHELM, and we and Eisai will co-promote ADUHELM with a region-based profit split.

Beginning January 1, 2019, Eisai is reimbursing us for 45.0 % of development costs incurred by the collaboration for the advancement of ADUHELM (ADUHELM development expense).

In March 2019, based on a pre-specified futility analysis, we discontinued the global Phase 3 trials, EMERGE and ENGAGE, designed to evaluate the efficacy and safety of ADUHELM in patients with early Alzheimer's disease.

In October 2019 we and Eisai announced that we planned to pursue regulatory approval for ADUHELM in the U.S.

A new analysis of a larger dataset from these trials, conducted in scientific collaboration with the FDA, showed that the Phase 3 EMERGE trial met its pre-specified primary and secondary endpoints.

In July 2020 we completed the submission of a BLA for the approval of ADUHELM to the FDA and made a $ 75.0 million milestone payment to Neurimmune.

We recognized net profit-sharing income of $ 33.8 million to reflect Eisai's 45.0 % share of the $ 75.0 million milestone payment.

In June 2021 ADUHELM was granted accelerated approval by the FDA for the treatment of Alzheimer's disease and had its first commercial sale.

As a result of the launch of ADUHELM in the U.S., we made a $ 100.0 million milestone payment to Neurimmune.

For the year ended December 31, 2021, we recognized net profit-sharing income of $ 45.0 million to reflect Eisai's 45.0 % share of the $ 100.0 million milestone payment.

Upon commercialization, both companies will co-promote ADUHELM with a region-based profit split.

We will receive a 55.0 % share of the potential profits (losses) in the U.S., a 68.5 % share of the potential profits (losses) in the E.U.

and a 20.0 % share of the potential profits (losses) in Japan and Asia, excluding China and South Korea.

The two companies will share equally in the potential profits (losses) in rest of world markets.

Sales and marketing expense are shared in proportion to the same region-based profit split that is utilized to co-promote ADUHELM.

A summary of development expense, sales and marketing expense and milestone payments related to the ADUHELM Collaboration Agreement is as follows:

For the Years Ended December 31,

(In millions) 2021 2020 2019

Total ADUHELM development expense $ 183.7 $ 152.0 $ 179.4

Biogen's share of ADUHELM development expense reflected in research and development expense in our consolidated statements of income 101.1 83.6 98.7

Total ADUHELM sales and marketing expense incurred by the ADUHELM Collaboration Agreement 562.3 353.0 27.4

Biogen's share of ADUHELM sales and marketing expense reflected in selling, general and administrative expense and collaboration profit (loss) sharing in our consolidated statements of income 301.4 193.7 15.1

Total ADUHELM collaboration third-party milestones 100.0 75.0 —

Biogen's share of reimbursement from Eisai of ADUHELM milestone payments reflected in collaboration profit (loss) sharing in our consolidated statements of income 45.0 33.8 —

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Co-promotion Profits and Losses

we recognize revenue on sales to third-parties as a component of product revenue, net in our consolidated statements of income.

We also record the related cost of revenue and sales and marketing expense in our consolidated statements of income as these costs are incurred.

Payments made to and received from Eisai for its 45.0 % share of the co-promotion profits or losses in the U.S.

are recognized in collaboration profit (loss) sharing in our consolidated statements of income.

For the year ended December 31, 2021, we recognized net profit-sharing income of $ 233.2 million to reflect Eisai's 45.0 % sharing of the net collaboration losses in the U.S.

In addition, we and Eisai co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings and Eisai distributes AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets, excluding China.

UCB Pharma S.A.

We have a collaboration agreement with UCB Pharma S.A.

(UCB) to jointly develop and commercialize dapirolizumab pegol, an anti-CD40L pegylated Fab, for the potential treatment of systemic lupus erythematosus and other future agreed indications.

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.

Amounts receivable from Eisai related to the agreements discussed above we re $ 285.4 million a nd $ 151.1 million as of December 31, 2021 and 2020, respectively.

Amounts payable to Eisai related to the agreements discussed above we re $ 46.5 million a nd $ 111.9 million as of December 31, 2021 and 2020, respectively.

We have a collaboration agreement with UCB to jointly develop and commercialize dapirolizumab pegol, an anti-CD40L pegylated Fab, for the potential treatment of systemic lupus erythematosus and other future agreed indications.

Either we or UCB may propose development of dapirolizumab pegol in additional indications.

If the parties do not agree to add an indication as an agreed indication to the collaboration, we or UCB may, at the sole expense of the applicable party, pursue development in such excluded indication(s), subject to an opt-in right of the non-pursuing party after proof of clinical activity.

All costs incurred for agreed indications, including research, development, sales and marketing expenses, are shared equally between us and UCB.

All costs incurred for agreed indications, including research, development, sales and marketing expense, are shared equally between us and UCB.

Upon marketing approval, we and UCB will co-promote dapirolizumab pegol and share profits equally.

2 unchanged sentences

(In millions) 2021 2020 2019

Total UCB development expense $ 58.3 $ 31.9 $ 29.7

Total UCB collaboration development expense $ 84.2 $ 58.3 $ 31.9

Biogen's share of UCB development expense reflected in research and development expense in our consolidated statements of income 42.1 29.2 16.0

3 unchanged sentences

In November 2019 VUMERITY became commercially available in the U.S.

Under this agreement, we received an exclusive, worldwide license to develop and commercialize VUMERITY and we pay Alkermes a royalty of 15.0 % on worldwide net commercial sales of VUMERITY.

During the fourth quarter of 2021 VUMERITY was approved for the treatment of RRMS in the E.U., Switzerland and the U.K.

Under this agreement, we received an exclusive, worldwide license to develop and commercialize VUMERITY and we pay Alkermes royalties of 15.0 % on worldwide net commercial sales of VUMERITY, which are recognized in cost of sales within 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.

Royalty cost of sales related to sales of VUMERITY for the years ended December 31, 2021, 2020 and 2019, totaled $ 61.6 million, $ 12.9 million and $ 1.6 million, respectively.

Alkermes is eligible to receive royalties in the high-single digits to sub-teen double digits of annual net commercial sales upon successful development and commercialization of new product candidates, other than VUMERITY, developed under the exclusive license from Alkermes.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

During the fourth quarter of 2019, following the FDA's approval of VUMERITY, we paid Alkermes $ 155.0 million in milestone payments, which were recorded in intangible assets in our consolidated balance sheets and will be amortized over the useful life of the product.

3 unchanged sentences

We have elected to initiate a technology transfer and, following a transition period, to manufacture VUMERITY or have VUMERITY manufactured by a third-party we have engaged in exchange for paying an increased royalty rate to Alkermes on any portion of future worldwide net commercial sales of VUMERITY that is manufactured by us or our designee.

Bristol-Myers Squibb Company

In June 2017 we completed an exclusive license agreement with Bristol-Myers Squibb Company (BMS) for the development and potential commercialization of BIIB092 (gosuranemab), an antibody targeting tau, the protein that forms the deposits, or tangles, in the brain associated with Alzheimer's disease.

Under this agreement, we received worldwide rights to gosuranemab and are responsible for the full development and potential commercialization of gosuranemab in Alzheimer's disease and progressive supranuclear palsy (PSP).

In December 2019 we announced that the Phase 2 PASSPORT study investigating gosuranemab in individuals with PSP did not meet its primary endpoint.

Based on these results, we discontinued development of gosuranemab in PSP and other primary tauopathies.

We will continue our ongoing Phase 2 TANGO study of gosuranemab for mild cognitive impairment due to Alzheimer's disease or mild Alzheimer's disease, given differences in disease pathology.

Upon entering into this agreement, we made an upfront payment of $ 300.0 million to BMS and assumed all remaining obligations to the former shareholders of iPierian, Inc.

(iPierian) related to BMS’s acquisition of iPierian in 2014.

We may pay BMS up to $ 360.0 million in additional milestone payments, and potential royalties, and we may pay the former shareholders of iPierian up to $ 370.0 million in remaining milestone payments as well as potential royalties on net commercial sales.

For the years ended December 31, 2020, 2019 and 2018, we recorded $ 62.4 million, $ 144.0 million and $ 97.0 million, respectively, in research and development expense in our consolidated statements of income related to this agreement.

Acorda Therapeutics, Inc.

5 unchanged sentences

The next expected milestone of $ 15.0 million, due if ex-U.S.

net sales reach $ 100.0 million over a period of four consecutive quarters, was recognized during the third quarter of 2020 and capitalized within intangible assets, net in our consolidated balance sheet.

Royalty payments are recognized in cost of sales within our consolidated statements of income.

1 unchanged sentence

This agreement is a sublicense arrangement of an existing agreement between Acorda and Alkermes Inc., who acquired Elan Drug Technologies, the original party to the license with Acorda.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the years ending December 31, 2021, 2020 and 2019, total cost of sales related to royalties and commercial supply of FAMPYRA reflected in our consolidated statements of income were $ 46.6 million, $ 44.5 million and $ 42.0 million, respectively.

Sage Therapeutics, Inc.

In November 2020 we entered into a global collaboration and license agreement with Sage to jointly develop and commercialize zuranolone (SAGE-217) for the potential treatment of major depressive disorder, postpartum depression and other psychiatric disorders and SAGE-324 for the potential treatment of essential tremor and other neurological disorders.

In connection of the closing of this transaction in December 2020 we purchased $ 650.0 million of Sage common stock, or approximately 6.2 million shares at approximately $ 104.14 per share, which are subject to transfer restrictions.

In November 2020 we entered into a global collaboration and license agreement with Sage to jointly develop and commercialize BIIB125 (zuranolone) for the potential treatment of major depressive disorder and postpartum depression and BIIB124 (SAGE-324) for the potential treatment of essential tremor with potential in other neurological conditions such as epilepsy.

We recorded an asset in investments and other assets in our consolidated balance sheets to reflect the initial fair value of the Sage common stock acquired and a charge of approximately $ 209.0 million to research and development expense in our consolidated statements of income to reflect the premium paid for the Sage common stock.

We also made an upfront payment of $ 875.0 million that was recorded as research and development expense.

We may also pay Sage development and commercial milestone payments that could total up to approximately $ 1.6 billion if all the specified milestones set forth in this agreement are achieved.

We also made an upfront payment of $ 875.0 million that was recorded as research and development expense in our consolidated statements of income.

We may also pay Sage development and commercial milestone payments that could total up to approximately $ 1.6 billion if all the specified milestones set forth in this collaboration are achieved.

Both companies will share equal responsibility and costs for development as well as profits and losses for commercialization in the U.S.

Outside of the U.S., we are responsible for development and commercialization, excluding Japan, Taiwan and South Korea, with respect to zuranolone and will pay Sage potential tiered royalties in the high teens to low twenties.

Outside of the U.S., we are responsible for development and commercialization, excluding Japan, Taiwan and South Korea, with respect to zuranolone and may pay Sage potential tiered royalties in the high teens to low twenties.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A summary of development and sales and marketing expense related to this collaboration is as follows:

For the Years Ended December 31,

(In millions) 2021

Total Sage collaboration development expense $ 167.7

Biogen's share of Sage development expense reflected in research and development expense in our consolidated statements of income 83.8

Total Sage sales and marketing expense incurred by the collaboration 36.4

Biogen's share of Sage sales and marketing expense reflected in selling, general and administrative expense in our consolidated statements of income 18.2

Denali Therapeutics Inc.

3 unchanged sentences

Further, we have a right of first negotiation on two additional Transport Vehicle-enabled therapeutics, should Denali decide to seek a collaboration for such programs.

As part of this collaboration we purchased approximately $ 465.0 million of Denali common stock in September 2020, or approximately 13 million shares at approximately $ 34.94 per share, which are subject to transfer restrictions.

We recorded an asset in investments and other assets in our consolidated balance sheets to reflect the initial fair value of the Denali common stock acquired and a charge of approximately $ 41.3 million to research and development expense in our consolidated statements of income to reflect the premium paid for the Denali common stock.

We also made an upfront payment of $ 560.0 million that was recorded as research and development expense.

We also made an upfront payment of $ 560.0 million that was recorded as research and development expense in our consolidated statements of income.

We may also pay Denali development and commercial milestone payments that could total up to approximately $ 1.1 billion if the milestones related to the LRRK2 program are achieved.

Under this agreement, both companies share responsibility and costs for global development based on specified percentages and we are responsible for commercialization and will pay Denali potential tiered royalties.

For the year ended December 31, 2020, we recorded $ 8.8 million in research and development expense in our consolidated statements of income related to this collaboration.

Under this collaboration, both companies share responsibility and costs for global development based on specified percentages and we are responsible for commercialization and may pay Denali potential tiered royalties.

A summary of development expense related to this collaboration is as follows:

For the Years Ended December 31,

(In millions) 2021 2020 2019

Total Denali collaboration development expense $ 42.5 $ 14.6 $ —

Biogen's share of Denali development expense reflected in research and development expense in our consolidated statements of income 25.5 8.8 —

Sangamo Therapeutics, Inc.

4 unchanged sentences

The companies are leveraging Sangamo’s proprietary zinc finger protein technology delivered via adeno-associated virus to modulate the expression of key genes involved in neurological diseases.

We recorded an asset in investments and other assets in our consolidated balance sheets to reflect the initial fair value of the Sangamo common stock acquired and a charge of approximately $ 83.0 million to research and development expense in our consolidated statements of income to reflect the premium paid for the Sangamo common stock.

We also made an upfront payment of $ 125.0 million that was recorded as research and development expense in our consolidated statements of income.

We may also pay Sangamo research, development, regulatory and commercial milestone payments that could total up to approximately $ 2.4 billion if we select all of the targets allowed under this collaboration and all the

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and development expense in our consolidated statements of income to reflect the premium paid for the Sangamo common stock.

We also made an upfront payment of $ 125.0 million that was recorded as research and development expense.

specified milestones set forth in this collaboration are achieved.

Of this amount, up to $ 80.0 million relates to the selection of targets, $ 1.9 billion relates to the achievement of specified research, clinical development, regulatory and first commercial sale milestones and $ 380.0 million relates to the achievement of specified sales-based milestones if annual worldwide net sales of licensed products reach specified levels.

In addition, we will pay Sangamo tiered royalties on potential net commercial sales of any products developed under this collaboration in the high single digit to double digit sub-teen percentages.

For the year ended December 31, 2020, we recorded $ 6.4 million in research and development expense in our consolidated statements of income related to this collaboration.

In addition, we may pay Sangamo tiered royalties on potential net sales of any products developed under this collaboration in the high single digit to double digit sub-teen percentages.

A summary of development expense related to this collaboration is as follows:

For the Years Ended December 31,

(In millions) 2021 2020 2019

Total Sangamo collaboration development expense $ 22.7 $ 10.1 $ —

Biogen's share of Sangamo development expense reflected in research and development expense in our consolidated statements of income 14.6 6.4 —

InnoCare Pharma Limited

In July 2021 we entered into a collaboration and license agreement with InnoCare Pharma Limited (InnoCare) for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS.

Orelabrutinib is currently being studied in a multi-country, placebo-controlled Phase 2 trial in relapsing-remitting MS.

Under the terms of this collaboration, we have exclusive rights to orelabrutinib in the field of MS worldwide and certain autoimmune diseases outside of China (including Hong Kong, Macau and Taiwan), while InnoCare retains exclusive worldwide rights to orelabrutinib in the field of oncology and certain autoimmune diseases in China (including Hong Kong, Macau and Taiwan).

In connection with the closing of this transaction in August 2021 we made an upfront payment of $ 125.0 million that was recorded as research and development expense in our consolidated statements of income.

We may also pay InnoCare up to approximately $ 812.5 million in potential development milestones and potential commercial payments should this collaboration achieve certain development, commercial milestones and sales thresholds.

In addition, we may pay InnoCare tiered royalties on potential net sales of any products developed under this collaboration in the low to high teen percentages.

Other Research and Discovery Arrangements

9 unchanged sentences

We recognize our share of the results of operations related to our investment in Samsung Bioepis under the equity method of accounting one quarter in arrears when the results of the entity become available, which is reflected as equity in (income) loss of investee, net of tax in our consolidated statements of income.

During 2015, as our share of losses exceeded the carrying value of our initial investment, we suspended recognizing additional losses.

During 2015, as our share of losses exceeded the carrying value of our initial investment, we suspended recognizing additional

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In the first quarter of 2019 we restarted recognizing our share of Samsung Bioepis' (income) losses, and we began recognizing amortization on certain basis differences resulting from our November 2018 investment.

3 unchanged sentences

The basis differences related to inventory were amortized, net of tax, over their estimated useful lives of 1.5 years, and the basis differences related to developed technology and IPR&D for marketed products will be amortized, net of tax, over their estimated useful lives of 15 years.

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

Certain officers and affiliates of our joint venture partner, Samsung BioLogics, are currently subject to ongoing criminal proceedings that we continue to monitor.

While these proceedings could impact the operations of Samsung Bioepis and its business, we have assessed the value of our investment in Samsung Bioepis and continue to believe that the fair value of the investment is in excess of its net book value.

For the year ended December 31, 2021, we recognized net income on our investment of $ 34.9 million, reflecting our share of Samsung Bioepis' operating profits, net of tax totaling $ 64.6 million offset by amortization of basis differences totaling $ 29.7 million.

For the year ended December 31, 2020, we recognized net income on our investment of $ 5.3 million, reflecting our share of Samsung Bioepis' operating profits, net of tax totaling $ 45.3 million offset by amortization of basis differences totaling $ 40.0 million.

Net income on our investment for the year ended December 31, 2021, reflects a $ 31.2 million benefit related to the release of a valuation allowance on deferred tax assets associated with Samsung Bioepis.

The valuation allowance was released in the second quarter of 2021 based on a consideration of the positive and negative evidence, including the historic earnings of Samsung Bioepis.

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.

2019 Development and Commercialization Agreement

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

Samsung Bioepis will be responsible for development and will supply both products to us at a pre-specified gross margin.

In connection with this transaction, we made an upfront payment of $ 100.0 million to Samsung Bioepis in January 2020, of which $ 63.0 million was recorded as research and development expense in our consolidated statements of income in 2019 and $ 37.0 million was recorded as an intangible assets, net in our consolidated balance sheets in 2019.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the year ended December 31, 2020, we recognized net income on our investment of $ 5.3 million, reflecting our share of income totaling $ 45.3 million offset by amortization of basis differences totaling $ 40.0 million.

For the year ended December 31, 2019, we recognized net losses on our investment of $ 79.4 million, reflecting our share of losses totaling $ 1.2 million and amortization of basis differences totaling $ 78.2 million.

2019 Transaction

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

Samsung Bioepis will be responsible for development and will supply both products to us.

In connection with this transaction, we made an upfront payment of $ 100.0 million to Samsung Bioepis in January 2020, of which $ 63.0 million was recorded as research and development expense in 2019 and $ 37.0 million was recorded as an intangible asset in 2019.

Additionally, during the third quarter of 2020, we paid Samsung Bioepis a $ 15.0 million development milestone, which was included in research and development expense in our consolidated statements of income.

We may pay Samsung Bioepis up to $ 195.0 million in additional development, regulatory and sales-based milestones.

During the third quarter of 2020, we paid Samsung Bioepis a $ 15.0 million development milestone, which was included in research and development expense in our consolidated statements of income.

During the third quarter of 2021, we accrued $ 15.0 million in milestone payments related to the approval of BYOOVIZ in the U.S., the E.U.

and the U.K., that were capitalized within intangible assets, net in our consolidated balance sheets.

We may also pay Samsung Bioepis up to approximately $ 180.0 million in additional development, regulatory and sales-based milestones.

We also acquired an option to extend the term of our 2013 commercial agreement for BENEPALI, IMRALDI and FLIXABI by an additional five years , subject to payment of an option exercise fee of $ 60.0 million, and obtained an option to acquire exclusive rights to commercialize these products in China.

10 unchanged sentences

Under the terms of the agreement, AbbVie granted us and Samsung Bioepis patent licenses for the use and sale of IMRALDI in Europe, on a country-by-country basis, and we make royalty payments to AbbVie on behalf of Samsung Bioepis.

We began to recognize revenues on sales of IMRALDI to third parties in Europe in the fourth quarter of 2018.

We reflect revenues on sales of BENEPALI, IMRALDI and FLIXABI to third parties in product revenues, net in our consolidated statements of income and record the related cost of revenues and sales and marketing expenses in our consolidated statements of income to their respective line items when these costs are incurred.

We began to recognize revenue on sales of IMRALDI to third-parties in Europe in the fourth quarter of 2018.

We reflect revenue on sales of BENEPALI, IMRALDI and FLIXABI to third-parties in product revenue, net in our consolidated statements of income and record the related cost of revenue and sales and marketing expense in our consolidated statements of income to their respective line items when these costs are incurred.

Royalty payments to AbbVie on sales of IMRALDI are recognized in cost of sales within our consolidated statements of income.

We share 50.0 % of the profit or loss related to our commercial agreement with Samsung Bioepis, which is recognized in collaboration profit (loss) sharing in our consolidated statements of income.

For the years ended December 31, 2020, 2019 and 2018, we recognized a net profit-sharing expense of $ 266.5 million, $ 241.6 million and $ 187.4 million, respectively, to reflect Samsung Bioepis' 50 % sharing of the net collaboration profits.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the years ended December 31, 2021, 2020 and 2019, we recognized net profit-sharing expense o f $ 285.4 million, $ 266.5 million and $ 241.6 million, respectively, to reflect Samsung Bioepis' 50.0 % sharing of the net collaboration profits.

Other Services

1 unchanged sentence

Under the technical development services agreement, we provided Samsung Bioepis technical development and technology transfer services, which included, but were not limited to, cell culture development, purification process development, formulation development and analytical development.

Under the manufacturing agreement, we manufacture clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis pursuant to contractual terms.

Under the manufacturing agreement, we manufactured clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis pursuant to contractual terms.

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

We no longer recognize revenues for the manufacturing completed after the divestiture date under the manufacturing agreements with Samsung Bioepis.

We no longer recognize revenue for the manufacturing completed after the divestiture date under the manufacturing agreements with Samsung Bioepis.

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Under the license agreement, we granted Samsung Bioepis an exclusive license to use, develop, manufacture and commercialize biosimilar products created by Samsung Bioepis using Biogen product-specific technology.

In exchange, we receive single digit royalties on biosimilar products developed and commercialized by Samsung Bioepis.

For the years ended December 31, 2020, 2019 and 2018, we recognized $ 20.9 million, $ 106.2 million and $ 96.4 million, respectively, in revenues under the license, technical development services and manufacturing agreements, which is reflected in revenues from collaborative and other relationships, as a component of other revenues in our consolidated statements of income.

Amounts receivable from Samsung Bioepis related to the agreements discussed above were $ 5.1 million and $ 85.0 million as of December 31, 2020 and 2019, respectively.

Amounts payable to Samsung Bioepis as of December 31, 2020, were $ 99.0 million.

Amounts payable to Samsung Bioepis as of December 31, 2019, consisted of the $ 100.0 million upfront payment related to the transaction we completed in December 2019, as discussed above.

For the years ended December 31, 2021, 2020 and 2019, we recognized $ 20.7 million , $ 20.9 million and $ 106.2 million, respectively, in revenue under the license, technical development services and manufacturing agreements, which is reflected in revenue from collaborative and other relationships, as a component of other revenue in our consolidated statements of income.

Amounts receivable from Samsung Bioepis related to the agreements discussed above we re $ 4.1 million a nd $ 5.1 million as of December 31, 2021 and 2020, respectively.

Amounts payable to Samsung Bioepis related to the agreements discussed above we re $ 148.7 million a nd $ 99.0 million as of December 31, 2021 and 2020, respectively.

INVESTMENTS IN VARIABLE INTEREST ENTITIES

3 unchanged sentences

Neurimmune SubOne AG

We have a collaboration and license agreement with Neurimmune SubOne AG (Neurimmune) for the development and commercialization of antibodies for the potential treatment of Alzheimer's disease, including aducanumab (as amended, the Neurimmune Agreement).

We have a collaboration and license agreement with Neurimmune for the development and commercialization of antibodies for the potential treatment of Alzheimer's disease, including ADUHELM (as amended, the Neurimmune Agreement).

We are responsible for the development, manufacturing and commercialization of all collaboration products.

1 unchanged sentence

We consolidate the results of Neurimmune as we determined that we are the primary beneficiary of Neurimmune because we have the power through the collaboration to direct the activities that most significantly impact the entity’s economic performance and we are required to fund 100.0 % of the research and development costs incurred in support of the collaboration.

In October 2017 we amended the terms of the Neurimmune Agreement and made a $ 150.0 million payment to Neurimmune in exchange for a 15.0 % reduction in the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including royalties payable on potential commercial sales of aducanumab.

In May 2018 we made an additional $ 50.0 million payment to Neurimmune to further reduce the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including

Our royalty rates payable on products developed under the Neurimmune Agreement, including royalty rates payable on commercial sales of ADUHELM, now range from the high single digits to sub-teens.

As we consolidate the results of Neurimmune, we treated these payments as distributions and recognized them as charges to noncontrolling interests in the fourth quarter of 2017 and the second quarter of 2018, as applicable.

Under the terms of the Neurimmune Agreement, we were required to pay Neurimmune a milestone payment of $ 75.0 million upon the regulatory filing with the FDA for the approval of ADUHELM.

During the second quarter of 2020 we paid Neurimmune $ 75.0 million upon the completed submission of the BLA for the approval of ADUHELM to the FDA, which was recognized as a charge to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income.

In addition, during the second quarter of 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, which was recognized in collaboration profit (loss) sharing in our consolidated statements of income.

In June 2021 ADUHELM was granted accelerated approval by the FDA.

Under the terms of the Neurimmune Agreement, we were required to pay Neurimmune a milestone payment of $ 100.0 million related to the launch of ADUHELM in the U.S.

During the second quarter of 2021 we made this $ 100.0 million payment, which was recognized as a charge to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income.

In addition, during the second quarter of 2021 we recognized net profit-sharing income of $ 45.0 million to reflect Eisai's 45.0 % share of the $ 100.0 million milestone payment, which was recognized in collaboration profit (loss) sharing in our consolidated statements of income.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

royalties payable on potential commercial sales of aducanumab, by an additional 5.0 %.

Our royalty rates payable on products developed under the Neurimmune Agreement, including royalty rates payable on potential commercial sales of aducanumab, now range from the high single digits to sub-teens.

Under the terms of the Neurimmune Agreement, we were required to pay Neurimmune a milestone payment of $ 75.0 million upon the regulatory filing with the FDA for the approval of aducanumab.

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

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

Additionally, if aducanumab receives regulatory approval in the jurisdictions where we have submitted filings, we may pay up to approximately $ 200.0 million in milestones to Neurimmune in 2021, which includes $ 100.0 million if launched in the U.S., $ 50.0 million if launched in three or more countries within the E.U.

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.

Milestones payable to Neurimmune are shared expenses under the ADUHELM Collaboration Agreement.

Research and development costs for which we reimburse Neurimmune are reflected in research and development expense in our consolidated statements of income.

During the years ending December 31, 2021, 2020 and 2019, amounts reimbursed were immaterial.

The assets and liabilities of Neurimmune are not significant to our consolidated financial position or results of operations as it is a research and development organization.

During the second quarter of 2021 we recorded a net deferred tax asset of approximately $ 490.0 million.

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.

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.

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.

Excluding the impact of the Neurimmune deferred tax asset, the assets and liabilities of Neurimmune are not significant to our consolidated financial position or results of operations as it is a research and development organization.

We have provided no financing to Neurimmune other than contractually required amounts.

Under the Aducanumab Collaboration Agreement, Eisai had an option to share in the benefit and cost associated with the royalty reductions discussed above;

however, Eisai did not elect to share in the benefit and cost with respect to either the October 2017 or May 2018 royalty reductions, which will impact the amount of profits (losses) on potential commercial sales of aducanumab to be shared with Eisai.

Under the ADUHELM Collaboration Agreement, Eisai had an option to share in the benefit and cost associated with the royalty reductions, as discussed above;

however, Eisai did not elect to share in the benefit and cost with respect to either the October 2017 or May 2018 royalty reductions, which will impact the amount of profits (losses) on commercial sales of ADUHELM to be shared with Eisai.

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

9 unchanged sentences

For information as to our accounting policies relating to claims and legal proceedings, including use of estimates and contingencies, please read Note 1, Summary of Significant Accounting Policies , to these consolidated financial statements.

With respect to some loss contingencies, an estimate of the possible loss or range of loss cannot be made until management has further information, including, for example, (i) which claims, if any, will survive dispositive

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

motion practice;

(ii) information to be obtained through discovery;

4 unchanged sentences

These include claims by third-parties that we infringe their patents.

An adverse outcome in any of these proceedings could result in one or more of the following and have a material impact on our business or consolidated results of operations and financial position:

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

adverse outcome in any of these proceedings could result in one or more of the following and have a material impact on our business or consolidated results of operations and financial position:

(i) loss of patent protection;

2 unchanged sentences

Loss Contingencies

Aducanumab Securities Litigation

We and certain current and former officers are named as defendants in an action filed by a shareholder on November 13, 2020, in the U.S.

District Court for the Central District of California and an action filed by a shareholder on January 5, 2021, in the U.S.

ADUHELM Securities Litigation

We and certain current and former officers are named as defendants in an action filed by a shareholder on November 13, 2020, and now pending in the U.S.

District Court for the District of Massachusetts.

Both actions allege violations of federal securities laws under 15 U.S.C §78j(b) and §78t(a) and 17 C.F.R.

§240.10b-5 and are seeking a declaration of the action as a class action and an award of damages, interest and attorneys' fees.

The action alleges violations of federal securities laws under 15 U.S.C §78j(b) and §78t(a) and 17 C.F.R.

§240.10b-5 and seeks a declaration of the action as a class action and monetary relief.

An estimate of the possible loss or range of loss cannot be made at this time.

No trial date has been set.

We have filed a motion to dismiss, which is pending.

IMRALDI Patent Litigation

In September 2018 Fresenius Kabi Deutschland GmbH (Fresenius Kabi) commenced proceedings for damages and injunctive relief against Biogen France SAS in the Tribunal de Grande Instance de Paris, alleging that IMRALDI, the adalimumab biosimilar product of Samsung Bioepis UK Limited that Biogen has commercialized in Europe, infringes the French counterpart of European Patent No.

3 148 510 (the '510 Patent), which was issued in June 2018 and expires in May 2035.

In September 2018 Fresenius Kabi Deutschland GmbH (Fresenius Kabi) commenced proceedings for damages and injunctive relief against Biogen France SAS in the Tribunal de Grande Instance de Paris (the French proceeding) and in November 2018 against Biogen GmbH in the Düsseldorf Regional Court (the German proceeding), alleging that IMRALDI, the adalimumab biosimilar product of Samsung Bioepis that Biogen has commercialized in Europe, infringes national counterparts of European Patent No.

3 148 510 (the EP '510 Patent, expiring in May 2035).

In May 2020 the European Patent Office (EPO) held the EP '510 Patent invalid.

Fresenius Kabi' has appealed to the EPO's Technical Boards of Appeal, a hearing has been set for June 2022, and the German and French proceedings have been stayed pending the decision on appeal.

In June 2020 Fresenius Kabi commenced proceedings in Denmark's Maritime and Commercial High Court alleging that IMRALDI infringes the Danish counterpart of European Patent No.

3 145 488 (the EP '488 Patent, expiring in May 2035) and a Danish utility model.

In September 2021 the Court ruled that the patent and utility model are invalid and not infringed.

Fresenius Kabi has appealed to the High Court of Eastern Denmark and the appeal is pending.

The EPO has scheduled a hearing on the validity of the EP '488 Patent for October 2022.

In July 2020 the Danish Patent Board of Appeal revoked the Danish utility models that Fresenius Kabi had asserted against Biogen and Fresenius Kabi has appealed to the Danish Maritime and Commercial High Court.

No hearing has been scheduled.

In October 2018 Fresenius Kabi commenced preliminary injunction proceedings against Biogen (Denmark) Manufacturing ApS and Biogen Denmark A/S in Denmark's Maritime and Commercial High Court alleging infringement of Danish Utility Models.

In June 2019 the Danish court denied Fresenius Kabi's request for a preliminary injunction.

Fresenius Kabi has appealed that decision and was permitted to add a claim of infringement of the Danish counterpart of the ‘510 patent, and the appeal is pending.

In July 2020 the Danish Patent Board of Appeal revoked the Danish Utility Models that were the subject of Fresenius Kabi’s October 2018 request for a preliminary injunction and Fresenius Kabi has appealed those revocations to Denmark’s Maritime and Commercial High Court.

No hearing has been scheduled in that appeal.

In June 2020 Fresenius Kabi commenced preliminary injunction proceedings against Biogen (Denmark) Manufacturing ApS and Biogen (Denmark) A/S in Denmark’s Maritime and Commercial High Court alleging infringement of another Danish Utility Model.

A hearing has been scheduled for May 2021.

In November 2018 Fresenius Kabi commenced infringement proceedings for damages and injunctive relief against Biogen GmbH in the Düsseldorf Regional Court relating to the German counterpart of the ‘510 Patent.

A hearing has been set for August 2021.

In July 2019 Gedeon Richter PLC (Gedeon Richter) commenced proceedings against Biogen GmbH in the Düsseldorf Regional Court alleging infringement of the German counterpart of European Patent No.

3 212 667 (the '667 Patent), which was issued in September 2018 and expires in October 2035, and seeking damages and injunctive relief.

A hearing has been set for November 2021.

In July 2019 Gedeon Richter Nyrt commenced proceedings for damages and injunctive relief against Biogen GmbH in the Düsseldorf Regional Court alleging infringement of the German counterpart of European Patent No.

3 212 667, which expires in October 2035.

The case has been stayed pending proceedings in the EPO seeking to invalidate the patent.

In November 2020 Gedeon Richter Nyrt commenced additional proceedings against Biogen GmbH in the Düsseldorf Regional Court alleging infringement of a German utility model.

In October 2021 Biogen filed cancellation proceedings in respect of the German utility model and the infringement proceedings have been stayed pending the outcome of the cancellation proceedings.

An estimate of the possible loss or range of loss in the IMRALDI patent litigation described above cannot be made at this time.

3 unchanged sentences

District Court for the District of Massachusetts.

The action alleges sales and promotional activities in violation of the federal False Claims Act and state law counterparts and seeks single and treble damages, civil penalties, interest, attorneys’ fees and costs.

No trial date has been set.

The action alleges sales and promotional activities in violation of the federal False Claims Act and state law counterparts and seeks damages of $ 981.1 million plus statutory trebling of damages, civil penalties, attorneys' fees and costs.

A trial is scheduled for the third quarter of 2022.

has not made an intervention decision.

An estimate of the possible loss or range of loss cannot be made at this time.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

An estimate of the possible loss cannot be made at this time.

Dispute with Former Convergence Shareholders

1 unchanged sentence

We dispute the claims.

Dispute with Jacobs Switzerland GmbH

Jacobs Switzerland GmbH, the general contractor for the construction of our large-scale biologics manufacturing facility in Solothurn, Switzerland, claimed additional payments were due for construction costs.

We have reached an agreement in principle to resolve the claim.

Samsung BioLogics Arbitration

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In December 2020 we requested arbitration in the International Chamber of Commerce Court of International Arbitration against Samsung BioLogics seeking interpretation of certain provisions of the parties Joint Venture Agreement.

Samsung BioLogics counterclaimed for breach and seeks declaratory relief and unspecified damages.

The arbitration hearing has concluded and a decision is pending.

An estimate of the possible loss or range of loss cannot be made at this time.

ERISA Class Action Litigation

In September 2020 the U.S.

District Court for the District of Massachusetts consolidated two cases filed against us in July and August 2020 by participants in the Biogen 401(k) Savings Plan alleging breach of fiduciary duty under ERISA.

Plaintiffs seek a declaration of the action as a class action and monetary and other relief.

No trial date has been set.

An estimate of the possible loss or range of loss cannot be made at this time.

Humana Patient Assistance Litigation

In September 2021 Humana Inc.

(Humana) filed suit against us in the U.S District Court for the District of Massachusetts alleging damages related to our providing MS patients with free medications and making charitable contributions to non-profit organizations that assist MS patients.

Humana alleges violation of the federal RICO Act and state laws and seeks statutory treble damages, attorneys' fees and costs.

No trial date has been set.

An estimate of the possible loss or range of loss cannot be made at this time.

Other Matters

Petition for Inter Partes Review

In July 2018 Mylan Pharmaceuticals, Inc.

(Mylan) filed a petition that was granted by the U.S.

Patent Trial and Appeal Board (PTAB) for inter partes review of our U.S.

8,399,514 (the '514 Patent).

The '514 Patent includes claims covering treatment of MS with 480 mg of dimethyl fumarate per day as provided for in our TECFIDERA label.

In February 2020 the PTAB issued a final written decision upholding the patentability of the ‘514 Patent and in April 2020 Mylan filed an appeal in the U.S.

Court of Appeals for the Federal Circuit (the Federal Circuit), which is pending.

Government Investigations

House of Representatives Committees on Oversight and Reform and Energy and Commerce and the Office of Inspector General of the U.S.

Department of Health and Human Services have announced investigations relating to ADUHELM.

In addition, the Company has received a civil investigative demand from the Federal Trade Commission and an inquiry from the Securities and Exchange Commission seeking information relating to ADUHELM, including healthcare sites, ADUHELM’s approval and ADUHELM’s marketing.

Hatch-Waxman Act Litigation relating to TECFIDERA Orange-Book Listed Patents

6 unchanged sentences

District Court for the Northern District of West Virginia (the West Virginia Court).

On June 22, 2020, the West Virginia Court entered judgment for Mylan that the asserted claims of the ‘514 Patent are invalid for lack of written description.

We appealed the judgment to the Federal Circuit and the appeal is pending.

In June 2020 the West Virginia Court entered judgment for Mylan that the asserted claims of the ‘514 Patent are invalid for lack of written description and in November 2021 the Federal Circuit affirmed.

The Delaware Court entered judgment for the Delaware Defendants on the grounds that the judgment of the West Virginia Court applies to the Delaware Actions under principles of collateral estoppel.

We have appealed the judgments and the appeal is pending.

The appeals in the Delaware cases were stayed and we expect will remain so until the Federal Circuit's decision in the West Virginia case becomes final.

Petition for Inter Partes Review

In July 2018 Mylan Pharmaceuticals, Inc.

(Mylan) filed a petition that was granted by the U.S.

Patent Trial and Appeal Board (PTAB) for inter partes review of our U.S.

8,399,514 (the '514 Patent).

The '514 Patent includes claims covering treatment of MS with 480 mg of dimethyl fumarate per day as provided for in our TECFIDERA label.

In February 2020 the PTAB issued a final written decision upholding the patentability of the ‘514 Patent and in November 2021 the Federal Circuit ruled that the decision was moot.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

European Patent Office Oppositions

In 2016 the European Patent Office (EPO) revoked our European Patent No.

In January 2022 the Technical Boards of Appeal of the EPO affirmed the EPO's 2016 decision revoking our European Patent No.

2 137 537, which covers the treatment of MS with 480 mg of dimethyl fumarate as provided for in our TECFIDERA label.

We have appealed to the Technical Boards of Appeal of the EPO and a hearing date has been set for January 2022.

In March 2018 the EPO revoked Forward Pharma's European Patent No.

2 801 355, which expires in October 2025.

Forward Pharma has filed an appeal to the Technical Boards of Appeal of the EPO and a hearing has been set for September 2021.

TYSABRI Patent Revocation Matters

In November 2017 Bioeq GMBH, affiliated with the Polpharma Group, brought an action in the Polish Patent Office seeking to revoke Polish Patent No.

215263 (the Polish '263 Patent), which corresponds to our European Patent No.

In November 2017 Swiss Pharma International AG, affiliated with the Polpharma Group, filed an action in the Commercial Court of Rome to invalidate the Italian counterpart of the European Patent No.

1 485 127 (the E.U.

'127 Patent) and covers administration of natalizumab (TYSABRI) to treat MS.

The Polish '263 Patent expires in February 2023.

A hearing was held in January 2021 and a decision is pending.

In August 2020 a related entity, Polpharma Biologics S.A., also brought an action seeking to revoke the Polish ‘263 Patent.

No hearing has been set in this matter.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Swiss Pharma International AG, also affiliated with the Polpharma Group, filed actions in the District Court of the Hague, Netherlands (January 2016), the German Patents Court (March 2016) and the Commercial Court of Rome (November 2017) seeking to invalidate the Dutch, German and Italian counterparts, respectively, of the E.U.

'127 Patent, which also cover administration of natalizumab (TYSABRI) to treat MS and expire in February 2023.

The Dutch and German counterparts were ruled invalid.

The decision in the Dutch action was affirmed on appeal and the German appeal has been withdrawn.

No hearing has been set in the Italian action.

'127 Patent) which covers administration of natalizumab (TYSABRI) to treat MS and expires in February 2023.

A hearing has been set for June 2022.

In August 2020 Polpharma Biologics S.A., also affiliated with the Polpharma Group, brought an action in the Polish Patent Office to revoke our Polish Patent No.

215263, which corresponds to the E.U.

'127 Patent and expires in February 2023.

The action was suspended by the Polish Patent Office in April 2021 pending examination of our amended patent claims.

In June 2021 Polpharma Biologics S.A., Sandoz B.V.

and Sandoz AG filed an action in the District Court of the Hague, Netherlands to invalidate the Dutch counterpart of our European Patent 2 676 967 (the EU '967 Patent), which expires in 2027 and covers methods of treatment using natalizumab (TYSABRI) and pre-treatment testing of patients.

A hearing has been set for September 2022.

In July 2021 the EPO revoked the EU ‘967 Patent.

We have appealed to the EPO’s Technical Boards of Appeal.

A hearing date has not been set.

In September 2021 Polpharma Biologics S.A., Sandoz AG, Sandoz Limited and Sandoz GmbH filed an action in the English High Court to revoke the UK counterpart of the EU ‘967 Patent and seeking a declaration that the patent would not be infringed by the marketing of Polpharma’s proposed natalizumab biosimilar.

A hearing has been set for November 2022.

Annulment Proceedings in General Court of the European Union relating to TECFIDERA

Pharmaceutical Works Polpharma SA (Polpharma) and Mylan Ireland Ltd.

(Mylan Ireland) have each filed applications in the General Court of the European Union (Polpharma in October 2018 and Mylan Ireland in November 2020) seeking to annul decisions of the European Medicines Agency (EMA) refusing to validate Polpharma’s and Mylan Ireland’s respective applications to market a generic version of TECFIDERA.

The EMA’s refusals were on the grounds that TECFIDERA benefits from regulatory data protection.

Biogen and the European Commission were granted leave to intervene in support of the EMA in the case brought by Polpharma.

That case was heard in July 2020 and we are awaiting a decision.

We intend to seek leave to intervene in support of the EMA in the case brought by Mylan Ireland.

No hearing has been set in that matter.

(Mylan Ireland) each filed actions in the General Court of the European Union (Polpharma in October 2018 and Mylan Ireland in November 2020) to annul the European Medicines Agency's (EMA) decision not to validate their applications to market generic versions of TECFIDERA on the grounds that TECFIDERA benefits from regulatory data protection.

On May 5, 2021, the European General Court annulled the EMA's non-validation decision with respect to Polpharma.

We have appealed the decision to the European Court of Justice and the appeal is pending.

The case brought by Mylan Ireland has been stayed.

Product Liability and Other Legal Proceedings

7 unchanged sentences

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.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

2 unchanged sentences

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

During the fourth quarter of 2021 VUMERITY was approved for the treatment of RRMS in the E.U., Switzerland and the U.K.

Under our agreement with Alkermes, 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.

3 unchanged sentences

In connection with our acquisition of Convergence, we agreed to make additional payments based upon the achievement of certain milestone events.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As the acquisition of Convergence occurred after January 1, 2009, we recognized the contingent consideration liabilities associated with this transaction at their fair value on the acquisition date and revalue the remaining obligations each reporting period.

We may pay up to approximately $ 400.0 million in remaining milestones related to these acquisitions.

We may pay up to approximately $ 400.0 million in remaining milestones related to this acquisition.

In 2006 we acquired Fumapharm AG.

3 unchanged sentences

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 $ 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.

2 unchanged sentences

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 in 2022, 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.

Milestones payable to Neurimmune are shared expenses under the ADUHELM Collaboration Agreement.

In June 2021 ADUHELM was granted accelerated approval by the FDA.

Under the terms of the Neurimmune Agreement, we were required to pay Neurimmune a milestone payment of $ 100.0 million related to the launch of

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ADUHELM in the U.S.

Other Funding Commitments

2 unchanged sentences

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.

3 unchanged sentences

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 these consolidated financial statements.

Tax Related Obligations

1 unchanged sentence

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

As of December 31, 2020 and 2019, we have accrued income tax liabilities of $ 697.0 million, respectively, under the Transition Toll Tax.

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

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

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.

For additional information on the Transition Toll Tax, please read Note 16, Income Taxes , to these consolidated financial statements.

Solothurn, Switzerland Manufacturing Facility

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

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

As of December 31, 2020, we had contractual commitments of approximately $ 9.3 million related to the construction of this facility.

As of December 31, 2021 and 2020, we did not have significant liabilities recorded for guarantees.

8 unchanged sentences

We sponsor various retirement and pension plans.

Our estimates of liabilities and expenses for these plans incorporate a number of assumptions, including expected rates of return on plan assets and interest rates used to discount future benefits.

Our estimates of liabilities and expense for these plans incorporate a number of assumptions, including expected rates of return on plan assets and interest rates used to discount future benefits.

401(k) Savings Plan

7 unchanged sentences

The expense related to our 401(k) Savings Plan primarily consists of our matching contributions.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Expense related to our 401(k) Savings Plan totaled $ 58.4 million, $ 44.3 million and $ 44.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

14 unchanged sentences

Our retiree benefit plans include defined benefit plans for employees in our affiliates in Switzerland and Germany as well as other insignificant defined benefit plans in certain other countries where we maintain an operating presence.

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Our Swiss plan is a government-mandated retirement fund that provides employees with a minimum investment return.

4 unchanged sentences

As of December 31, 2021 and 2020, the Swiss plan had an unfunded net pension obligation of $ 64.1 million and $ 75.7 million, respectively, and plan assets that totaled $ 200.1 million and $ 170.0 million, respectively.

In 2020, 2019 and 2018 we recognized expense totaling $ 15.5 million, $ 14.7 million and $ 14.8 million, respectively, related to our Swiss plan, of which $ 2.6 million, $ 1.2 million and $ 1.3 million, respectively, was included in other income (expense), net.

In 2021, 2020 and 2019 we recognized expense totaling $ 21.5 million, $ 15.5 million and $ 14.7 million, respectively, related to our Swiss plan, of which $ 3.5 million, $ 2.6 million and $ 1.2 million, respectively, was included in other income (expense), net in our consolidated statements of income.

The obligations under the German plans are unfunded and totaled $ 68.4 million and $ 75.5 million as of December 31, 2021 and 2020, respectively.

Net periodic pension cost related to the German plans totaled $ 6.2 million, $ 5.1 million and $ 5.3 million for the years ended December 31, 2020, 2019 and 2018, respectively, of which $ 2.0 million, $ 1.4 million and $ 1.5 million, respectively, was included in other income (expense), net.

Net periodic pension cost related to the German plans totaled $ 7.6 million, $ 6.2 million and $ 5.1 million for the years ended December 31, 2021, 2020 and 2019, respectively, of which $ 2.1 million, $ 2.0 million and $ 1.4 million, respectively, was included in other income (expense), net in our consolidated statements of income.

SEGMENT INFORMATION

8 unchanged sentences

Consistent with this decision-making process, our CEO uses consolidated, single-segment financial information for purposes of evaluating performance, forecasting future period financial results, allocating resources and setting incentive targets.

Enterprise-wide disclosures about product revenues, other revenues and long-lived assets by geographic area are presented below.

Revenues are primarily attributed to individual countries based on location of the customer or licensee.

Enterprise-wide disclosures about product revenue, other revenue and long-lived assets by geographic area are presented below.

Revenue is primarily attributed to individual countries based on location of the customer or licensee.

AND SUBSIDIARIES

4 unchanged sentences

(In millions) U.S.

Europe Asia Other Total

Product revenues from external customers $ 5,900.1 $ 3,656.4 $ 596.7 $ 539.0 $ 10,692.2

Revenues from anti-CD20 therapeutic programs 1,897.4 0.1 — 80.3 1,977.8

Other revenues from external customers 733.6 8.1 32.9 — 774.6

Germany Asia Other Total

Product revenue from external customers $ 3,805.7 $ 2,626.0 $ 1,162.4 $ 688.0 $ 564.8 $ 8,846.9

Revenue from anti-CD20 therapeutic programs 1,596.7 — — — 61.8 1,658.5

Other revenue from external customers 429.9 9.7 — 36.7 — 476.3

Long-lived assets 1,390.5 2,337.8 25.4 16.4 21.7 3,791.8

1 unchanged sentence

(In millions) U.S.

Europe Asia Other Total

Product revenues from external customers $ 6,713.8 $ 3,794.5 $ 320.3 $ 551.2 $ 11,379.8

Revenues from anti-CD20 therapeutic programs 2,211.9 0.2 — 78.3 2,290.4

Other revenues from external customers 585.8 9.7 112.2 — 707.7

Germany Asia Other Total

Product revenue from external customers $ 5,900.1 $ 2,495.3 $ 1,161.1 $ 596.7 $ 539.0 $ 10,692.2

Revenue from anti-CD20 therapeutic programs 1,897.4 0.1 — — 80.3 1,977.8

Other revenue from external customers 733.6 8.0 0.1 32.9 — 774.6

Long-lived assets 1,496.3 2,290.2 31.2 16.2 10.9 3,844.8

1 unchanged sentence

(In millions) U.S.

Europe Asia Other Total

Product revenues from external customers $ 6,800.5 $ 3,370.3 $ 281.2 $ 434.8 $ 10,886.8

Revenues from anti-CD20 therapeutic programs 1,903.4 0.2 — 76.6 1,980.2

Other revenues from external customers 457.0 32.7 96.2 — 585.9

Germany Asia Other Total

Product revenue from external customers $ 6,713.8 $ 2,668.4 $ 1,126.1 $ 320.3 $ 551.2 $ 11,379.8

Revenue from anti-CD20 therapeutic programs 2,211.9 0.2 — — 78.3 2,290.4

Other revenue from external customers 585.8 9.4 0.3 112.2 — 707.7

Long-lived assets 1,493.2 2,135.4 27.5 6.2 12.0 3,674.3

(1) Represents amounts related to Europe less those attributable to Germany.

As of December 31, 2021, 2020 and 2019, approximately $ 2,237.0 million, $ 2,180.6 million and $ 2,028.8 million, respectively, of our long-lived assets were related to the construction of our large-scale biologics manufacturing facility in Solothurn, Switzerland.

In August 2019 we completed the sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM.

As of December 31, 2018, approximately $ 646.5 million of our long-lived assets were related to our manufacturing facility in Hillerød, Denmark.

For additional information on our large-scale biologics manufacturing facility in Solothurn, Switzerland, please read Note 10, Property, Plant and Equipment, to these consolidated financial statements.

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

AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Quarterly Financial Data (Unaudited)

(In millions, except per share amounts) First

Quarter Second

Quarter Third

Quarter Fourth

Quarter Total

Product revenues, net $ 2,904.6 $ 2,795.7 $ 2,690.3 $ 2,301.6 $ 10,692.2

Revenues from anti-CD20 therapeutic programs $ 520.4 $ 478.3 $ 560.1 $ 419.0 $ 1,977.8

Other revenues $ 109.3 $ 407.6 $ 125.7 $ 132.0 $ 774.6

Total revenues $ 3,534.3 $ 3,681.6 $ 3,376.1 $ 2,852.6 $ 13,444.6

Gross profit (1)

$ 3,080.0 $ 3,270.5 $ 2,927.0 $ 2,361.9 $ 11,639.4

Net income $ 1,392.6 $ 1,606.5 $ 703.9 $ 357.6 $ 4,060.5

Net income attributable to Biogen Inc.

$ 1,399.1 $ 1,542.1 $ 701.5 $ 357.9 $ 4,000.6

Net income per share:

Basic earnings per share attributable to Biogen Inc.

$ 8.10 $ 9.60 $ 4.47 $ 2.33 $ 24.86

Diluted earnings per share attributable to Biogen Inc.

$ 8.08 $ 9.59 $ 4.46 $ 2.32 $ 24.80

Weighted-average shares used in calculating:

Basic earnings per share attributable to Biogen Inc.

172.8 160.6 156.9 153.7 160.9

Diluted earnings per share attributable to Biogen Inc.

173.1 160.9 157.2 154.0 161.3

(In millions, except per share amounts) First

Quarter Second

Quarter Third

Quarter Fourth

Quarter Total

Product revenues, net $ 2,680.0 $ 2,880.3 $ 2,894.7 $ 2,924.8 $ 11,379.8

Revenues from anti-CD20 therapeutic programs $ 517.4 $ 576.4 $ 595.8 $ 600.8 $ 2,290.4

Other revenues $ 292.4 $ 160.0 $ 109.6 $ 145.7 $ 707.7

Total revenues $ 3,489.8 $ 3,616.7 $ 3,600.1 $ 3,671.3 $ 14,377.9

Gross profit (1)

$ 2,887.8 $ 3,140.4 $ 3,170.1 $ 3,224.2 $ 12,422.5

Net income $ 1,408.8 $ 1,494.1 $ 1,545.9 $ 1,439.7 $ 5,888.5

Net income attributable to Biogen Inc.

$ 1,408.8 $ 1,494.1 $ 1,545.9 $ 1,439.7 $ 5,888.5

Net income per share:

Basic earnings per share attributable to Biogen Inc.

$ 7.17 $ 7.85 $ 8.40 $ 8.10 $ 31.47

Diluted earnings per share attributable to Biogen Inc.

$ 7.15 $ 7.85 $ 8.39 $ 8.08 $ 31.42

Weighted-average shares used in calculating:

Basic earnings per share attributable to Biogen Inc.

196.6 190.3 184.0 177.8 187.1

Diluted earnings per share attributable to Biogen Inc.

197.0 190.4 184.2 178.2 187.4

(1) Gross profit is calculated as total revenues less cost of sales, excluding amortization and impairment of acquired intangible assets .

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Biogen Inc.

and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of income, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income, of comprehensive income, of equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

1 unchanged sentence

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and the manner in which it accounts for income taxes for intra-entity transfers of assets other than inventory in 2018.

Basis for Opinions

14 unchanged sentences

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance

with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

6 unchanged sentences

As described in Notes 1 and 4 to the consolidated financial statements, the Company recognized revenue from product sales net of reserves, including Medicaid and managed care rebates.

Within Accrued expenses and other, total contractual adjustments amounted to $1,093.0 million as of December 31, 2020.

This balance primarily includes provisions for Medicaid and managed care rebates in the US.

Within accrued expense and other, total contractual adjustments amounted to $759.6 million as of December 31, 2021.

A portion of this balance includes provisions for Medicaid and managed care rebates in the US.

Medicaid rebates relate to the Company’s estimated obligations to states under established reimbursement arrangements.

1 unchanged sentence

Managed care rebates represent the Company’s estimated obligations to third-parties, primarily pharmacy benefit managers.

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

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

As disclosed by management, the Medicaid and managed care estimates reflect historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.

The principal considerations for our determination that performing procedures relating to reserves for Medicaid and managed care rebates is a critical audit matter are the significant judgment by management due to the significant measurement uncertainty involved in developing these reserves, as the reserves are based on assumptions developed using historical experience, current contractual requirements, specific known market events and payment patterns, which in turn led to a high degree of auditor judgment, subjectivity and effort in applying procedures related to these assumptions.

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

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

The Medicaid and managed care estimates reflect historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the reserves for Medicaid and managed care rebates, including controls over the assumptions used to estimate these rebate reserves.

These procedures also included, among others, (i) developing an independent estimate of the rebate reserves by utilizing third-party data related to product demand, data related to price changes, the terms of the specific rebate programs, the historical trend of actual rebate claims paid and consideration of contractual requirement changes and market events;

(ii) comparing the independent estimate to management’s estimate, and (iii) testing rebate claims paid by the Company, including evaluating the claims for consistency with the contractual terms of the Company’s rebate agreements.

These procedures also included, among others (i) developing an independent estimate of the Medicaid and managed care rebate reserves by utilizing third-party data related to product demand, data related to price changes, the terms of the specific rebate programs, the historical trend of actual rebate claims paid and consideration of contractual requirement changes and market events;

(ii) comparing the independent estimate to management’s estimate;

and (iii) testing rebate claims paid by the Company, including evaluating the claims for consistency with the contractual terms of the Company’s rebate agreements.

/s/ PricewaterhouseCoopers LLP

3 unchanged sentences

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

What changed 10-K

Item 9A. Controls and Procedures