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Item 7. Management’s Discussion and Analysis

2025-02-12 compared with 2024-02-14 · 406 added, 388 removed, 501 unchanged (61% of the section changed)

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EXECUTIVE SUMMARY

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

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

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

Through our 2023 acquisition of Reata we market the first and only drug approved in the U.S.

for the treatment of Friedreich's Ataxia in adults and adolescents aged 16 years and older.

We market the first and only drug approved in the U.S.

for the treatment of FA in adults and adolescents aged 16 years and older.

We are focused on advancing our pipeline in neurology, 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;

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

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

SPINRAZA for the treatment of SMA;

SKYCLARYS for the treatment of Friedreich's Ataxia;

SKYCLARYS for the treatment of FA;

QALSODY for the treatment of ALS;

and FUMADERM for the treatment of severe plaque psoriasis.

We also have collaborations with Eisai on the commercialization of LEQEMBI for the treatment of Alzheimer's disease and Sage on the commercialization of ZURZUVAE for the treatment of PPD and we have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, CLL and other conditions;

We also have collaborations with Eisai on the commercialization of LEQEMBI for the treatment of Alzheimer's disease and Sage on the commercialization of ZURZUVAE for the treatment of PPD.

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

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

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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.

We commercialize a portfolio of 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 commercialize a portfolio of biosimilars of advanced biologics including:

BENEPALI, an etanercept biosimilar referencing ENBREL;

IMRALDI, an adalimumab biosimilar referencing HUMIRA;

FLIXABI, an infliximab biosimilar referencing REMICADE;

and BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, in certain international markets, as well as TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, in the U.S.

and certain international markets.

We also have exclusive rights to commercialize TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA.

We continue to develop potential biosimilar product SB15, a proposed aflibercept biosimilar referencing EYLEA.

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

We also have commercialization rights related to OPUVIZ, an aflibercept biosimilar referencing EYLEA.

On July 2, 2024, we completed the acquisition of HI-Bio.

As a result of this transaction we acquired HI-Bio's lead asset, felzartamab, an anti-CD38 antibody currently being evaluated for three leading indications, AMR, PMN and IgAN.

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

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.

To that end, we continually review our manufacturing capacity, capabilities, processes and facilities.

To that end, we regularly review our manufacturing capacity, capabilities, processes and facilities.

In order to support our future growth and drug development pipeline, we expanded our large molecule production capacity and built a large-scale biologics manufacturing facility in Solothurn, Switzerland.

In the second quarter of 2021 a portion of the facility (the first manufacturing suite) received a GMP multi-product license from the SWISSMEDIC and was placed into service.

The second manufacturing suite became operational in January 2024.

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

We believe that the Solothurn facility will support our anticipated near to mid-term needs for the manufacturing of biologic assets, including the commercial launch of LEQEMBI.

The plant represents a significant increase in our overall manufacturing capacity and is not yet being fully utilized, resulting in our recording of excess capacity charges.

In the second quarter of 2021 a portion of the facility (the first manufacturing suite) received a GMP multi-product license from SWISSMEDIC and was placed into service.

The second manufacturing suite, which was also licensed to operate by SWISSMEDIC, became operational in the first quarter of 2024.

Solothurn has been approved for the manufacture of LEQEMBI.

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

The plant represents a significant increase in our overall manufacturing capacity.

If we are unable to fully utilize our manufacturing facilities, we will incur additional excess capacity charges which would have a negative effect on our financial condition and results of operations.

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and maintain patents and other rights related to our marketed products, assets originating from our research and development efforts and/or successful execution of external business development opportunities.

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

BUSINESS ENVIRONMENT

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Risk Factors, included in this report.

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.

Following a favorable March 2023 decision of the CJEU affirming TECFIDERA's right to regulatory data and marketing protection and the EC determination in May 2023 that TECFIDERA is entitled to an additional year of market protection for its pediatric indication, we believe that TECFIDERA is entitled to regulatory marketing protection in the E.U.

until at least February 2, 2025, and are seeking to enforce this protection.

In December 2023, the EC revoked all centralized marketing authorizations for generic versions of TECFIDERA.

As of December 31, 2023, some of the TECFIDERA generics have not yet fully exited some E.U.

markets and we expect removal of all generics from the market will take additional time.

We are closely monitoring this situation and working to enforce our legal right to market protection.

In addition, we will continue to enforce our EP 2 653 873 patent related to TECFIDERA, which expires in 2028.

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

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

We are defending the validity of our EP 2 653 873 patent related to TECFIDERA and expiring in 2028 in opposition proceedings in the European Patent Office.

We are also engaged in litigation in Europe to defend and enforce national counterparts of our EP 2 653 873 patent, with mixed results.

A biosimilar entrant of TYSABRI was approved in the U.S.

We expect the future sales of TYSABRI may be adversely affected by the entrance of this biosimilar.

BUSINESS UPDATE REGARDING MACROECONOMIC CONDITIONS AND OTHER DISRUPTIONS

Significant portions of our business are conducted in Europe, Asia and other international geographies.

Factors such as global health outbreaks, adverse weather events, geopolitical events, inflation, 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.

Additionally, global disputes and interruptions in international relationships, including tariffs, trade protection measures, import or export licensing requirements and the imposition of trade sanctions or similar restrictions by the U.S.

or other governments, affect our ability to do business.

For example, tensions between the U.S.

and China have led to a series of tariffs and sanctions being imposed by the U.S.

on imports from China mainland, as well as other business restrictions.

Factors such as global health outbreaks, adverse weather events, geopolitical events, tariffs, inflation, 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.

CURRENT ECONOMIC CONDITIONS

Economic conditions remain vulnerable as markets continue to be impacted in part by elevated inflation, rising interest rates, global supply chain constraints and recent bank failures.

During 2023 concerns arose with respect to the financial condition of certain banking institutions in the U.S., in particular those with exposure to certain types of depositors and large portfolios of investment securities.

In March 2023 two such banks were closed and taken over by the FDIC, which created significant market disruption.

While we did not have any direct exposure to these institutions, we do maintain our cash at financial institutions, often in balances that exceed the current FDIC insurance limits, and will continue to monitor our cash, cash equivalents and investments and take steps to identify any potential impact and minimize any disruptions on our business.

If other banks and financial institutions enter receivership or become insolvent in the future due to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents and investments, including transferring funds, making payments or receiving funds, may be threatened and could have a material adverse effect on our business and financial condition.

Economic conditions remain vulnerable as markets continue to be impacted in part by elevated inflation, higher interest rates, adverse weather events, global supply chain uncertainties and risks associated with geopolitical conflicts.

ADVERSE WEATHER EVENTS

Adverse weather conditions, including hurricanes, earthquakes, wildfires and natural disaster damage, may affect our ability to do business.

We currently have operations in RTP, North Carolina, which were not impacted by recent hurricanes.

GLOBAL SUPPLY CHAIN DISRUPTIONS

Global supply chain disruptions, such as strikes, work stoppages, port congestion, port closures and other logistical problems, may affect our ability to do business.

For example, in 2024 major port strikes on the East and Gulf Coasts of the U.S.

resulted in delayed cargo movement for several days.

As our primary shipping method for resources and finished goods is through air freight, the recent port strikes did not impact our business;

however, we will continue to assess any future port disruptions and if necessary, work to secure alternative transportation.

GEOPOLITICAL TENSIONS

The ongoing geopolitical tensions related to Russia's invasion of Ukraine and the recent military conflict in the Middle East have resulted in global business disruptions and economic volatility.

Global disputes and interruptions in international relationships, including tariffs, trade protection measures, import or export licensing requirements and the imposition of trade sanctions or similar restrictions, affect our ability to do business.

For example, tensions between China and Taiwan and tensions between the U.S.

and China have led to a series of tariffs and sanctions being imposed by the U.S.

on imports from China mainland, retaliatory tariffs imposed by China on U.S.

imports, as well as other business restrictions, with additional restrictive measures being proposed.

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We, and the pharmaceutical industry, utilize China-based partners for certain raw materials, ingredients and components for our pharmaceutical products and their delivery devices.

Engaging alternative suppliers may involve seeking additional regulatory approvals and be costly in terms of time and resources needed.

For example, certain early processes related to our acquired SKYCLARYS product rely on a single supplier based in China.

We are continuing to evaluate SKYCLARYS' supply chain and prioritizing actions to mitigate risks associated with its manufacturing and our ability to supply patients.

The ongoing geopolitical tensions related to Russia's invasion of Ukraine and the military conflict in the Middle East have resulted in global business disruptions and economic volatility.

For example, sanctions and other restrictions have been 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.

In addition, new government sanctions on the export of certain

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manufacturing materials to Russia may delay or limit our ability to get new products approved.

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 between Russia and Ukraine, its impact on regional and global economic conditions and whether the conflict spreads or has effects on countries outside Ukraine and Russia.

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Revenue generated from sales in Russia and Ukraine represent less than 2.0% of total revenue for the years ended December 31, 2024, 2023 and 2022.

Revenue generated from sales in the broader Middle East region represents less than 2.0% of total revenue for the years ended December 31, 2023, 2022 and 2021.

Additionally, revenue generated from sales in the broader Middle East region represents less than 2.0% of total revenue for the years ended December 31, 2024, 2023 and 2022.

INFLATION REDUCTION ACT OF 2022

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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 IRA's drug pricing controls and Medicare redesign may have an adverse impact on our sales (particularly for our products that are more substantially reliant on Medicare reimbursement), our business and our results of operations.

However, the degree of impact from this legislation on our business depends on a number of implementation decisions.

We will continue to assess as further information becomes available.

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This includes the following:

(i) allowing CMS to negotiate prices for select high-cost Medicare Part D drugs (beginning in 2026) and Part B drugs (beginning in 2028) to reduce out-of-pocket prescription drug costs for beneficiaries, potentially resulting in higher contributions from plans and manufacturers;

(ii) drug inflationary rebate requirements to penalize manufacturers from raising the prices of Medicare covered single-source drugs and biologics beyond the inflation-adjusted rate, beginning in 2022 for Part D drugs and 2023 for Part B drugs;

(iii) 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;

(IV) Medicare Part D redesign which replaces the current coverage gap provisions and establishes a $2,000 cap for out-of-pocket costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for up to 10.0% of costs up to the $2,000 cap and up to 20.0% after that cap is reached.

Manufacturers that qualify as either specified or specified small manufacturers will phase-in the new manufacturer liability for prescription drug costs over a 7-year period from 2025 to 2031 for certain Medicare Part D drugs dispensed to certain beneficiaries.

In April 2024 CMS informed us that we qualified for the specified manufacturer exception pertaining to the Medicare Part D redesign.

We expect the IRA's drug pricing controls and Medicare Part D redesign may have an adverse impact on our sales, particularly for our products that are more substantially reliant on Medicare reimbursement.

We anticipate the IRA Medicare Part D redesign will have a modest net unfavorable impact to our 2025 revenue, ranging from approximately $50.0 million to $100.0 million, concentrated in our SKYCLARYS and MS portfolio product revenue, approximately a third of which could be associated with SKYCLARYS.

The degree of impact from this legislation on our business depends on a number of forthcoming implementation actions by regulatory authorities, the full extent of the IRA's impacts on our sales and, in turn, our business, remains unclear.

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FINANCIAL HIGHLIGHTS

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$3.21 or 40.3%

PRODUCT REVENUE

PRODUCT REVENUE, NET

$33.2 million or 0.5%

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• Rare disease revenue increased $185.1 million, or 10.3%

• Biosimilars revenue increased $18.9 million, or 2.5%

• The decrease in MS product revenue 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, a decrease in Interferon demand due to competition as patients transition to higher efficacy therapies and a decrease in U.S.

TYSABRI revenue primarily driven by increased competition and pricing pressure.

• The increase in rare disease revenue was primarily due to revenue from SKYCLARYS, which we began recognizing in the fourth quarter of 2023 as a result of our acquisition of Reata in September 2023.

The increase was partially offset by a decrease in rest of world SPINRAZA revenue primarily due to the unfavorable impact of foreign currency exchange, increased competition, a decrease in pricing and the timing of shipments.

• The decrease in MS product revenue was primarily due to a decrease in Interferon demand due to competition as patients transition to higher efficacy therapies and a decrease in global TYSABRI revenue driven by increased competition.

• The increase in rare disease product revenue in 2024 was primarily due to revenue from new product launches, including global SKYCLARYS revenue of $382.5 million, $72.2 million for ZURZUVAE and $32.4 million for QALSODY.

This was partially offset by a decrease in rest of world SPINRAZA revenue driven by the loss of an annual tender in Russia which resulted in an unfavorable impact of approximately $45.0 million.

The decrease was also impacted by the timing of SPINRAZA shipments and the unfavorable impact of foreign currency exchange.

TOTAL COST AND EXPENSE

$768.9 million or 9.0%

• Cost of sales increased $255.1 million, or 11.2%

• R&D expense increased $230.9 million, or 10.3%

• SG&A expense increased $146.1 million, or 6.1%

• Restructuring expense increased $87.7 million, or 66.9%

• Other income decreased $423.7 million, net

• The increase in cost of sales was primarily due to unfavorable product mix from increased contract manufacturing revenue, MS product mix and higher idle capacity charges, partially offset by a decrease in excess and obsolescence inventory charges in 2023.

• The increase in research and development expense was primarily due to clinical trial close out costs incurred in 2023 of approximately $125.4 million and the recognition of $197.0 million in equity-based compensation expense related to our acquisition of Reata.

• The increase in selling, general and administrative expense was primarily due to the recognition of $196.4 million in equity-based compensation expense related to our acquisition of Reata .

• The increase in restructuring expense was primarily due to higher severance benefits associated with the 2023 cost savings initiatives as compared to 2022.

• The decrease in other income, net was primarily due to the pre-tax gain of $1.5 billion recorded in 2022 related to the sale of our 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

• Additionally, total cost and expense in 2022 was reduced by a pre-tax gain of approximately $503.7 million related to a sale of a building.

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• Cost of sales decreased $223.0 million, or 8.8%

• R&D expense decreased $420.2 million, or 17.1%

• SG&A expense decreased $146.0 million, or 5.7%

• Amortization and impairment of acquired intangible assets increased $206.1 million, or 85.7%

• The decrease in cost of sales was primarily due to favorable product mix from lower contract manufacturing revenue and lower idle capacity charges, partially offset by approximately $181.5 million in SKYCLARYS amortization costs.

• The decrease in R&D expense was primarily driven by approximately $197.0 million of equity-based compensation expense recognized in 2023 related to our Reata acquisition, cost-reduction measures realized in 2024 in connection with our portfolio prioritization initiatives and our Fit for Growth program, as well as higher spend on clinical trials and close out costs incurred during 2023, partially offset by approximately $48.5 million in SKYCLARYS amortization costs and approximately $42.5 million of equity-based compensation expense recognized in 2024 related to our HI-Bio acquisition.

• The decrease in SG&A expense was primarily due to approximately $196.4 million of equity-based compensation expense recognized in 2023 related to our Reata acquisition.

• The increase in amortization and impairment of acquired intangible assets was primarily due to amortization for the acquired intangible assets associated with SKYCLARYS, as well as impairment charges of approximately $60.2 million during 2024.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

• We generated $1,547.2 million of net cash flow from operations for the years ended December 31, 2023.

Net cash flow from operations includes $393.4 million of equity-based compensation expense related to our acquisition of Reata in September 2023.

• Cash, cash equivalents and marketable securities totaled approximately $1.0 billion as of December 31, 2023, compared to approximately $5.6 billion as of December 31, 2022.

The decrease was primarily due to consideration paid for our acquisition of Reata in September 2023.

• There were no share repurchases of our common stock during 2023 under our 2020 Share Repurchase Program.

Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of December 31, 2023.

• Cash and cash equivalents totaled approximately $2.4 billion as of December 31, 2024, compared to approximately $1.0 billion as of December 31, 2023.

• We generated approximately $2,875.5 million of net cash flow from operations for the year ended December 31, 2024.

• We received a net cash payment of $88.6 million from the sale of our rare pediatric disease PRV in 2024.

• In April 2024 we received $437.5 million from Samsung BioLogics related to the sale of our equity interest in Samsung Bioepis.

• In July 2024 we completed the acquisition of HI-Bio for $1.15 billion, which was funded through available cash on hand.

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RECENT DEVELOPMENTS

ACQUISITIONS AND DIVESTITURES

HUMAN IMMUNOLOGY BIOSCIENCES

On July 2, 2024, we completed the acquisition of all of the issued and outstanding shares of HI-Bio, a privately-held clinical-stage biotechnology company focused on targeted therapies for patients with severe immune-mediated diseases.

HI-Bio's lead asset, felzartamab, an anti-CD38 antibody, is currently being evaluated for three leading indications, AMR, PMN and IgAN.

Felzartamab has received Breakthrough Therapy Designation and ODD from the FDA for development in the treatment of PMN and AMR.

Subsequent to our acquisition, felzartamab received ODD in the E.U.

in IgAN and solid organ transplantation.

The acquisition of HI-Bio is expected to augment our pipeline and build on our expertise in immunology.

Under the terms of this acquisition, we paid shareholders of HI-Bio approximately $1.15 billion at closing and may pay up to an additional $650.0 million in potential future development and regulatory milestone payments.

We funded this acquisition through available cash on hand and accounted for this acquisition as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations , and recorded assets acquired and liabilities assumed at their respective fair values as of the acquisition date.

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

SALE OF PRIORITY REVIEW VOUCHER

In April 2024 we completed the sale of our rare pediatric disease PRV, generated by the development associated with SPINRAZA, to a third party.

In consideration for the PRV we received a cash payment of $103.0 million upon the closing of the PRV purchase, of which approximately $14.4 million was paid to Ionis.

Our net portion of approximately $88.6 million was recognized in gain on sale of priority review voucher, net within our consolidated statements of income for the year ended December 31, 2024.

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

DEVELOPMENTS IN KEY COLLABORATIVE RELATIONSHIPS

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United States

In July 2023 the FDA granted traditional approval of LEQEMBI, an anti-amyloid antibody for the treatment of Alzheimer's disease, which was previously granted accelerated approval by the FDA in January 2023.

Following the FDA's traditional approval of LEQEMBI, CMS confirmed broader coverage of LEQEMBI.

Additionally, in March 2023 Eisai announced that the U.S.

Veteran's Health Administration will be providing coverage of LEQEMBI to veterans living with early stages of Alzheimer's disease.

Key developments related to LEQEMBI in the U.S.

consisted of the following:

• In January 2025 the FDA approved LEQEMBI monthly IV maintenance dosing for the treatment of early Alzheimer's disease.

• In January 2025 the FDA accepted for review the BLA for LEQEMBI subcutaneous autoinjector for weekly maintenance dosing, with a PDUFA action date set for August 31, 2025.

• In July 2024 Eisai presented new clinical data from the CLARITY AD study open-label extension of LEQEMBI, demonstrating that three years of continuous LEQEMBI treatment reduced clinical decline, resulting in a clinically meaningful benefit for early Alzheimer's disease patients.

Rest of World

Key developments related to LEQEMBI (lecanemab) in rest of world markets during 2023 consisted of the following:

• In January 2024 we and Eisai announced that the SAG will convene at the request of the CHMP to discuss the MAA of lecanemab that is currently under review by the EMA.

The meeting of the SAG is expected to take place during the first quarter of 2024 and the EC decision for the MAA of lecanemab is expected during the first half of 2024.

• In January 2024 the NMPA approved LEQEMBI in China, with an expected launch date in 2024.

• In December 2023 we and Eisai announced that LEQEMBI intravenous infusion was launched in Japan.

• In September 2023 the Japanese Ministry of Health, Labor and Welfare approved LEQEMBI in Japan.

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

• In February 2023 the BLA for lecanemab was granted Priority Review by the NMPA of China.

• In May 2023 we and Eisai announced the submission of a MAA for lecanemab to the U.K.

MHRA in Great Britain, which has been designated by the MHRA for the Innovative Licensing and Access Pathway.

Additionally, in May 2023 Health Canada accepted for review the NDS for lecanemab.

• In June 2023 we and Eisai announced the submission of a MAA for lecanemab to the Ministry of Food and Drug Safety in South Korea.

ZURZUVAE (zuranolone)

In August 2023 the FDA approved ZURZUVAE for adults with PPD, pending DEA scheduling, which was completed in October 2023.

Upon approval, ZURZUVAE for PPD became the first and only oral, once-daily, 14-day treatment that can provide rapid improvements in depressive symptoms by day 15 for women with PPD.

ZURZUVAE for PPD became commercially available in the U.S.

during the fourth quarter of 2023.

Additionally, the FDA issued a CRL for the NDA for zuranolone in the treatment of adults with MDD.

The CRL stated that the application did not provide substantial evidence of effectiveness to support the approval of zuranolone for the treatment of MDD and that an additional study or studies would be needed.

We and Sage are continuing to seek feedback from the FDA and evaluating next steps.

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BUSINESS COMBINATIONS

REATA ACQUISITION

On September 26, 2023, we completed the acquisition of all of the issued and outstanding shares of Reata, a biopharmaceutical company focused on developing therapeutics that regulate cellular metabolism and inflammation in serious neurologic diseases.

As a result of this transaction we acquired SKYCLARYS (omaveloxolone), the first and only drug approved in the U.S.

for the treatment of Friedreich's Ataxia in adults and adolescents aged 16 years and older, as well as other clinical and preclinical pipeline programs.

Under the terms of this acquisition, we paid Reata shareholders $172.50 in cash for each issued and outstanding Reata share, which totaled approximately $6.6 billion.

In addition, we agreed to pay approximately $983.9 million in cash for Reata's outstanding equity awards, inclusive of employer taxes, of which approximately $590.5 million was attributable to pre-acquisition services and is therefore reflected as a component of total purchase price paid.

Of the $983.9 million paid to Reata's equity award holders, we recognized approximately $393.4 million as compensation attributable to the post-acquisition service period, of which $196.4 million was recognized as a charge to selling, general and administrative expense with the remaining $197.0 million as a charge to research and development expense within our consolidated statements of income for the year ended December 31, 2023 .

These amounts were associated with the accelerated vesting of stock options and RSUs previously granted to Reata employees that required no future services to vest.

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

Key developments related to LEQEMBI (lecanemab) in rest of world markets consisted of the following:

• In January 2025 we and Eisai announced an update regarding the ongoing regulatory review of the MAA for lecanemab in the E.U., which the CHMP of the EMA previously adopted a positive opinion on in November 2024.

The EC has asked the CHMP to consider information on the safety of lecanemab that became available after the adoption of the CHMP opinion in November 2024 and whether this may require an update of the opinion, and to consider whether the wording of the risk minimization measures in the opinion is clear enough to ensure correct implementation.

These will be discussed at the CHMP meeting in February 2025.

• In December 2024 LEQEMBI was approved by the Federal Commission for the Protection Against Sanitary Risk in Mexico.

• In November 2024 we and Eisai announced the launch of LEQEMBI in South Korea, which had been approved by the Ministry of Food and Drug Safety in South Korea in May 2024.

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• In October 2024 the Therapeutic Goods Administration of Australia issued a public statement about the initial decision not to register lecanemab.

In December 2024 Eisai submitted a request for reconsideration of this decision.

• In August 2024 LEQEMBI was approved by the Medicines and Healthcare products Regulatory Agency in Great Britain and by the Ministry of Health and Prevention in the United Arab Emirates.

• In July 2024 LEQEMBI was approved in Hong Kong and Israel.

• In June 2024 we and Eisai announced the launch of LEQEMBI in China, which had been approved by the NMPA in China in January 2024.

OTHER KEY DEVELOPMENTS

SKYCLARYS (omaveloxolone)

In February 2024 the EC approved SKYCLARYS in the E.U.

for the treatment of FA in adults and adolescents aged 16 years and older.

SKYCLARYS is the first treatment approved within the E.U.

for this rare, genetic, progressive neurodegenerative disease.

QALSODY (tofersen)

In April 2023 the FDA approved QALSODY for the treatment of ALS in adults who have a mutation in the SOD1 gene.

This indication is approved under accelerated approval based on reduction in plasma neurofilament light chain observed in patients treated with QALSODY.

Continued approval for this indication may be contingent upon verification of clinical benefit in confirmatory trial(s).

until at least February 2, 2025, and are seeking to enforce this protection.

In December 2023, the EC revoked all centralized marketing authorizations for generic versions of TECFIDERA.

As of December 31, 2023, some of the TECFIDERA generics have not yet fully exited some E.U.

markets and we expect removal of all generics from the market will take additional time.

We are closely monitoring this situation and working to enforce our legal right to market protection.

In addition, we will continue to enforce our EP 2 653 873 patent related to TECFIDERA, which expires in 2028.

CORPORATE MATTERS

FIT FOR GROWTH

In 2023 we initiated additional cost saving measures as part of our Fit for Growth program to reduce operating costs, while improving operating efficiency and effectiveness.

The Fit for Growth program is expected to generate approximately $1.0 billion in gross operating expense savings and $800.0 million in net operating expense savings by 2025, some of which will be reinvested in various initiatives.

The Fit for Growth program is currently estimated to include net headcount reductions of approximately 1,000 employees and we expect to incur restructuring charges ranging from approximately $260.0 million to $280.0 million.

For additional information on our Fit for Growth program, please read Note 4, Restructuring , to our consolidated financial statements included in this report.

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In October 2024 the FDA granted felzartamab Breakthrough Therapy Designation for the treatment of late AMR without T-cell mediated rejection in kidney transplant patients.

Additionally, felzartamab was granted ODD in the E.U.

in IgAN and solid organ transplantation in November 2024 and December 2024, respectively.

UCB COLLABORATION

In September 2024 we and UCB announced positive topline data from the Phase 3 PHOENYCS GO study of dapirolizumab pegol, a novel Fc-free anti-CD40L drug candidate, in people living with moderate-to-severe SLE.

The Phase 3 study met the primary endpoint demonstrating clinical improvement in moderate-to-severe SLE with clinical improvements observed among key secondary endpoints.

Based on these results, UCB and Biogen initiated a second Phase 3 study in late 2024.

SPINRAZA (nusinersen)

In September 2024 we announced positive topline data from the Phase 2/3 DEVOTE study of nusinersen, which evaluated the safety and efficacy of a higher dose regimen of nusinersen in treatment-naive symptomatic infants with SMA.

In January 2025 the FDA accepted the supplemental NDA and the EMA validated the application for a higher dose regimen of nusinersen for SMA.

The higher dose regimen of nusinersen comprises a more rapid loading regimen, two 50 mg-doses 14 days apart, and higher maintenance regimen, 28 mg, every four months, compared to the currently approved dose of SPINRAZA.

DISCONTINUED PROGRAMS AND STUDIES

ENVISION STUDY

In November 2023 we notified Neurimmune of our decision to terminate our collaboration and license agreement with Neurimmune, to discontinue the development and commercialization of ADUHELM and to terminate the ENVISION clinical study.

In connection with this termination, we recorded close-out costs of approximately $60.0 million in research and development expense within our consolidated statements of income for the year ended December 31, 2023.

In September 2023 we discontinued our EMBARK study for aducanumab.

In connection with this discontinuation we recorded termination costs of approximately $43.0 million in research and development expense within our consolidated statements of income for the year ended December 31, 2023 .

ACORDA COLLABORATION

In January 2024 we notified Acorda of our decision to terminate our collaboration and license agreement, effective January 1, 2025.

As a result of this termination, Acorda will regain global commercialization rights to FAMPYRA.

In June 2023 we and Denali announced plans to terminate the Phase 3 LIGHTHOUSE study for BIIB122, a small molecule inhibitor of LRRK2 in Parkinson's disease.

The protocol for the Phase 2b LUMA study for BIIB122 in patients with early-stage Parkinson’s disease was amended to now include eligible patients with a LRRK2 genetic mutation in addition to continuing to enroll eligible patients with early-stage idiopathic Parkinson’s disease.

In April 2023 we announced that we would terminate the development of BIIB093 (glibenclamide IV), currently in a Phase 3 study for LHI and a Phase 2 study for brain contusion, due to operational challenges and other strategic considerations.

In connection with this termination, we recorded close-out costs of approximately $13.2 million in research and development expense within our consolidated statements of income for the year ended December 31, 2023.

In April 2023 we announced that we will be pausing the initiation of a Phase 2b study for BIIB131 (TMS-007) for acute ischemic stroke and will continue to assess whether to initiate this study.

We sold the rights to BIIB131 to a third-party biopharmaceutical company in exchange for an upfront with potential milestones and future royalties on global sales.

In April 2023 we announced that we would discontinue further development of BIIB132 in spinocerebellar ataxia type 3, as part of our ongoing research and development prioritization initiative.

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SAGE COLLABORATION

In October 2024 we and Sage agreed to not pursue further development of zuranolone for the potential treatment of MDD.

This decision was based on the significant new investment and time we expect would be needed to conduct the additional studies required to support approval of this indication.

In July 2024 we and Sage announced that the Phase 2 KINETIC 2 dose-range study of BIIB124 did not meet its endpoints.

Based on these results, we discontinued our further development of BIIB124 and terminated our rights under the collaboration and license agreement specific to BIIB124, effective February 17, 2025.

SAMSUNG BIOEPIS 2019 DEVELOPMENT AND COMMERCIALIZATION AGREEMENT

In October 2024 we notified Samsung Bioepis of our decision to terminate our 2019 Development and Commercialization Agreement (the DCA Agreement) solely within the U.S.

Biogen will transfer commercialization rights for BYOOVIZ and OPUVIZ in the U.S.

and Canada back to Samsung Bioepis over a period of up to 18 months.

During this transition period, we will continue to commercialize BYOOVIZ.

The termination does not impact the other markets in the DCA Agreement.

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IONIS COLLABORATION

In May 2024 we and Ionis announced that the Phase 1/2 ALSpire study of BIIB105, an investigational ASO for the potential treatment of ALS, did not meet its endpoints.

Based on these results, we discontinued our further development of BIIB105.

In May 2024 we announced that we have elected not to exercise our option to license and lead development of BIIB121, an ASO for the potential treatment of Angelman syndrome.

MERZ THERAPEUTICS (PREVIOUSLY ACORDA THERAPEUTICS, INC.)

In January 2024 we notified Acorda of our decision to terminate our collaboration and license agreement, effective January 1, 2025, whereby Acorda regained global commercialization rights to FAMPYRA.

On April 1, 2024, Acorda filed for bankruptcy protection and announced its intention to sell substantially all of Acorda's assets to a third party.

On July 10, 2024, Merz Therapeutics announced that its subsidiary Merz Pharmaceuticals LLC had completed the acquisition of FAMPYRA, and related assets from Acorda.

We are now working with Merz Therapeutics on the transition of global commercialization rights of FAMPYRA and we expect to recognize minimal revenue in 2025.

BIIB143 (cemdomespib)

In early 2025 we discontinued further development of BIIB143 (cemdomespib) for the treatment of diabetic neuropathic pain, as part of our ongoing pipeline prioritization efforts.

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RESULTS OF OPERATIONS

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Revenue from anti-CD20 therapeutic programs 1,749.9 1,689.6 1,700.5 3.6 (0.6) 60.3 (10.9)

Alzheimer's collaboration revenue (1)

59.9 — — nm — 59.9 —

Contract manufacturing, royalty and other revenue 652.6 899.3 485.1 (27.4) 85.4 (246.7) 414.2

Total revenue $ 9,675.9 $ 9,835.6 $ 10,173.4 (1.6) % (3.3) % $ (159.7) $ (337.8)

nm Not meaningful

(1) Alzheimer's collaboration revenue consists of our 50.0% share of LEQEMBI product revenue, net and cost of sales, including royalties.

PRODUCT REVENUE

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during the fourth quarter of 2023.

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MULTIPLE SCLEROSIS

• Global TYSABRI revenue decreased $161.9 million, from $1,876.9 million in 2023 to $1,715.0 million in 2024, or 8.6%, primarily due to increased competition and a decrease in pricing in rest of world TYSABRI.

• Global TECFIDERA revenue decreased $45.4 million, from $1,012.5 million in 2023 to $967.1 million in 2024, or 4.5%, driven by a decrease in demand as a result of multiple TECFIDERA generic entrants in North America, Brazil and certain E.U.

• Global Interferon revenue decreased $199.7 million, from $1,305.4 million in 2022 to $1,105.7 million in 2023, or 15.3%, driven by a decrease in sales volumes as patients transition to higher efficacy therapies.

• Global VUMERITY revenue increased $22.9 million, from $553.4 million in 2022 to $576.3 million in 2023, or 4.1%, primarily due to an increase in global demand, partially offset by higher discounts and allowances in the U.S.

driven by a favorable Medicaid-related sales adjustment in the first quarter of 2022.

• Global TYSABRI revenue decreased $154.0 million, from $2,030.9 million in 2022 to $1,876.9 million in 2023, or 7.6%, primarily due to a decrease in U.S.

TYSABRI revenue driven by a decrease in demand, higher discounts and unfavorable channel dynamics.

• Global Interferon revenue decreased $137.7 million, from $1,105.7 million in 2023 to $968.0 million in 2024, or 12.5%, driven by a decrease is demand as patients transition to higher efficacy therapies.

• Global VUMERITY revenue increased $51.7 million, from $576.3 million in 2023 to $628.0 million in 2024, or 9.0%, primarily due to an increase in global demand.

MS revenue includes sales from TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA.

Effective January 1, 2025, our collaboration and license agreement for FAMPYRA global commercialization rights was terminated.

We expect to recognize minimal revenue in 2025.

In 2025 we expect total MS revenue will continue to decline as a result of increasing competition for many of our MS products in both the U.S.

and rest of world markets.

We are also aware of a biosimilar entrant of TYSABRI that was approved in the U.S.

in August 2023 and the E.U.

in September 2023.

We believe that future sales of TYSABRI may be adversely affected by the entrance of this biosimilar.

We believe that we have resolved previously reported manufacturing issues at our VUMERITY 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 2024 and are currently focused on rebuilding adequate inventory.

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SPINRAZA revenue increased $10.3 million, from $600.2 million in 2022 to $610.5 million in 2023, or 1.7%, primarily due to an increase in pricing, partially offset by higher discounts and allowances.

• Rest of world SPINRAZA revenue decreased $62.6 million, from $1,193.3 million in 2022 to $1,130.7 million in 2023, or 5.2%, primarily due to the unfavorable impact of foreign currency exchange, a decrease in demand in certain European markets driven by increased competition, a decrease in pricing and the timing of shipments in certain Asian markets.

SKYCLARYS revenue was $55.9 million in 2023, which we began recognizing during the fourth quarter of 2023, subsequent to our acquisition of Reata.

Additionally, a biosimilar entrant of TYSABRI was approved in the U.S.

We expect that future sales of TYSABRI may be adversely affected by the entrance of this biosimilar.

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SPINRAZA revenue increased $15.2 million, from $610.5 million in 2023 to $625.7 million in 2024, or 2.5%, primarily due to favorable net pricing, offset by a decrease in demand.

• Rest of world SPINRAZA revenue decreased $183.2 million, from $1,130.7 million in 2023 to $947.5 million in 2024, or 16.2%, primarily driven by the loss of an annual tender in Russia which resulted in an unfavorable impact of approximately $45.0 million.

The decrease was also impacted by the timing of shipments and the unfavorable impact of foreign currency exchange.

• Global SKYCLARYS revenue was $382.5 million in 2024, including $301.1 million of U.S.

SKYCLARYS revenue, which we began recognizing during the fourth quarter of 2023, subsequent to our acquisition of Reata, and $81.4 million of rest of world SKYCLARYS revenue, which was approved in the E.U.

and became commercially available during the first quarter of 2024.

• Global QALSODY revenue was $32.4 million in 2024.

Rare disease revenue includes sales from SPINRAZA, QALSODY, which became commercially available in the U.S.

during the second quarter of 2023, and SKYCLARYS (omaveloxolone), which was obtained as part of our acquisition of Reata in September 2023.

during the second quarter of 2023 and commercially available in the E.U.

during the second quarter of 2024, and SKYCLARYS, which was obtained as part of our acquisition of Reata in September 2023.

SKYCLARYS became commercially available in the U.S.

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during the fourth quarter of 2023, subsequent to our acquisition of Reata.

In February 2024 the EC approved SKYCLARYS in the E.U.

for the treatment of FA in adults and adolescents aged 16 years and older.

SKYCLARYS was also approved in the E.U.

and became commercially available during the first quarter of 2024.

In 2025 we expect growth in rare disease revenue as we continue to launch SKYCLARYS in the U.S.

Despite competition from a gene therapy product and an oral product, we anticipate SPINRAZA revenue to be relatively flat in 2024.

We expect moderate growth in SPINRAZA in the U.S.

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

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• For 2023 compared to 2022, the increase in biosimilar revenue was primarily due to an increase in sales volumes related to the continued launch of BYOOVIZ in the U.S.

and rest of world, partially offset by unfavorable BYOOVIZ pricing and the unfavorable impact of foreign currency exchange.

Biosimilars revenue includes sales from BENEPALI, IMRALDI, FLIXABI and BYOOVIZ.

BYOOVIZ launched in the U.S.

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

We anticipate global SPINRAZA revenue to be relatively flat in 2025.

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• For 2024 compared to 2023, the increase in biosimilar revenue was primarily due to an increase in sales volumes related to BENEPALI, partially offset by a decrease in pricing due to competitive pressures.

Biosimilars revenue includes sales from BENEPALI, IMRALDI, FLIXABI, BYOOVIZ and TOFIDENCE.

In 2023 BYOOVIZ became commercially available in certain international markets.

During the third quarter of 2023 the FDA approved TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, which we expect to become commercially available during 2024.

In 2024 we anticipate modest growth in revenue from our biosimilars business driven by the continued launch of BYOOVIZ in the U.S.

and rest of world, offset in part by lower pricing in certain markets.

During the third quarter of 2023 the FDA approved TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, which became commercially available in the U.S.

during the second quarter of 2024 and approved in the E.U.

during the second quarter of 2024.

We continue to work with our third-party contract manufacturers for IMRALDI and BENEPALI to address supply constraints.

If not resolved these supply constraints could have an adverse impact on 2025 sales.

In addition, one of our contract manufacturers for IMRALDI and BENEPALI entered into a proposed acquisition by a third party, which is expected to close at the end of 2024.

We are currently evaluating the impact this will have on our biosimilars business.

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

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In addition, one of our contract manufacturers for IMRALDI and BENEPALI was acquired by a third party in December 2024.

We have evaluated the impact this will have on our biosimilars business and have mitigation activities in progress designed to ensure supply continuity.

After evaluating our strategic options, we have made the decision to retain our biosimilars business.

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REVENUE FROM ANTI-CD20 THERAPEUTIC PROGRAMS

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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.

BIOGEN'S SHARE OF PRE-TAX PROFITS IN THE US.

BIOGEN'S SHARE OF PRE-TAX PROFITS IN THE U.S.

FOR RITUXAN, GAZYVA AND LUNSUMIO

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of 7.9%, resulting from competition from multiple biosimilar products, partially offset by an increase in sales volumes of GAZYVA of 11.8%.

For 2023 compared to 2022, the increase in collaboration costs and expense was primarily due to higher expense related to LUNSUMIO, which became commercially available in the first quarter of 2023.

In April 2023 our pre-tax profit share for RITUXAN, GAZYVA and LUNSUMIO decreased from 37.5% to 35.0%.

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in future years.

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OTHER REVENUE FROM ANTI-CD20 THERAPEUTIC PROGRAMS

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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.

ALZHEIMER'S COLLABORATION REVENUE

Alzheimer's collaboration revenue consists of our 50.0 % share of LEQEMBI product revenue, net and cost of sales, including royalties, as we are not the principal.

We began recognizing Alzheimer's collaboration revenue upon the accelerated approval of LEQEMBI in the U.S.

during the first quarter of 2023.

For the year ended December 31, 2024, we recognized approximately $ 59.9 million of Alzheimer's collaboration revenue within our consolidated statements of income.

For the year ended December 31, 2023, our share of LEQEMBI product revenue, net, was fully offset by our share of cost of sales, including royalties, resulting in a zero net impact to Alzheimer's collaboration revenue within our consolidated statements of income.

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.

CONTRACT MANUFACTURING, ROYALTY AND OTHER REVENUE

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CONTRACT MANUFACTURING REVENUE

We record contract manufacturing revenue primarily from amounts earned under contract manufacturing agreements with our strategic customers.

For 2023 compared to 2022, the increase in contract manufacturing revenue was primarily driven by higher volumes due to the timing of batch production, which includes batches related to LEQEMBI that we began recognizing in the first quarter of 2023 upon the accelerated approval of LEQEMBI in the U.S.

As part of the 2020 sale of our Hillerød, Denmark manufacturing operations to FUJIFILM, we provided FUJIFILM with certain minimum batch production commitment guarantees, including batches related to our contract manufacturing arrangements.

As of December 31, 2023, these batch commitments have been satisfied and we expect that our contract manufacturing revenue will be lower in 2024, compared to 2023, as we are no longer supplying contract manufacturing customers in this manner.

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.

Contract manufacturing revenue primarily reflects amounts earned under contract manufacturing agreements with our strategic customers.

For 2024 compared to 2023, the decrease in contract manufacturing revenue was primarily driven by higher volumes in 2023 due to the timing of batch production, which includes batches related to LEQEMBI that we began recognizing in the first quarter of 2023 upon the accelerated approval of LEQEMBI in the U.S.

In addition, as part of the 2020 sale of our Hillerød, Denmark manufacturing operations to FUJIFILM, we provided FUJIFILM with certain minimum batch production commitment guarantees, including batches related to our contract manufacturing arrangements.

These batch commitments were satisfied as of December 31, 2023.

As a result, we recognized lower contract manufacturing revenue in 2024, compared to 2023, as we are no longer supplying contract manufacturing customers using Hillerød in this manner.

ROYALTY AND OTHER REVENUE

Royalty and other revenue primarily reflects the royalties we receive from net sales on products related to patents that we have out-licensed, as well as royalty revenue on biosimilar products from our license arrangements with Samsung Bioepis and our 50.0% share of LEQEMBI product revenue, net and cost of sales, including royalties, as we are not the principal.

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.

Royalty and other revenue primarily reflects royalty revenue on biosimilar products from our license arrangements with Samsung Bioepis and royalties we receive from net sales on products related to patents that we have out-licensed.

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

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RESERVES FOR DISCOUNTS AND ALLOWANCES

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

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

and contains substantial drug pricing reforms.

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

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

For 2023 compared to 2022, the decrease in contractual adjustments was primarily due to lower government rebates in the U.S.

as a result of a contract pharmacy change made during the first quarter of 2023 related to our Interferons, partially offset by higher managed care and Medicaid rebates in the U.S.

and higher government rebates in rest of world.

Discounts include trade term discounts and wholesaler incentives.

For 2023 compared to 2022, the increase in discounts was primarily driven by higher purchase and volume discounts for biosimilars.

For 2024 compared to 2023, the decrease in contractual adjustments was primarily due to lower government rebates in rest of world and biosimilars, partially offset by higher government rebates in the U.S.

Discounts include trade term discounts, wholesaler incentives and volume related discounts.

For 2024 compared to 2023, the increase in discounts was primarily driven by higher purchase and volume discounts for biosimilars and rest of world, as well as higher purchase discounts in the U.S.

Product return reserves are established for returns made by wholesalers.

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

For 2023 compared to 2022, the increase in returns was primarily driven by higher return rates in the U.S.

For 2024 compared to 2023, return reserves were relatively consistent.

For additional information on our revenue reserves, please read Note 5, Revenue, to our consolidated financial statements included in this report.

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COST AND EXPENSE

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Collaboration profit sharing/(loss reimbursement) 254.4 218.8 (7.4) 16.3 nm 35.6 226.2

(Gain) loss on fair value remeasurement of contingent consideration — (209.1) (50.7) nm 312.4 209.1 (158.4)

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

Restructuring charges 218.8 131.1 — 66.9 nm 87.7 131.1

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

(Gain) loss on fair value remeasurement of contingent consideration 27.7 — (209.1) nm nm 27.7 209.1

Restructuring charges 30.2 218.8 131.1 (86.2) 66.9 (188.6) 87.7

Gain on sale of priority review voucher, net (88.6) — — nm — (88.6) —

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

Other (income) expense, net 343.6 315.5 (108.2) 8.9 (391.6) 28.1 423.7

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PRODUCT COST OF SALES

For 2023 compared to 2022, the increase in product cost of sales was primarily due to unfavorable product mix from increased contract manufacturing revenue, MS product mix and higher idle capacity charges, partially offset by a decrease in excess and obsolescence inventory charges in 2023.

For 2024 compared to 2023, the decrease in product cost of sales was primarily due to favorable product mix from decreased contract manufacturing revenue and lower idle capacity charges, offset in part by approximately $181.5 million in SKYCLARYS amortization costs.

Contract manufacturing revenue includes LEQEMBI inventory produced for Eisai, beginning in the first quarter of 2023 upon the accelerated approval of LEQEMBI in the U.S.

Cost of sales as a percentage of revenue was adversely affected by LEQEMBI batches due to minimal margins.

The increase was partially offset by a decrease in excess and obsolescence inventory charges as 2022 included a write-off of approximately $275.0 million during the first quarter of 2022 of excess inventory and contractual commitments related to ADUHELM.

As a result of our acquisition of Reata in September 2023 we recorded a fair value step-up adjustment related to the acquired inventory of SKYCLARYS of approximately $1.3 billion.

This fair value step-up adjustment will be amortized to cost of sales within our consolidated statements of income when the inventory is sold, which is expected to be within approximately 3 years from the acquisition date.

For the year ended December 31, 2023, amortization from the fair value step-up adjustment as a result of inventory sold during the fourth quarter was approximately $31.5 million.

This fair value step-up adjustment is being amortized to cost of sales within our consolidated statements of income as the inventory is sold, which is expected to be sold over a period of approximately 4 years from the acquisition date.

For the years ended December 31, 2024 and 2023, amortization from the fair value step-up adjustment was approximately $181.5 million and $31.5 million, respectively.

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

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Inventory amounts written down as a result of excess, obsolescence or unmarketability totaled $101.9 million, $124.4 million and $336.2 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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

We also recognized approximately $197.0 million related to Eisai's 45.0% share of inventory, idle capacity charges and contractual commitments in collaboration profit sharing/(loss reimbursement) within our consolidated statements of income for the year ended December 31, 2022.

For the years ended December 31, 2023 and 2022, we recorded approximately $165.2 million and $119.0 million, respectively, of aggregate gross idle capacity charges.

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.

For the years ended December 31, 2024, 2023 and 2022, we recorded approximately $4.8 million, $165.2 million and $119.0 million, respectively, of aggregate gross idle capacity charges.

ROYALTY COST OF SALES

For 2023 compared to 2022, the decrease in royalty cost of sales was primarily due to lower royalties payable on lower sales of TYSABRI, partially offset by an increase in royalty cost of sales due to higher royalties payable on higher sales of VUMERITY and SKYCLARYS, which we began recognizing in the fourth quarter of 2023, subsequent to our acquisition of Reata.

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For 2024 compared to 2023 , the decrease in royalty cost of sales was primarily due to lower royalties payable associated with lower sales of SPINRAZA and TYSABRI, partially offset by higher royalties payable associated with higher sales of SKYCLARYS.

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RESEARCH AND DEVELOPMENT

Research and development expense, as a percentage of total revenue, was 21.1%, 25.0% and 21.9% for the years ended December 31, 2024, 2023 and 2022, respectively.

For 2023 compared to 2022, the increase in research and development was primarily due to approximately $197.0 million of equity-based compensation expense incurred as a result of our acquisition of Reata in 2023, an increase in spending for the development of LEQEMBI for the treatment of Alzheimer's disease, litifilimab for the treatment of CLE and SLE, and TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, as well as clinical trial close out costs incurred in 2023 of approximately $125.4 million.

For 2024 compared to 2023, the decrease in research and development was primarily driven by approximately $197.0 million of equity-based compensation expense recognized in 2023 related to our acquisition of Reata, cost-reduction measures realized in 2024 in connection with our portfolio prioritization initiatives and our Fit for Growth program, as well as higher spend on clinical trials and close out costs incurred during 2023, partially offset by approximately $48.5 million of step-up amortization related to SKYCLARYS inventory and approximately $42.5 million of equity based compensation expense recognized in 2024 related to our acquisition of HI-Bio.

EARLY STAGE PROGRAMS

The increase in early stage programs was driven by an increase in costs associated with:

• development of BIIB121 for the treatment of Angelman syndrome;

• development of litifilimab for the treatment of CLE;

• development of BIIB115 for the treatment of SMA;

• development of BIIB091 for the treatment of MS;

The decrease in early stage programs was driven by a decrease in costs associated with:

• advancement of BIIB059 for the treatment of CLE into late stage;

• discontinuation of BIIB121 for the treatment of Angelman syndrome;

• discontinuation of BIIB131 for the treatment of acute ischemic stroke.

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

• development of BIIB080 for the treatment of Alzheimer's disease;

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

• discontinuation of BIIB104 for the treatment of cognitive impairment associated with schizophrenia;

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

• development of cemdomespib for the treatment of diabetic neuropathic pain;

• development of BIIB091 for the treatment of MS.

LATE STAGE PROGRAMS

The decrease in late stage programs was driven by a decrease in costs associated with:

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

• advancement of ZURZUVAE from late stage to marketed upon the approval of ZURZUVAE for PPD in the U.S.;

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

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

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

• discontinuation of BIIB093 for LHI.

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

• development of litifilimab for the treatment of SLE into late stage;

• development of TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA.

• advancement of BIIB059 for the treatment of CLE into late stage;

• development of BIIB059 for the treatment of SLE.

MARKETED PROGRAMS

The increase in marketed programs was driven by an increase in costs associated with:

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

• increased spend in ADUHELM primarily due to the change in our cost sharing arrangement with Eisai and clinical trial close out costs of approximately $103.0 million from the termination of our EMBARK and ENVISION studies;

• advancement of ZURZUVAE from late stage to marketed upon the approval of ZURZUVAE for PPD in the U.S.;

• increased spend in SKYCLARYS as a result of our acquisition of Reata in September 2023;

The decrease in marketed programs was driven by a decrease in costs associated with:

• discontinuation of ADUHELM for the treatment of Alzheimer's disease;

• decreased spend on LEQEMBI for the treatment of Alzheimer's disease;

• decreased spend on ZURZUVAE for MDD.

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

• increased spend in SKYCLARYS as a result of our acquisition of Reata in 2023;

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

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

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MILESTONE AND UPFRONT EXPENSE

Research and development expense for 2024 includes:

• $20.0 million in charges to research and development expense in connection with the upfront payment associated with entering into our collaboration with Neomorph in the fourth quarter of 2024;

• $16.0 million in charges to research and development expense in connection with milestone payments to C4;

• $12.0 million in charges to research and development expense in connection with milestone payments to Alcyone;

• $7.5 million in charges to research and development expense in connection with a milestone payment to Ionis.

Research and development expense for 2023 includes:

• $7.5 million charge to research and development expense in connection with a milestone payment to Ionis;

• $5.0 million charge to research and development expense in connection with exercising our option with Denali to license the ATV-enabled anti-amyloid beta program.

Research and development expense for 2022 includes:

• $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 Therapeutics Inc.

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 our collaboration with Alcyone Therapeutics in the fourth quarter of 2022.

Research and development expense is reported above based on the following classifications.

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Therefore, the same program could be reflected in different development stages in the same year.

For several of our programs, the research and development activities are part of our collaborative and other relationships.

Our costs reflect our share of the total costs incurred.

• Research and discovery:

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

For several of our programs, the research and development activities are part of our collaborative and other relationships.

Our costs reflect our share of the total costs incurred.

For the year ended December 31, 2023, other research and development costs also includes approximately $197.0 million of equity-based compensation expense incurred as a result of our acquisition of Reata in September 2023.

Excluding any milestone and upfront payments, we expect our core research and development expense to decrease in 2024, while continuing to invest in our pipeline.

This is primarily due to the continued realization of our cost savings initiatives and the one-time costs incurred from our acquisition of Reata in September 2023 of approximately $197.0 million.

For 2023 other research and development costs also includes approximately $197.0 million of equity-based compensation expense incurred as a result of our acquisition of Reata in 2023.

Excluding any milestone and upfront payments, we expect our core research and development expense to decrease in 2025, while continuing to invest in our pipeline, such as our acquisition of HI-Bio in July 2024.

This is primarily due to the continued realization of our cost savings initiatives.

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.

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

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For additional information on our acquisitions of Reata and HI-Bio, please read Note 2, Acquisitions , to our consolidated financial statements included in this report.

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SELLING, GENERAL AND ADMINISTRATIVE

For 2023 compared to 2022, selling, general and administrative expense increased by approximately 6.1% primarily due to the recognition of approximately $196.4 million in equity-based compensation expense related to our acquisition of Reata in September 2023.

Additionally, we incurred transaction and integration-related expense of approximately $34.6 million related to this acquisition.

The increase in selling, general and administrative expense was also due to a $31.0 million obligation to Eisai related to the termination of the co-promotion agreement for our MS products in Japan during 2023 and approximately $11.5 million of accelerated depreciation, associated with exiting a leased property, recognized during the second quarter of 2023.

The increases were partially offset by the impact of cost-reduction measures realized during 2023.

We expect selling, general and administrative costs to continue to decline in 2024 due to the continued realization of our cost savings initiatives and the one-time costs incurred from our acquisition of Reata in 2023 of approximately $196.4 million.

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

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.

For 2024 compared to 2023, selling, general and administrative expense decreased by approximately 5.7% primarily due to equity-based compensation expense recognized in 2023 of approximately $196.4 million related to our acquisition of Reata.

Selling, general and administrative expense for 2024 also includes higher operational spending on sales and marketing activities in support of LEQEMBI and SKYCLARYS as we continue to expand our U.S.

and international product launches, which was partially offset by cost-reduction measures realized in connection with our Fit for Growth program.

In 2024, selling, general and administrative expense included the recognition of approximately $13.9 million in equity-based compensation expense related to our acquisition of HI-Bio that was associated with the accelerated vesting of stock options and RSUs previously granted to HI-Bio employees and required no future services to vest.

Additionally, we incurred transaction and integration-related expense of approximately $3.6 million related to our acquisition of HI-Bio.

In 2023, selling, general and administrative expense included the recognition of approximately $196.4 million in equity-based compensation expense related to our acquisition of Reata that was associated with the accelerated vesting of stock options and RSUs previously granted to Reata employees and required no future services to vest.

Additionally, we incurred transaction and integration-related expense of approximately $34.6 million related to our acquisition of Reata.

In 2023, selling, general and administrative expense also included a $31.0 million obligation to Eisai related to the termination of the co-promotion agreement for our MS products in Japan and approximately $11.5 million of accelerated depreciation.

GENERAL AND ADMINISTRATIVE EXPENSE

In 2024 compared to 2023, general and administrative expense decreased by approximately $173.2 million, or 19.6%, due to the recognition of approximately $196.4 million in equity-based compensation expense in 2023 related to our acquisition of Reata.

We expect selling, general and administrative costs to continue to decline in 2025 due to the continued realization of our cost-reduction measures in connection with our Fit for Growth program.

For additional information on our acquisitions of Reata and HI-Bio, please read Note 2, Acquisitions , to our consolidated financial statements included in this report.

AMORTIZATION AND IMPAIRMENT OF ACQUIRED INTANGIBLE ASSETS

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

For 2023 compared to 2022, the decrease i n amortization and impairment of acquired intangible assets was primarily due to higher impairment charges in 2022 of approximately $119.6 million, compared to no impairment charges in 2023.

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 (BIIB074) for the potential treatment of DPN.

For the year ended December 31, 2024 , amortization and impairment of acquired intangible assets reflects the impact of a $40.0 million impairment charge related to intangible assets from other clinical programs we acquired from Reata, reducing the remaining book value of these IPR&D intangible assets to zero, and a $20.2 million impairment charge related to intangible assets associated with Samsung Bioepis commercialization rights terminated during the third quarter of 2024.

For the year ended December 31, 2023, we had no impairment charges.

Amortization of acquired intangible assets, excluding impairment charges, totaled $386.5 million, $240.6 million and $246.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

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

For 2024 compared to 2023, the increase in amortization of acquired intangible assets, excluding impairment charges, was primarily due to amortization for the Reata acquisition acquired intangible assets associated with SKYCLARYS.

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.

For additional information on our 2019 Development and Commercialization Agreement with Samsung Bioepis, please read Note 19, Collaborative and Other Relationships , to our consolidated financial statements included in this report.

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COLLABORATION PROFIT SHARING/(LOSS REIMBURSEMENT)

Collaboration profit sharing/(loss reimbursement) primarily includes Samsung Bioepis' 50.0% share of the profit or loss related to our biosimilars 2013 commercial agreement with Samsung Bioepis.

In the third quarter of 2023 we began recognizing collaboration profit sharing/(loss reimbursement) related to Sage's 50.0% share of income and expense in the U.S.

Collaboration profit sharing/(loss reimbursement) 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 third quarter of 2023, collaboration profit sharing/(loss reimbursement) related to Sage's 50.0% share of the profit or loss in the U.S.

related to ZURZUVAE for PPD.

During 2022 we recognized Eisai's 45.0% share of income and expense in the U.S.

related to the ADUHELM Collaboration Agreement.

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, 2023 and 2022, we recognized net profit-sharing expense of $223.5 million and $217.4 million, respectively, to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits.

For the year ended December 31, 2023, we recognized net reductions to our operating expense of approximately $4.7 million to reflect Sage's 50.0% share of net collaboration losses in the U.S.

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

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

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For the years ended December 31, 2024, 2023 and 2022, we recognized net profit-sharing expense of approximately $227.4 million, $223.5 million and $217.4 million, respectively, to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits.

For the years ended December 31, 2024 and 2023, we recognized net profit-sharing expense of approximately $27.0 million and net loss reimbursement of approximately $4.7 million, respectively, to reflect Sage's 50.0% share of net collaboration results in the U.S.

for ZURZUVAE for PPD.

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

(GAIN) LOSS ON FAIR VALUE REMEASUREMENT OF CONTINGENT CONSIDERATION

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, reducing the remaining fair value of vixotrigine to zero, as well as changes in the interest rates used to revalue our contingent consideration liabilities.

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.

Consideration payable for certain of our business combinations include 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 condensed consolidated statements of income.

In connection with our acquisition of HI-Bio in July 2024 we recorded contingent consideration obligations related to potential milestone payments.

For the year ended December 31, 2024, the changes in the fair value of our contingent consideration obligations were primarily due to changes in interest rates used to revalue our contingent consideration liabilities, the passage of time and updates to the expected timing of achieving certain milestones which will trigger contingent consideration payments.

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

RESTRUCTURING CHARGES

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In 2023 we initiated additional cost saving measures as part of our Fit for Growth program to reduce operating costs, while improving operating efficiency and effectiveness.

The Fit for Growth program is expected to generate approximately $1.0 billion in gross operating expense savings by the end of 2025, some of which will be reinvested in various initiatives.

Total charges incurred from our 2023 cost saving initiatives are summarized as follows:

Total charges incurred from our 2023 Fit for Growth program are summarized as follows:

For the Years Ended December 31,

(In millions) Severance

(In millions) Severance Costs Accelerated Depreciation and Other Costs Total Severance

Costs Accelerated Depreciation and Other Costs Total

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includes costs associated with items such as asset abandonment and write-offs, facility closure costs, pretax gains and losses resulting from the termination of certain leases, employee non-severance expense, consulting fees and other costs.

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REATA INTEGRATION

Following the close of our Reata acquisition, we implemented an integration plan designed to realize operating synergies through cost savings and avoidance.

These amounts are primarily related to severance and are expected to be paid by the end of 2024.

For the year ended December 31, 2023, we recognized approximately $30.4 million of net pre-tax restructuring charges related to employee severance costs.

Following the close of our Reata acquisition in September 2023, we implemented an integration plan designed to realize operating synergies through cost savings and avoidance.

Under this initiative, we estimate we will incur total integration charges of approximately $35.0 million, related to severance and employment costs.

These severance and employment costs were substantially incurred during 2023.

Total charges incurred from our Reata integration are summarized as follows:

For the Years Ended December 31,

(In millions) Severance Costs Accelerated Depreciation and Other Costs Total Severance Costs Accelerated Depreciation and Other Costs Total

Selling, general and administrative $ — $ 6.3 $ 6.3 $ — $ — $ —

Research and development — 11.9 11.9 — — —

Restructuring charges 3.4 — 3.4 30.4 — 30.4

Total charges $ 3.4 $ 18.2 $ 21.6 $ 30.4 $ — $ 30.4

In connection with our acquisition of Reata we assumed responsibility for a single-tenant, build-to-suit building of approximately 327,400 square feet of office and laboratory space located in Plano, Texas, with an initial lease term of 16 years.

We do not intend to occupy this building and are evaluating opportunities to sublease the property.

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

HI-BIO INTEGRATION

Following the close of our HI-Bio acquisition in July 2024, we implemented an integration plan designed to realize operating synergies through cost savings and avoidance.

Under this initiative, we incurred approximately $2.6 million of severance and employment costs, which are reflected in restructuring charges within our consolidated statements of income for the year ended December 31, 2024 .

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

2022 COST SAVING INITIATIVES

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Charges related to our 2022 cost saving initiatives were substantially incurred during 2022 with remaining payments expected to be made through 2026.

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Total charges incurred from our 2022 cost saving initiatives are summarized as follows:

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(1) Amounts reflect a gain recorded during the third quarter of 2022 of approximately $5.3 million related to the partial termination of a portion of our lease located at 300 Binney Street.

For additional information on our 300 Binney Street lease modification, please read Note 12, Leases , to these consolidated financial statements.

For additional information on our 300 Binney Street lease modification, please read Note 12, Leases , to our consolidated financial statements included in this report.

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

GAIN ON SALE OF BUILDING

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.

This sale resulted in a pre-tax gain on sale of approximately $503.7 million, net of transaction costs, which is reflected within gain on sale of building in our consolidated statements of income 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 a new lease liability and right-of-use asset 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.

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.

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OTHER (INCOME) EXPENSE, NET

For 2023 compared to 2022, the change in other (income) expense, net primarily reflects a pre-tax gain recorded 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 recorded during 2022 of approximately $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.

Additionally, other (income) expense, net for 2023 reflects higher interest income driven by higher interest rates in 2023.

For 2024 compared to 2023, the change in other (income) expense, net primarily reflects lower interest income driven by lower cash balances in 2024, compared to 2023, partially offset by higher net losses on our holdings in equity securities in 2023.

NET (GAINS) LOSSES IN EQUITY SECURITIES

For the year ended December 31, 2023, net unrealized and realized losses on our holdings in equity securities were approximately $270.0 million and $5.2 million, respectively, compared to net unrealized losses and realized (gains) losses of approximately $264.7 million and zero, respectively, in 2022.

For the year ended December 31, 2024, net unrealized losses and realized gains on our holdings in equity securities were approximately $102.4 million and $2.0 million, respectively, compared to net unrealized and realized losses of approximately $270.0 million and $5.2 million, respectively, in 2023.

• The net unrealized losses recognized during the year ended December 31, 2024, primarily reflect a decrease in the aggregate fair value of our investments in Sage common stock of approximately $101.4 million, partially offset by an increase in the fair value of Denali and Sangamo common stock of approximately $7.5 million.

• The net unrealized losses recognized during the year ended December 31, 2023, primarily reflect a decrease in the aggregate fair value of our investments in Sage, Denali, Sangamo and Ionis common stock of approximately $248.5 million.

• 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, partially offset by an increase in the fair value of Ionis and Sage common stock of approximately $27.3 million.

INTEREST INCOME AND EXPENSE

For the year ended December 31, 2023, net interest income was $29.6 million, compared to net interest expense of $157.3 million in 2022.

The increase was primarily due to higher interest rates leading to greater interest income earned on our investments in 2023, compared to 2022.

For 2024 compared to 2023, we anticipate an increase in net interest expense as a result of lower cash balances leading to lower interest income due to the funding of our acquisition of Reata.

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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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.

For the year ended December 31, 2024, net interest expense was approximately $182.7 million, compared to net interest income of $29.6 million in 2023.

The change was primarily due to lower interest income driven by lower cash balances in 2024, compared to 2023, due to use of cash on hand for business development transactions.

For 2025 compared to 2024, we anticipate lower net interest expense as a result of higher cash balances, somewhat offset by lower interest rates, leading to more interest income.

INCOME TAX PROVISION

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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 2023 compared to 2022, the decrease in our effective tax rate was driven by the impact of the non-cash changes in the value of our equity investments, the impact of Fit for Growth related expenses and Reata acquisition-related expenses, as well as the combined net unfavorable tax rate impacts in 2022 related to a litigation settlement agreement, the sale of our equity interest in Samsung Bioepis, the impact of a Neurimmune valuation allowance and an international reorganization to align with global tax developments.

The change also benefits from the resolution of an uncertain tax matter during the first quarter of 2023 related to tax credits.

For 2024 compared to 2023, the increase in our effective tax rate was partially driven by the relative deferred tax effects of the changes in the value of our equity investments and amortization of purchased intangible assets and inventory.

Further, 2023 benefited from the combined impacts of Reata acquisition-related expenses and the resolution of an uncertain tax matter related to tax credits.

This was partially offset by a 2024 benefit related to a decrease in our valuation allowance related to projected future foreign taxable income.

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

As a result of decreases in our stock price between the grant date of certain share-based compensation awards and the vesting date in 2025, we expect that we will record an income tax expense of approximately $15.0 million during the first quarter of 2025, upon the vesting of these awards.

The exact amount of the income tax expense will depend on our stock price at the time of vesting.

The OECD has issued model rules, which generally provide for a jurisdictional minimum effective tax rate of 15.0% as defined in those rules.

Various countries have or are in the process of enacting legislation intended to implement the principles effective January 1, 2024.

Our income tax provision for the year ended December 31, 2024, reflects currently enacted legislation and guidance related to the OECD model rules.

This enacted legislation and guidance related to the OECD model rules did not result in any material adjustments to our income tax provision or income tax balances as of December 31, 2024.

On January 20, 2025, the Global Tax Deal Executive Order was issued.

At this stage, we do not believe this Executive Order impacts our financial results as of December 31, 2024.

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

NONCONTROLLING INTERESTS, NET OF TAX

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Subsequent to the termination, we reconsidered our relationship with Neurimmune and determined that we were no longer the primary beneficiary of the variable interest entity.

As a result, we recorded a net gain on the deconsolidation of

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Neurimmune of approximately $3.0 million, which was recorded in other (income) expense, net within our consolidated statements of income for the year ended December 31, 2023.

For 2023 compared to 2022, the change in net income (loss) attributable to noncontrolling interests, net of tax, was primarily due to an increase in a valuation allowance of approximately $85.0 million recorded in the first quarter of 2022.

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

As a result, we recorded a net gain on the deconsolidation of Neurimmune of approximately $3.0 million, which was recorded in other (income) expense, net within our consolidated statements of income for the year ended December 31, 2023.

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

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

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Cash and cash equivalents $ 2,375.0 $ 1,049.9 126.2 % $ 1,325.1

Marketable securities — current — 1,473.5 nm (1,473.5)

Marketable securities — non-current — 705.7 nm (705.7)

Total cash, cash equivalents and marketable securities $ 1,049.9 $ 5,598.5 (81.2) % $ (4,548.6)

Current portion of term loan $ 150.0 $ — nm $ 150.0

Total cash and cash equivalents $ 2,375.0 $ 1,049.9 126.2 % $ 1,325.1

Current portion of notes payable and term loan $ 1,748.6 $ 150.0 nm $ 1,598.6

Notes payable and term loan 4,547.2 6,788.2 (33.0) (2,241.0)

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We may 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.

On September 26, 2023 , we completed the acquisition of all of the issued and outstanding shares of Reata for $6.6 billion and $983.9 million for outstanding equity awards.

This transaction was funded with cash on hand and the issuance of a $1.0 billion term loan.

Additionally, we paid approximately $459.9 million to settle outstanding debt obligations acquired as part of our acquisition of Reata.

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

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On July 2, 2024, we completed the acquisition of all of the issued and outstanding shares of HI-Bio.

Under the terms of this acquisition, we paid shareholders of HI-Bio approximately $1.15 billion as well as an additional $43.7 million related to working capital adjustments as of the transaction close date.

These amounts were funded through available cash on hand.

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

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

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WORKING CAPITAL

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Our working capital was $1.9 billion as of December 31, 2024, compared to $3.4 billion as of December 31, 2023.

The change in working capital reflects a decrease in total current assets of approximately $2,931.9 million and an increase in total current liabilities of approximately $161.5 million.

The change in working capital reflects an increase in total current assets of approximately $597.5 million and an increase in total current liabilities of approximately $2.1 billion.

The changes in total current assets and total current liabilities were primarily driven by the following:

CURRENT ASSETS

• $3,842.9 million decrease in cash, cash equivalents and current marketable securities primarily due to consideration paid for our acquisition of Reata as well as the early repayment of $350.0 million in outstanding debt obligations associated with our Reata acquisition ;

• $235.6 million decrease in other current assets primarily due to the receipt of $812.5 million from Samsung BioLogics related to the sale of Samsung Bioepis, partially offset by the final deferred payment of $437.5 million now due within one year;

• $1,183.0 million increase in inventory primarily due to the fair value step-up adjustment for acquired inventory from our acquisition of Reata.

• $1.3 billion increase in cash and cash equivalents ;

• $259.3 million decrease in accounts receivable, net related to our ongoing operations;

• $429.5 million decrease in other current assets primarily due to the receipt of $437.5 million from Samsung BioLogics related to the sale of our 49.9% equity interest in Samsung Bioepis.

CURRENT LIABILITIES

• $88.2 million decrease in accounts payable primarily due to timing of payments;

• $102.2 million increase in accrued expense and other primarily reflecting accrued costs related to our acquisition of Reata;

• $150.0 million increase in current portion of debt due to the short-term portion of our outstanding 2023 Term Loan related to our acquisition of Reata.

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

• $184.1 million increase in accrued expense and other primarily due to $279.3 million of short-term contingent consideration recognized from our acquisition of HI-Bio, offset in part by the timing of our annual incentive compensation payment and other benefits-related payments;

• $1.6 billion increase in current portion of debt primarily due to the reclassification of our $1.75 billion aggregate principal amount of 4.05% Senior Notes due September 15, 2025, from long-term to short-term and the repayment of our 2023 Term Loan.

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

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

For additional information on our 2023 Term Loan, please read Note 13, Indebtedness , to our consolidated financial statements included in this report.

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.

CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

As of December 31, 2023, we had cash, cash equivalents and marketable securities totaling approximately $1.0 billion compared to approximately $5.6 billion as of December 31, 2022.

The decrease in the balance was primarily due to the use of cash, cash equivalents and marketable securities to fund our acquisition of Reata.

In connection with our acquisition of Reata we paid approximately $6.6 billion for the issued and outstanding shares of Reata and $983.9 million related to Reata's outstanding equity awards, inclusive of employer taxes.

Additionally, we assumed a payable to Blackstone of approximately $300.0 million related to a one-time contract termination fee to eliminate potential future royalty obligations related to SKYCLARYS, which was triggered as part of the change in control provision under Reata's funding agreement with Blackstone.

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

As of December 31, 2024, we had cash and cash equivalents totaling approximately $2.4 billion compared to approximately $1.0 billion as of December 31, 2023.

The increase in the balance was primarily due to cash generated by our operations, the receipt of $437.5 million in April 2024 from Samsung BioLogics related to the sale of our 49.9% equity interest in Samsung Bioepis, the net cash receipt of $88.6 million from the sale of one of our two PRV's and proceeds from the sale of a portion of our Denali common stock and our remaining Sangamo common stock during 2024.

The increase was offset in part by $1.15 billion of cash and cash equivalents used to fund our acquisition of HI-Bio in July 2024 and $650.0 million of cash used for the repayment of our 2023 Term Loan.

Until required for another use in our business, we typically invest our cash reserves in bank deposits, certificates of deposit, commercial paper, corporate notes, U.S.

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We have experienced no significant limitations in our liquidity resulting from uncertainties in the banking sector.

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The following table summarizes the fair value of our significant common stock investments in our strategic investment portfolio:

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Total $ 179.7 $ 416.8

(1) During 2023 we sold a portion of our Sangamo and Denali common stock.

(2) During 2023 we sold our remaining shares of Ionis common stock.

Our ability to liquidate our investments in Denali, Sage and Sangamo 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.

(1) During 2024 we sold a portion of our Denali common stock and the remaining shares of our Sangamo common stock.

Our ability to liquidate our investments in Denali and Sage 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.

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• (gains) losses on the disposal of assets, deferred income taxes, changes in the fair value of contingent payments associated with our acquisitions of businesses and acquired IPR&D.

For 2023 compared to 2022, the change in net cash flow provided by operating activities was driven by changes in operating assets and liabilities primarily related to a lower inventory build in 2023 as compared to 2022, the favorable timing of customer payment receipts in 2023 and the unfavorable timing of U.S.

federal tax payments in 2023.

Operating cash flow in 2023 was also negatively impacted by the $393.4 million in equity-based compensation payments associated with the Reata acquisition.

Operating cash flow in 2022 was also negatively impacted by the payment of of approximately $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 2024 compared to 2023, the increase in net cash flow provided by operating activities was primarily due to higher net income, lower employee-benefit payments made during the first quarter of 2024, as compared to the same period in 2023, lower estimated federal tax payments made during 2024, as compared to 2023, and changes in non-cash adjustments to net income.

The increase was partially offset by the timing of working capital, which includes higher inventory levels, primarily associated with our contract manufacturing for LEQEMBI.

INVESTING ACTIVITIES

For 2023 compared to 2022, the change in net cash flow provided by (used in) investing activities was primarily due to a $6.9 billion payment made in 2023 for our acquisition of Reata, net of cash acquired, partially offset by higher net proceeds from the sales of marketable securities in the current period.

Additionally, we received $582.6 million in 2022 related to the sale of one of our buildings.

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For 2024 compared to 2023, the change in net cash flow in investing activities was primarily due to cash payments made associated with our acquisition of HI-Bio in 2024 and with our acquisition of Reata in 2023.

Additionally, cash outlay in 2023 was partially offset by net proceeds received from the sale of our marketable securities.

FINANCING ACTIVITIES

For 2023 compared to 2022, the change in net cash flow provided by (used in) financing activities was primarily due to the issuance of our 2023 Term Loans totaling $1.0 billion under our $1.5 billion term loan credit agreement which were used to partially fund our acquisition of Reata, partially offset by repayments of borrowings and debt premiums paid totaling $809.9 million.

We had debt repayments of approximately $1.0 billion and share repurchases of $750.0 million during the same period in 2022.

For 2024 compared to 2023, the change in net cash flow in financing activities was primarily due to the repayment of our 2023 Term Loan for $650.0 million during 2024 compared to the issuance of term loans totaling $1.0 billion under our 2023 Term Loan which were used to partially fund our acquisition of Reata in 2023, partially offset by repayments of borrowings and debt premiums paid in 2023 totaling $809.9 million.

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

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CAPITAL RESOURCES

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The remaining unused commitment of $500.0 million was terminated.

During the fourth quarter of 2023 we repaid $350.0 million of the 364-day tranche.

As of December 31, 2023, we had $650.0 million outstanding under the 2023 Term Loan, of which $150.0 million was outstanding under the 364-day tranche and $500.0 million was outstanding under the three-year tranche.

As of December 31, 2023, we repaid $350.0 million of the 364-day tranche.

The remaining $150.0 million portion of the 364-day tranche was repaid during the first quarter of 2024.

Additionally, during the first quarter of 2024 we repaid $250.0 million of the three-year tranche, with the remaining $250.0 million portion being subsequently repaid in full during the second quarter of 2024.

2024 REVOLVING CREDIT FACILITY

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

In August 2024 we entered into a $1.5 billion, five-year senior unsecured revolving credit facility under which we are permitted to draw funds for working capital and general corporate purposes.

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

This revolving credit facility replaced the revolving credit facility that we entered into in January 2020.

As of December 31, 2024, we had no outstanding borrowings and were in compliance with all covenants under this facility.

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

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

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

There were no share repurchases of our common stock during the year ended December 31, 2023.

All shares repurchased under our 2020 Share Repurc hase Program were retired.

There were no share repurchases of our common stock during the years ended December 31, 2024 and 2023.

Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of December 31, 2024.

CAPITAL EXPENDITURES

In the fourth quarter of 2021 we began construction of a new gene therapy manufacturing facility in RTP, North Carolina to support our gene therapy pipeline across multiple therapeutic areas.

In the fourth quarter of 2021 we began construction of a new gene therapy, clinical packaging and other manufacturing facility in RTP, North Carolina to support our gene therapy pipeline across multiple therapeutic areas.

The new manufacturing facility will be approximately 197,000 square feet with an estimated total investment of approximately $195.0 million.

We estimate the construction of this manufacturing facility will be completed during 2025.

As we continue to advance our research and development prioritization efforts, which includes refocusing our investment in gene therapy, we are evaluating several alternative uses for this facility.

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CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

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1 Year 1 to 3

Non-cancellable operating leases (1)(2)(3)

Non-cancelable operating leases (1)(2)(3)

$ 459.6 $ 88.7 $ 152.5 $ 66.0 $ 152.4

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Amounts reflected within the table above detail future minimum rental commitments under non-cancelable operating leases as of December 31 for each of the periods presented.

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

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

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

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

(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, and our 2023 Term Loan.

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

For additional information on our long-term debt obligations, please read Note 13, Indebtedness , to our consolidated financial statements included in this report.

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

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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.

We have elected to initiate a technology transfer and, following a transition period, to

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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.

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

CONTINGENT CONSIDERATION RELATED TO BUSINESS COMBINATIONS

In connection with our acquisition of HI-Bio in July 2024 we may make additional payments based upon the achievement of certain milestone events.

We recognized the contingent consideration obligations associated with this acquisition at its fair value on the acquisition date and we revalue this obligation each reporting period.

We may pay up to an additional $650.0 million in potential future development and regulatory milestone payments.

The acquisition-date fair value of these milestones was approximately $485.1 million.

We anticipate that we may trigger the first and second milestone payments of approximately $150.0 million each in 2025.

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

CONTINGENT DEVELOPMENT, REGULATORY AND COMMERCIAL MILESTONE PAYMENTS

Based on our development plans as of December 31, 2023, we could trigger potential future milestone payments to third parties of up to approximately $5.1 billion, including approximately $0.9 billion in development milestones, approximately $0.4 billion in regulatory milestones and approximately $3.8 billion in commercial milestones, as part of our various collaborations, including licensing and development programs.

Based on our development plans as of December 31, 2024, we could trigger potential future milestone payments to third parties of up to approximately $3.8 billion, including approximately $0.5 billion in development milestones, approximately $0.5 billion in regulatory milestones and approximately $2.8 billion in commercial milestones, as part of our various collaborations, including licensing and development programs and HI-Bio's pre-existing commitments, as discussed below.

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

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

During the fourth quarter of 2023 we accrued a milestone payment due to Sage of $75.0 million upon the first commercial sale of ZURZUVAE for PPD in the U.S., which was recorded within intangible assets, net in our consolidated balance sheets, and subsequently paid in January 2024.

If certain clinical and commercial milestones are met, we may pay up to approximately $109.0 million in milestones in 2024 under our current agreements.

If certain clinical and commercial milestones are met, we may pay up to approximately $73.6 million in milestones in 2025 under our current agreements, excluding opt-in payments.

We acquired HI-Bio's pre-existing in-license commitments under third-party agreements, which include tiered royalties on potential future sales of felzartamab and izastobart/HIB210, ranging from high-single digit to mid-teen percentages, as well as potential future development, regulatory and commercial milestone payments related to felzartamab and izastobart/HIB210 of up to $130.0 million, $230.0 million and $640.0 million, respectively.

This amount includes potential milestone payments due upon the first patient dosed in a phase 3 clinical trial of felzartamab in a first and second indication of $35.0 million and $30.0 million, respectively, which we anticipate will be triggered in 2025.

OTHER FUNDING COMMITMENTS

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As of December 31, 2024, we have approximately $173.8 million of liabilities associated with uncertain tax positions.

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As of December 31, 2024 and 2023, we have accrued income tax liabilities of approximately $234.0 million and $419.5 million, respectively, under the Transition Toll Tax.

Of the amounts accrued as of December 31, 2023, approximately $185.4 million is expected to be paid within one year.

The amount accrued as of December 31, 2024, is expected to be paid within one year.

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

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We consolidate variable interest entities if we are the primary beneficiary.

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NEW ACCOUNTING STANDARDS

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

Our process for

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

The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the

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cumulative revenue recognized will not occur in a future period.

Actual amounts may ultimately differ from our estimates.

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When we purchase a business, the acquired IPR&D is measured at fair value, capitalized as an intangible asset and tested for impairment at least annually, as of October 31, until commercialization, after which time the IPR&D is amortized over its estimated useful life.

If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, the acquired IPR&D is expensed on its acquisition date.

Future costs to develop these assets are recorded to research and development expense as they are incurred.

If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, then the acquired IPR&D is expensed on its acquisition date.

Future costs to develop these assets are recorded to research and development expense within our consolidated statements of income 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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No assurance can be given that the underlying assumptions used to estimate expected project sales, development costs or profitability, or the events associated with such projects, will transpire as estimated.

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At each reporting period we review our inventories for excess or obsolescence and write-down obsolete or otherwise unmarketable inventory to its estimated net realizable value.

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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 2022 and 2021 we wrote-off excess inventory of $275.0 million and $120.0 million, respectively, related to ADUHELM.

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IMPAIRMENT AND AMORTIZATION OF LONG-LIVED ASSETS

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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 $119.6 million for the year ended December 31, 2022, mainly related to the discontinuation of IPR&D programs.

Based on our most recent impairment assessment we incurred impairment charges of approximately $60.2 million for the year ended December 31, 2024, related to the impairment of other clinical programs we acquired from Reata and Samsung Bioepis commercialization rights terminated during the third quarter of 2024.

For the year ended December 31, 2023, we had no impairment charges.

For additional information on our impairments, please read 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.

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.

Our most significant intangible assets relate to SKYCLARYS and TYSABRI.

We amortize the intangible assets related to our marketed products using the economic consumption method, which is 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 2024, 2023 and 2022, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.

CONTINGENT CONSIDERATION

We record contingent consideration resulting from a business combination at its fair value on the acquisition date.

Each reporting period thereafter, we revalue the remaining obligations and record changes in the fair value as an adjustment to (gain) loss on fair value remeasurement of contingent consideration in our consolidated statements of income.

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

These fair value measurements represent Level 3 measurements as they are based on significant inputs that are not observable in the market.

Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent period.

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

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

In preparing our consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes.

These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets.

These differences result in

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deferred tax assets and liabilities, which are included in our consolidated balance sheets.

Upon our election in the fourth quarter of 2018 to record deferred taxes for GILTI, we have included amounts related to GILTI taxes within temporary difference.

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Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished, through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the “more likely than not” threshold or the liability becomes effectively settled through the examination process.

We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals and administrative reviews, we have no plans to appeal or litigate any aspect of the tax position and we believe that it is highly unlikely that the taxing authority would examine

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or re-examine the related tax position.

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

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

BUSINESS COMBINATIONS

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

What changed 10-K

Item 7. Management’s Discussion and Analysis