BIOGEN INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
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| Our results of operations are summarized as follows: | | | | | | | | | | | | | | | | | | | |
| For the Years Ended December 31, | | | | | | | | | | | | | | | | | | |
| 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |
| (In millions, except per share amounts) | (a) (b) (c) (d) (e) | | | | (c) (d) (e) (f) | | | | (e) | | | | | | | | | | |
| Results of Operations (1) | | | | | | | | | | | | | | | | | | | |
| Product revenues, net (2) | $ | 10,886.8 | | | $ | 10,354.7 | | | $ | 9,817.9 | | | $ | 9,188.5 | | | $ | 8,203.4 | |
| Revenues from anti-CD20 therapeutic programs | 1,980.2 | | | | 1,559.2 | | | | 1,314.5 | | | | 1,339.2 | | | | 1,195.4 | | |
| Other revenues | 585.9 | | | | 360.0 | | | | 316.4 | | | | 236.1 | | | | 304.5 | | |
| Total revenues | 13,452.9 | | | | 12,273.9 | | | | 11,448.8 | | | | 10,763.8 | | | | 9,703.3 | | |
| Total cost and expenses | 7,564.3 | | | | 6,928.1 | | | | 6,297.1 | | | | 5,872.8 | | | | 5,747.7 | | |
| Gain on sale of rights | — | | | | — | | | | — | | | | — | | | | 16.8 | | |
| Income from operations | 5,888.6 | | | | 5,345.8 | | | | 5,151.7 | | | | 4,891.0 | | | | 3,972.4 | | |
| Other income (expense), net | 11.0 | | | | (217.0 | | ) | | (218.7 | | ) | | (123.7 | | ) | | (25.8 | | ) |
| Income before income tax expense and equity in loss of investee, net of tax | 5,899.6 | | | | 5,128.8 | | | | 4,933.0 | | | | 4,767.3 | | | | 3,946.6 | | |
| Income tax expense | 1,425.6 | | | | 2,458.7 | | | | 1,237.3 | | | | 1,161.6 | | | | 989.9 | | |
| Equity in loss of investee, net of tax | — | | | | — | | | | — | | | | 12.5 | | | | 15.1 | | |
| Net income | 4,474.0 | | | | 2,670.1 | | | | 3,695.7 | | | | 3,593.2 | | | | 2,941.6 | | |
| Net income (loss) attributable to noncontrolling interests, net of tax (3) | 43.3 | | | | 131.0 | | | | (7.1 | | ) | | 46.2 | | | | 6.8 | | |
| Net income attributable to Biogen Inc. | $ | 4,430.7 | | | $ | 2,539.1 | | | $ | 3,702.8 | | | $ | 3,547.0 | | | $ | 2,934.8 | |
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| Diluted Earnings Per Share (4) | | | | | | | | | | | | | | | | | | | |
| Diluted earnings per share attributable to Biogen Inc. | $ | 21.58 | | | $ | 11.92 | | | $ | 16.93 | | | $ | 15.34 | | | $ | 12.37 | |
| Weighted-average shares used in calculating diluted earnings per share attributable to Biogen Inc. | 205.3 | | | | 213.0 | | | | 218.8 | | | | 231.2 | | | | 237.2 | | |
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| Our financial condition is summarized as follows: | | | | | | | | | | | | | | | | | | | |
| As of December 31, | | | | | | | | | | | | | | | | | | |
| (In millions) | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |
| Financial Condition (1) | | | | | | | | | | | | | | | | | | | |
| Cash, cash equivalents and marketable securities | $ | 4,913.9 | | | $ | 6,746.3 | | | $ | 7,724.5 | | | $ | 6,188.9 | | | $ | 3,316.0 | |
| Total assets | $ | 25,288.9 | | | $ | 23,652.6 | | | $ | 22,876.8 | | | $ | 19,504.8 | | | $ | 14,314.7 | |
| Notes payable, less current portion (5) | $ | 5,936.5 | | | $ | 5,935.0 | | | $ | 6,512.7 | | | $ | 6,521.5 | | | $ | 580.3 | |
| Total Biogen Inc. shareholders’ equity (4) | $ | 13,039.6 | | | $ | 12,612.8 | | | $ | 12,140.1 | | | $ | 9,372.8 | | | $ | 10,809.0 | |
In addition to the following notes, the financial data included within the tables above should be read in conjunction with our consolidated financial statements and related notes and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report and our previously filed Annual Reports on Form 10-K.
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| (1) | On February 1, 2017, we completed the spin-off of our hemophilia business. Our consolidated results of operations and financial position reflect the financial results of our hemophilia business for all periods through January 31, 2017. |
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| (2) | Product revenues, net reflect the impact of the following product launches: |
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| • | Commercial sales of SPINRAZA in the U.S. began in the fourth quarter of 2016 and in rest of world markets beginning in the first quarter of 2017. |
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| • | Under our collaboration agreement with AbbVie, we began to recognize revenues on sales of ZINBRYTA to third parties in the E.U. in the third quarter of 2016. In March 2018 we and AbbVie announced the voluntary worldwide withdrawal of ZINBRYTA for RMS. |
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| • | Under our commercial agreement with Samsung Bioepis, we began to recognize revenues on sales of BENEPALI and FLIXABI to third parties in the E.U. in the first and third quarters of 2016, respectively, and began to recognize revenues on sales of IMRALDI to third parties in the E.U. in the fourth quarter of 2018. |
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| • | Commercial sales of ALPROLIX commenced in the second quarter of 2014 and commercial sales of ELOCTATE and PLEGRIDY commenced in the third quarter of 2014. We stopped recognizing product revenues from ALPROLIX and ELOCTATE effective February 1, 2017,upon the completion of the spin-off of our hemophilia business. |
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| (3) | Net income (loss) attributable to noncontrolling interests, net of tax includes the following activity: |
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| • | Pre-tax charges of $50.0 million and $150.0 million for the years ended December 31, 2018 and 2017, respectively, for payments made under the terms of the Neurimmune Agreement in exchange for reductions in the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including royalties payable on potential commercial sales of aducanumab. |
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| • | A pre-tax charge of $60.0 million for the year ended December 31, 2015, for a milestone payment due to Neurimmune upon the enrollment of the first patient in a Phase 3 study for aducanumab. |
For additional information on our collaboration arrangement with Neurimmune, please read Note 20, Investments in Variable Interest Entities, to our consolidated financial statements included in this report.
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| (4) | Total Biogen Inc. shareholders' equity reflects the repurchase of approximately 40.0 million shares of our common stock at a cost of approximately $11.7 billion between December 31, 2014 and December 31, 2018: |
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| • | During 2018 we repurchased and retired approximately 4.3 million and 10.5 million shares of our common stock at a cost of approximately $1.4 billion and $3.0 billion under our 2018 and 2016 Share Repurchase Programs, respectively. |
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| • | During 2017 we repurchased and retired approximately 3.7 million shares of our common stock at a cost of approximately $1.0 billion under our 2016 Share Repurchase Program. |
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| • | During 2017 we repurchased approximately 1.2 million shares of our common stock at a cost of $365.4 million under a program authorized by our Board of Directors in February 2011 for the repurchase of up to 20.0 million shares of our common stock (2011 Share Repurchase Program). |
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| • | During 2016 we repurchased and retired approximately 3.3 million shares of our common stock at a cost of approximately $1.0 billion under our 2016 Share Repurchase Program. |
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| • | During 2015 we repurchased and retired approximately 16.8 million shares of our common stock at a cost of $5.0 billion under a program authorized by our Board of Directors in May 2015 for the repurchase of up to $5.0 billion of our common stock. |
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| (5) | Notes payable, less current portion reflect: |
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| • | Our 2017 repayment of our 6.875% Senior Notes that were issued in 2008 with an aggregate principal amount of $550.0 million; and |
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| • | The issuance of our senior unsecured notes for an aggregate principal amount of $6.0 billion in September 2015. |
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| (a) | Total cost and expenses for the year ended December 31, 2018, includes a pre-tax charge to research and development expense of $486.2 million upon the closing of the 2018 Ionis Agreement. Included in this amount was a charge of $162.1 million reflecting the premium paid above fair value for the purchase of approximately 11.5 million shares of Ionis' common stock upon the closing of the 2018 Ionis Agreement. This charge is partially offset by net gains totaling $100.9 million recognized in other income (expense), net for the year ended December 31, 2018, related to these shares. For further information on our collaboration arrangements with Ionis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report. |
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| (b) | Total cost and expenses for the year ended December 31, 2018, includes the impact of impairment charges totaling $189.3 million related to certain in-process research and development (IPR&D) assets associated with our vixotrigine (BIIB074) program. |
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| (c) | Total cost and expenses for the year ended December 31, 2018, includes pre-tax charges to acquired IPR&D totaling $112.5 million for upfront payments made to AliveGen, Pfizer and Karyopharm upon the closing of our asset purchase |
transactions for BIIB110, BIIB104 and BIIB100, respectively, as the underlying assets had not yet reached technological feasibility.
Total cost and expenses for the year ended December 31, 2017, includes a pre-tax charge to acquired IPR&D of $120.0 million for an upfront payment made to Remedy Pharmaceuticals Inc. (Remedy) upon the closing of our asset purchase transaction for BIIB093 in LHI.
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| (d) | Income tax expense for the year ended December 31, 2017, includes a $1,173.6 million provisional estimate pursuant to SEC Staff Accounting Bulletin No. 118. Our provisional estimate included an amount of $989.6 million associated with the Transition Toll Tax and $184.0 million related to the impact of remeasuring our deferred tax balances to reflect the new federal statutory rate and other changes to U.S. tax law. |
Income tax expense for the year ended December 31, 2018, reflects a net increase to expense of approximately $125.0 million recognized upon finalization of our provisional estimates related to the Transition Toll Tax, the remeasurement of our deferred tax assets and liabilities, the impact of electing to record deferred taxes on GILTI and other aspects of the 2017 Tax Act. For additional information on the 2017 Tax Act, please read Note 17, Income Taxes, to our consolidated financial statements included in this report.
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| (e) | Total cost and expenses for the year ended December 31, 2016, includes a pre-tax charge of $454.8 million related to our January 2017 settlement and license agreement with Forward Pharma A/S (Forward Pharma). |
Total cost and expenses for the years ended December 31, 2018 and 2017, includes $176.8 million and $328.2 million, respectively, of impairment charges related to our intangible asset associated with our U.S. license to Forward Pharma’s intellectual property, including Forward Pharma's intellectual property related to TECFIDERA. For additional information on our settlement and license agreement with Forward Pharma and related intangible assets, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.
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| (f) | Total cost and expenses for the year ended December 31, 2017, includes pre-tax charge of $300.0 million for an upfront payment made to BMS upon entering into our agreement to exclusively license BIIB092 and a pre-tax charge of $60.0 million for a development milestone that became payable to the former shareholders of iPierian, Inc. (iPierian) upon the dosing of the first patient in the Phase 2 study of BIIB092 for PSP. |
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