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Item 7. Management’s Discussion and Analysis

2023-02-15 compared with 2022-02-03 · 531 added, 459 removed, 404 unchanged (71% of the section changed)

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Executive Summary

Biogen is a global biopharmaceutical company focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies.

We have a leading portfolio of medicines to treat multiple sclerosis (MS), have introduced the first approved treatment for spinal muscular atrophy (SMA) and are providing the first and only approved treatment to address a defining pathology of Alzheimer’s disease.

We also commercialize biosimilars of advanced biologics and focus on advancing our pipeline in neuroscience and specialized immunology.

Lastly, we are focused on accelerating our efforts in digital health to support our commercial and pipeline programs while also creating opportunities for potential digital therapeutics.

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

Biogen is a global biopharmaceutical company focused on discovering, developing and delivering innovative therapies for people living with serious and complex diseases worldwide.

We have a broad portfolio of medicines to treat MS, have introduced the first approved treatment for SMA and co-developed two treatments to address a defining pathology of Alzheimer’s disease.

We are focused on advancing our pipeline in neurology, neuropsychiatry, specialized immunology and rare diseases.

We support our drug discovery and development efforts through internal research and development programs and external collaborations.

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

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and FUMADERM for the treatment of severe plaque psoriasis.

We also collaborate with Eisai on the commercialization of LEQEMBI for the treatment of Alzheimer's disease, which was granted accelerated approval by the FDA in January 2023.

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

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OCREVUS for the treatment of PPMS and RMS;

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

owned member of the Roche Group.

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

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

Through our agreements with Samsung Bioepis, our joint venture with Samsung BioLogics, we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe.

We have also secured the exclusive rights to commercialize BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, which was approved in the U.S., the E.U.

during the third quarter of 2021.

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

LUNSUMIO (mosunetuzumab), which was granted accelerated approval in the U.S.

during the fourth quarter of 2022 for the treatment of relapsed or refractory follicular lymphoma;

glofitamab, an investigational bispecific antibody for the potential treatment of non-Hodgkin's lymphoma;

and have the option to add other potential anti-CD20 therapies, pursuant to our collaboration arrangements with Genentech, a wholly-owned member of the Roche Group.

In addition to continuing to invest in new potential innovation in MS and SMA we are advancing our mid-to-late stage programs including zuranolone for MDD and PPD, BIIB080 for Alzheimer's disease, tofersen for ALS and both litifilimab and dapirolizumab pegol for certain forms of lupus.

We also commercialize biosimilars of advanced biologics including BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe, as well as BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, in the U.S.

We continue to develop potential biosimilar products including BIIB800, a proposed tocilizumab biosimilar referencing ACTEMRA, and SB15, a proposed aflibercept biosimilar referencing EYLEA.

In February 2023 we announced that we are exploring strategic options for our biosimilars business.

For additional information on our collaboration arrangements, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

We seek to ensure an uninterrupted supply of medicines to patients around the world.

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In the second quarter of 2021 a portion of the facility received a GMP multi-product license from SWISSMEDIC.

We believe that the Solothurn facility will support our anticipated near-term needs for the manufacturing of ADUHELM and other biologic assets.

In addition, we believe that the Solothurn site may provide us with the ability to further expand if we need additional large scale manufacturing capacity to support future clinical and commercial manufacturing requirements.

Solothurn has been approved for the manufacture of ADUHELM and LEQEMBI by the FDA.

We estimate the second manufacturing suite at the Solothurn facility will be operational by the end of 2023.

We believe that the Solothurn facility will support our anticipated near-term needs for the manufacturing of biologic assets.

If we are unable to fully utilize our manufacturing facilities, due to lower than forecasted demand for our products, we will incur excess capacity charges which will have a negative effect on our financial condition and results of operations.

Our revenue depends upon continued sales of our products as well as the financial rights we have in our anti-CD20 therapeutic programs, and, unless we develop, acquire rights to and/or commercialize new products and technologies, we will be substantially dependent on sales from our products and our financial rights in our anti-CD20 therapeutic programs for many years.

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In the longer term, our revenue growth will depend upon the successful clinical development, regulatory approval and launch of new commercial products as well as additional indications for our existing products, our ability to obtain and maintain patents and other rights related to our marketed products, assets originating from our research and development efforts and/or successful execution of external business development opportunities.

In the longer term, our revenue growth will depend upon the successful clinical development, regulatory approval and launch of new commercial

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products as well as additional indications for our existing products, our ability to obtain and maintain patents and other rights related to our marketed products, assets originating from our research and development efforts and/or successful execution of external business development opportunities.

Business Environment

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ADUHELM (aducanumab)

In June 2021 the FDA granted accelerated approval of ADUHELM, which we are developing and commercializing in collaboration with Eisai, based on reduction in amyloid beta plaques observed in patients treated with ADUHELM.

As part of the accelerated approval, we will conduct a confirmatory trial to verify the clinical benefit of ADUHELM in patients with Alzheimer’s disease.

In June 2021 the FDA granted accelerated approval of ADUHELM, which, until March of 2022, we had been collaborating on with Eisai, based on reduction in amyloid beta plaques observed in patients treated with ADUHELM.

As part of the accelerated approval, we are required to conduct a confirmatory trial to verify the clinical benefit of ADUHELM in patients with Alzheimer’s disease.

The FDA may withdraw approval if, among other things, the confirmatory trial fails to verify clinical benefit of ADUHELM, ADUHELM's benefit-risk is no longer positive or we fail to comply with the conditions of the accelerated approval.

ADUHELM product label states that treatment with ADUHELM should be initiated in patients with mild cognitive impairment or mild dementia stage of disease, the population which was studied in clinical trials.

We expect patient uptake will be gradual and we do not expect all eligible patients will be treated with ADUHELM for a variety of reasons, including appropriate patient selection criteria, a complex diagnostic and care pathway, the lack of readiness of healthcare providers and institutions to initiate treatment, concern regarding the accelerated approval of ADUHELM and its data and the ability to obtain and maintain adequate reimbursement for ADUHELM.

In January 2022 the Centers for Medicare and Medicaid Services (CMS) released a proposed NCD decision memorandum, stating the proposed NCD would cover FDA approved monoclonal antibodies that target amyloid for the treatment of Alzheimer's disease for people with Medicare only if they are enrolled in qualifying clinical trials.

We expect a final Medicare NCD by the second quarter of 2022, which should clarify Medicare reimbursement for the class of antibodies directed against amyloid.

NCD is not broader than the proposed NCD, our future operating results may be negatively impacted.

Under our collaboration agreement with Eisai (ADUHELM Collaboration Agreement), we and Eisai will co-promote ADUHELM with a region-based profit split, with Eisai reimbursing us for 45.0% of development and commercialization costs incurred by the collaboration for the advancement of ADUHELM in the U.S.

Shipments of ADUHELM commenced during the second quarter of 2021.

We have made, and may continue to make, commercial, medical and infrastructure investments in support of activities associated with the launch of ADUHELM in the U.S.

In April 2022 the CMS released a final NCD for the class of anti-amyloid treatments in Alzheimer's disease, including ADUHELM.

The final NCD confirmed coverage with evidence development, in which patients with Medicare can only access treatment if they are part of an approved clinical trial.

This decision effectively resulted in denying all Medicare beneficiaries access to ADUHELM.

We expect that this decision will reduce future demand for ADUHELM to a minimal level.

During the first quarter of 2022, as a result of the final NCD, we recorded approximately $275.0 million of charges associated with the write-off of inventory and purchase commitments in excess of forecasted demand related to ADUHELM.

Additionally, for the year ended December 31, 2022, we recorded approximately $111.0 million of aggregate gross idle capacity charges related to ADUHELM.

These charges were recorded in cost of sales within our consolidated statements of income for the year ended December 31, 2022.

We have recognized approximately $197.0 million related to Eisai's 45.0% share of inventory, idle capacity charges and contractual commitments in collaboration profit (loss) sharing

within our consolidated statements of income for the year ended December 31, 2022.

Additionally, as a result of the final NCD we have substantially eliminated our commercial infrastructure supporting ADUHELM, retaining minimal resources to manage patient access programs, including a continued free drug program for patients currently on treatment in the U.S.

We expect to continue funding certain regulatory and research and development activities for ADUHELM, including the continuation of the EMBARK re-dosing study and the Phase 4 post-marketing requirement study, ENVISION.

Additional actions regarding ADUHELM may be informed by upcoming data readouts expected for this class of antibodies, as well as further engagement with the FDA and CMS.

On March 14, 2022, we amended our ADUHELM Collaboration Agreement with Eisai.

As of the amendment date, we have sole decision making and commercialization rights worldwide on ADUHELM, and beginning January 1, 2023, Eisai receives only a tiered royalty based on net sales of ADUHELM, and no longer participates in sharing ADUHELM's global profits and losses.

Eisai's share of development, commercialization and manufacturing expense was limited to $335.0 million for the period from January 1, 2022 to December 31, 2022, which was achieved as of December 31, 2022.

Once this limit was achieved, we became responsible for all ADUHELM related costs.

Rest of World

In October 2020 the EMA accepted for review the Marketing Authorization Application for aducanumab and in December 2020 the MHLW accepted for review the Japanese NDA for aducanumab.

In October 2020 the EMA accepted for review the MAA for aducanumab and in December 2020 the Ministry of Health, Labor and Welfare (MHLW) accepted for review the Japanese NDA for aducanumab.

In December 2021 the CHMP of the EMA adopted a negative opinion on the MAA for aducanumab in Europe.

We are seeking a re-examination of the opinion by the CHMP.

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

federal courts in West Virginia and Delaware entered judgments in favor of the defendants in patent infringement proceedings relating to TECFIDERA Orange-Book listed patents.

We appealed both decisions.

In late 2021 the U.S.

Court of Appeals for the Federal Circuit (Federal Circuit) affirmed the judgment of the West Virginia federal court.

The appeals in the Delaware cases were stayed and we expect will remain so until the decision in the West Virginia case becomes final.

Multiple TECFIDERA generic entrants are now in the U.S.

market and have deeply discounted prices compared to TECFIDERA.

The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and is expected to continue to have a substantial and increasing negative impact on our U.S.

TECFIDERA revenue in the future.

In May 2021 the European General Court annulled the EMA's decision not to validate applications for approval of TECFIDERA generics on the basis that the EMA conducted the wrong assessment when determining TECFIDERA's entitlement to regulatory data and marketing protection.

We sought re-examination of the opinion by the CHMP.

In April 2022 we announced our decision to withdraw our MAA for aducanumab in Europe.

Multiple TECFIDERA generic entrants are now in North America, Brazil and certain E.U.

countries and have deeply discounted prices compared to TECFIDERA.

The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and we expect that TECFIDERA revenue will continue to decline in the future.

In the E.U., we are seeking to enforce a patent granted in June 2022 that relates to TECFIDERA and expires in 2028.

In addition, we are litigating to affirm that TECFIDERA is entitled to regulatory data and

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market protection until at least February 2024.

Our Company, the EMA and the EC have each appealed the May 2021 decision of the European General Court, which annulled the EMA's decision not to validate an application for approval of a TECFIDERA generic on the basis that the EMA and EC conducted the wrong assessment when determining TECFIDERA's entitlement to regulatory data and marketing protection.

Our Company, the EMA and the EC have each appealed the General Court’s decision as wrongly decided and the appeal is pending.

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In November 2021 the CHMP of the EMA issued an ad hoc opinion referencing the General Court’s decision which concluded that "the totality of the available data cannot establish that [monoethyl fumarate] exerts a clinically relevant therapeutic contribution within FUMADERM." The EC will decide TECFIDERA’s entitlement to regulatory data and market protection.

If data and market protection is not upheld, we could face generic competition in the E.U.

as early as the first half of 2022, which would have an adverse impact on our TECFIDERA sales in the E.U.

and our results of operations.

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

Business Update Regarding COVID-19

On October 6, 2022, the Advocate General of the CJEU issued a nonbinding advisory opinion in Biogen's favor.

This opinion recommends that the CJEU set aside the judgment of the European General Court.

We are awaiting the decision of the CJEU.

For additional information, please read Note 21, Litigation , to our consolidated financial statements included in this report and the discussion under Results of Operations - Product Revenue - Multiple Sclerosis (MS) - Fumarate below.

Business Update Regarding COVID-19 and Other Disruptions

The COVID-19 pandemic continues to present a substantial public health and economic challenge around the world.

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We may also see reduced demand for immunosuppressant therapies during the COVID-19 pandemic.

While we are currently continuing the clinical trials we have underway in sites across the globe, COVID-19 precautions have impacted the timeline for some of our clinical trials and these precautions may, directly or indirectly, have a further impact on timing in the future.

To help mitigate the impact of the COVID-19 pandemic to our clinical trials, we are pursuing innovative approaches such as remote monitoring, remote patient visits and supporting home infusions.

These alternative measures have resulted in an immaterial increase to the cost of the clinical trials underway.

Factors such as the COVID-19 pandemic, adverse weather events, labor or raw material shortages and other supply chain disruptions could result in product shortages or other difficulties and delays in manufacturing our products.

For additional information on the various risks posed by the COVID-19 pandemic, please read Item 1A.

directly or indirectly, have a further impact on timing in the future.

Geopolitical Tensions

The ongoing geopolitical tensions related to Russia's invasion of Ukraine have resulted in global business disruptions and economic volatility, including sanctions and other restrictions levied on the government and businesses in Russia.

Although we do not have affiliates or employees, in either Russia or Ukraine, we do provide various therapies to patients in Russia through a distributor and are currently involved in clinical trials with sites in Ukraine and Russia.

The timing and costs of these trials may be impacted as a result of the conflict.

In addition, new government sanctions on the export of certain manufacturing materials to Russia may delay or limit our ability to get new products approved.

The impact of the conflict on our operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflict, its impact on regional and global economic conditions and whether the conflict spreads or has effects on countries outside Ukraine and Russia.

Revenue generated from sales in these regions represented less than 2.0% of total product revenue for the years ended December 31, 2022 and 2021.

We will continue to monitor the ongoing conflict between Russia and Ukraine and assess any potential impacts on our business, supply chain, partners or customers, as well as any factors that could have an adverse effect on our results of operations.

Factors such as the COVID-19 pandemic and other global health outbreaks, adverse weather events, geopolitical events, labor or raw material shortages and other supply chain disruptions could result in product shortages or other difficulties and delays or increased costs in manufacturing our products.

For additional information on the various risks posed by the COVID-19 pandemic and the conflict in Ukraine, please read Item 1A.

Risk Factors, included in this report.

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Inflation Reduction Act of 2022

In August 2022 the IRA was signed into law in the U.S.

The IRA introduced new tax provisions, including a 15.0% corporate alternative minimum tax and a 1.0% excise tax on stock repurchases.

The provisions of the IRA will be effective for periods after December 31, 2022.

The enactment of the IRA did not result in any material adjustments to our income tax provision or net deferred tax assets as of December 31, 2022.

We expect additional guidance and regulations to be issued in future periods and will continue to assess its potential impact on our business and results of operations as further information becomes available.

The IRA also contains substantial drug pricing reforms that may have a significant impact on the pharmaceutical industry in the U.S.

This includes allowing CMS to negotiate a maximum fair price for certain high-priced single source Medicare drugs, as well as redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, potentially resulting in higher contributions from plans and manufacturers.

The IRA also establishes drug inflationary rebate requirements to penalize manufacturers from raising the prices of Medicare covered single-source drugs and biologics beyond the inflation-adjusted rate.

Further, to incentivize biosimilar development, the IRA provides an 8.0% Medicare Part B add-on payment for qualifying biosimilar products for a five-year period.

The overall impact that the IRA will have on our business, results of operations and financial condition, and the impact on the pharmaceutical industry as a whole is not yet known.

We will continue to assess as further information becomes available.

Financial Highlights

Diluted earnings per share attributable to Biogen Inc.

were $10.40 for 2021, representing a decrease of 58.1% as compared to $24.80 in the same period in 2020.

were $20.87 for 2022, representing an increase of 100.7% as compared to $10.40 in the same period in 2021.

As described below under Results of Operations , our net income and diluted earnings per share attributable to Biogen Inc.

for the year ended December 31, 2022, compared to the year ended December 31, 2021, reflects the following:

• Total revenue was $10,981.7 million for 2021, representing a $2,462.9 million, or 18.3%, decrease compared to $13,444.6 million in 2020.

• Product revenue, net totaled $8,846.9 million for 2021, representing a $1,845.3 million, or 17.3%, decrease compared to $10,692.2 million in 2020.

This decrease was primarily due to a $1,735.4 million, or 22.2%, decrease in MS product revenue and a $147.0 million, or 7.2%, decrease in SPINRAZA product revenue, partially offset by a $35.3 million, or 4.4%, increase in revenue from our biosimilar business.

◦ The decrease in MS product revenue was primarily due to a decrease in U.S.

TECFIDERA demand as a result of multiple TECFIDERA generic entrants in the U.S.

◦ The decrease in SPINRAZA revenue was primarily due to a decrease in demand as a result of increased competition in the U.S.

and Germany as well as a decrease in pricing in the U.S.

and rest of world markets, partially offset by an increase in sales volumes in Latin America and certain distributor markets.

• Revenue from anti-CD20 therapeutic programs totaled $1,658.5 million for 2021, representing a $319.3 million, or 16.1%, decrease compared to $1,977.8 million in 2020.

This decrease was primarily due to a $480.2 million, or 45.5%, decrease in RITUXAN revenue, partially offset by a $146.3 million, or 17.3%, increase in royalty revenue on sales of OCREVUS.

Sales of RITUXAN have been adversely affected by the onset of biosimilar competition.

• Other revenue totaled $476.3 million for 2021, representing a $298.3 million, or 38.5%, decrease from $774.6 million in 2020.

◦ The decrease in other revenue was primarily due to higher contract manufacturing revenue in 2020, resulting from $346.2 million in revenue related to the delivery of the license for certain of our manufacturing-related intellectual property to a contract manufacturing customer.

• Total revenue was $10,173.4 million for 2022, representing an $808.3 million, or 7.4%, decrease compared to $10,981.7 million in 2021.

• Product revenue, net totaled $7,987.8 million for 2022, representing an $859.1 million, or 9.7%, decrease compared to $8,846.9 million in 2021.

This decrease was primarily due to a $666.5 million, or 10.9%, decrease in MS product

revenue, a $111.6 million, or 5.9%, decrease in SPINRAZA product revenue and an $80.0 million, or 9.6%, decrease in revenue from our biosimilar business.

◦ The decrease in MS product revenue of $666.5 million, or 10.9%, from $6,096.7 million in 2021 to $5,430.2 million in 2022, was primarily due to a decrease in TECFIDERA demand as a result of multiple TECFIDERA generic entrants in North America, Brazil and certain E.U.

countries, and a decrease in Interferon demand due to competition as patients transition to higher efficacy and oral MS therapies.

◦ The decrease in SPINRAZA revenue of $111.6 million, or 5.9%, from $1,905.1 million in 2021 to $1,793.5 million in 2022, was primarily due to country mix, the unfavorable impact of foreign currency exchange and the timing of shipments, partially offset by an increase in sales volumes.

The increase in sales volumes reflects growth in certain Asian markets, partially offset by a decrease in sales volumes from increased competition in certain established markets, particularly Germany and Japan.

◦ The decrease in revenue from our biosimilar business of $80.0 million, or 9.6%, from $831.1 million in 2021 to $751.1 million in 2022, was primarily due to unfavorable pricing and the unfavorable impact of foreign currency exchange, partially offset by an increase in sales volumes.

• Revenue from anti-CD20 therapeutic programs totaled $1,700.5 million for 2022, representing a $42.0 million, or 2.5%, increase compared to $1,658.5 million in 2021.

This increase was primarily due to a $144.6 million, or 14.6%, increase in royalty revenue on sales of OCREVUS, partially offset by a $103.4 million, or 18.0%, decrease in RITUXAN revenue.

Sales of RITUXAN have been adversely affected by biosimilar competition.

• Other revenue totaled $485.1 million for 2022, representing a $8.8 million, or 1.8%, increase from $476.3 million in 2021.

• Total cost and expense was $6,581.6 million for 2022, representing a $2,654.9 million, or 28.7%, decrease compared to $9,236.5 million in 2021.

This decrease was primarily due to a $1,489.7 million, or 37.3%, decrease in research and development expense.

◦ The decrease in research and development expense was primarily due to $1,893.3 million in upfront payments recognized in 2020 in connection with our collaborations with Sangamo, Denali and Sage, partially offset by a $125.0 million upfront payment recognized in connection with our collaboration with InnoCare in 2021.

◦ The decrease was partially offset by a $304.5 million, or 16.9%, increase in cost of sales, which was primarily driven by $164.0 million of charges associated with inventory and purchase commitments in excess of forecasted demand related to ADUHELM during 2021 as well as higher impairment charges recorded during 2021 as compared to 2020.

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◦ Research and development expense decreased $270.1 million, or 10.8%, from $2,501.2 million in 2021 to $2,231.1 million in 2022, primarily due to higher upfront payments in 2021.

In 2021 we recorded approximately $285.0 million of upfront payments related to our collaborations with InnoCare, Ionis, Bio-Thera, Genentech, Capsigen Inc., and Ginkgo Bioworks, as compared to $28.5 million in 2022.

In addition, $39.1 million of estimated clinical trial closeout costs and manufacturing commitments associated with BIIB111 (timrepigene emparvovec) and BIIB112 (cotoretigene toliparvovec) were recorded in 2021.

◦ Amortization and impairment of acquired intangible assets decreased $515.4 million, or 58.5%, from $881.3 million in 2021 to $365.9 million in 2022, primarily due to higher impairment charges recorded in 2021.

In 2021 we recorded $629.3 million of impairment charges, as compared to $119.6 million in 2022.

◦ The decrease in cost and expense was also due to a pre-tax gain of $503.7 million recognized in 2022 related to the sale of one of our buildings.

◦ Other (income) expense, net for 2022 reflected a pre-tax gain of $1.5 billion related to the sale of our 49.9% equity interest in Samsung Bioepis, partially offset by a pre-tax charge of $900.0 million, plus settlement fees and expenses, related to a litigation settlement agreement to resolve a qui tam litigation relating to conduct prior to 2015.

As described below under Financial Condition, Liquidity and Capital Resources :

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• Cash, cash equivalents and marketable securities totaled approximately $5,598.5 million as of December 31, 2022.

• We repurchased and retired approximately 6.0 million shares of our common stock at a cost of approximately $1.8 billion during 2021 under our 2020 Share Repurchase Program.

• We repurchased and retired approximately 3.6 million shares of our common stock at a cost of approximately $750.0 million during 2022 under our 2020 Share Repurchase Program.

Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of December 31, 2022.

Acquisitions, Collaborative and Other Relationships

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

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please read Note 2, Acquisitions , Note 18, Collaborative and Other Relationships, and Note 19, Investments in Variable Interest Entities , to our consolidated financial statements included in this report.

Bio-Thera Solutions

In April 2021 we entered into a commercialization and license agreement to develop, manufacture and commercialize BAT1806, a Phase 3 clinical stage anti-interleukin-6 (IL-6) receptor monoclonal antibody that is a proposed biosimilar referencing ACTEMRA.

In connection with this agreement, we made an upfront payment of $30.0 million to Bio-Thera Solutions.

InnoCare Pharma Limited

In July 2021 we entered into a collaboration and license agreement with InnoCare for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS.

In connection with this agreement, we made an upfront payment of $125.0 million to InnoCare.

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

Mosunetuzumab

In January 2022 we exercised our option with Genentech to participate in the joint development and commercialization of mosunetuzumab, a late-stage bispecific antibody in development for B-cell non-Hodgkin’s lymphoma and other therapeutic areas.

Developments in Key Collaborative Relationships

For additional information on our collaborative and other relationships discussed below, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

Eisai Collaboration Agreements

LEQEMBI (lecanemab) Collaboration Agreement

In January 2023 we and Eisai announced that the FDA granted accelerated approval of LEQEMBI, an anti-amyloid antibody for the treatment of Alzheimer's disease.

Additionally, in January 2023 we and Eisai announced the completed submission of a supplemental BLA to the FDA for traditional approval of LEQEMBI.

In January 2023 the EMA accepted for review the MAA for lecanemab.

In January 2023 Eisai completed the submission of a MAA to the PMDA in Japan for lecanemab, and was granted Priority Review by the Japanese Ministry of Health, Labor and Welfare.

In December 2022 Eisai initiated a rolling submission of a BLA to the NMPA of China for the approval of lecanemab.

In March 2022 we extended our supply agreement with Eisai related to LEQEMBI from five years to ten years for the manufacture of LEQEMBI drug substance.

ADUHELM Collaboration Agreement

On March 14, 2022, we amended our ADUHELM Collaboration Agreement with Eisai.

Once this limit was achieved, we became responsible for all ADUHELM related costs.

For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

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Zuranolone (BIIB125)

In June 2022 we and our collaboration partner Sage announced that the Phase 3 SKYLARK study of zuranolone, for the potential treatment of MDD and PPD, met its primary and all key secondary endpoints.

In December 2022 we and Sage completed the rolling submission of a NDA to the FDA for the approval of zuranolone for the potential treatment of MDD and PPD.

This submission completes the NDA filing initiated earlier in 2022.

In February 2023 the FDA accepted the NDA and granted Priority Review for zuranolone, with a PDUFA action date of August 5, 2023.

For additional information on our collaboration arrangement with Sage, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

LUNSUMIO (mosunetuzumab)

In January 2022 we exercised our option with Genentech to participate in the joint development and commercialization of LUNSUMIO (mosunetuzumab), a bispecific antibody for the treatment of relapsed or refractory follicular lymphoma.

In connection with this exercise, we recorded a $30.0 million option exercise fee payable to Genentech in December 2021.

BIIB115 Option Exercise

In December 2021 we exercised our option with Ionis and obtained a worldwide, exclusive, royalty-bearing license to develop and commercialize BIIB115, a preclinical investigational ASO in development for SMA.

In connection with this option exercise, we made an opt-in payment of $60.0 million to Ionis.

Samsung Bioepis - Biogen's Joint Venture with Samsung BioLogics

In January 2022 we entered into an agreement to sell to Samsung Biologics our equity in Samsung Bioepis.

Under the terms of the proposed transaction, we would receive $1.0 billion in cash at closing and $1.3 billion to be deferred over two payments of $812.5 million due at the first anniversary and $437.5 million due at the second anniversary of the closing of the transaction.

We would also be eligible

to receive up to an additional $50.0 million upon the achievement of certain commercial milestones.

Closing of the transaction is currently anticipated in mid-2022, contingent on the effectiveness of a securities registration statement filed by Samsung Biologics and satisfaction of certain regulatory and other customary closing conditions.

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

In December 2022 Genentech announced that the FDA granted accelerated approval of LUNSUMIO, which was also approved by the EC in June 2022.

In December 2022 we reached an agreement with Genentech related to the commercialization and sharing of economics for glofitamab, an investigational T-cell engaging bispecific antibody targeting CD20 and CD3 for the potential treatment of B-cell non-Hodgkin's lymphoma.

For additional information on our collaboration arrangements with Genentech, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

Other Collaborative Relationships

Alcyone Therapeutics

In December 2022 we entered into a license and collaboration agreement with Alcyone to jointly develop the ThecaFlex DRx™ System, an implantable medical device intended for subcutaneous delivery of ASO therapies with a goal of improving the patient treatment experience and accessibility for people suffering from neurological disorders, such as SMA and ALS.

Under the terms of this collaboration, we

and Alcyone will jointly develop the ThecaFlex DRx™ System and Alcyone will be solely responsible for its manufacture and commercialization.

In connection with this transaction, we made an upfront payment of $10.0 million to Alcyone.

Other Key Developments

Exchange Offer

In February 2021 we completed our Exchange Offer of our tendered 2045 Senior Notes for our 2051 Senior Notes and cash, and an offer to purchase our tendered 2045 Senior Notes for cash.

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

North Carolina Gene Therapy Manufacturing Facility

In March 2021 we announced our plans to build a new gene therapy manufacturing facility in RTP, NC to support our gene therapy pipeline across multiple therapeutic areas.

The new facility will be 175,000 square feet and is expected to be operational by the end of 2023, with an estimated total investment of approximately $200.0 million.

Construction for this new facility began during the fourth quarter of 2021.

Solothurn, Switzerland Manufacturing Facility

In May 2021 we announced that a portion of our Solothurn manufacturing facility received a GMP multi-product license from SWISSMEDIC.

For additional information on our Solothurn manufacturing facility, please read Note 10, Property, Plant and Equipment , to our consolidated financial statements included in this report.

BIIB125 (zuranolone)

In June 2021 we and Sage announced positive Phase 3 results for BIIB125 (zuranolone) for the potential treatment of MDD and PPD.

In October 2021 we and Sage announced our plan to submit an NDA to the FDA for zuranolone in the second half of 2022, with rolling submission expected to start in early 2022.

The planned initial submission package will seek approval of zuranolone for MDD, and an additional filing for PPD is anticipated in the first half of 2023.

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

Lecanemab (BAN2401)

In June 2021 the FDA granted Breakthrough Therapy designation for lecanemab, an anti-amyloid antibody for the potential treatment of Alzheimer's disease, which we are developing in collaboration with Eisai.

In September 2021 Eisai initiated a rolling submission to the FDA of a BLA for lecanemab.

The BLA is being submitted under the accelerated approval pathway and is primarily based on clinical, biomarker and safety data from the Phase 2b clinical trial in people with early Alzheimer's disease and confirmed amyloid pathology.

BYOOVIZ (ranibizumab-nuna)

In September 2021 we and Samsung Bioepis announced that the FDA has approved BYOOVIZ (ranibizumab-nuna), a biosimilar referencing LUCENTIS for the treatment of neovascular (wet) age-related macular degeneration, macular edema following retinal vein occlusion, and myopic choroidal neovascularization.

In addition to the U.S.

approval, BYOOVIZ was approved in the E.U.

during the third quarter of 2021.

BIIB067 (tofersen)

In October 2021 we announced topline results from our pivotal Phase 3 VALOR study of BIIB067 (tofersen), an investigational antisense drug being evaluated for people with SOD1 ALS, indicating that the primary endpoint was not met.

We are engaging with regulators and other key stakeholders to determine potential next steps.

Tofersen (BIIB067)

In July 2022 we announced that the FDA accepted the NDA and granted Priority Review for tofersen, an investigational antisense drug being evaluated for people with SOD1 ALS, which currently has a PDUFA action date of April 25, 2023.

In December 2022 the EMA accepted for review the MAA for tofersen.

BIIB800 (referencing ACTEMRA)

In September 2022 we and our collaboration partner Bio-Thera announced that the EMA accepted for review the MAA for BIIB800, a proposed tocilizumab biosimilar referencing ACTEMRA, an anti-interleukin-6 receptor monoclonal antibody, for the treatment of severe, active and progressive rheumatoid arthritis.

In December 2022 the FDA accepted for review the abbreviated BLA for BIIB800.

BIIB122 (DNL151)

In October 2022 we and our collaboration partner Denali announced the initiation of the Phase 3 LIGHTHOUSE study of BIIB122 for the potential treatment of Parkinson's disease.

For additional information on our collaboration arrangement with Denali, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report .

Corporate Matters

Samsung Bioepis - Biogen's Joint Venture with Samsung BioLogics

In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics.

Under the terms of this transaction, we received approximately $1.0 billion in cash at closing and expect to receive approximately $1.3 billion in cash to be deferred over two payments of approximately $812.5 million due at the first anniversary and approximately $437.5 million due at the second anniversary of the closing of this transaction.

As part of this transaction, we are also eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones.

Our policy for contingent payments of this nature is to recognize the payments in the period that they become realizable, which is generally the same period in which the payments are earned.

Table of Conten ts

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions, to our consolidated financial statements included in this report.

2022 Cost Saving Initiatives

In December 2021 and May 2022 we announced our plans to implement a series of cost-reduction measures that when completed we expect may yield approximately $1.0 billion in expense savings.

These savings are being achieved through a number of initiatives, including reductions to our workforce, the substantial elimination of our commercial ADUHELM infrastructure, the consolidation of certain real estate locations and operating efficiency gains across our selling, general and administrative and research and development functions.

Under these initiatives, we estimate we will incur total restructuring charges of approximately $131.0 million, primarily related to severance.

These amounts were substantially incurred during 2022.

As of December 31, 2022, approximately $35.9 million remained in our restructuring reserve and payments are expected to be made through 2026.

For additional information on our 2022 cost saving initiatives, please read Note 4, Restructuring , to our consolidated financial statements included in this report.

Senior Note Redemption

In July 2022 we redeemed our 3.625% Senior Notes totaling $1.0 billion in aggregate principal amount prior to their maturity on September 15, 2022.

For additional information on the redemption of our Senior Notes, please read Note 13, Indebtedness , to our consolidated financial statements included in this report.

125 Broadway Sale and Leaseback Transaction

In September 2022 we completed the sale of our building and land parcel located at 125 Broadway for an aggregate sales price of approximately $603.0 million, which is inclusive of a $10.8 million tenant allowance.

Simultaneously, with the close of this transaction we leased back the building for a term of approximately 5.5 years.

For additional information on our 125 Broadway sale and leaseback transaction, please read Note 11, Property, Plant and Equipment and Note 12, Leases , to our consolidated financial statements included in this report.

RESULTS OF OPERATIONS

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Total revenue $ 10,173.4 $ 10,981.7 $ 13,444.6 (7.4) % (18.3) % $ (808.3) $ (2,462.9)

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Table of Conten ts

Product Revenue

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Multiple Sclerosis (MS):

$ 2,362.3 $ 3,905.4 $ 4,438.2 (39.5) % (12.0) % $ (1,543.1) $ (532.8)

Interferon (2)

TECFIDERA $ 1,443.9 $ 1,951.9 $ 3,841.1 (26.0) % (49.2) % $ (508.0) $ (1,889.2)

553.4 410.4 64.3 34.8 538.3 143.0 346.1

Total Fumarate 1,997.3 2,362.3 3,905.4 (15.5) (39.5) (365.0) (1,543.1)

AVONEX 973.5 1,208.7 1,491.9 (19.5) (19.0) (235.2) (283.2)

PLEGRIDY 331.9 357.4 385.6 (7.1) (7.3) (25.5) (28.2)

Total Interferon 1,305.4 1,566.1 1,877.5 (16.6) (16.6) (260.7) (311.4)

TYSABRI 2,030.9 2,063.1 1,946.1 (1.6) 6.0 (32.2) 117.0

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SPINRAZA 1,793.5 1,905.1 2,052.1 (5.9) (7.2) (111.6) (147.0)

Alzheimer's disease:

3.0 — — nm — 3.0 —

BENEPALI 441.0 498.3 481.6 (11.5) 3.5 (57.3) 16.7

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FLIXABI 81.3 99.4 97.9 (18.2) 1.5 (18.1) 1.5

4.3 — — nm — 4.3 —

Biosimilars 751.1 831.1 795.8 (9.6) 4.4 (80.0) 35.3

FUMADERM 8.2 11.0 12.2 (25.5) (9.8) (2.8) (1.2)

ADUHELM 4.8 3.0 — 60.0 nm 1.8 3.0

Total product revenue, net $ 7,987.8 $ 8,846.9 $ 10,692.2 (9.7) % (17.3) % $ (859.1) $ (1,845.3)

(1) Fumarate includes TECFIDERA and VUMERITY.

(1) VUMERITY became commercially available in the E.U.

during the fourth quarter of 2021.

(2) Interferon includes AVONEX and PLEGRIDY.

(3) In June 2021 the FDA granted accelerated approval of ADUHELM, which became commercially available in the U.S.

during the second quarter of 2021.

For additional information, please read Note 18, Collaborative and Other Relationships - Eisai Co., Ltd.

- ADUHELM Collaboration Agreement, to our consolidated financial statements included in this report.

(2) BYOOVIZ launched in the U.S.

in June 2022 and became commercially available during the third quarter of 2022.

nm Not meaningful

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Table of Conten ts

Multiple Sclerosis (MS)

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For 2022 compared to 2021, the 13.8% decrease in U.S.

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

The decrease was partially offset by an increase in VUMERITY sales volumes in the U.S.

For 2021 compared to 2020, the 9.4% increase in rest of world Fumarate revenue was primarily due to an increase in TECFIDERA sales volumes of 6.2%.

federal courts in West Virginia and Delaware entered judgments in favor of the defendants in patent infringement proceedings relating to TECFIDERA Orange-Book listed patents.

We appealed both decisions.

In late 2021 the Federal Circuit affirmed the judgment of the West Virginia federal court.

The appeals in the Delaware cases were stayed and we expect will remain so until the decision in the West Virginia case becomes final.

Multiple TECFIDERA generic entrants are now in the U.S.

market and have deeply discounted prices compared to TECFIDERA.

The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and is expected to continue to have a substantial and increasing negative impact on our U.S.

TECFIDERA revenue in the future.

In May 2021 the European General Court annulled the EMA's decision not to validate applications for approval of TECFIDERA generics on the basis that the EMA conducted the wrong

assessment when determining TECFIDERA's entitlement to regulatory data and marketing protection.

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

market, partially offset by net price increases in TECFIDERA driven by lower pharmacy rebates, managed care rebates and co-pay assistance as well as an increase in VUMERITY sales volumes.

For 2022 compared to 2021, the 16.9% decrease in rest of world Fumarate revenue was primarily due to TECFIDERA pricing reductions and a decrease in TECFIDERA demand as multiple TECFIDERA generic entrants entered into markets such as Germany and Canada.

The decrease was also driven by the unfavorable impact of foreign currency exchange, partially offset by an increase in VUMERITY sales volumes.

In the E.U., we are seeking to enforce a patent granted in June 2022 that relates to TECFIDERA and expires in 2028.

In addition, we are litigating to affirm that TECFIDERA is entitled to regulatory data and market protection until at least February 2024.

Our Company, the EMA and the EC have each appealed the May 2021 decision of the European General Court, which annulled the EMA's decision not to

validate an application for approval of a TECFIDERA generic on the basis that the EMA and EC conducted the wrong assessment when determining TECFIDERA's entitlement to regulatory data and marketing protection.

Our Company, the EMA and the EC have each appealed the General Court’s decision as wrongly decided and the appeal is pending.

If data and market protection is not upheld, we could face generic competition in the E.U.

as early as the first half of 2022, which would have an adverse impact on our TECFIDERA sales in the E.U.

and our results of operations.

On October 6, 2022, the Advocate General of the CJEU issued a nonbinding advisory opinion in Biogen's favor.

This opinion recommends that the CJEU set aside the judgment of the European General Court.

We are awaiting the decision of the CJEU.

For additional information, please read Note 21, Litigation, to our consolidated financial statements included in this report.

We expect that TECFIDERA revenue will continue to decline in 2022, compared to 2021, as a result of increasing generic competition.

We expect an increase in VUMERITY sales volumes in 2022, compared to 2021, mostly driven by demand growth, including the continued launch of VUMERITY in the E.U.

We expect that TECFIDERA revenue will continue to decline in 2023, compared to 2022, as a result of generic competition in the North America, Latin America and certain E.U.

We expect an increase in VUMERITY sales volumes in 2023, compared to 2022, mostly due to demand growth in the U.S.

and select European markets.

We believe that we have resolved previously reported manufacturing issues at our contract manufacturer.

In addition, we are in the process of securing regulatory approval for a secondary source of supply.

We do not anticipate a supply shortage in 2023 and are currently focused on rebuilding adequate inventory .

Table of Conten ts

For 2022 compared to 2021, the 18.9% decrease in U.S.

Interferon revenue was primarily due to a decrease in Interferon sales volumes of 15.5%.

The net decline in sales volumes reflects the continued decline of the Interferon market as patients transition to other higher efficacy and oral MS therapies.

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For 2021 compared to 2020, the 3.5% decrease in rest of world Interferon revenue was primarily due to a decrease in Interferon sales volumes of 3.8%.

The net decline in sales volumes reflects the continued decline of the Interferon market as patients transition to higher efficacy and oral MS therapies.

For 2022 compared to 2021, the 12.9% decrease in rest of world Interferon revenue was primarily due to a decrease in Interferon sales volumes of 6.0% resulting from the continued decline of the Interferon market as patients transition to higher efficacy and oral MS therapies, as well as the unfavorable impact of foreign currency exchange.

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

and rest of world markets in 2022, compared to 2021, as a result of increasing competition from other MS products, including biosimilars, and further pricing reductions in certain European markets.

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

TYSABRI revenue was primarily due to an increase in pricing, partially offset by a decrease in sales volumes.

For 2021 compared to 2020, the 8.4% increase in rest of world TYSABRI revenue was primarily due to favorable volume impacts, partially offset by decreases in pricing.

and rest of world markets in 2023, compared to 2022, as a result of increasing competition from other MS products.

For 2022 compared to 2021, U.S.

TYSABRI revenue was relatively flat, with a modest decrease in sales volumes, partially offset by an increase in pricing, net of higher discounts and allowances.

For 2022 compared to 2021, rest of world TYSABRI revenue was relatively flat, with a modest decrease in pricing and the unfavorable impact of foreign currency exchange, partially offset by an increase in sales volumes.

We anticipate TYSABRI revenue to be relatively flat on a global basis in 2023, compared to 2022, despite increasing competition from additional treatments for MS.

We expect to continue to face price reductions in certain European markets.

We are also aware of a potential biosimilar entrant of TYSABRI that may enter the U.S.

and European markets as early as 2023.

Table of Conten ts

Spinal Muscular Atrophy

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

SPINRAZA revenue was primarily due to a decrease in sales volumes of 24.2%, resulting from increased competition.

For 2021 compared to 2020, the 4.2% increase in rest of world SPINRAZA revenue was primarily due to an increase in sales volumes, particularly in Latin America and certain distributor markets.

These increases were offset by lower volumes resulting from increased competition in certain established markets, particularly Germany.

We face competition from a gene therapy product and an oral product.

In 2022 we expect that SPINRAZA revenue will be subject to increased competition, likely resulting in continued patient discontinuations and a lower rate of new patient starts, combined with the impact of loading dose dynamics, as patients transition to dosing once every four months, and lower prices in certain rest of world countries.

For 2022 compared to 2021, U.S.

SPINRAZA revenue was relatively flat, with a modest increase in sales volumes of 3.7%, resulting from the timing of shipments, partially offset by higher discounts and allowances.

For 2022 compared to 2021, the 9.4% decrease in rest of world SPINRAZA revenue was primarily due to country mix, the unfavorable impact of foreign currency exchange and the timing of shipments, partially offset by an increase in sales volumes.

Despite competition from a gene therapy product and an oral product, we anticipate SPINRAZA revenue to be relatively flat in 2023, compared to 2022.

Moderate growth in the U.S.

as well as continued access expansion in emerging markets is expected to offset increased competition and the impact of loading dose dynamics.

For additional information on our collaboration arrangements with Ionis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

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Alzheimer's Disease

In June 2021 the FDA granted accelerated approval of ADUHELM, which became commercially available in the U.S.

during the second quarter of 2021.

We expect minimal sales of ADUHELM in 2022.

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

BENEPALI, IMRALDI and FLIXABI

During the third quarter of 2021 BYOOVIZ, a biosimilar referencing LUCENTIS, was approved in the U.S., the E.U and the U.K.

For 2021 compared to 2020, the 4.4% increase in biosimilar revenue was primarily due to the

favorable impact of higher volumes and foreign currency exchange, partially offset by decreases in pricing in certain markets.

We anticipate a slight decline in revenue from our biosimilars business in 2022 compared to 2021, despite the launch of BYOOVIZ in the U.S.

and an anticipated modest increase in sales volume in 2022, as we continue to face price reductions in certain markets.

BENEPALI, IMRALDI, FLIXABI and BYOOVIZ

During the third quarter of 2021 BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, was approved in the U.S., the E.U and the U.K.

BYOOVIZ launched in the U.S.

in June 2022 and became commercially available in July 2022 through major distributors in the U.S.

For 2022 compared to 2021, the 9.6% decrease in biosimilar revenue was primarily due to unfavorable pricing and the unfavorable impact of foreign currency exchange, partially offset by an increase in sales volumes.

We anticipate modest growth in revenue from our biosimilars business in 2023, compared to 2022, driven by the continued launch of BYOOVIZ in the U.S.

and rest of world, offset in part by continued price reductions in certain markets.

We are currently working with our contract manufacturer for IMRALDI to address facility regulatory inspection deficiencies at two filling locations, which could impact supply and have an adverse impact on 2023 IMRALDI sales, if not resolved.

Manufacturing of BENEPALI also utilizes one of these facilities and therefore could have an adverse impact on 2023 BENEPALI sales.

We are working with our existing secondary supplier for BENEPALI with the aim to secure additional capacity.

Table of Conten ts

For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

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Genentech (Roche Group)

Our share of RITUXAN, including RITUXAN HYCELA, and GAZYVA collaboration operating profits in the U.S.

and other revenue from anti-CD20 therapeutic programs are summarized in the table below.

Our share of RITUXAN, including RITUXAN HYCELA, and GAZYVA collaboration operating profits in the U.S., royalty revenue on sales of OCREVUS and other revenue from anti-CD20 therapeutic programs are summarized in the table below.

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

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

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

of 38.8%, primarily due to the onset of competition from multiple biosimilar products.

For 2021 compared to 2020, product revenue, net also reflects an increase in GAZYVA sales volumes of 8.5%.

For 2021 compared to 2020, the decrease in collaboration cost and expense was primarily due to lower cost of sales, distribution costs and selling and marketing expense related to RITUXAN.

28.4%, primarily due to the onset of competition from multiple biosimilar products.

For 2022 compared to 2021, the decrease in collaboration costs and expense was primarily due to lower cost of sales, selling and marketing expense, distribution costs and other costs and expense related to RITUXAN.

We are aware of several other anti-CD20 molecules, including biosimilar products, that have been approved and are competing with RITUXAN and GAZYVA in the oncology and other markets.

In November 2019, January 2020 and January 2021 biosimilar products referencing RITUXAN were launched in the U.S.

and are being offered at lower prices.

This competition has had a significant adverse impact on the pre-tax profits of our collaboration

arrangements with Genentech, as the sales of RITUXAN have decreased substantially compared to prior periods.

B i osimilar products referencing RITUXAN have launched in the U.S and are being offered at lower prices.

This competition has had a significant adverse impact on the pre-tax profits of our collaboration arrangements with Genentech, as the sales of RITUXAN have decreased substantially compared to prior periods.

We expect that biosimilar competition will continue to increase as these products capture additional market share and that this will have a significant adverse impact on our co-promotion profits in the U.S.

in future years.

Other Revenue from Anti-CD20 Therapeutic Programs

Other revenue from anti-CD20 therapeutic programs consist of royalty revenue on sales of OCREVUS and our share of pre-tax co-promotion profits from RITUXAN in Canada.

For 2021 compared to 2020, the increase in other revenue from anti-CD20 therapeutic programs was primarily due to sales growth of OCREVUS.

Royalty revenue recognized on sales of OCREVUS for the years ended December 31, 2021, 2020 and 2019, totaled $991.7 million, $845.4 million and $687.5 million, respectively.

Royalty Revenue on Sales of OCREVUS

For 2022 compared to 2021, the increase in royalty revenue on sales of OCREVUS was primarily due to sales growth of OCREVUS in the U.S.

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

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

Other Revenue from Anti-CD20 Therapeutic Programs

Other revenue from anti-CD20 therapeutic programs consists of our share of pre-tax co-promotion profits from RITUXAN in Canada.

In December 2022 the FDA approved LUNSUMIO, a bispecific antibody for the treatment of relapsed or refractory follicular lymphoma.

Our share of pre-tax profits and losses on LUNSUMIO will be included as a component of revenue from anti-CD20 therapeutic programs in our consolidated statements of income.

For the year ended December 31, 2022, LUNSUMIO revenue was immaterial.

For additional information on our collaboration arrangements with Genentech, including information regarding the pre-tax profit-sharing formula and its impact on future revenue from anti-CD20 therapeutic programs, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

Table of Conten ts

Other Revenue

Other revenue is summarized as follows:

For the Years Ended December 31, % Change $ Change

(In millions, except percentages) 2021 2020 2019

Revenue from collaborative and other relationships $ 20.7 $ 21.6 $ 106.2 (4.2) % (79.7) % $ (0.9) $ (84.6)

Other royalty and corporate revenue 455.6 753.0 601.5 (39.5) 25.2 (297.4) 151.5

Total other revenue $ 476.3 $ 774.6 $ 707.7 (38.5) % 9.5 % $ (298.3) $ 66.9

Revenue from Collaborative and Other Relationships

Revenue from collaborative and other relationships primarily includes royalty revenue on biosimilar products from Samsung Bioepis.

For additional information on our collaborative arrangements with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships , to our

consolidated financial statements included in this report.

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Other Royalty and Corporate Revenue

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

For 2021 compared to 2020, the decrease in other corporate revenue was primarily due to higher contract manufacturing revenue during the year ended December 31, 2020, resulting from $346.2 million in revenue related to the delivery of the license for certain of our manufacturing-related intellectual property to a contract manufacturing customer.

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

Other revenue consists of royalty revenue and contract manufacturing and other revenue and is summarized as follows:

Royalty Revenue and Contract Manufacturing and Other Revenue

Contract Manufacturing and Other Revenue

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

For 2022 compared to 2021, the decrease in contract manufacturing and other revenue was primarily due to lower contract manufacturing revenue related to the timing of batch releases.

Royalty Revenue

We receive royalties from net sales on products related to patents that we have out-licensed, as well as royalty revenue on biosimilar products from our collaboration arrangements with Samsung Bioepis.

For additional information on our collaborative arrangements with Samsung Bioepis, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

Reserves for Discounts and Allowances

Revenue from product sales is recorded net of reserves established for applicable discounts and allowances, including those associated with the implementation of pricing actions in certain international markets where we operate.

Revenue from product sales is recorded net of reserves established for applicable discounts and

allowances, including those associated with the implementation of pricing actions in certain international markets where we operate.

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

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Reserves for discounts, contractual adjustments and returns that reduced gross product revenue are summarized as follows:

Table of Conten ts

For the years ended December 31, 2022, 2021 and 2020, reserves for discounts and allowances as a percentage of gross product revenue were 30.1%, 28.6% and 27.1%, respectively.

Discounts include trade term discounts and wholesaler incentives.

For 2021 compared to 2020, the decrease in discounts was primarily driven by a decrease in gross sales.

For 2022 compared to 2021, the decrease in discounts was primarily due to a decrease in gross sales, driven by lower TECFIDERA sales, offset by higher purchase discounts for TYSABRI.

Contractual Adjustments

Contractual adjustments primarily relate to Medicaid and managed care rebates in the U.S., pharmacy rebates, co-payment (copay) assistance, Veterans Administration, 340B discounts, specialty pharmacy program fees and other government rebates or applicable allowances.

For 2021 compared to 2020, the decrease in contractual adjustments was primarily driven by lower TECFIDERA sales in the U.S., resulting in lower Medicaid, managed care and government rebates, partially offset by managed care rebates in the U.S.

from VUMERITY sales.

For 2022 compared to 2021, the decrease in contractual adjustments was primarily driven by lower

TECFIDERA sales in the U.S., resulting in lower pharmacy rebates, Medicaid rebates and managed care rebates, as well as lower Medicaid rebates in the U.S.

driven by a favorable change in estimates for VUMERITY.

Product return reserves are established for returns made by wholesalers.

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The majority of wholesaler returns are due to product expiration.

Provisions for product returns are

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recognized in the period the related revenue is recognized, resulting in a reduction to product sales.

Provisions for product returns are recognized in the period the related revenue is recognized, resulting in a reduction to product sales.

For 2022 compared to 2021, return reserves were relatively consistent.

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Collaboration profit (loss) sharing (7.4) 7.2 232.9 (202.8) (96.9) (14.6) (225.7)

(Gain) loss on divestiture of Hillerød, Denmark manufacturing operations — (92.5) 55.3 nm nm 92.5 (147.8)

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

(Gain) loss on fair value remeasurement of contingent consideration (209.1) (50.7) (86.3) 312.4 (41.3) (158.4) 35.6

Acquired in-process research and development 18.0 75.0 — (76.0) nm (57.0) 75.0

Restructuring charges — — 1.5 nm nm — (1.5)

Acquired in-process research and development — 18.0 75.0 (100.0) (76.0) (18.0) (57.0)

Restructuring charges 131.1 — — nm — 131.1 —

Gain on sale of building (503.7) — — nm — (503.7) —

Other (income) expense, net (108.2) 1,095.5 (497.4) (109.9) (320.2) (1,203.7) 1,592.9

Total cost and expense $ 6,581.6 $ 9,236.5 $ 8,397.1 (28.7) % 10.0 % $ (2,654.9) $ 839.4

nm Not meaningful

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Cost of Sales, Excluding Amortization and Impairment of Acquired Intangible Assets

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Product Cost of Sales

For 2021 compared to 2020, the increase in product cost of sales was primarily due to product mix and higher cost of sales associated with contract manufacturing agreements.

The increase was also

due to the write-off of ADUHELM inventory during the year ended December 31, 2021, as discussed below.

For 2022 compared to 2021, the increase in product cost of sales was primarily due to higher charges in 2022 associated with the write-off of excess ADUHELM inventory and purchase commitments, higher gross idle capacity charges associated with our manufacturing facilities and increased product cost of sales driven by product mix.

Inventory amounts written down as a result of excess, obsolescence or unmarketability totaled $336.2 million, $167.6 million and $26.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

During the fourth quarter of 2021 we recorded approximately $164.0 million of charges associated with inventory and purchase commitments in excess of forecasted demand related to ADUHELM, which was recognized in cost of sales within our consolidated statements of income.

In addition, we recognized the expected share of these charges from Eisai's 45.0% share in collaboration profit (loss) sharing within our consolidated statements of income.

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

We may record additional write-downs of ADUHELM inventory if the final NCD is not broader than the proposed NCD.

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

For the years ended December 31, 2022 and 2021, we recorded approximately $286.0 million and $170.0 million, respectively, of charges associated with the write-off of ADUHELM inventory and purchase commitments in excess of forecasted demand.

For the years ended December 31, 2022 and 2021, we recorded approximately $119.0 million and $48.0 million, respectively, of aggregate gross idle capacity charges.

We have also recognized approximately $197.0 million and $99.0 million related to Eisai's 45.0% share of inventory, idle capacity charges and contractual commitments, which was recorded in collaboration profit (loss) sharing within our consolidated statements of income for the years ended December 31, 2022 and 2021, respectively.

For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

Royalty Cost of Sales

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

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royalties payable on higher sales of TYSABRI and VUMERITY.

For 2022 compared to 2021, the decrease in royalty cost of sales was primarily due to lower royalties payable on lower sales of SPINRAZA, TYSABRI and AVONEX, partially offset by higher royalties payable on higher sales of VUMERITY.

Research and Development

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

A significant amount of our research and development costs consist of indirect costs incurred in support of overall research and development activities and non-specific programs, including activities that benefit multiple programs, such as management costs, as well as depreciation, information technology and facility-based expenses.

These costs are considered other research and

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

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

Research and development expense incurred in support of our marketed products includes costs associated with product lifecycle management activities including, if applicable, costs associated with the development of new indications for existing products.

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Our costs reflect our share of the total costs incurred.

For 2021 compared to 2020, the decrease in research and development expense was primarily due to approximately $1,084.0 million, $601.3 million and $208.0 million in upfront payments recognized upon the closing of our collaborations with Sage, Denali and Sangamo, respectively, in 2020.

This decrease was partially offset by approximately $125.0 million in an upfront payment recognized upon the closing of our collaboration with InnoCare in the third quarter of 2021, the development of zuranolone for the potential treatment of MDD and PPD, the development of BIIB124 (SAGE-324) for the potential treatment of essential tremor, which we are developing in collaboration with Sage, and closeout costs associated with BIIB111 (timrepigene emparvovec) and BIIB112 (cotoretigene).

In 2021 we recorded upfront payments related to our new collaborations as part of research and development expense.

Excluding upfront payments, we expect our core research and development expense to increase in 2022, driven by continued investment in our pipeline.

For 2022 compared to 2021, the decrease in research and development expense was primarily due to higher milestone payments in 2021, partially offset by the advancement of BIIB059 (anti-BDCA2) for the potential treatment of SLE and CLE, the development of LUNSUMIO, a a bispecific antibody for the treatment of relapsed or refractory follicular lymphoma, the development of BIIB124 (SAGE-324) for the potential treatment of essential tremor, which we are developing in collaboration with Sage, the development of BIIB122 (DNL151) for the potential treatment of Parkinson's disease, which we are developing in collaboration with Denali, and the development of BIIB800, a proposed tocilizumab biosimilar referencing ACTEMRA.

Excluding upfront payments, we expect our core research and development expense to modestly increase in 2023, as we continue to invest in our pipeline.

We intend to continue committing significant resources to targeted research and development opportunities where there is a significant unmet need and where a drug candidate has the potential to be highly differentiated.

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Research and development expense for 2022 includes:

• $125.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with InnoCare in the third quarter of 2021;

• $60.0 million charge to research and development expense upon the exercise of our option under our collaboration agreement with Ionis to develop and commercialize BIIB115, a preclinical investigational ASO in development for SMA;

• $30.0 million charge to research and development expense related to the option exercise fee payable to Genentech to jointly develop and commercialize mosunetuzumab, a late-stage bispecific antibody in development for B-cell non-Hodgkin's lymphoma and other therapeutic areas;

• $30.0 million charge to research and development expense in connection with the upfront payment associated with entering into a commercialization and license agreement with Bio-Thera to develop, manufacture and commercialize BAT1806, a proposed biosimilar referencing ACTEMRA.

• $37.0 million in charges to research and development expense in connection with milestone payments to Ionis;

• $15.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Alectos in the second quarter of 2022;

• $10.0 million charge to research and development expense in connection with the upfront payment associated with entering into

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our collaboration with Alcyone in the fourth quarter of 2022.

Research and development expense for 2021 includes:

• $1,084.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Sage in the fourth quarter of 2020;

• $601.3 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Denali in the third quarter of 2020;

• $208.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Sangamo in the second quarter of 2020.

• $125.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with InnoCare in the third quarter of 2021;

• $60.0 million charge to research and development expense upon the exercise of our option under our collaboration agreement with Ionis to develop and commercialize BIIB115, an investigational ASO in development for SMA;

• $30.0 million charge to research and development expense related to the option exercise fee payable to Genentech to jointly develop and commercialize LUNSUMIO;

The upfront payments associated with these collaborations are classified as research and development expense as the programs they relate to had not achieved regulatory approval as of the payment date.

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For 2022 compared to 2021, the decrease in spending related to our early stage programs was primarily due to a decrease in costs associated with:

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

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• the discontinuation of BIIB054 (cinpanemab) in Parkinson's disease and the discontinuation of gosuranemab (BIIB092) in Alzheimer's disease;

• the advancement of dapirolizumab pego, an anti-CD40L pegylated Fab that we are developing in collaboration with UCB, for the potential treatment of SLE into late stage;

• the advancement of BIIB059 (anti-BDCA2) for the potential treatment of SLE into late stage.

These decreases were partially offset by an increase in costs associated with:

• the discontinuation of cinpanemab (BIIB054) in Parkinson's disease;

• the discontinuation of gosuranemab (BIIB092) in Alzheimer's disease;

• the discontinuation of cotoretigene toliparvovec (BIIB112) in X-linked retinitis pigmentosa;

• the advancement of litifilimab (BIIB059) for the potential treatment of SLE into late stage;

• the advancement of BIIB122 for the potential treatment of Parkinson's disease into late stage;

• the discontinuation of vixotrigine (BIIB074) in TGN and DPN;

• the discontinuation of BIIB078 for the potential treatment of Alzheimer's disease.

The decrease was partially offset by an increase in costs associated with:

• an increase in spending in the development of BIIB124 for the potential treatment of essential tremor;

• an increase in spending in the development of BIIB122 (DNL151) for the potential treatment of Parkinson's disease, which we are developing in collaboration with Denali;

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

• an increase in spending in the development of litifilimab (BIIB059) for the potential treatment of CLE;

• an increase in spending in the development of BIIB113 for the potential treatment of Alzheimer's disease;

• an increase in spending in the development of BIIB131 for the potential treatment of acute ischemic stroke;

• an increase in spending in the development of BIIB121 for the potential treatment of Angelman syndrome.

Late Stage Programs

For 2021 compared to 2020, the increase in spending associated with our late stage programs was primarily due to:

• an increase in spending in the development of zuranolone for the potential treatment of MDD and PPD;

• the advancement of dapirolizumab pegol for the potential treatment of SLE into late stage;

• the advancement of BIIB059 for the potential treatment of SLE into late stage;

• an increase in spending related to our option exercise with Genentech to jointly develop and commercialize mosunetuzumab, a late-stage bispecific antibody in development for B-cell non-Hodgkin's lymphoma and other therapeutic areas;

• an increase in spending related to lecanemab;

• close out costs related to BIIB111.

These increases were partially offset by a decrease in costs associated with the advancement of ADUHELM from late stage to marketed.

For 2022 compared to 2021, the decrease in spending associated with our late stage programs was primarily due to a decrease in costs associated with:

• the advancement of ADUHELM from late stage to marketed upon the accelerated approval of ADUHELM in the U.S.;

• the discontinuation of BIIB111 in choroideremia.

The decrease was partially offset by an increase in costs associated with:

• the advancement of litifilimab (BIIB059) for the potential treatment of SLE into late stage;

• the advancement of BIIB122 for the potential treatment of Parkinson's disease into late stage;

• the advancement of BIIB800, a proposed tocilizumab biosimilar referencing ACTEMRA, into late stage.

Marketed Programs

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• the advancement of ADUHELM from late stage to marketed upon the accelerated approval of ADUHELM in the U.S.;

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

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

• the advancement of LUNSUMIO from late stage to marketed upon the accelerated approval of LUNSUMIO in the U.S.

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Other Research and Development

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

Under our collaboration arrangement, Eisai serves as the lead of LEQEMBI development and regulatory submissions globally with both companies co-commercializing and co-promoting the product, and Eisai having final decision-making authority.

All costs, including research, development, sales and marketing expense, are shared equally between us and Eisai.

In January 2023 the FDA granted accelerated approval of LEQEMBI.

Additionally, in January 2023 Eisai completed the submission of a supplemental BLA to the FDA for approval under the traditional pathway for LEQEMBI.

As of December 31, 2022, we had approximately $89.8 million of work-in-process inventory related to LEQEMBI.

For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

Selling, General and Administrative

For 2021 compared to 2020, the increase in selling, general and administrative expense was primarily due to an increase in personnel in support of the launch of ADUHELM in the U.S.

For 2022 compared to 2021, the decrease in selling, general and administrative expense was primarily due to cost-reduction measures realized during 2022.

As a result of the final NCD we have substantially eliminated our commercial infrastructure supporting ADUHELM, retaining minimal resources to manage patient access programs, including a continued free drug program for patients currently on treatment in the U.S.

Beginning in the second quarter of 2021 reimbursement from Eisai for its share of U.S.

ADUHELM selling, general and administrative expense is recognized in collaboration profit (loss) sharing in our consolidated statements of income.

In 2022 we expect selling, general and administrative costs to decrease as we plan to implement cost-reduction measures with a significant portion expected to be realized in 2022.

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We expect selling, general and administrative costs to continue to decline in 2023 due to the implementation of our cost saving initiatives during 2022, which include the substantial elimination of our commercial infrastructure supporting ADUHELM as well as other cost-reduction measures.

Amortization and Impairment of Acquired Intangible Assets

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Our most significant amortizable intangible assets are related to our TYSABRI, AVONEX, SPINRAZA, VUMERITY and TECFIDERA (rest of world) products and other programs acquired through business combinations.

For the year ended December 31, 2021, amortization and impairment of acquired intangible assets reflects the impact of a $365.0 million impairment charge related to BIIB111, a $220.0 million impairment charge related to BIIB112 and a $44.3 million impairment charge related to vixotrigine (BIIB074) for the potential treatment of trigeminal neuralgia (TGN).

For the year ended December 31, 2020, amortization and impairment of acquired intangible assets reflects the impact of a $115.0 million impairment charge related to BIIB111, a $75.4 million impairment charge related to BIIB054 and a $19.3 million impairment charge related to one of our other IPR&D intangible assets.

For 2022 compared to 2021, the decrease in amortization and impairment of acquired intangible assets was primarily due to higher impairment charges in 2021 of approximately $629.3 million, compared to impairment charges of approximately $119.6 million in 2022.

For the year ended December 31, 2022, amortization and impairment of acquired intangible assets reflects the impact of a $119.6 million impairment charge related to vixotrigi ne for the potential treatment of DPN.

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Amortization of acquired intangible assets, excluding impairment charges, totaled $246.3 million, $252.0 million and $255.1 million for the years ended December 31, 2022, 2021 and 2020, respectively.

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If new information indicates that the assumptions underlying our most recent analysis are substantially different than those utilized in our current estimates, our analysis would be updated and may result in a significant change in the anticipated lifetime revenue of the relevant products.

The occurrence of an adverse event could substantially increase the amount of amortization expense related to our acquired intangible assets as compared to previous periods or our current expectations, which

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

IPR&D Related to Business Combinations

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Changes in our estimates may result in a significant change to our valuation of our IPR&D assets.

In the periods since we acquired vixotrigine, there have been numerous delays in the initiation of Phase 3 studies for the potential treatment of TGN and for the potential treatment of diabetic painful neuropathy (DPN), another form of neuropathic pain.

We have engaged with the FDA regarding the design of the Phase 3 studies of vixotrigine for the potential treatment of TGN and DPN and are now performing an additional clinical trial of vixotrigine.

In the periods following our acquisition of vixotrigine, there were numerous delays in the initiation of Phase 3 studies for the potential treatment of TGN and for the potential t reatment of DPN, another form of neuropathic pain.

We engaged with the FDA regarding the design of the potential Phase 3 studies of vixotrigine for the potential treatment of TGN and DPN and performed an additional clinical trial of vixotrigine, which was completed during 2022.

The performance of this additional clinical trial delayed the initiation of the Phase 3 studies of vixotrigine for the potential treatment of TGN, and, as a result, we recognized an impairment charge of $44.3 million related to vixotrigine for the potential treatment of TGN during the first quarter of 2021.

As of December 31, 2021, the carrying value associated with the remaining IPR&D asset for DPN was $132.7 million and the fair value of this asset was not significantly in excess of its carrying value.

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During the fourth quarter of 2022 we discontinued further development of vixotrigine based on regulatory, development and commercialization challenges.

For the year ended December 31, 2022, we recognized an impairment charge of approximately $119.6 million related to vixotrigine for the potential treatment of DPN, reducing the remaining book value of this IPR&D intangible asset to zero.

We also adjusted the value of our contingent consideration obligations related to this asset resulting in a pre-tax gain of approximately $209.1 million, which was recognized in (gain) loss on fair value remeasurement of contingent consideration within our consolidated statements of income.

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.

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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 addition, as a result of our decision to suspend further development of BIIB111 and BIIB112, we recorded charges of approximately $39.1 million during the third quarter of 2021 related to our manufacturing arrangements and other costs that we expect to incur as a result of suspending these programs.

These charges were recognized in research and development expense in our consolidated statements of income for the year ended December 31, 2021.

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For additional information on the amortization and impairment of our acquired intangible assets, please read Note 7, Intangible Assets and Goodwill , to our consolidated financial statements included in this report.

Collaboration Profit (Loss) Sharing

Collaboration profit (loss) sharing primarily includes Samsung Bioepis' 50.0% share of the profit or loss related to our biosimilars commercial agreement with Samsung Bioepis and, beginning in the second quarter of 2021, Eisai's 45.0% share of

income and expense in the U.S.

Collaboration profit (loss) sharing primarily includes Samsung Bioepis' 50.0% share of the profit or loss related to our biosimilars 2013 commercial agreement with Samsung Bioepis and, beginning in the second quarter of 2021, Eisai's 45.0% share of income and expense in the U.S.

related to the ADUHELM Collaboration Agreement.

For the years ended December 31, 2021 , 2020 and 2019 we recognized net profit-sharing expense of $285.4 million, $266.5 million and $241.6 million, respectively, to reflect Samsung Bioepis’ 50.0% sharing of the net collaboration profits.

For the year ended December 31, 2021, we recognized net profit-sharing income o f $233.2 million t o ref lect Eisai's 45.0% share of loss related to the ADUHELM Collaboration Agreement.

We also recognized net profit-sharing income of $45.0 million to reflect Eisai's 45.0% share of the $100.0 million milestone payment made to Neurimmune related to the launch of ADUHELM in the U.S.

For the year ended December 31, 2020, we recognized net profit-sharing income of $33.8 million to reflect Eisai's 45.0% share of the $75.0 million milestone payment made to Neurimmune related to the completed submission of the BLA for the approval of ADUHELM to the FDA.

Beginning January 1, 2023, Eisai receives only a tiered royalty based on net sales of ADUHELM, and will no longer share global profits and losses.

For the years ended December 31, 2022 and 2021, we recognized net profit-sharing expense of $217.4 million and $285.4 million, respectively, to reflect Samsung Bioepis’ 50.0% sharing of the net collaboration profits.

For the years ended December 31, 2022 and 2021 we recognized net reductions to our operating expense of approximately $224.7 million and $233.2 million, respectively, to reflect Eisai's 45.0% share of net collaboration losses in the U.S.

For the year ended December 31, 2021, we also recognized net reductions to our operating expense of $45.0 million to reflect Eisai's 45.0% share of the $100.0 million milestone payment made to Neurimmune related to the launch of ADUHELM in the U.S.

during the second quarter of 2021.

For additional information on our collaboration arrangements with Samsung Bioepis and Eisai, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

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

In March 2019 we entered into a share purchase agreement with FUJIFILM to sell all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark.

The transaction closed in August 2019.

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

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

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

(Gain) Loss on Fair Value Remeasurement of Contingent Consideration

Consideration payable for certain of our business combinations includes future payments that are contingent upon the occurrence of a particular event or events.

We record an obligation for such

contingent consideration payments at fair value on the acquisition date.

We then revalue our contingent consideration obligations each reporting period.

Changes in the fair value of our contingent consideration obligations, other than changes due to payments, are recognized as a (gain) loss on fair value remeasurement of contingent consideration in our consolidated statements of income.

The gain on fair value remeasurement of contingent consideration for 2021 was primarily due to reductions in the probability of technical and regulatory success and delays in the expected timing of the achievement of certain remaining developmental milestones related to our vixotrigine programs.

The gain on fair value remeasurement of contingent consideration for 2020 was primarily due to the remeasurement of the contingent consideration associated with our BIIB054 program as well as changes in the probability and the expected timing of the achievement of certain remaining developmental milestones, changes in the interest rates used to revalue our contingent consideration liabilities and the passage of time.

For the year ended December 31, 2022, the changes in fair value of our contingent consideration obligations were primarily due to the discontinuation of further development efforts related to vixotrigine for the potential treatment of TGN and DPN, resulting in a reduction of our contingent consideration obligations of approximatel y $195.4 million, and changes in the interest rates used to revalue our contingent consideration liabilities.

For the year ended December 31, 2021, the changes in 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 additional information on our IPR&D intangible assets, please read Note 7, Intangible Assets and Goodwill , to our consolidated financial statements included in this report.

Acquired In-Process Research and Development

BIIB118 Acquisition

In March 2020 we acquired BIIB118 (CK1 inhibitor) for the potential treatment of patients with behavioral and neurological symptoms across various psychiatric and neurological diseases from Pfizer Inc.

In connection with this acquisition, we made an upfront payment of $75.0 million to Pfizer, which was accounted for as an asset acquisition and

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recorded as acquired IPR&D in our consolidated statements of income as BIIB118 has not yet reached technological feasibility.

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

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Restructuring Charges

2022 Cost Saving Initiatives

In December 2021 and May 2022 we announced our plans to implement a series of cost-reduction measures that when completed we expect may yield approximately $1.0 billion in expense savings.

Under these initiatives, we estimate we will incur total restructuring charges of approximately $131.0 million, primarily related to severance.

These amounts were substantially incurred during 2022.

As of December 31, 2022, approximately $35.9 million remained in our restructuring reserve and payments are expected to be made through 2026.

For the year ended December 31, 2022, we recognized approximately $131.1 million of net pre-tax restructuring charges related to our 2022 cost saving initiatives, of which approximately $112.6 million consisted of employee severance costs.

Our restructuring reserve is included in accrued expense and other in our consolidated balance sheets.

In September 2022 we entered into an agreement to partially terminate a portion of our lease located at 300 Binney Street, as well as to reduce the lease term for the majority of the remaining space.

This resulted in a gain of approximately $5.3 million, which was recorded within restructuring charges in our consolidated statements of income for the year ended December 31, 2022 .

For additional information on our 300 Binney Street lease modification, please read

Note 12, Leases , to these consolidated financial statements included in this report.

Following an evaluation of our current capacity needs, in March 2022 we ceased using a patient services office space in Durham, NC.

Our decision to cease use of the facility resulted in the immediate expense of certain leasehold improvements and other assets at this facility.

As a result, we recognized approximately $10.4 million of accelerated depreciation expense, which was recorded in restructuring charges in our consolidated statements of income for the year ended December 31, 2022 .

In May 2022 we entered into a lease assignment agreement whereby we assigned our remaining lease obligations to an external third party.

As a result of the lease assignment, we derecognized the related operating lease obligation and right-of-use asset during the second quarter of 2022.

For the year ended December 31, 2022, we recognized other restructuring costs of approximately $13.2 million, which were recorded in restructuring charges in our consolidated statements of income.

Other restructuring costs include items such as facility closure costs, employee non-severance expense, asset write-offs and other costs.

The following table summarizes the charges and spending related to our 2022 workforce reductions for the year ended December 31, 2022 :

(In millions) Total

Restructuring reserve, December 31, 2021 $ —

Expense 112.6

Payment (78.0)

Foreign currency and other adjustments 1.3

Restructuring reserve, December 31, 2022 $ 35.9

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Gain on Sale of Building

This sale resulted in a pre-tax gain on sale of approximately $503.7 million, net of transaction costs, for the year ended December 31, 2022.

Simultaneously, with the close of this transaction we leased back the building for a term of approximately 5.5 years, which resulted in the recognition of approximately $168.2 million in new lease liabilities and right-of-use assets recorded within our consolidated balance sheets as of December 31, 2022.

The sale and immediate leaseback of this building qualified for sale and leaseback treatment and is classified as an operating lease.

Other (Income) Expense, Net

For 2021 compared to 2020, the change in other income (expense), net primarily reflects net unrealized losses on our holdings in equity securities.

For the year ended December 31, 2021, net unrealized losses and realized gains on our holdings in equity securities were approximately $831.4 million and $10.3 million, respectively, compared to net unrealized and realized gains of $681.8 million and $12.1 million, respectively, in 2020.

For 2022 compared to 2021, the change in other (income) expense, net primarily reflects a pre-tax gain during 2022 of approximately $1.5 billion related to the sale of our 49.9% equity interest in Samsung Bioepis, partially offset by a pre-tax charge of $900.0 million, plus settlement fees and expenses, related to a litigation settlement agreement to resolve a qui tam litigation relating to conduct prior to 2015.

For the year ended December 31, 2022, net unrealized losses and realized (gains) losses on our holdings in equity securities were approximately $264.7 million and zero, respectively, compared to net unrealized losses and realized gains of $831.4 million and $10.3 million, respectively, in 2021.

The net unrealized losses recognized during the year ended December 31, 2022, primarily reflect a decrease in the aggregate fair value of our investments in Denali and Sangamo common stock of approximately $278.0 million.

The net unrealized losses recognized during the year ended December 31, 2021, primarily reflect decreases in the aggregate fair value of our investments in Denali, Sage, Sangamo and Ionis common stock of approximately $819.6 million.

For the year ended December 31, 2022, net interest expense was $157.3 million, compared to $242.6 million in 2021.

This increase was primarily due to a lower amount of interest being capitalized to capital projects in 2021, compared to 2020, due to a portion of our Solothurn facility being placed in service in 2021 and lower interest income earned on our investments in 2021, compared to 2020.

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

We expect a moderate increase in interest expense in 2022, compared to 2021, primarily due to lower interest being capitalized as a result of assets being placed into service during 2021.

For additional information on our 2020 Senior Notes, please read Note 12, Indebtedness , to our

consolidated financial statements included in this report.

This decrease was primarily due to higher interest income earned on our investments in 2022, compared to 2021, and lower interest expense in 2022 due to the redemption of our 3.625% Senior Notes due September 15, 2022, with an aggregate principal amount of $1.0 billion.

For 2023 compared to 2022, we anticipate a decrease in net interest expense as a result of lower average debt balances in 2023 and an increase in

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interest income driven by higher interest rates on our cash and marketable securities.

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions , to our consolidated financial statements included in this report.

For additional information on the redemption of our Senior Notes, please read Note 13, Indebtedness , to our consolidated financial statements included in this report.

For additional information on the litigation settlement agreement, please read Note 18, Other Consolidated Financial Statement Detail , to our consolidated financial statements included in this report.

Income Tax Provision

Our effective tax rate fluctuates from year to year due to the global nature of our operations.

The factors that most significantly impact our effective tax rate include changes in tax laws, variability in the allocation of our taxable earnings among multiple jurisdictions, the amount and characterization of our research and development expense, the levels of certain deductions and credits, acquisitions and licensing transactions.

For the year ended December 31, 2021, compared to 2020, the decrease in our effective tax rate, excluding the impact of the Neurimmune deferred tax asset, as discussed below, was primarily due to the change in the territorial mix of our profitability, which included the adverse effect of generic competition for TECFIDERA in the U.S.

market, the tax impacts of the BIIB111 and BIIB112 impairment charges and the impact of the non-cash tax effects of changes in the value of our equity investments, where we recorded net unrealized losses in 2021 and net unrealized gains in 2020.

Our 2020 effective tax rate also reflected an income tax expense related to the establishment of a valuation allowance against certain deferred tax assets, the realization of which is dependent on future sales of TECFIDERA in the U.S.

In addition, for the year ended December 31, 2021, compared to 2020, the decrease in our effective tax rate was significantly impacted by a current year deferred tax benefit in Switzerland resulting from the accelerated approval of ADUHELM by the FDA in the U.S., recognized during the second

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quarter of 2021.

We recorded a net deferred tax asset of approximately $490.0 million during the second quarter of 2021.

The net deferred tax asset is comprised of approximately $945.0 million of gross deferred tax asset, reduced by approximately $455.0 million of unrecognized tax benefit.

During the fourth quarter of 2021 we recorded a valuation allowance of approximately $390.0 million related to this deferred tax asset.

The deferred tax benefit relates to Neurimmune's tax basis in ADUHELM, the realization of which is dependent on future sales of ADUHELM and approval of the Swiss cantonal tax authorities, with an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc.

certain deductions and credits, acquisitions and licensing transactions.

For the year ended December 31, 2022, compared to 2021, the increase in our effective tax rate, excluding the impact of the net Neurimmune deferred tax asset, as discussed below, includes the tax impacts of the litigation settlement agreement and the sale of our building at 125 Broadway.

These increases were partially offset by the impact of the current year tax benefits related to an international reorganization to align with global tax developments, the impacts of the sale of our equity interest in Samsung Bioepis and the tax impacts of the decision to discontinue development of vixotrigine.

Further in 2021, our effective tax rate benefited from the tax effects of the BIIB111 and BIIB112 impairment charges and the non-cash tax effects of changes in the value of our equity instruments.

Neurimmune Deferred Tax Asset

During 2021 we recorded a net deferred tax asset in Switzerland of approximately $100.0 million on Neurimmune's tax basis in ADUHELM, the realization of which was dependent on future sales of ADUHELM.

During the first quarter of 2022, upon issuance of the final NCD related to ADUHELM, we recorded an increase in a valuation allowance of approximately $85.0 million to reduce the net value of this deferred tax asset to zero.

These adjustments to our net deferred tax asset are each recorded 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 20, Investments in Variable Interest Entities , to our consolidated financial statements included in this report.

For additional information on our income taxes please read Note 16, Income Taxes , to our consolidated financial statements included in this report.

Accounting for Uncertainty in Income Taxes

For additional information on our uncertain tax positions and income tax rate reconciliation for 2021, 2020 and 2019, please read Note 16, Income Taxes, to our consolidated financial statements included in this report.

Inflation Reduction Act

In August 2022 the IRA was signed into law in the U.S.

The IRA introduced new tax provisions, including a 15.0% corporate alternative minimum tax and a 1.0% excise tax on stock repurchases.

The provisions of the IRA will be effective for periods after December 31, 2022.

The enactment of the IRA did not result in any material adjustments to our income

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tax provision or net deferred tax assets as of December 31, 2022.

For additional information on our income taxes, uncertain tax positions and income tax rate reconciliation, please read Note 17, Income Taxes , to our consolidated financial statements included in this report.

Equity in (Income) Loss of Investee, Net of Tax

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

In June 2018 we exercised our option under our joint venture agreement to increase our ownership

percentage in Samsung Bioepis from approximately 5.0% to approximately 49.9%.

The share purchase transaction was completed in November 2018.

As of December 31, 2021, our ownership percentage remained at approximately 49.9%.

We recognize our share of the results of operations related to our investment in Samsung Bioepis under the equity method of accounting one quarter in arrears when the results of the entity become available, which is reflected as equity in (income) loss of investee, net of tax in our consolidated statements of income.

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

Certain officers and affiliates of our joint venture partner, Samsung BioLogics, are currently subject to ongoing criminal proceedings that we continue to monitor.

While these proceedings could impact the operations of Samsung Bioepis and its business, we have assessed the value of our investment in Samsung Bioepis and continue to believe that the fair value of the investment is in excess of its net book value.

In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics.

Following the sale of Samsung Bioepis we no longer recognize gains or losses associated with Samsung Bioepis' results of operations and amortization related to basis differences.

Prior to this sale, we recognized 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 became available, which was reflected as equity in (income) loss of investee, net of tax in our consolidated statements of income.

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

For the year ended December 31, 2022, we recognized net income on our investment of $2.6 million, reflecting our share of Samsung Bioepis' operating profits, net of tax, totaling $17.0 million offset by amortization of basis differences totaling $14.4 million.

This amount reflects our share of

results prior to the sale of Samsung Bioepis as the results are recognized one quarter in arrears.

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.

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The valuation allowance was released in the second quarter of 2021 based on a consideration of the positive and negative evidence, including the historic earnings of Samsung Bioepis.

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions , to our consolidated financial statements included in this report.

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Noncontrolling Interests, Net of Tax

Our consolidated financial statements include the financial results of our variable interest entity, Neurimmune, as we determined that we are the primary beneficiary.

For 2021 the change in net income (loss) attributable to noncontrolling interests, net of tax, was primarily due to the recognition of a current year deferred tax benefit associated with the accelerated approval of ADUHELM by the FDA in the U.S.

During the second quarter of 2021 we recorded a net deferred tax asset of approximately $490.0 million related to Neurimmune's tax basis in ADUHELM, the realization of which is dependent on future sales of ADUHELM and approval of the Swiss cantonal tax authorities.

During the fourth quarter of 2021 we recorded a valuation allowance of approximately $390.0 million related to this deferred tax asset.

There is an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc.

For 2022 compared to 2021, the change in net income (loss) attributable to noncontrolling interests, net of tax, was primarily due to a deferred tax benefit and milestone payment recorded in 2021, as discussed below.

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For 2021 the change in net income (loss) attributable to noncontrolling interests, net of tax, was also due to the $100.0 million milestone payment to Neurimmune related to the launch of ADUHELM in the U.S.

during the second quarter of 2021.

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

For additional information on our collaboration agreement with Neurimmune, please read Note 20, Investments in Variable Interest Entities, to our consolidated financial statements included in this report.

For additional information on our income taxes please read Note 17, Income Taxes , to our consolidated financial statements included in this report.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our financial condition is summarized as follows:

As of December 31, % Change

(In millions, except percentages) 2021 2020 2021

As of December 31,

(In millions, except percentages) 2022 2021 % Change $ Change

Financial assets:

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nm Not meaningful

We have historically financed and expect to continue to fund our operating and capital expenditures primarily through cash flow earned through our operations as well as our existing cash resources.

We believe generic competition for TECFIDERA in the U.S.

and other key markets and the impact of biosimilar competition on RITUXAN sales volumes will continue to reduce our cash flow from operations in 2023 and will have a significant adverse impact on our future cash flow from operations.

For the year ended December 31, 2022, certain significant cash flows were as follows:

• $3.6 billion in net cash flow provided by operating activities, which reflected an upfront payment of $125.0 million made in connection with entering into our collaboration with InnoCare and recognized as research and development expense;

• $1.8 billion used for share repurchases;

• $170.0 million used in connection with our Exchange Offer;

• $258.1 million used for purchases of property, plant and equipment;

• $1,384.3 million in net cash flow provided by operating activities;

• $990.3 million in net proceeds received from the sale of our equity interest in Samsung Bioepis;

• $582.6 million in net proceeds received from the sale of one of our buildings;

• $1.0 billion payment made for the redemption of our 3.625% Senior Notes due September 15, 2022;

• $917.0 million in total net payments for a litigation settlement agreement and settlement fees and expenses;

• $932.9 million in total net payments for income taxes;

• $100.0 million milestone payment to Neurimmune.

• $750.0 million used for share repurchases;

• $240.3 million used for purchases of property, plant and equipment.

For the year ended December 31, 2021, certain significant cash flows were as follows:

• $4.2 billion in net cash flows provided by operating activities, which reflected $1.9 billion of upfront payments and the premium on stock purchases made in connection with entering into our collaborations with Sage, Denali and Sangamo and recognized as research and development expense;

• $3,639.9 million in net cash flow provided by operating activities;

• $1.8 billion used for share repurchases;

• $3.0 billion in proceeds received from the

issuance of our 2020 Senior Notes;

• $1.5 billion payment made for the redemption of our 2.90% Senior Notes due September 15, 2020, prior to their maturity;

• $906.7 million in total net payments for income taxes;

• $441.0 million used to purchase Sage common stock;

• $423.7 million used to purchase Denali common stock;

• $141.8 million used to purchase Sangamo common stock;

• $170.0 million used in connection with our private offer to exchange (Exchange Offer) our tendered 5.200% Senior Notes due September 15, 2045 (2045 Senior Notes) for a new series of 3.250% Senior Notes due February 15, 2051 (2051 Senior Notes) and cash, and an offer to purchase our tendered 2045 Senior Notes for cash;

• $258.1 million used for purchases of property, plant and equipment;

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

We expect our operating expenditures, particularly those related to research and development, clinical trials, commercialization of new products and international expansion to continue to grow.

However, we expect to continue funding our current and planned operating requirements primarily through our cash flow earned from our operations as well as our existing cash resources.

We believe generic competition for TECFIDERA in the U.S.

will continue to reduce our cash flow from operations in 2022 and will have a significant adverse impact on our future cash flow

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from operations.

Additionally, in 2022 we will repay or refinance $1.0 billion related to our 3.625% Senior Note due September 15, 2022.

• $247.9 million in total net payments for income taxes;

• $100.0 million milestone payment to Neurimmune.

We believe that our existing funds, when combined with cash generated from operations and our access to additional financing resources, if needed, are sufficient to satisfy our operating, working capital, strategic alliance, milestone payment, capital expenditure and debt service requirements for the foreseeable future.

In addition, we may choose to opportunistically return cash to shareholders and pursue other business initiatives, including acquisition and licensing activities.

We may, from time to time, also seek additional funding through a combination of new collaborative agreements, strategic alliances and additional equity and debt financings or from other sources should we identify a significant new opportunity .

We may, from time to time, also seek additional funding through a combination of new collaborative agreements, strategic alliances and additional equity and debt financings or from other

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sources should we identify a significant new opportunity .

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

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As of December 31, 2022, we had cash, cash equivalents and marketable securities totaling approximately $5.6 billion compared to approximately $4.7 billion as of December 31, 2021.

The change in cash, cash equivalents and marketable securities at December 31, 2021, from December 31, 2020, was primarily due to net cash flow provided by operating activities, partially offset by cash used for share repurchases and capital expenditures, cash payments made in connection with our Exchange Offer and a milestone payment made to Neurimmune.

Investments and other assets in our consolidated balance sheet as of December 31, 2021 and 2020, include the carrying value of our investment in Samsung Bioepis of $599.9 million and $620.2 million, respectively.

As Samsung Bioepis is a privately-held entity, our ability to liquidate our investment in Samsung Bioepis may be limited and we may realize significantly less than the value of

such investment.

The investment is also subject to foreign currency exchange fluctuations.

In connection with our collaboration with Sangamo, we purchased approximately 24 million shares of Sangamo common stock in April 2020.

As of December 31, 2021 and 2020, the fair value of this investment was $173.7 million and $333.7 million, respectively.

In connection with our collaboration with Denali, we purchased approximately 13 million shares of Denali common stock in September 2020.

As of December 31, 2021 and 2020, the fair value of this investment was $550.7 million and $935.7 million, respectively.

In connection with our collaboration with Sage, we purchased approximately 6.2 million shares of Sage common stock in December 2020.

As of December 31, 2021 and 2020, the fair value of this investment was $231.9 million and $433.9 million, respectively.

Our investment in Ionis common stock had a fair value of $87.5 million and $249.1 million as of December 31, 2021 and 2020, respectively.

The decrease was partially due to the sale of a portion of our investment in Ionis common stock during the first quarter of 2021.

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

The change in cash, cash equivalents and marketable securities at December 31, 2022, from December 31, 2021, was primarily due to net cash flow provided by operating activities, which includes $917.0 million in total net payments for a litigation settlement agreement and settlement fees and expenses, and $990.3 million in net proceeds received from the sale of our equity interest in Samsung Bioepis and $582.6 million in net proceeds received from the sale of one of our buildings, partially offset by $1.0 billion of cash used for the redemption of our 3.625% Senior Notes due September 15, 2022 and $750.0 million used for share repurchases.

The following table summarizes the fair value of our significant common stock investments:

As of December 31,

(In millions) 2022 2021

Denali $ 370.2 $ 550.7

Sage 238.0 231.9

Sangamo 74.3 173.7

Ionis 108.6 87.5

$ 791.1 $ 1,043.8

Although the contractual holding period restrictions on our investments in Denali, Sage,

Sangamo and Ionis have expired, our ability to liquidate these investments may be limited by the size of our interest, the volume of market related activity, our concentrated level of ownership and potential restrictions resulting from our status as a collaborator.

Therefore, we may realize significantly less than the current value of such investments.

For additional information on our collaboration arrangements, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

Investments and Other Assets

Investments and other assets in our consolidated balance sheet as of December 31, 2021, includes the carrying value of our investment in Samsung Bioepis of $599.9 million.

In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics.

As part of this transaction, we are also eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones.

If any payments due to us remain outstanding after the second anniversary of the closing of this transaction, we may elect to receive shares of Samsung BioLogics common stock at a 5.0% discount in lieu of a cash payment for the remaining amount due.

Currently, we believe that the likelihood of Samsung BioLogics failing to make timely payments to us for the amounts due is remote.

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions , to our consolidated financial statements included in this report.

Capital Expenditures

In March 2021 we announced our plans to build a new gene therapy manufacturing facility in RTP, NC to support our gene therapy pipeline across multiple therapeutic areas.

The new manufacturing facility will be approximately 197,000 square feet and is expected to be operational by the end of 2023, with an estimated total investment of approximately $195.0 million.

Construction for this new facility began during the fourth quarter of 2021.

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In February 2021 we completed our Exchange Offer, consisting of the following:

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

In April 2020 we issued our 2020 Senior Notes for an aggregate principal amount of $3.0 billion, consisting of the following:

The following is a summary of our currently outstanding senior unsecured notes issued in 2020 (2020 Senior Notes):

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

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

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

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

The following is a summary of our currently outstanding senior unsecured notes issued in 2015 (2015 Senior Notes):

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

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Our 2020 Senior Notes and our 2015 Senior Notes were issued at a discount, which are amortized as additional interest expense over the period from issuance through maturity.

In July 2022 we redeemed our 3.625% Senior Notes due September 15, 2022, with an aggregate principal amount of $1.0 billion.

For additional information on our Senior Notes, please read Note 13, Indebtedness , to our consolidated financial statements included in this report.

For a summary of the fair values of our outstanding borrowings as of December 31, 2022 and 2021, please read Note 8, Fair Value Measurements, to our consolidated financial statements included in this report.

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

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

The terms of the revolving credit facility include a financial

covenant that requires us not to exceed a maximum consolidated leverage ratio.

As of December 31, 2022 and 2021, we had no outstanding borrowings and were in compliance with all covenants under this facility.

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Working capital was $6.5 billion and $3.6 billion as of December 31, 2022 and 2021, respectively.

The change in working capital reflects an increase in total current assets of approximately $969.4 million and an increase in total current liabilities of approximately $556.0 million.

The increase in total current assets was primarily driven by an increase in net cash, cash equivalents and marketable securities, due to net cash flow provided by operating activities, partially offset by cash used for share repurchases and capital expenditures, cash payments made in connection with our Exchange Offer and a milestone payment made to Neurimmune.

The increase in total current liabilities was primarily due to the reclassification of $1.0 billion of our Senior Notes due September 15, 2022, to current liabilities from notes payable, as these Senior Notes

are due within one year.

This increase was partially offset by a reduction in accounts payable as well as accrued expense and other, which was primarily related to decreases in the accrual of contingent payments, the accrual for employee compensation and benefits and the fair values of derivative liabilities.

The change in working capital reflects an increase in total current assets of approximately $1.9 billion and a decrease in total current liabilities of approximately $1.0 billion.

Current Assets

The increase in total current assets was primarily driven by the following:

• net increase in cash, cash equivalents and marketable securities due to net cash flow provided by operating activities of approximately $1,384.3 million;

• receipt of approximately $990.3 million in cash, net of expenses, from the sale of our equity interest in Samsung Bioepis;

• recording of a receivable from Samsung BioLogics for approximately $798.8 million as part of the sale of our equity interest in Samsung Bioepis;

• cash receipt of approximately $582.6 million related to the sale of one of our buildings.

The increase was partially offset by cash used for the redemption of our 3.625% Senior Notes due September 15, 2022, of approximately $1.0 billion and share repurchases of $750.0 million and $917.0 million in total net payments for a litigation settlement agreement and settlement fees and expenses.

Current Liabilities

The decrease in total current liabilities was primarily due to the following:

• redemption of our 3.625% Senior Notes due September 15, 2022, of approximately $1.0 billion, which were classified within current liabilities in 2021;

• a reduction in our accounts payable.

Share Repurchase Programs

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

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

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

All share repurchases under our 2020 Share Repurc hase

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Program will be retired.

Under our 2020 Share Repurchase Program, we repurchased and retired approximately 3.6 million, 6.0 million and 1.6 million shares of our common stock at a cost of approximately $750.0 million, $1.8 billion and $400.0 million during the years ended December 31, 2022, 2021 and 2020 , respectively.

Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of December 31, 2022.

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

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

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

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

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

Under our December 2019 Share Repurchase Program, we repurchased and retired approximately 16.7 million shares of our common stock at a cost of

approximately $5.0 billion during the year ended December 31, 2020.

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

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

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

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

All share repurchases under our 2018 Share Repurchase Program were retired.

Under our 2018 Share Repurchase Program, we repurchased and retired approximately 8.9 million shares of our common stock at a cost of approximately $2.1 billion during the year ended December 31, 2019.

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

In August 2022 the IRA was signed into law.

Among other things, the IRA levies a 1.0% excise tax on net stock repurchases after December 31, 2022.

Historically, we have made discretionary share repurchases.

The following table summarizes our cash flow activity:

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(In millions, except percentages) 2022 2021 2020

Net cash flow provided by operating activities $ 3,639.9 $ 4,229.8 $ 7,078.6 (13.9) % (40.2) %

Net cash flow provided by (used in) operating activities $ 1,384.3 $ 3,639.9 $ 4,229.8 (62.0) % (13.9) %

Net cash flow provided by (used in) investing activities 1,576.6 (563.7) (608.6) 379.7 (7.4)

Net cash flow used in financing activities (2,086.2) (5,272.7) (5,860.4) 60.4 10.0

nm Not meaningful

Net cash flow provided by (used in) financing activities (1,747.3) (2,086.2) (5,272.7) (16.2) (60.4)

Operating Activities

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For 2022 compared to 2021, the decrease in net cash flow provided by operating activities was

primarily due to lower net income.

Net income in 2020 reflected approximately $1,084.0 million, $601.3 million and $208.0 million of upfront payments made in connection with entering into our

collaborations with Sage, Denali and Sangamo, respectively.

primarily due to lower revenue in 2022, net payments of $917.0 million for a litigation settlement agreement and settlement fees and expenses, timing of payments and higher net income tax payments in 2022.

The higher tax payments are, in part, due to a change in the tax deductibility of payments made for research and development.

Investing Activities

For 2021 compared to 2020, the decrease in net cash flow used in investing activities was primarily due to the purchases of the common stock of Sangamo, Denali and Sage totaling $1.0 billion during 2020 as well as higher capital expenditures and acquisitions of IPR&D and other intangible assets in 2020, partially offset by higher net proceeds received from the sale of marketable securities in 2020 as compared to the current year.

For 2022 compared to 2021, the increase in net cash flow provided by investing activities was primarily due to proceeds received from the sale of our 49.9% equity interest in Samsung Bioepis of $990.3 million, net of expenses, during the second quarter of 2022 as well as $582.6 million in net proceeds received from the sale of one of our buildings during the third quarter of 2022.

Financing Activities

For 2021 compared to 2020, the decrease in net cash flow used in financing activities was primarily due to the greater number of shares repurchased in 2020 as compared to the comparative period in 2021, partially offset by cash used in connection with our Exchange Offer and a milestone payment to Neurimmune in 2021.

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For 2022 compared to 2021, the decrease in net cash flow used in financing activities was primarily due to $1.1 billion in lower share repurchases in 2022, partially offset by $832.2 million in higher debt repayments in 2022.

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Contractual Obligations and Off-Balance Sheet Arrangements

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In addition to the minimum rental commitments, these leases may require us to pay additional amounts for taxes, insurance, maintenance and other operating expenses.

(2) Obligations are presented net of sublease income expected to be received for our vacated small-scale biologics manufacturing facility in Cambridge, MA, the vacated portion of our Weston, MA facility and other facilities throughout the world.

(3) Long-term debt obligations are related to our 2015 Senior Notes and our 2020 Senior Notes, including principal and interest payments.

(2) Obligations are presented net of sublease income expected to be received for our vacated portion of our Weston, MA facility and other facilities throughout the world.

(3) In September 2022 we completed the sale of our building and land parcel located at 125 Broadway.

Simultaneously, with the close of this transaction we leased back the building for a term of approximately 5.5 years.

(4) Long-term debt obligations are related to our 2015 Senior Notes, our 2020 Senior Notes and our 2021 Exchange Offer Senior Notes, including principal and interest payments.

(5) Purchase and other obligations include $558.0 million related to the remaining payments on a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax) and $26.0 million related to the fair value of net liabilities on derivative contracts.

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We make royalty payments on annual worldwide net sales of SPINRAZA using a tiered royalty rate between 11.0% and 15.0%, which are recognized as cost of sales in our consolidated statements of income.

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

During the fourth quarter of 2021 VUMERITY was approved for the treatment of RRMS in the E.U., Switzerland and the U.K.

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

In October 2019 we entered into a new supply agreement and amended our license and collaboration agreement with Alkermes.

We have elected to initiate a technology transfer and, following

a transition period, to manufacture VUMERITY or have VUMERITY manufactured by a third-party we have engaged in exchange for paying an increased royalty rate to Alkermes on any portion of future worldwide net sales of VUMERITY that is manufactured by us or our designee.

We make royalty payments to Alkermes Pharma Ireland Limited, a subsidiary of Alkermes plc (Alkermes) on worldwide net sales of VUMERITY using a royalty rate of 15.0%, which are recognized as cost of sales in our consolidated statements of income.

In October 2019 we entered into a new supply agreement and amended our license and collaboration agreement with Alkermes for VUMERITY.

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.

For additional information on our collaboration arrangement with Alkermes, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

Contingent Consideration related to Business Combinations

In connection with our acquisition of Convergence Pharmaceuticals Ltd.

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

We recognized the contingent consideration liabilities associated with this acquisition at their fair value on the acquisition date and revalue these obligations each reporting period.

We may pay up to approximately $400.0 million in remaining milestones related to this acquisition.

Contingent Development, Regulatory and Commercial Milestone Payments

Based on our development plans as of December 31, 2021, we could trigger potential future milestone payments to third-parties of up to approximately $10.0 billion, including approximately $2.0 billion in development milestones, approximately

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$900.0 million in regulatory milestones and approximately $7.1 billion in commercial milestones, as part of our various collaborations, including licensing and development programs.

Based on our development plans as of December 31, 2022, we could trigger potential future milestone payments to third parties of up to approximately $9.3 billion, including approximately $2.0 billion in development milestones, approximately $0.5 billion in regulatory milestones and approximately $6.8 billion in commercial milestones, as part of our various collaborations, including licensing and development programs.

Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones.

Because the achievement of these milestones was not considered probable as of December 31, 2021, such contingencies have not been recorded in our financial statements.

Because the achievement of these milestones was not considered probable as

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of December 31, 2022, such contingencies have not been recorded in our financial statements.

Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory or commercial milestones.

If certain clinical and commercial milestones are met, we may pay up to $356.2 million in milestones in 2023 under our current agreements.

Additionally, if aducanumab receives regulatory approval in the jurisdictions where we have submitted filings, we may pay up to $100.0 million in additional milestones to Neurimmune, which includes $50.0 million if launched in three or more countries in the E.U.

and $50.0 million if launched in Japan.

Milestones payable to Neurimmune are shared expenses under the ADUHELM Collaboration Agreement.

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

For additional information on our collaboration arrangement with Neurimmune, please read Note 19, Investments in Variable Interest Entities , to our consolidated financial statements included in this report.

This includes milestones totaling $225.0 million due to Sage upon the first commercial sale of zuranolone, for the potential treatment of MDD and PPD, in the U.S.

Other Funding Commitments

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We have approximately $929.0 million in cancellable future commitments based on existing CRO contracts as of December 31, 2022.

As part of the sale of our Hillerød, Denmark manufacturing operations to FUJIFILM, we provided FUJIFILM with certain minimum batch production commitment guarantees.

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

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

We developed this

estimate using a probability-weighted estimate of future manufacturing activity and may further adjust this estimate based upon changes in business conditions, which may result in the increase or reduction of this adverse commitment obligation in subsequent periods.

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

Tax Related Obligations

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Critical Accounting Policies and Estimates

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

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with accounting principles generally accepted in the U.S.

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

GAAP), requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenue and expense and related disclosure of contingent assets and liabilities.

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Product Revenue

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

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

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

These customers subsequently resell our products to health care providers and patients.

These customers subsequently resell our products to

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health care providers and patients.

In addition, we enter into arrangements with health care providers and payors that provide for government-mandated or privately-negotiated discounts and allowances related to our products.

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Product revenue is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate.

Our process for estimating reserve established for these variable consideration components do not differ materially fro our historical practices.

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 revenue, are generally characterized in the following categories:

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

As of December 31, 2021, a 10.0% change in our discounts, contractual adjustments and reserves would have resulted in a decrease of our pre-tax earnings by approximately $359.7 million.

As of December 31, 2022, a 10.0% change in our discounts, contractual adjustments and reserves

would have resulted in a decrease of our pre-tax earnings by approximately $338.6 million.

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

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

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For additional information on our revenue, please read Note 5, Revenue , to our consolidated financial statements included in this report.

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The determination of obsolete or excess inventory requires management to make estimates based on assumptions about the future demand of our products, product expiration dates, estimated future sales and our general future plans.

If customer demand subsequently differs from our forecasts, requirements for inventory write-offs that differ from our estimates may become necessary.

If customer demand subsequently differs from our forecasts, we may be required to record additional charges for excess inventory.

Although we believe that the assumptions we use in estimating inventory write-downs are reasonable, no assurance can be given that significant future changes in these assumptions or changes in future events and market conditions could result in different estimates.

During the fourth quarter of 2021 we wrote-off approximately $120.0 million of inventory in excess of forecasted demand related to ADUHELM.

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

We may record additional write-downs of ADUHELM inventory if the final NCD is not broader than the proposed NCD.

During 2021 we wrote-off approximately $120.0 million of inventory in excess of forecasted demand related to ADUHELM.

During the first quarter of 2022 we wrote-off approximately $275.0 million, as a result of the final CMS decision.

As of December 31, 2022, the carrying value of our ADUHELM inventory was immaterial.

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

Acquired Intangible Assets, including IPR&D

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If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, the acquired IPR&D is expensed on its acquisition date.

Future costs to develop these assets are recorded to research and development expense as they are incurred.

Future costs to develop these assets are recorded to

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research and development expense as they are incurred.

We have acquired, and expect to continue to acquire, intangible assets through the acquisition of biotechnology companies or through the consolidation of variable interest entities.

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Management will determine the fair value of less significant identifiable intangible assets acquired.

Discounted cash flow models are typically used in

these valuations, and these models require the use of significant estimates and assumptions including but not limited to:

Discounted cash flow models are typically used in these valuations, and these models require the use of significant estimates and assumptions including but not limited to:

• estimating the timing of and expected costs to complete the in-process projects;

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We review our intangible assets with indefinite lives for impairment annually, as of October 31, and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

When performing our impairment assessment, we calculate the fair value using the same methodology as described above under Acquired Intangible Assets, including IPR&D .

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

Intangible Assets, including IPR&D .

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

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

Based on our most recent impairment assessment we incurred impairment charges of approximately $629.3 million for the year ended December 31, 2021, mainly related to the discontinuation of IPR&D programs.

For additional

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information on our impairments, Note 6, Intangible Assets and Goodwill , to our consolidated financial statements included in this report.

Based on our most recent impairment assessment we incurred impairment charges of approximately $119.6 million and $629.3 million for the years ended December 31, 2022 and 2021, respectively, mainly related to the discontinuation of IPR&D programs.

For additional information on our impairments, Note 7, Intangible Assets and Goodwill , to our consolidated financial statements included in this report.

Our most significant intangible assets are our acquired and in-licensed rights and patents.

Acquired and in-licensed rights and patents primarily relate to our acquisition of all remaining rights to TYSABRI from Elan.

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

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

Acquired and in-licensed rights and patents primarily relate to our acquisition of all remaining rights to TYSABRI.

We amortize the intangible assets related to our marketed 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 marketed products is performed annually during our long-range planning cycle and whenever events or changes in circumstances would significantly affect anticipated lifetime revenue of the relevant products.

For additional information on the impairment charges related to our long-lived assets during 2022, 2021 and 2020, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.

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These fair value measurements represent Level 3 measurements as they are based on significant inputs not observable in the market.

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Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.

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

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

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

In preparing our consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes.

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We adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions.

Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished, through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the “more likely than not” threshold or the liability becomes effectively settled through the examination process.

We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals and administrative reviews, we have no plans to appeal or litigate any aspect of the tax position and we believe that it is highly unlikely that the taxing authority would examine or re-examine the related tax

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Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished, through

either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the “more likely than not” threshold or the liability becomes effectively settled through the examination process.

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

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

What changed 10-K

Item 7. Management’s Discussion and Analysis