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Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-19311

BIOGEN INC.

(Exact name of registrant as specified in its charter)


Delaware						33-0112644
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

225 Binney Street, Cambridge, MA 02142

(617) 679-2000

(Address, including zip code, and telephone number, including

area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, $0.0005 par value						BIIB						The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files): Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The number of shares of the issuer’s Common Stock, $0.0005 par value, outstanding as of July 19, 2022, was 145,113,047 shares.

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BIOGEN INC.

FORM 10-Q — Quarterly Report

For the Quarterly Period Ended June 30, 2022

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		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Income — For the Three and Six Months Ended June 30, 2022 and 2021	5

	Condensed Consolidated Statements of Comprehensive Income — For the Three and Six Months Ended June 30, 2022 and 2021	6

	Condensed Consolidated Balance Sheets — As of June 30, 2022 and December 31, 2021	7

	Condensed Consolidated Statements of Cash Flow — For the Six Months Ended June 30, 2022 and 2021	8

	Condensed Consolidated Statements of Equity — For the Three and Six Months Ended June 30, 2022 and 2021	9

	Notes to Condensed Consolidated Financial Statements	13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	77

Item 4.	Controls and Procedures	79

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	81

Item 1A.	Risk Factors	81

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	96

Item 6.	Exhibits	97

Signatures		98

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NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 (the Act) with the intention of obtaining the benefits of the “Safe Harbor” provisions of the Act. These forward-looking statements may be accompanied by such words as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” "goal," “intend,” “may,” “plan,” “potential,” “possible,” “will,” “would” and other words and terms of similar meaning. Reference is made in particular to forward-looking statements regarding:

the anticipated amount, timing and accounting of revenue; contingent, milestone, royalty and other payments under licensing, collaboration, acquisition or divestiture agreements; tax positions and contingencies; collectability of receivables; pre-approval inventory; cost of sales; research and development costs; compensation and other selling, general and administrative expense; amortization of intangible assets; foreign currency exchange risk; estimated fair value of assets and liabilities; and impairment assessments;
expectations, plans and prospects relating to sales, pricing, growth and launch of our marketed and pipeline products;
the potential impact of increased product competition in the markets in which we compete, including increased competition from new originator therapies, generics, prodrugs and biosimilars of existing products and products approved under abbreviated regulatory pathways, including generic or biosimilar versions of our products;
patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity;
our plans and investments in our portfolio as well as implementation of our corporate strategy;
the drivers for growing our business, including our plans and intention to commit resources relating to discovery, research and development programs and business development opportunities as well as the potential benefits and results of, and the anticipated completion of, certain business development transactions and cost-reduction measures;
the expectations, development plans and anticipated timelines, including costs and timing of potential clinical trials, filings and approvals, of our products, drug candidates and pipeline programs, including collaborations with third-parties, as well as the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline products;
the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters;
our ability to finance our operations and business initiatives and obtain funding for such activities;
adverse safety events involving our marketed products, generic or biosimilar versions of our marketed products or any other products from the same class as one of our products;
the direct and indirect impact of the COVID-19 pandemic on our business and operations, including sales, expense, reserves and allowances, the supply chain, manufacturing, cyber-attacks or other privacy or data security incidents, research and development costs, clinical trials and employees;
the current and potential impacts of the conflict in Ukraine, including impacts on our operations, sales and the possible disruptions or delays in our plans to conduct clinical trial activities in affected regions;
the potential impact of healthcare reform in the United States (U.S.) and measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our products;
our manufacturing capacity, use of third-party contract manufacturing organizations, plans and timing relating to changes in our manufacturing capabilities, activities in new or existing manufacturing facilities and the expected timeline for the remaining portion of the Solothurn manufacturing facility to begin manufacturing products or product candidates and for the gene therapy manufacturing facility in Research Triangle Park (RTP), North Carolina to be operational;
the impact of the continued uncertainty of the credit and economic conditions in certain countries and our collection of accounts receivable in such countries;

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lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations; and
the impact of new laws (including tax), regulatory requirements, judicial decisions and accounting standards.

These forward-looking statements involve risks and uncertainties, including those that are described in Item 1A. Risk Factors included in this report and elsewhere in this report, that could cause actual results to differ materially from those reflected in such statements. You should not place undue reliance on these statements. Forward-looking statements speak only as of the date of this report. Except as required by law, we do not undertake any obligation to publicly update any forward-looking statements, whether as a result of new information, future developments or otherwise.

NOTE REGARDING COMPANY AND PRODUCT REFERENCES

References in this report to:

“Biogen,” the “company,” “we,” “us” and “our” refer to Biogen Inc. and its consolidated subsidiaries; and
“RITUXAN” refers to both RITUXAN (the trade name for rituximab in the U.S., Canada and Japan) and MabThera (the trade name for rituximab outside the U.S., Canada and Japan).

NOTE REGARDING TRADEMARKS

AVONEX®, PLEGRIDY®, RITUXAN®, RITUXAN HYCELA®, SPINRAZA®, TECFIDERA®, TYSABRI® and VUMERITY® are registered trademarks of Biogen.

ADUHELM™, BENEPALI™, BYOOVIZ™, FLIXABI™, FUMADERM™ and IMRALDI™ are trademarks of Biogen.

CIMZIA®, ENBREL®, EYLEA®, FAMPYRA™, GAZYVA®, HUMIRA®, LUCENTIS®, OCREVUS®, REMICADE® and other trademarks referenced in this report are the property of their respective owners.

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PART I FINANCIAL INFORMATION

BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited, in millions, except per share amounts)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Product, net	$	2,054.9	$	2,236.0	$	4,121.2	$	4,447.7
Revenue from anti-CD20 therapeutic programs	436.3		440.0		835.7		829.0
Other	97.9		99.0		164.0		192.3
Total revenue	2,589.1		2,775.0		5,120.9		5,469.0
Cost and expense:
Cost of sales, excluding amortization and impairment of acquired intangible assets	484.0		459.7		1,237.9		937.8
Research and development	528.6		585.1		1,080.3		1,099.3
Selling, general and administrative	572.6		637.3		1,207.5		1,232.3
Amortization and impairment of acquired intangible assets	67.5		604.1		134.4		702.2
Collaboration profit (loss) sharing	29.4		(15.2)		(87.9)		53.3
(Gain) loss on fair value remeasurement of contingent consideration	(4.5)		0.3		(11.6)		(33.5)
Acquired in-process research and development	—		18.0		—		18.0
Restructuring charges	70.6		—		108.7		—
Other (income) expense, net	(428.6)		(96.4)		(165.3)		410.5
Total cost and expense	1,319.6		2,192.9		3,504.0		4,419.9
Income before income tax expense and equity in loss of investee, net of tax	1,269.5		582.1		1,616.9		1,049.1
Income tax (benefit) expense	216.7		(409.1)		342.3		(364.9)
Equity in (income) loss of investee, net of tax	(5.9)		(34.3)		(2.6)		(16.1)
Net income	1,058.7		1,025.5		1,277.2		1,430.1
Net income (loss) attributable to noncontrolling interests, net of tax	0.7		577.0		(84.6)		571.4
Net income attributable to Biogen Inc.	$	1,058.0	$	448.5	$	1,361.8	$	858.7

Net income per share:
Basic earnings per share attributable to Biogen Inc.	$	7.25	$	3.00	$	9.30	$	5.70
Diluted earnings per share attributable to Biogen Inc.	$	7.24	$	2.99	$	9.27	$	5.68

Weighted-average shares used in calculating:
Basic earnings per share attributable to Biogen Inc.	145.9		149.7		146.5		150.8
Diluted earnings per share attributable to Biogen Inc.	146.2		150.1		146.8		151.2

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited, in millions)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Net income attributable to Biogen Inc.	$	1,058.0	$	448.5	$	1,361.8	$	858.7
Other comprehensive income:
Unrealized gains (losses) on securities available for sale, net of tax	(8.3)		(0.5)		(18.0)		(1.3)
Unrealized gains (losses) on cash flow hedges, net of tax	57.2		(11.0)		73.1		138.6
Gains (losses) on net investment hedges, net of tax	(31.7)		(2.3)		(25.5)		20.1
Unrealized gains (losses) on pension benefit obligation, net of tax	1.8		0.4		2.7		2.4
Currency translation adjustment	(14.2)		15.9		(36.0)		(32.6)
Total other comprehensive income (loss), net of tax	4.8		2.5		(3.7)		127.2
Comprehensive income (loss) attributable to Biogen Inc.	1,062.8		451.0		1,358.1		985.9
Comprehensive income (loss) attributable to noncontrolling interests, net of tax	0.7		576.9		(84.6)		572.0
Comprehensive income (loss)	$	1,063.5	$	1,027.9	$	1,273.5	$	1,557.9

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in millions, except per share amounts)


	As of June 30, 2022		As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	2,646.6	$	2,261.4
Marketable securities	2,151.3		1,541.1
Accounts receivable, net	1,567.6		1,549.4
Due from anti-CD20 therapeutic programs	435.9		412.3
Inventory	1,294.2		1,351.5
Other current assets	1,645.3		740.8
Total current assets	9,740.9		7,856.5
Marketable securities	1,102.9		892.0
Property, plant and equipment, net	3,355.1		3,416.4
Operating lease assets	321.1		375.4
Intangible assets, net	2,075.3		2,221.3
Goodwill	5,749.6		5,761.1
Deferred tax asset	1,235.7		1,415.1
Investments and other assets	1,500.8		1,939.5
Total assets	$	25,081.4	$	23,877.3
LIABILITIES AND EQUITY
Current liabilities:
Current portion of notes payable	$	999.8	$	999.1
Taxes payable	284.9		174.7
Accounts payable	434.8		589.2
Accrued expense and other	3,298.5		2,535.2
Total current liabilities	5,018.0		4,298.2
Notes payable	6,277.4		6,274.0
Deferred tax liability	480.6		694.5
Long-term operating lease liabilities	274.2		330.4
Other long-term liabilities	1,167.8		1,320.5
Total liabilities	13,218.0		12,917.6
Commitments, contingencies and guarantees
Equity:
Biogen Inc. shareholders’ equity:
Preferred stock, par value $0.001 per share	—		—
Common stock, par value $0.0005 per share	0.1		0.1
Additional paid-in capital	—		68.2
Accumulated other comprehensive income (loss)	(110.4)		(106.7)
Retained earnings	14,959.9		13,911.7
Treasury stock, at cost	(2,977.1)		(2,977.1)
Total Biogen Inc. shareholders’ equity	11,872.5		10,896.2
Noncontrolling interests	(9.1)		63.5
Total equity	11,863.4		10,959.7
Total liabilities and equity	$	25,081.4	$	23,877.3

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW

(unaudited, in millions)


	For the Six Months Ended June 30,
	2022		2021
Cash flow from operating activities:
Net income	$	1,277.2	$	1,430.1
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization	277.9		219.8
Impairment of intangible assets	—		585.9
Excess and obsolescence charges related to inventory	305.6		8.3
Acquired in-process research and development	—		18.0
Share-based compensation	123.3		124.1
Contingent consideration	(11.6)		(33.5)
Deferred income taxes	(47.5)		(622.8)
(Gain) loss on strategic investments	269.3		283.6
(Gain) loss on equity method investments	(2.6)		(16.1)
Gain on sale of equity interest in Samsung Bioepis	(1,505.4)		—
Other	112.2		104.1
Changes in operating assets and liabilities, net:
Accounts receivable	(67.3)		211.5
Due from anti-CD20 therapeutic programs	(23.6)		(8.7)
Inventory	(243.3)		(193.8)
Accrued expense and other current liabilities	634.0		(188.4)
Income tax assets and liabilities	(65.9)		171.5
Other changes in operating assets and liabilities, net	(134.0)		(97.3)
Net cash flow provided by (used in) operating activities	898.3		1,996.3
Cash flow from investing activities:
Purchases of property, plant and equipment	(94.8)		(164.5)
Proceeds from sales and maturities of marketable securities	1,461.5		1,452.7
Purchases of marketable securities	(2,311.6)		(1,626.9)
Proceeds from sale of equity in Samsung Bioepis	990.3		—
Proceeds from divestiture of Hillerød, Denmark manufacturing operations	—		28.1

Acquisitions of intangible assets	(1.9)		—
Proceeds from the sales of strategic investments	—		91.2
Other	2.0		2.0
Net cash flow provided by (used in) investing activities	45.5		(217.4)
Cash flow from financing activities:
Purchases of treasury stock	(500.0)		(1,050.0)
Payments related to issuance of stock for share-based compensation arrangements, net	(11.5)		(14.2)
Repayment of borrowings and premiums paid on debt exchange	—		(170.0)


Net (distribution) contribution to noncontrolling interest	12.1		(94.8)
Other	11.4		(20.5)
Net cash flow provided by (used in) financing activities	(488.0)		(1,349.5)
Net increase (decrease) in cash and cash equivalents	455.8		429.4
Effect of exchange rate changes on cash and cash equivalents	(70.6)		(18.6)
Cash and cash equivalents, beginning of the period	2,261.4		1,331.2
Cash and cash equivalents, end of the period	$	2,646.6	$	1,742.0

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(unaudited, in millions)


	Preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive loss			Retained earnings			Treasury stock			Total Biogen Inc. shareholders’ equity		Noncontrolling interests		Total equity
	Shares	Amount		Shares	Amount						Shares			Amount
Balance, March 31, 2022	—	$	—	171.3	$	0.1	$	119.0	$	(115.2)		$	14,215.5		(23.8)	$	(2,977.1)	$	11,242.3	$	(21.6)	$	11,220.7
Net income	—	—		—	—		—		—			1,058.0			—	—		1,058.0		0.7		1,058.7
Other comprehensive income (loss), net of tax	—	—		—	—		—		4.8			—			—	—		4.8		—		4.8

Capital contribution from noncontrolling interest	—	—		—	—		—		—			—			—	—		—		11.8		11.8
Repurchase of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		—	—		—		—			—			(2.4)	(500.0)		(500.0)		—		(500.0)
Retirement of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		(2.4)	—		(186.4)		—			(313.6)			2.4	500.0		—		—		—
Issuance of common stock under stock option and stock purchase plans	—	—		0.1	—		10.0		—			—			—	—		10.0		—		10.0
Issuance of common stock under stock award plan	—	—		—	—		(0.7)		—			—			—	—		(0.7)		—		(0.7)
Compensation related to share-based payments	—	—		—	—		58.0		—			—			—	—		58.0		—		58.0
Other	—	—		—	—		0.1		—			—			—	—		0.1		—		0.1
Balance, June 30, 2022	—	$	—	169.0	$	0.1	$	—	$	(110.4)		$	14,959.9		(23.8)	$	(2,977.1)	$	11,872.5	$	(9.1)	$	11,863.4

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - (Continued)

(unaudited, in millions)


	Preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive loss			Retained earnings			Treasury stock			Total Biogen Inc. shareholders’ equity		Noncontrolling interests		Total equity
	Shares	Amount		Shares	Amount						Shares			Amount
Balance, December 31, 2021	—	$	—	170.8	$	0.1	$	68.2	$	(106.7)		$	13,911.7		(23.8)	$	(2,977.1)	$	10,896.2	$	63.5	$	10,959.7
Net income	—	—		—	—		—		—			1,361.8			—	—		1,361.8		(84.6)		1,277.2
Other comprehensive income (loss), net of tax	—	—		—	—		—		(3.7)			—			—	—		(3.7)		—		(3.7)

Capital contribution from noncontrolling interest	—	—		—	—		—		—			—			—	—		—		12.0		12.0
Repurchase of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		—	—		—		—			—			(2.4)	(500.0)		(500.0)		—		(500.0)
Retirement of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		(2.4)	—		(186.4)		—			(313.6)			2.4	500.0		—		—		—
Issuance of common stock under stock option and stock purchase plans	—	—		0.2	—		28.9		—			—			—	—		28.9		—		28.9
Issuance of common stock under stock award plan	—	—		0.4	—		(40.4)		—			—			—	—		(40.4)		—		(40.4)
Compensation related to share-based payments	—	—		—	—		128.4		—			—			—	—		128.4		—		128.4
Other	—	—		—	—		1.3		—			—			—	—		1.3		—		1.3
Balance, June 30, 2022	—	$	—	169.0	$	0.1	$	—	$	(110.4)		$	14,959.9		(23.8)	$	(2,977.1)	$	11,872.5	$	(9.1)	$	11,863.4

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - (Continued)

(unaudited, in millions)


	Preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive loss			Retained earnings			Treasury stock			Total Biogen Inc. shareholders’ equity		Noncontrolling interests		Total equity
	Shares	Amount		Shares	Amount						Shares			Amount
Balance, March 31, 2021	—	$	—	174.4	$	0.1	$	—	$	(174.3)		$	13,833.5		(23.8)	$	(2,977.1)	$	10,682.2	$	(19.0)	$	10,663.2
Net income	—	—		—	—		—		—			448.5			—	—		448.5		577.0		1,025.5
Other comprehensive income (loss), net of tax	—	—		—	—		—		2.5			—			—	—		2.5		(0.1)		2.4
Distribution to noncontrolling interest	—	—		—	—		—		—			—			—	—		—		(100.0)		(100.0)
Capital contribution from noncontrolling interest	—	—		—	—		—		—			—			—	—		—		5.0		5.0
Repurchase of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		—	—		—		—			—			(1.6)	(450.0)		(450.0)		—		(450.0)
Retirement of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		(1.6)	—		(69.5)		—			(380.5)			1.6	450.0		—		—		—
Issuance of common stock under stock option and stock purchase plans	—	—		0.1	—		13.7		—			—			—	—		13.7		—		13.7
Issuance of common stock under stock award plan	—	—		—	—		—		—			(0.8)			—	—		(0.8)		—		(0.8)
Compensation related to share-based payments	—	—		—	—		55.8		—			—			—	—		55.8		—		55.8

Balance, June 30, 2021	—	$	—	172.9	$	0.1	$	—	$	(171.8)		$	13,900.7		(23.8)	$	(2,977.1)	$	10,751.9	$	462.9	$	11,214.8

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - (Continued)

(unaudited, in millions)


	Preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive loss			Retained earnings			Treasury stock			Total Biogen Inc. shareholders’ equity		Noncontrolling interests		Total equity
	Shares	Amount		Shares	Amount						Shares			Amount
Balance, December 31, 2020	—	$	—	176.2	$	0.1	$	—	$	(299.0)		$	13,976.3		(23.8)	$	(2,977.1)	$	10,700.3	$	(14.2)	$	10,686.1
Net income	—	—		—	—		—		—			858.7			—	—		858.7		571.4		1,430.1
Other comprehensive income (loss), net of tax	—	—		—	—		—		127.2			—			—	—		127.2		0.6		127.8
Distribution to noncontrolling interest	—	—		—	—		—		—			—			—	—		—		(100.0)		(100.0)
Capital contribution from noncontrolling interest	—	—		—	—		—		—			—			—	—		—		5.1		5.1
Repurchase of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		—	—		—		—			—			(3.8)	(1,050.0)		(1,050.0)		—		(1,050.0)
Retirement of common stock pursuant to the 2020 Share Repurchase Program, at cost	—	—		(3.8)	—		(163.3)		—			(886.7)			3.8	1,050.0		—		—		—
Issuance of common stock under stock option and stock purchase plans	—	—		0.2	—		33.4		—			—			—	—		33.4		—		33.4
Issuance of common stock under stock award plan	—	—		0.3	—		—		—			(47.6)			—	—		(47.6)		—		(47.6)
Compensation related to share-based payments	—	—		—	—		128.4		—			—			—	—		128.4		—		128.4
Other	—	—		—	—		1.5		—			—			—	—		1.5		—		1.5
Balance, June 30, 2021	—	$	—	172.9	$	0.1	$	—	$	(171.8)		$	13,900.7		(23.8)	$	(2,977.1)	$	10,751.9	$	462.9	$	11,214.8

See accompanying notes to these unaudited condensed consolidated financial statements.

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(unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

References in these notes to "Biogen," the "company," "we," "us" and "our" refer to Biogen Inc. and its consolidated subsidiaries.

Business Overview

Biogen is a global biopharmaceutical company focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies. We have a leading portfolio of medicines to treat multiple sclerosis (MS), have introduced the first approved treatment for spinal muscular atrophy (SMA) and developed the first and only approved treatment to address a defining pathology of Alzheimer's disease. We also commercialize biosimilars of advanced biologics and focus on advancing our pipeline in neuroscience and specialized immunology. Lastly, we are focused on accelerating our efforts in digital health to support our commercial and pipeline programs while also creating opportunities for potential digital therapeutics. We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities.

Our marketed products include TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; ADUHELM for the treatment of Alzheimer's disease; and FUMADERM for the treatment of severe plaque psoriasis. We have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions; RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of primary progressive MS (PPMS) and relapsing MS (RMS); and other potential anti-CD20 therapies, including mosunetuzumab, pursuant to our collaboration arrangements with Genentech, Inc. (Genentech), a wholly-owned member of the Roche Group. For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships, to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (2021 Form 10-K).

Our innovative drug development and commercialization activities are complemented by our biosimilar business that expands access to medicines and reduces the cost burden for healthcare systems. Through our collaboration with Samsung Bioepis Co., Ltd. (Samsung Bioepis) we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe, as well as BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS. For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 17, Collaborative and Other Relationships, to these unaudited condensed consolidated financial statements (condensed consolidated financial statements).

Basis of Presentation

In the opinion of management, our condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair statement of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The information included in this quarterly report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and the accompanying notes included in our 2021 Form 10-K. Our accounting policies are described in the Notes to Consolidated Financial Statements in our 2021 Form 10-K and updated, as necessary, in this report. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from our audited financial statements, but does not include all disclosures required by U.S. GAAP. The results of operations for the three and six months ended June 30, 2022, are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.

We operate as one operating segment, focused on discovering, developing and delivering worldwide innovative therapies for people living with serious neurological and neurodegenerative diseases as well as related therapeutic adjacencies.

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Consolidation

Our condensed consolidated financial statements reflect our financial statements, those of our wholly-owned subsidiaries and those of certain variable interest entities where we are the primary beneficiary. For consolidated entities where we own or are exposed to less than 100.0% of the economics, we record net income (loss) attributable to noncontrolling interests, net of tax in our condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Intercompany balances and transactions are eliminated in consolidation.

In determining whether we are the primary beneficiary of a variable interest entity, we apply a qualitative approach that determines whether we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. We continuously assess whether we are the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in us consolidating or deconsolidating one or more of our collaborators or partners.

Use of Estimates

The preparation of our condensed consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenue and expense and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and assumptions. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense. Actual results may differ from these estimates.

The length of time and full extent to which the COVID-19 pandemic directly or indirectly impacts our business, results of operations and financial condition, including sales, expense, reserves and allowances, the supply chain, manufacturing, clinical trials, research and development costs and employee-related costs, depends on future developments that are highly uncertain, subject to change and are difficult to predict, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19 as well as the economic impact on local, regional, national and international customers and markets. Additionally, the ongoing geopolitical tensions related to the conflict in Ukraine, and the related sanctions and other penalties imposed, are creating substantial uncertainty in the global economy. The extent and duration of the conflict, sanctions and resulting market disruptions are highly unpredictable. We have made estimates of the impact of the COVID-19 pandemic and the ongoing geopolitical conflict within our condensed consolidated financial statements and there may be changes to those estimates in future periods.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed below, we do not believe that the adoption of recently issued standards have had or may have a material impact on our condensed consolidated financial statements or disclosures.

Fair Value Measurements

In June 2022 the Financial Accounting Standards Board issued Accounting Standards Update No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This standard clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. This standard becomes effective for us on January 1, 2024, and is not expected to have a material impact on our condensed consolidated financial statements and related disclosures.

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2. DISPOSITIONS

Sale of Joint Venture Equity Interest in Samsung Bioepis

In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics Co., Ltd (Samsung BioLogics). Under the terms of this transaction, we received approximately $1.0 billion in cash at closing and expect to receive approximately $1.3 billion in cash to be deferred over two payments of approximately $812.5 million due at the first anniversary and approximately $437.5 million due at the second anniversary of the closing of the transaction.

Prior to the sale, the carrying value of our investment in Samsung Bioepis totaled $581.6 million. For the three and six months ended June 30, 2022, we recognized a pre-tax gain of approximately $1.5 billion related to the transaction, which was recorded in other (income) expense, net in our condensed consolidated statements of income. This pre-tax gain included reclassifications from accumulated other comprehensive income (loss) to net income of approximately $58.9 million in cumulative translation losses, partially offset by approximately $57.0 million in gains resulting from the termination of our net investment hedge.

We have concluded that the divestment of Samsung Bioepis does not meet the criteria to be reported as discontinued operations in our condensed consolidated financial statements, as our decision to divest this business does not represent a strategic shift that will have a major effect on our operations and financial results.

We have elected the fair value option and measured the payments due to us from Samsung BioLogics at fair value based on risk-adjusted discount rates of 3.1% and 3.7% for the first and second payments due, respectively. As of June 30, 2022, the estimated fair values of the first and second payments were approximately $788.1 million and $406.8 million, respectively, and have been classified as level 3 measurements reflected in other current assets and investments and other assets, respectively, in our condensed consolidated balance sheets.

As part of the transaction, we are also eligible to receive up to an additional $50.0 million upon the achievement of certain commercial milestones. Our policy for contingent payments of this nature is to recognize them in the period that they become realizable, which is generally the same period in which they are earned.

If any payments due to us remain outstanding after the second anniversary of the closing of the transaction, we may elect to receive shares of Samsung BioLogics common stock at a 5.0% discount in lieu of a cash payment for the remaining amount due. Currently, we believe that the likelihood of Samsung BioLogics failing to make timely payments to us for the amounts due is remote.

Additionally, for the three and six months ended June 30, 2022, we recorded a discrete tax expense of approximately $269.5 million related to this transaction, which is reflected in income tax (benefit) expense in our condensed consolidated statements of income.

3. RESTRUCTURING, BUSINESS TRANSFORMATION AND OTHER COST SAVING INITIATIVES

2022 Cost Saving Initiatives

In December 2021 and May 2022 we announced our plans to implement a series of cost-reduction measures during 2022. These savings are being achieved through a number of initiatives, including reductions to our workforce, the substantial elimination of our commercial ADUHELM infrastructure, the consolidation of certain real estate locations and operating efficiencies across our selling, general and administrative and research and development functions.

Under these initiatives, we expect to incur restructuring charges ranging from approximately $130.0 million to $150.0 million. These amounts are primarily related to severance and are expected to be substantially incurred and paid by the end of 2022.

For the three and six months ended June 30, 2022, we recognized approximately $70.6 million and $108.7 million, respectively, of pre-tax restructuring charges related to our 2022 cost saving initiatives, of which approximately $60.9 million and $88.6 million, respectively, consisted of employee severance costs. These costs were recorded in restructuring charges in our condensed consolidated statements of income. Our restructuring reserve is included in accrued expense and other in our condensed consolidated balance sheets.

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Following an evaluation of our current capacity needs, in March 2022 we ceased using a patient services office space in Durham, North Carolina. Our decision to cease use of the facility resulted in the immediate expense of certain leasehold improvements and other assets at this facility. As a result, for the six months ended June 30, 2022, we recognized approximately $10.4 million of accelerated depreciation expense, which was recorded in restructuring charges in our condensed consolidated statements of income. In May 2022 we entered into a lease assignment agreement whereby we assigned our remaining lease obligations to an external third party. As a result of the lease assignment, we derecognized the related operating lease obligation and right-of-use asset as of June 30, 2022.

For the three and six months ended June 30, 2022, we recorded other restructuring costs of approximately $9.7 million, which were recorded in restructuring charges in our condensed consolidated statements of income. Other restructuring costs includes items such as facility closure costs, employee non-severance expense, asset write-offs and other costs.

The following table summarizes the charges and spending related to our 2022 workforce reductions for the three and six months ended June 30, 2022:


(In millions)	Total
Restructuring reserve as of December 31, 2021	$	—
Expense	27.7
Payment	(6.2)

Restructuring reserve as of March 31, 2022	$	21.5
Expense	60.9
Payment	(29.7)
Adjustment	(0.5)
Restructuring reserve as of June 30, 2022	$	52.2

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4. REVENUE

Product Revenue

Revenue by product is summarized as follows:


	For the Three Months Ended June 30,
	2022						2021
(In millions)	United States		Rest of World		Total		United States		Rest of World		Total
Multiple Sclerosis (MS):
TECFIDERA	$	120.7	$	277.2	$	397.9	$	178.4	$	309.2	$	487.6
VUMERITY(1)	129.9		6.9		136.8		90.7		0.2		90.9
Total Fumarate	250.6		284.1		534.7		269.1		309.4		578.5
AVONEX	171.0		87.7		258.7		214.0		96.9		310.9
PLEGRIDY	40.2		51.3		91.5		43.4		46.1		89.5
Total Interferon	211.2		139.0		350.2		257.4		143.0		400.4
TYSABRI	291.9		224.3		516.2		299.8		224.4		524.2
FAMPYRA	—		25.5		25.5		—		26.1		26.1
Subtotal: MS	753.7		672.9		1,426.6		826.3		702.9		1,529.2

Spinal Muscular Atrophy:
SPINRAZA	139.8		291.3		431.1		149.3		350.4		499.7

Biosimilars:
BENEPALI	—		115.8		115.8		—		121.5		121.5
IMRALDI	—		57.6		57.6		—		55.6		55.6
FLIXABI	—		20.5		20.5		—		25.3		25.3
BYOOVIZ(2)	0.5		—		0.5		—		—		—
Subtotal: Biosimilars	0.5		193.9		194.4		—		202.4		202.4

Other:
FUMADERM	—		2.7		2.7		—		3.1		3.1
ADUHELM	0.1		—		0.1		1.6		—		1.6
Total product revenue	$	894.1	$	1,160.8	$	2,054.9	$	977.2	$	1,258.8	$	2,236.0

(1) VUMERITY became commercially available in the European Union (E.U.) during the fourth quarter of 2021.

(2) BYOOVIZ launched in the United States (U.S.) in June 2022 and will be commercially available in July 2022.

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	For the Six Months Ended June 30,
	2022						2021
(In millions)	United States		Rest of World		Total		United States		Rest of World		Total
Multiple Sclerosis (MS):
TECFIDERA	$	237.8	$	570.0	$	807.8	$	340.8	$	626.0	$	966.8
VUMERITY(1)	255.1		9.7		264.8		164.3		0.3		164.6
Total Fumarate	492.9		579.7		1,072.6		505.1		626.3		1,131.4
AVONEX	319.0		169.3		488.3		423.2		198.8		622.0
PLEGRIDY	74.5		97.0		171.5		76.0		102.9		178.9
Total Interferon	393.5		266.3		659.8		499.2		301.7		800.9
TYSABRI	576.4		460.6		1,037.0		573.1		454.4		1,027.5
FAMPYRA	—		51.7		51.7		—		52.7		52.7
Subtotal: MS	1,462.8		1,358.3		2,821.1		1,577.4		1,435.1		3,012.5

Spinal Muscular Atrophy:
SPINRAZA	303.1		600.5		903.6		298.0		722.2		1,020.2

Biosimilars:
BENEPALI	—		230.5		230.5		—		243.2		243.2
IMRALDI	—		114.7		114.7		—		113.5		113.5
FLIXABI	—		43.0		43.0		—		50.8		50.8
BYOOVIZ(2)	0.5		—		0.5		—		—		—
Subtotal: Biosimilars	0.5		388.2		388.7		—		407.5		407.5

Other:
FUMADERM	—		4.9		4.9		—		5.9		5.9
ADUHELM	2.9		—		2.9		1.6		—		1.6
Total product revenue	$	1,769.3	$	2,351.9	$	4,121.2	$	1,877.0	$	2,570.7	$	4,447.7

(1) VUMERITY became commercially available in the E.U. during the fourth quarter of 2021.

(2) BYOOVIZ launched in the U.S. in June 2022 and will be commercially available in July 2022.

We recognized revenue from two wholesalers accounting for 27.4% and 11.2% of gross product revenue for the three months ended June 30, 2022, and 26.8% and 10.8% of gross product revenue for the six months ended June 30, 2022.

We recognized revenue from two wholesalers accounting for 30.2% and 9.9% of gross product revenue for the three months ended June 30, 2021, and 30.1% and 9.6% of gross product revenue for the six months ended June 30, 2021.

An analysis of the change in reserves for discounts and allowances is summarized as follows:


(In millions)	Discounts		Contractual Adjustments		Returns		Total
Balance, December 31, 2021	$	137.7	$	759.6	$	38.0	$	935.3
Current provisions relating to sales in current year	337.7		1,346.1		6.4		1,690.2
Adjustments relating to prior years	(1.1)		(58.6)		(4.6)		(64.3)
Payments/credits relating to sales in current year	(243.8)		(833.3)		—		(1,077.1)
Payments/credits relating to sales in prior years	(98.4)		(391.3)		(10.6)		(500.3)
Balance, June 30, 2022	$	132.1	$	822.5	$	29.2	$	983.8

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The total reserves above, which are included in our condensed consolidated balance sheets, are summarized as follows:


(In millions)	As of June 30, 2022		As of December 31, 2021
Reduction of accounts receivable	$	137.8	$	133.2
Component of accrued expense and other	846.0		802.1
Total revenue-related reserves	$	983.8	$	935.3

Revenue from Anti-CD20 Therapeutic Programs

Revenue from anti-CD20 therapeutic programs is summarized in the table below. For the purposes of this footnote, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN.


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Biogen’s share of pre-tax profits in the U.S. for RITUXAN and GAZYVA	$	139.9	$	178.8	$	283.1	$	352.9
OCREVUS and other revenue from anti-CD20 therapeutic programs	296.4		261.2		552.6		476.1
Total revenue from anti-CD20 therapeutic programs	$	436.3	$	440.0	$	835.7	$	829.0

For additional information on our collaboration arrangements with Genentech, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.

Other Revenue

Other revenue is summarized as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Revenue from collaborative and other relationships:
Revenue earned under our technical development agreement, manufacturing services agreements and royalty revenue on biosimilar products with Samsung Bioepis	$	6.4	$	5.5	$	14.4	$	9.4

Other royalty and corporate revenue:
Royalty	10.3		6.4		20.9		12.6
Other corporate	81.2		87.1		128.7		170.3
Total other revenue	$	97.9	$	99.0	$	164.0	$	192.3

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

5. INVENTORY

The components of inventory are summarized as follows:


(In millions)	As of June 30, 2022		As of December 31, 2021
Raw materials	$	378.0	$	349.6
Work in process(1)	706.3		814.0
Finished goods	209.9		187.9
Total inventory	$	1,294.2	$	1,351.5

(1) Work in process inventory as of June 30, 2022, includes approximately $71.5 million related to lecanemab.

In April 2022 the Centers for Medicare and Medicaid Services (CMS) released the final National Coverage Decision (NCD) for the class of anti-amyloid treatments in Alzheimer’s disease, including ADUHELM. The final NCD confirmed coverage with evidence development, in which patients with Medicare can only access treatment if they are part of an approved clinical trial. We expect that this decision will reduce future demand for ADUHELM to a minimal level. During the first quarter of 2022 we wrote-off approximately $275.0 million of inventory related to

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ADUHELM, as a result of this CMS decision, which was recognized in cost of sales within our condensed consolidated statements of income for the six months ended June 30, 2022. We have recognized approximately $136.0 million related to Eisai's 45.0% share of these charges in collaboration profit (loss) sharing within our condensed consolidated statements of income for the six months ended June 30, 2022.

During the fourth quarter of 2021 we wrote-off approximately $120.0 million of inventory in excess of forecasted demand related to ADUHELM, which was recognized in cost of sales within our condensed consolidated statements of income. We have recognized approximately $59.0 million related to Eisai's 45.0% share of these charges in collaboration profit (loss) sharing within our condensed consolidated statements of income for the year ended December 31, 2021.

As of June 30, 2022, our total ADUHELM inventory was de minimis. As of December 31, 2021, we had approximately $223.0 million of ADUHELM inventory. For additional information please read Note 17, Collaborative and Other Relationships, to these condensed consolidated financial statements.

6. INTANGIBLE ASSETS AND GOODWILL

Intangible Assets

Intangible assets, net of accumulated amortization, impairment charges and adjustments are summarized as follows:


		As of June 30, 2022						As of December 31, 2021
(In millions)	Estimated Life	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Completed technology	4-28 years	$	7,415.0	$	(5,522.9)	$	1,892.1	$	7,413.1	$	(5,388.5)	$	2,024.6
In-process research and development	Indefinite until commercialization	119.2		—		119.2		132.7		—		132.7
Trademarks and trade names	Indefinite	64.0		—		64.0		64.0		—		64.0
Total intangible assets		$	7,598.2	$	(5,522.9)	$	2,075.3	$	7,609.8	$	(5,388.5)	$	2,221.3

Amortization and Impairments

For the three and six months ended June 30, 2022, amortization and impairment of acquired intangible assets totaled $67.5 million and $134.4 million, respectively, compared to $604.1 million and $702.2 million, respectively, in the prior year comparative periods. For the three and six months ended June 30, 2022, we had no impairment charges.

For the three and six months ended June 30, 2021, amortization and impairment of acquired intangible assets reflects a $350.0 million impairment charge related to BIIB111 (timrepigene emparvovec) for the potential treatment of choroideremia and a $191.6 million impairment charge related to BIIB112 (cotoretigene toliparvovec) for the potential treatment of X-linked retinitis pigmentosa.

For the six months ended June 30, 2021, amortization and impairment of acquired intangible assets also reflects a $44.3 million impairment charge related to vixotrigine (BIIB074) for the potential treatment of trigeminal neuralgia (TGN).

Completed Technology

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

IPR&D Related to Business Combinations

In-process research and development (IPR&D) represents the fair value assigned to research and development assets that we acquired as part of a business combination and had not yet reached technological feasibility at the date of acquisition. Included in IPR&D balances are adjustments related to foreign currency exchange rate fluctuations. We review amounts capitalized as acquired IPR&D for impairment annually, as of October 31, and whenever events or changes in circumstances indicate to us that the carrying value of the assets might not be recoverable. The carrying value associated with our IPR&D assets as of June 30, 2022, relates to the IPR&D programs we acquired in connection with our acquisition of Convergence Pharmaceuticals Holdings Ltd. (Convergence).

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Vixotrigine

In the periods since we acquired vixotrigine, there have been numerous delays in the initiation of Phase 3 studies for the potential treatment of TGN and for the potential treatment of diabetic painful neuropathy (DPN), another form of neuropathic pain. We have engaged with the FDA regarding the design of the Phase 3 studies of vixotrigine for the potential treatment of TGN and DPN and are now performing an additional clinical trial of vixotrigine, which is expected to be completed by the end of 2022.

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

As of June 30, 2022, the carrying value associated with the remaining IPR&D intangible asset for DPN was $119.2 million and the fair value of this asset was not significantly in excess of its carrying value. We will reassess the carrying value of this program upon conclusion of the ongoing clinical trial or sooner if there is a reevaluation event and may record an impairment charge related to this asset.

BIIB111 and BIIB112

During the second quarter of 2021 we announced that our Phase 3 STAR study of BIIB111 did not meet its primary or key secondary endpoints. We reassessed the fair value of the program based on the results of this study and recognized an impairment charge of $350.0 million during the second quarter of 2021, which resulted in a reduction of the IPR&D intangible asset from $365.0 million to $15.0 million.

During the second quarter of 2021 we announced that our Phase 2/3 XIRIUS study of BIIB112 did not meet its primary endpoint; however, positive trends were observed across several clinically relevant prespecified secondary endpoints. We reassessed the fair value of the program based on the results of this study and recognized an impairment charge of $191.6 million during the second quarter of 2021, which resulted in a reduction of the IPR&D intangible asset from $220.0 million to $28.4 million.

In the third quarter of 2021 we suspended further development on these programs based on the decision by management as part of its strategic review process. For the year ended December 31, 2021, we recognized additional impairment charges related to BIIB111 and BIIB112, reducing the remaining book values of these IPR&D intangible assets to zero.

Estimated Future Amortization of Intangible Assets

The estimated future amortization of finite-lived intangible assets for the next five years is expected to be as follows:


(In millions)	As of June 30, 2022
2022 (remaining six months)	$	130.0
2023	210.0
2024	195.0
2025	195.0
2026	180.0
2027	165.0

Goodwill

The following table provides a roll forward of the changes in our goodwill balance:


(In millions)	As of June 30, 2022
Goodwill, December 31, 2021	$	5,761.1

Other	(11.5)
Goodwill, June 30, 2022	$	5,749.6

As of June 30, 2022, we had no accumulated impairment losses related to goodwill. Other includes adjustments related to foreign currency exchange rate fluctuations.

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7. FAIR VALUE MEASUREMENTS

The tables below present information about our assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques we utilized to determine such fair value:


	Fair Value Measurements on a Recurring Basis
	As of June 30, 2022
(In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	2,144.9	$	—	$	2,144.9	$	—
Marketable debt securities:
Corporate debt securities	1,890.3		—		1,890.3		—
Government securities	1,156.9		—		1,156.9		—
Mortgage and other asset backed securities	207.0		—		207.0		—
Marketable equity securities	785.6		668.7		116.9		—
Other current assets:
Receivable from Samsung BioLogics(1)	788.1		—		—		788.1
Other assets:
Derivative contracts	180.0		—		180.0		—
Plan assets for deferred compensation	31.9		—		31.9		—
Receivable from Samsung BioLogics(1)	406.8		—		—		406.8
Total	$	7,591.5	$	668.7	$	5,727.9	$	1,194.9
Liabilities:
Derivative contracts	$	23.3	$	—	$	23.3	$	—
Contingent consideration obligations	197.5		—		—		197.5
Total	$	220.8	$	—	$	23.3	$	197.5

(1) Represents the fair value of the current and non-current payments due from Samsung BioLogics as a result of the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics during the second quarter of 2022, for which we elected the fair value option. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements.

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	Fair Value Measurements on a Recurring Basis
	As of December 31, 2021
(In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	1,632.2	$	—	$	1,632.2	$	—
Marketable debt securities:
Corporate debt securities	1,108.2		—		1,108.2		—
Government securities	1,192.7		—		1,192.7		—
Mortgage and other asset backed securities	132.2		—		132.2		—
Marketable equity securities	1,048.5		181.7		866.8		—
Derivative contracts	80.9		—		80.9		—
Plan assets for deferred compensation	33.4		—		33.4		—
Total	$	5,228.1	$	181.7	$	5,046.4	$	—
Liabilities:
Derivative contracts	$	10.8	$	—	$	10.8	$	—
Contingent consideration obligations	209.1		—		—		209.1
Total	$	219.9	$	—	$	10.8	$	209.1

There have been no material impairments of our assets measured and carried at fair value as of June 30, 2022 and December 31, 2021. In addition, there have been no changes in valuation techniques as of June 30, 2022 and December 31, 2021.

The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities was determined through third-party pricing services. The fair value of Level 2 instruments classified as marketable equity securities represents a portion of our investment in the common stock of Sage Therapeutics, Inc. (Sage) and is valued using an option pricing valuation model as the investment is subject to certain holding period restrictions. This initial holding period restriction for a portion of our investment in the common stock of Sage expired during the second quarter of 2022 and is reflected as a Level 1 measurement as of June 30, 2022.

The initial holding period restriction for a portion of our investment in the common stock of Sangamo Therapeutics, Inc. (Sangamo) expired during the second quarter of 2021 and the remaining portion expired during the second quarter of 2022. The holding period restriction for our investment in the common stock of Denali Therapeutics Inc. (Denali) expired during the first quarter of 2022. As of June 30, 2022, the fair values of our investments in Sangamo and Denali common stock were classified as Level 1 measurements. Prior to the expiration of these holding period restrictions the investments were classified as level 2 instruments.

For additional information on our investments in Sangamo, Denali and Sage common stock, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.

For a description of our validation procedures related to prices provided by third-party pricing services and our option pricing valuation model, please read Note 1, Summary of Significant Accounting Policies - Fair Value Measurements, to our consolidated financial statements included in our 2021 Form 10-K.

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Level 3 Assets and Liabilities Held at Fair Value

The following table presents quantitative information, as of the dates indicated, about the valuation techniques and significant unobservable inputs used in the valuation of our level 3 financial assets and liabilities measured at fair value on a recurring basis:


	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value							Weighted Average
(In millions)	June 30, 2022		December 31, 2021		Valuation Technique	Significant Unobservable Input(s)	Range	June 30, 2022		December 31, 2021




Liabilities:
Contingent consideration obligations	$	197.5	$	209.1	Discounted cash flow	Discount rate	3.96%	3.96	%	1.30	%
					Expected timing of achievement of development milestones	2023 to 2028	—	—

The weighted average discount rates were calculated based on the relative fair value of our contingent consideration obligations. In addition, we apply various probabilities of technological and regulatory success to the valuation models to estimate the fair values of our contingent consideration obligations, which ranged from 10.9% to certain probability as of June 30, 2022 and December 31, 2021.

There were no transfers of assets or liabilities into or out of Level 3 as of June 30, 2022 and December 31, 2021.

Contingent Consideration Obligations

In connection with our acquisitions of Convergence and Biogen International Neuroscience GmbH, we agreed to make additional payments based upon the achievement of certain milestone events. The following table provides a roll forward of the fair values of our contingent consideration obligations, which are classified as Level 3 measurements:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Fair value, beginning of period	$	202.0	$	226.0	$	209.1	$	259.8
Changes in fair value	(4.5)		0.3		(11.6)		(33.5)

Fair value, end of period	$	197.5	$	226.3	$	197.5	$	226.3

As of June 30, 2022 and December 31, 2021, approximately $197.5 million and $209.1 million, respectively, of the fair value of our total contingent consideration obligations was reflected as a component of other long-term liabilities in our condensed consolidated balance sheets with any remaining balances reflected as a component of accrued expense and other. Changes in the fair values of our contingent consideration obligations are recorded in (gain) loss on fair value remeasurement of contingent consideration in our condensed consolidated statements of income.

For the three and six months ended June 30, 2022, changes in the fair value of our contingent consideration obligations were primarily due to increases in the discount rates used to revalue these obligations and delays in the expected timing of the achievement of certain remaining developmental milestones related to our vixotrigine programs.

For the three and six months ended June 30, 2021, changes in the fair value of our contingent consideration obligations were primarily due to delays in the expected timing of the achievement of certain remaining developmental milestones related to our vixotrigine programs.

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Financial Instruments Not Carried at Fair Value

Other Financial Instruments

Due to the short-term nature of certain financial instruments, the carrying value reflected in our condensed consolidated balance sheets for current accounts receivable, due from anti-CD20 therapeutic programs, other current assets, accounts payable and accrued expense and other, approximates fair value.

Debt Instruments

The fair and carrying values of our debt instruments, which are Level 2 liabilities, are summarized as follows:


	As of June 30, 2022				As of December 31, 2021
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value

3.625% Senior Notes due September 15, 2022	$	1,001.1	$	999.8	$	1,020.0	$	999.1
4.050% Senior Notes due September 15, 2025	1,730.1		1,743.8		1,895.2		1,742.9
2.250% Senior Notes due May 1, 2030	1,232.2		1,492.5		1,475.9		1,492.0
5.200% Senior Notes due September 15, 2045	1,066.3		1,100.1		1,463.0		1,099.9
3.150% Senior Notes due May 1, 2050	1,027.9		1,473.4		1,457.7		1,473.2
3.250% Senior Notes due February 15, 2051	489.1		467.6		692.9		466.0
Total	$	6,546.7	$	7,277.2	$	8,004.7	$	7,273.1

The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources. The change in the fair value of our Senior Notes as of June 30, 2022, compared to December 31, 2021, is related to the increase in U.S. treasury yields and wider credit spreads used to value the notes since December 31, 2021. For additional information related to our Senior Notes, please read Note 12, Indebtedness, to our consolidated financial statements included in our 2021 Form 10-K.

8. FINANCIAL INSTRUMENTS

The following table summarizes our financial assets with maturities of less than 90 days from the date of purchase included in cash and cash equivalents in our condensed consolidated balance sheets:


(In millions)	As of June 30, 2022		As of December 31, 2021
Commercial paper	$	79.7	$	247.6
Overnight reverse repurchase agreements	83.8		200.0
Money market funds	1,764.5		901.6
Short-term debt securities	216.9		283.0
Total	$	2,144.9	$	1,632.2

The carrying values of our commercial paper, including accrued interest, overnight reverse repurchase agreements, money market funds and short-term debt securities approximate fair value due to their short-term maturities.

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Our marketable equity securities gains (losses) are recorded in other (income) expense, net in our condensed consolidated statements of income. The following tables summarize our marketable debt and equity securities, classified as available-for-sale:


	As of June 30, 2022
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable debt securities
Corporate debt securities:
Current	$	1,363.9	$	—	$	(6.3)	$	1,357.6
Non-current	540.4		0.1		(7.8)		532.7
Government securities:
Current	798.0		0.1		(4.5)		793.6
Non-current	367.2		0.2		(4.1)		363.3
Mortgage and other asset backed securities:
Current	0.1		—		—		0.1
Non-current	210.0		—		(3.1)		206.9
Total marketable debt securities	$	3,279.6	$	0.4	$	(25.8)	$	3,254.2

Marketable equity securities
Marketable equity securities, current	$	33.9	$	—	$	(9.7)	$	24.2
Marketable equity securities, non-current	1,103.3		—		(341.9)		761.4
Total marketable equity securities	$	1,137.2	$	—	$	(351.6)	$	785.6


	As of December 31, 2021
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable debt securities
Corporate debt securities:
Current	$	723.6	$	0.1	$	(0.3)	$	723.4
Non-current	385.4		0.2		(0.8)		384.8
Government securities:
Current	817.0		—		(0.4)		816.6
Non-current	377.0		0.1		(1.0)		376.1
Mortgage and other asset backed securities:
Current	1.1		—		—		1.1
Non-current	131.8		—		(0.7)		131.1
Total marketable debt securities	$	2,435.9	$	0.4	$	(3.2)	$	2,433.1

Marketable equity securities
Marketable equity securities, current	$	33.9	$	9.9	$	—	$	43.8
Marketable equity securities, non-current	1,133.1		151.0		(279.4)		1,004.7
Total marketable equity securities	$	1,167.0	$	160.9	$	(279.4)	$	1,048.5

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Summary of Contractual Maturities: Available-for-Sale Debt Securities

The estimated fair value and amortized cost of our marketable debt securities classified as available-for-sale by contractual maturity are summarized as follows:


	As of June 30, 2022				As of December 31, 2021
(In millions)	Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost
Due in one year or less	$	2,151.3	$	2,135.6	$	1,541.1	$	1,541.7
Due after one year through five years	1,089.4		1,130.1		868.2		870.2
Due after five years	13.5		13.9		23.8		24.0
Total marketable debt securities	$	3,254.2	$	3,279.6	$	2,433.1	$	2,435.9

The average maturity of our marketable debt securities classified as available-for-sale as of June 30, 2022 and December 31, 2021, was approximately 11 months and 10 months, respectively.

Proceeds from Marketable Debt Securities

The proceeds from maturities and sales of marketable debt securities and resulting realized gains and losses are summarized as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Proceeds from maturities and sales	$	917.9	$	633.5	$	1,461.5	$	1,452.7
Realized gains	—		0.1		—		0.3
Realized losses	0.8		0.5		1.4		1.2

Realized losses for the three and six months ended June 30, 2022 and 2021, primarily relate to sales of corporate bonds, agency mortgage-backed securities and other asset-backed securities.

Strategic Investments

As of June 30, 2022 and December 31, 2021, our strategic investment portfolio was comprised of investments totaling $839.3 million and $1,110.3 million, respectively, which are included in other current assets and investments and other assets in our condensed consolidated balance sheets.

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

The decreases in our strategic investment portfolio for the three and six months ended June 30, 2022, were primarily due to decreases in the fair value of our investments in Denali, Sage and Sangamo common stock.

For additional information on our investments in Denali, Sage and Sangamo common stock, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.

9. DERIVATIVE INSTRUMENTS

Foreign Currency Forward Contracts - Hedging Instruments

Due to the global nature of our operations, portions of our revenue and operating expense are recorded in currencies other than the U.S. dollar. The value of revenue and operating expense measured in U.S. dollars is therefore subject to changes in foreign currency exchange rates. We enter into foreign currency forward contracts and foreign currency options with financial institutions with the primary objective to mitigate the impact of foreign currency exchange rate fluctuations on our international revenue and operating expense.

Foreign currency forward contracts and foreign currency options in effect as of June 30, 2022 and December 31, 2021, had durations of 1 to 15 months. These contracts have been designated as cash flow hedges and unrealized gains or losses on the portion of these foreign currency forward contracts that are included in the effectiveness test are reported in accumulated other comprehensive income (loss) (referred to as AOCI in the tables below). Realized gains and losses of such contracts are recognized in revenue when the sale of product in the

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currency being hedged is recognized and in operating expense when the expense in the currency being hedged is recorded. We recognize all cash flow hedge reclassifications from accumulated other comprehensive income (loss) and fair value changes of excluded portions in the same line item in our condensed consolidated statements of income that have been impacted by the hedged item.

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


	Notional Amount
(In millions)	As of June 30, 2022		As of December 31, 2021
Euro	$	1,285.4	$	1,828.0
British pound	87.0		166.2
Swiss franc	78.7		—
Japanese yen	44.6		72.7
Canadian dollar	29.5		59.9
Total foreign currency forward contracts	$	1,525.2	$	2,126.8

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



(In millions)	As of June 30, 2022		As of December 31, 2021
Unrealized gains	$	140.7	$	60.8
Unrealized (losses)	(3.1)		(7.0)
Net unrealized gains (losses)	$	137.6	$	53.8

We expect the net unrealized gains of approximately $137.6 million to be settled over the next 15 months, of which approximately $133.7 million of these net unrealized gains are expected to be settled over the next 12 months, with any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenue or operating expense. We consider the impact of our and our counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its contractual obligations. As of June 30, 2022 and December 31, 2021, credit risk did not materially change the fair value of our foreign currency forward contracts.

The following tables summarize the effect of foreign currency forward contracts designated as hedging instruments in our condensed consolidated statements of income:


For the Three Months Ended June 30,
Net Gains/(Losses) Reclassified from AOCI into Operating Income (in millions)					Net Gains/(Losses) Recognized in Operating Income (in millions)
Location	2022		2021		Location	2022		2021
Revenue	$	44.6	$	(30.7)	Revenue	$	(0.9)	$	(0.8)
Operating expense	(2.4)		0.4		Operating expense	(0.2)		(0.3)

For the Six Months Ended June 30,
Net Gains/(Losses) Reclassified from AOCI into Operating Income (in millions)					Net Gains/(Losses) Recognized in Operating Income (in millions)
Location	2022		2021		Location	2022		2021
Revenue	$	65.5	$	(53.8)	Revenue	$	(7.4)	$	(3.8)
Operating expense	(2.7)		—		Operating expense	(0.3)		(0.4)

Net Investment Hedges - Hedging Instruments

In February 2012 we entered into a joint venture agreement with Samsung BioLogics establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar products. In June 2018 we exercised our option under our joint venture agreement to increase our ownership percentage in Samsung Bioepis from approximately 5.0% to approximately 49.9%. The share purchase transaction was completed in November 2018 and, upon closing, we paid 759.5 billion South Korean won ($676.6 million) to Samsung BioLogics. Our investment in the equity of Samsung Bioepis related to this transaction was exposed to the currency fluctuations in the South Korean won.

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In order to mitigate the currency fluctuations between the U.S. dollar and South Korean won, we entered into foreign currency forward contracts. These contracts were designated as net investment hedges. In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics and closed these foreign currency forward contracts. Upon completing this sale, the cumulative gains on our net investment hedges of $57.0 million were reclassified from accumulated other comprehensive income (loss) and reflected within the total pre-tax gain recognized from the sale, which was recorded in other (income) expense, net in our condensed consolidated statements of income. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements.

Prior to the sale of our equity interest in Samsung Bioepis we recognized changes in the spot exchange rate of these foreign currency forward contracts in accumulated other comprehensive income (loss). The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity reflected net gains of $10.6 million as of December 31, 2021. We excluded fair value changes related to the forward rate from our hedging relationship and amortized the forward points in other (income) expense, net in our condensed consolidated statements of income over the term of the contract. The pre-tax portion of the fair value of the forward points that were included in accumulated other comprehensive income (loss) in total equity reflected net losses of $3.6 million as of December 31, 2021.

The following tables summarize the effect of our net investment hedges in our condensed consolidated financial statements:


For the Three Months Ended June 30,
Net Gains/(Losses) Recognized in Other Comprehensive Income (Effective Portion) (in millions)					Net Gains/(Losses) Recognized in Other Comprehensive Income (Amounts Excluded from Effectiveness Testing) (in millions)					Net Gains/(Losses) Recognized in Net Income (Amounts Excluded from Effectiveness Testing) (in millions)
Location	2022		2021		Location	2022		2021		Location	2022		2021
Gains (losses) on net investment hedges(1)	$	10.3	$	(2.5)	Gains (losses) on net investment hedges(1)	$	0.1	$	0.3	Other (income) expense(1)	$	(3.5)	$	—

For the Six Months Ended June 30,
Net Gains/(Losses) Recognized in Other Comprehensive Income (Effective Portion) (in millions)					Net Gains/(Losses) Recognized in Other Comprehensive Income (Amounts Excluded from Effectiveness Testing) (in millions)					Net Gains/(Losses) Recognized in Net Income (Amounts Excluded from Effectiveness Testing) (in millions)
Location	2022		2021		Location	2022		2021		Location	2022		2021
Gains (losses) on net investment hedges(1)	$	20.4	$	21.3	Gains (losses) on net investment hedges(1)	$	(3.2)	$	(1.1)	Other (income) expense(1)	$	(4.6)	$	0.1

(1) Beginning in the second quarter of 2022 we no longer held net investment hedges as they were closed with the sale of our 49.9% equity interest in Samsung Bioepis in April 2022. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements.

For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 17, Collaborative and Other Relationships, to these condensed consolidated financial statements.

Foreign Currency Forward Contracts - Other Derivative Instruments

We also enter into other foreign currency forward contracts, usually with durations of one month or less, to mitigate the foreign currency risk related to certain balance sheet positions. We have not elected hedge accounting for these transactions.

The aggregate notional amount of these outstanding foreign currency forward contracts was $1,230.4 million and $1,268.0 million as of June 30, 2022 and December 31, 2021, respectively. Net losses of $37.1 million and $49.3 million related to these contracts were recorded as a component of other (income) expense, net for the three and six months ended June 30, 2022, respectively, compared to net gains of $4.8 million and net losses of $12.6 million, respectively, in the prior year comparative periods.

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Summary of Derivative Instruments

While certain of our derivative instruments are subject to netting arrangements with our counterparties, we do not offset derivative assets and liabilities in our condensed consolidated balance sheets. The amounts in the table below would not be substantially different if the derivative assets and liabilities were offset.

The following table summarizes the fair value and presentation in our condensed consolidated balance sheets of our outstanding derivative instruments, including those designated as hedging instruments:


(In millions)	Balance Sheet Location	As of June 30, 2022		As of December 31, 2021
Cash Flow Hedging Instruments:
Asset derivative instruments	Other current assets	$	142.3	$	66.2
	Investments and other assets	4.1		5.5
Liability derivative instruments	Accrued expense and other	5.2		6.6


Net Investment Hedging Instruments:(1)
Asset derivative instruments	Other current assets	21.4		4.1






Other Derivative Instruments:
Asset derivative instruments	Other current assets	12.2		5.1
Liability derivative instruments	Accrued expense and other	18.1		4.2

(1) Beginning in the second quarter of 2022 we no longer held net investment hedges as they were closed with the sale of our 49.9% equity interest in Samsung Bioepis in April 2022. Amount represents unsettled balance of our closed net investment hedges. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements.

10. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are recorded at historical cost, net of accumulated depreciation. Accumulated depreciation on property, plant and equipment was $2,131.0 million and $2,006.6 million as of June 30, 2022 and December 31, 2021, respectively. For the three and six months ended June 30, 2022, depreciation expense totaled $67.2 million and $143.5 million, respectively, compared to $54.7 million and $103.5 million, respectively, in the prior year comparative periods.

Solothurn, Switzerland Manufacturing Facility

In order to support our future growth and drug development pipeline, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland. Upon completion, this facility will include 393,000 square feet related to a large-scale biologics manufacturing facility, 290,000 square feet of warehouse, utilities and support space and 51,000 square feet of administrative space. As of June 30, 2022 and December 31, 2021, we had approximately $691.7 million and $677.0 million, respectively, capitalized as construction in progress related to this facility. In the second quarter of 2021, a portion of the facility received a Good Manufacturing Practice multi-product license from the Swiss Agency for Therapeutic Products, resulting in approximately $1.2 billion of fixed assets being placed in service during the second quarter of 2021. In April 2022 the FDA approved the Prior Approval Supplement for the Solothurn facility for ADUHELM. We estimate the second manufacturing suite will be operational during the second half of 2023.

11. INDEBTEDNESS

3.625% Senior Notes due September 15, 2022

On September 15, 2015, we issued $1.0 billion aggregate principal amount of our 3.625% Senior Notes due September 15, 2022, at 99.920% of par. Our 3.625% Senior Notes were senior unsecured obligations. In July 2022 we redeemed our 3.625% Senior Notes prior to their maturity and will recognize a net pre-tax charge of approximately $2.4 million upon the extinguishment of these notes, which primarily reflects the payment of an early call premium as well as the write-off of remaining unamortized original debt issuance costs and discount balances. These charges

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will be recognized as interest expense in other (income) expense, net in our condensed consolidated statements of income during the third quarter of 2022.

Exchange Offer

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

An aggregate principal amount of approximately $624.6 million of our 2045 Senior Notes was exchanged for an aggregate principal amount of approximately $700.7 million of our 2051 Senior Notes and aggregate cash payments of approximately $151.8 million. Our Exchange Offer has been accounted for as a debt modification; as such, the cash component has been reflected as additional debt discount and is amortized as an adjustment to interest expense over the term of our 2051 Senior Notes.

In addition, we redeemed an aggregate principal amount of approximately $8.9 million of our 2045 Senior Notes for aggregate cash payments of approximately $12.1 million, excluding accrued and unpaid interest. The redemption has been accounted for as a debt extinguishment; as such, we recognized a pre-tax charge of $3.2 million upon the extinguishment of such 2045 Senior Notes. This charge, which was recognized in interest expense in other (income) expense, net in our condensed consolidated statements of income for the six months ended June 30, 2021, reflects the payment of an early call premium and the write-off of the remaining unamortized original debt issuance costs and discount balances associated with such 2045 Senior Notes.

Upon settlement, we also made aggregate cash payments of approximately $13.8 million to settle all accrued and unpaid interest from the last interest payment date on our 2045 Senior Notes that were exchanged or redeemed. We incurred approximately $6.1 million of costs associated with our Exchange Offer, which was recognized in interest expense in other (income) expense, net in our condensed consolidated statements of income for the six months ended June 30, 2021.

12. EQUITY

Share Repurchases

In October 2020 our Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock (2020 Share Repurchase Program). Our 2020 Share Repurchase Program does not have an expiration date. All share repurchases under our 2020 Share Repurchase Program will be retired. Under our 2020 Share Repurchase Program, we repurchased and retired approximately 2.4 million shares of our common stock at a cost of approximately $500.0 million during the three and six months ended June 30, 2022. During the three and six months ended June 30, 2021, we repurchased and retired approximately 1.6 million and 3.8 million shares of our common stock at a cost of approximately $450.0 million and $1.1 billion, respectively. Approximately $2.3 billion remained available under our 2020 Share Repurchase Program as of June 30, 2022.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in accumulated other comprehensive income (loss), net of tax by component:


(In millions)	Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax		Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Gains (Losses) on Net Investment Hedges, Net of Tax(1)		Unrealized gains (losses) on pension benefit obligation, Net of Tax		Currency Translation Adjustments		Total
Balance, December 31, 2021	$	(2.2)	$	53.8	$	25.5	$	(44.8)	$	(139.0)	$	(106.7)
Other comprehensive income (loss) before reclassifications	(19.1)		129.5		12.6		2.7		(94.9)		30.8
Amounts reclassified from accumulated other comprehensive income (loss)	1.1		(56.4)		(38.1)		—		58.9		(34.5)
Net current period other comprehensive income (loss)	(18.0)		73.1		(25.5)		2.7		(36.0)		(3.7)
Balance, June 30, 2022	$	(20.2)	$	126.9	$	—	$	(42.1)	$	(175.0)	$	(110.4)

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(In millions)	Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax		Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Gains (Losses) on Net Investment Hedges, Net of Tax		Unrealized gains (losses) on pension benefit obligation, Net of Tax		Currency Translation Adjustments		Total
Balance, December 31, 2020	$	1.4	$	(179.0)	$	(8.5)	$	(66.3)	$	(46.6)	$	(299.0)
Other comprehensive income (loss) before reclassifications	(2.0)		90.2		20.2		2.4		(32.6)		78.2
Amounts reclassified from accumulated other comprehensive income (loss)	0.7		48.4		(0.1)		—		—		49.0
Net current period other comprehensive income (loss)	(1.3)		138.6		20.1		2.4		(32.6)		127.2
Balance, June 30, 2021	$	0.1	$	(40.4)	$	11.6	$	(63.9)	$	(79.2)	$	(171.8)

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


(In millions)	Income Statement Location	Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
	For the Three Months Ended June 30,			For the Six Months Ended June 30,
	2022	2021		2022		2021
Gains (losses) on securities available for sale	Other (income) expense	$	(0.8)	$	(0.4)	$	(1.4)	$	(0.9)
	Income tax benefit (expense)	0.2		0.1		0.3		0.2

Gains (losses) on cash flow hedges	Revenue	44.6		(30.7)		65.5		(53.8)
	Operating expense	(2.4)		0.4		(2.7)		—
	Other (income) expense	(0.1)		(0.1)		(0.2)		0.1
	Income tax benefit (expense)	(4.2)		3.0		(6.2)		5.3

Gains (losses) on net investment hedges(1)	Other (income) expense	39.2		0.1		38.1		0.1


Currency Translation Adjustments	Other (income) expense	(58.9)		—		(58.9)		—
Total reclassifications, net of tax		$	17.6	$	(27.6)	$	34.5	$	(49.0)

13. EARNINGS PER SHARE

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


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Numerator:
Net income attributable to Biogen Inc.	$	1,058.0	$	448.5	$	1,361.8	$	858.7
Denominator:
Weighted average number of common shares outstanding	145.9		149.7		146.5		150.8
Effect of dilutive securities:

Time-vested restricted stock units	0.2		0.2		0.2		0.2
Market stock units	—		0.1		—		0.1
Performance stock units settled in stock	0.1		0.1		0.1		0.1
Dilutive potential common shares	0.3		0.4		0.3		0.4
Shares used in calculating diluted earnings per share	146.2		150.1		146.8		151.2

Amounts excluded from the calculation of net income per diluted share because their effects were anti-dilutive were insignificant.

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14. SHARE-BASED PAYMENTS

Share-based Compensation Expense

The following table summarizes share-based compensation expense included in our condensed consolidated statements of income:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Research and development	$	22.4	$	19.1	$	48.1	$	52.7
Selling, general and administrative	36.7		40.3		82.8		85.2

Subtotal	59.1		59.4		130.9		137.9
Capitalized share-based compensation costs	(2.3)		(1.7)		(5.1)		(4.3)
Share-based compensation expense included in total cost and expense	56.8		57.7		125.8		133.6
Income tax effect	(10.2)		(10.9)		(23.0)		(24.9)
Share-based compensation expense included in net income attributable to Biogen Inc.	$	46.6	$	46.8	$	102.8	$	108.7

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


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Market stock units	$	1.5	$	9.3	$	7.4	$	25.8
Time-vested restricted stock units	50.4		40.4		101.7		83.2


Performance stock units settled in stock	3.3		3.0		11.6		9.3
Performance stock units settled in cash	1.1		3.4		2.5		9.4
Employee stock purchase plan	2.8		3.3		7.7		10.2

Subtotal	59.1		59.4		130.9		137.9
Capitalized share-based compensation costs	(2.3)		(1.7)		(5.1)		(4.3)
Share-based compensation expense included in total cost and expense	$	56.8	$	57.7	$	125.8	$	133.6

We estimate the fair value of our obligations associated with our performance stock units settled in cash at the end of each reporting period through expected settlement. Cumulative adjustments to these obligations are recognized each quarter to reflect changes in the stock price and estimated outcome of the performance-related conditions.

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15. INCOME TAXES

Tax Rate

A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2022		2021		2022		2021
Statutory rate	21.0	%	21.0	%	21.0	%	21.0	%
State taxes	0.6		1.3		0.4		1.1
Taxes on foreign earnings	(3.8)		(7.7)		(5.3)		(9.1)
Tax credits	(1.4)		(2.9)		(1.6)		(3.3)
Purchased intangible assets	0.1		(0.8)		0.2		(0.1)



GILTI	0.2		1.5		0.2		1.3



Sale of Samsung Bioepis	(3.7)		—		(2.9)		—
Litigation agreement in principle	8.5		—		6.7		—
Neurimmune tax impacts	—		(83.1)		5.2		(46.3)
International reorganization	(4.0)		—		(3.1)		—
Other	(0.4)		0.4		0.4		0.6
Effective tax rate	17.1	%	(70.3)	%	21.2	%	(34.8)	%

Changes in Tax Rate

For the three and six months ended June 30, 2022, compared to the same periods in 2021, the increases in our effective tax rate were primarily due to the overall current year unfavorable tax rate impact on the sale of our equity interest in Samsung Bioepis in April 2022, the litigation agreement in principle and the tax benefit recorded in the second quarter of 2021 related to the Neurimmune SubOne AG (Neurimmune) deferred tax asset matter, as discussed below. These effective tax rate increases were partially offset by the non-cash tax effects of changes in the value of our equity instruments and the current year tax benefits recorded in the second quarter of 2022 related to an international reorganization to align with global tax developments.

For the six months ended June 30, 2022, compared with the same period in 2021, our effective tax rate also increased as a result of the Neurimmune valuation allowance recorded in the first quarter of 2022.

During the first quarter of 2022, upon issuance of the final NCD related to ADUHELM, we recorded an additional valuation allowance of approximately $85.0 million to reduce the net value of this deferred tax asset to zero. These adjustments to our deferred tax assets and their valuation allowances are each recorded with an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our condensed consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc.

For additional information on the litigation agreement in principle, please read Note 19, Litigation, to these condensed consolidated financial statements.

For additional information on our collaboration arrangement with Neurimmune, please read Note 18, Investments in Variable Interest Entities, to these condensed consolidated financial statements.

Accounting for Uncertainty in Income Taxes

We and our subsidiaries are routinely examined by various taxing authorities. We file income tax returns in various U.S. states and in U.S. federal and other foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal tax examination for years before 2017 or state, local or non-U.S. income tax examinations for years before 2012.

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The U.S. Internal Revenue Service and other national tax authorities routinely examine our intercompany transfer pricing with respect to intellectual property related transactions and it is possible that they may disagree with one or more positions we have taken with respect to such valuations.

It is reasonably possible that we will adjust the value of our uncertain tax positions related to certain transfer pricing, collaboration matters and other issues as we receive additional information from various taxing authorities, including reaching settlements with such authorities.

We estimate that it is reasonably possible that our gross unrecognized tax benefits, exclusive of interest, could

decrease by up to approximately $500.0 million, including approximately $455.0 million related to the unrecognized

tax benefits related to Neurimmune's tax basis in ADUHELM, in the next 12 months as a result of various audit

closures, settlements and expiration of the statute of limitations. Any changes to our gross unrecognized tax benefits related to Neurimmune's tax basis in ADUHELM would result in a zero net impact to net income attributable to Biogen, Inc., as we have recorded a full valuation allowance against the relevant deferred tax assets.

16. OTHER CONSOLIDATED FINANCIAL STATEMENT DETAIL

Other (Income) Expense, Net

Components of other (income) expense, net, are summarized as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Gain on sale of equity interest in Samsung Bioepis(1)	$	(1,505.4)	$	—	$	(1,505.4)	$	—
Litigation agreement in principle	900.0		—		900.0		—
Interest income	(12.6)		(2.7)		(15.5)		(5.6)
Interest expense	65.8		56.4		131.9		121.1
Gains (losses) on investments, net	78.2		(153.9)		269.3		282.7
Foreign exchange gains (losses), net	19.2		0.8		27.5		9.4
Other, net	26.2		3.0		26.9		2.9
Total other (income) expense, net	$	(428.6)	$	(96.4)	$	(165.3)	$	410.5

(1) Reflects the pre-tax gain, net of transaction costs, recognized from the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics in April 2022. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements.

Gains (losses) on investments, net, as reflected in the table above, relate to debt securities, equity securities of certain biotechnology companies, venture capital funds where the underlying investments are in equity securities of certain biotechnology companies and non-marketable equity securities.

During the second quarter of 2022 we recorded a pre-tax charge of $900.0 million, plus estimated fees and expenses, related to an agreement in principle to resolve a qui tam litigation relating to conduct prior to 2015. This charge is included within other (income) expense, net in our condensed consolidated statements of income for the three and six months ended June 30, 2022. For additional information on the litigation agreement in principle, please read Note 19, Litigation, to these condensed consolidated financial statements.

The following table summarizes our gains (losses) on investments, net that relate to our equity securities held during the following periods:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Net gains (losses) recognized on equity securities	$	(77.2)	$	154.3	$	(267.9)	$	(281.8)
Less: Net gains (losses) realized on equity securities	(0.7)		0.4		(0.5)		6.6
Net unrealized gains (losses) recognized on equity securities	$	(76.5)	$	153.9	$	(267.4)	$	(288.4)

The net unrealized losses recognized during the three months ended June 30, 2022, primarily reflect a decrease in the aggregate fair value of our investments in Sangamo and Denali common stock of approximately $75.3 million.

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The net unrealized losses recognized during the six months ended June 30, 2022, primarily reflect a decrease in the aggregate fair value of our investments in Denali, Sangamo and Sage common stock of approximately $277.1 million.

Accrued Expense and Other

Accrued expense and other consists of the following:


(In millions)	As of June 30, 2022		As of December 31, 2021
Litigation agreement in principle(1)	$	900.0	$	—
Revenue-related reserves for discounts and allowances	846.0		802.1
Collaboration expense	261.8		324.7
Royalties and licensing fees	216.2		234.7
Employee compensation and benefits	281.5		345.1


Other	793.0		828.6
Total accrued expense and other	$	3,298.5	$	2,535.2

(1) During the second quarter of 2022 we recorded a pre-tax charge of $900.0 million, plus estimated fees and expenses, related to an agreement in principle to resolve a qui tam litigation relating to conduct prior to 2015. For additional information on the litigation agreement in principle, please read Note 19, Litigation, to these condensed consolidated financial statements.

Other Long-term Liabilities

Other long-term liabilities were $1,167.8 million and $1,320.5 million as of June 30, 2022 and December 31, 2021, respectively, and included accrued income taxes totaling $499.6 million and $664.5 million, respectively.

17. COLLABORATIVE AND OTHER RELATIONSHIPS

Eisai Co., Ltd.

Lecanemab Collaboration

We have a collaboration agreement with Eisai Co., Ltd. (Eisai) to jointly develop and commercialize lecanemab (BAN2401), an anti-amyloid antibody, and elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor, two Eisai product candidates for the potential treatment of Alzheimer's disease (the Lecanemab Collaboration). In September 2019 we and Eisai discontinued the global Phase 3 studies of elenbecestat in early Alzheimer's disease.

Eisai serves as the lead of lecanemab development and regulatory submissions globally with both companies co-commercializing and co-promoting the product, and Eisai having final decision-making authority. All costs, including research, development, sales and marketing expense, are shared equally between us and Eisai. If lecanemab receives marketing approval, we and Eisai will co-promote lecanemab and share profits equally. In March 2022 we extended our supply agreement related to lecanemab from five years to ten years, and we will manufacture the lecanemab drug substance.

In May 2022 Eisai completed the submission of a Biologics License Application (BLA) to the FDA for the accelerated approval of lecanemab. In July 2022 the FDA accepted the BLA and granted Priority Review with a Prescription Drug User Fee Act action date of January 6, 2023.

The Lecanemab Collaboration also provided Eisai with an option to jointly develop and commercialize ADUHELM (aducanumab) (ADUHELM Option). In October 2017 Eisai exercised its ADUHELM Option and we entered into a new collaboration agreement for the joint development and commercialization of ADUHELM (the ADUHELM Collaboration Agreement).

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A summary of development and sales and marketing expense related to the Lecanemab Collaboration is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Total development expense incurred by the collaboration related to the advancement of lecanemab and elenbecestat	$	78.6	$	62.2	$	155.6	$	117.7
Biogen's share of lecanemab and elenbecestat development expense reflected in research and development expense in our condensed consolidated statements of income	39.3		31.1		77.8		58.8
Total sales and marketing expense incurred by the Lecanemab Collaboration	23.4		4.3		39.3		10.0
Biogen's share of lecanemab and elenbecestat sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income	11.7		2.1		19.7		5.0

For additional information on our Lecanemab Collaboration, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.

ADUHELM Collaboration Agreement

Under our initial ADUHELM Collaboration Agreement, we would lead the ongoing development of ADUHELM, and we and Eisai would co-promote ADUHELM with a region-based profit split. Beginning January 1, 2019, Eisai was reimbursing us for 45.0% of development costs incurred by the collaboration for the advancement of ADUHELM (ADUHELM development expense).

In June 2021 ADUHELM was granted accelerated approval by the FDA for the treatment of Alzheimer's disease and had its first commercial sale. As a result of the launch of ADUHELM in the U.S., we made a $100.0 million milestone payment to Neurimmune. For the three and six months ended June 30, 2021, we recognized net profit-sharing income of $45.0 million to reflect Eisai's 45.0% share of the $100.0 million milestone payment, which was recorded in collaboration profit (loss) sharing in our condensed consolidated statements of income.

In March 2022 we amended our ADUHELM Collaboration Agreement with Eisai. Effective March 2022 we have sole decision making and commercialization rights worldwide on ADUHELM and beginning January 1, 2023, Eisai will receive a tiered royalty based on net sales of ADUHELM, rather than sharing global profits and losses. Eisai's share of development, commercialization and manufacturing expense is limited to $335.0 million for the period from January 1, 2022 to December 31, 2022. As of June 30, 2022, Eisai's portion of these expenses was approximately $275.0 million. Once this limit is achieved, we will be responsible for all ADUHELM related development costs. After the tiered royalty model commences on January 1, 2023, Eisai will not participate in ADUHELM’s economics beyond these royalties.

A summary of development expense, sales and marketing expense and milestone payments related to the ADUHELM Collaboration Agreement is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Total ADUHELM development expense	$	37.2	$	42.1	$	81.4	$	89.1
Biogen's share of ADUHELM development expense reflected in research and development expense in our condensed consolidated statements of income	20.5		23.2		44.8		49.0
Total ADUHELM sales and marketing expense incurred by the ADUHELM Collaboration Agreement	40.8		125.6		135.8		237.4
Biogen's share of ADUHELM sales and marketing expense reflected in selling, general and administrative expense and collaboration profit (loss) sharing in our condensed consolidated statements of income	21.1		67.6		72.0		127.9
Total ADUHELM collaboration third-party milestones	—		100.0		—		100.0
Biogen's share of reimbursement from Eisai of ADUHELM milestone payments reflected in collaboration profit (loss) sharing in our condensed consolidated statements of income	—		45.0		—		45.0

C**o-promotion Profits and Losses

In the U.S. we recognize revenue on sales to third parties as a component of product revenue, net in our condensed consolidated statements of income. We also record the related cost of revenue and sales and marketing expense in our condensed consolidated statements of income as these costs are incurred. Payments made to and

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received from Eisai for its 45.0% share of the co-promotion profits or losses in the U.S. are recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income. For the three and six months ended June 30, 2022, we recognized a net reduction to our operating expense of $28.9 million and $210.6 million, respectively, to reflect Eisai's 45.0% share of net collaboration losses in the U.S., compared to $40.1 million in each of the prior year comparative periods.

In addition, we and Eisai co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings and Eisai distributes AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets, excluding China.

During the first quarter of 2022 we recorded approximately $275.0 million of gross charges associated with inventory and purchase commitments in excess of forecasted demand related to ADUHELM, as well as approximately $45.0 million of gross idle capacity charges, which were recognized in cost of sales within our condensed consolidated statements of income for the six months ended June 30, 2022. We have recognized approximately $160.0 million related to Eisai's 45.0% share of these charges in collaboration profit (loss) sharing within our condensed consolidated statements of income for the six months ended June 30, 2022.

Amounts receivable from Eisai related to the agreements discussed above were $250.8 million and $285.4 million as of June 30, 2022 and December 31, 2021, respectively. Amounts payable to Eisai related to the agreements discussed above were $56.0 million and $46.5 million as of June 30, 2022 and December 31, 2021, respectively.

For additional information on the ADUHELM Collaboration Agreement, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.

UCB

We have a collaboration agreement with UCB to jointly develop and commercialize dapirolizumab pegol, an anti-CD40L pegylated Fab, for the potential treatment of systemic lupus erythematosus and other future agreed indications. Either we or UCB may propose development of dapirolizumab pegol in additional indications. If the parties do not agree to add an indication as an agreed indication to the collaboration, we or UCB may, at the sole expense of the applicable party, pursue development in such excluded indication(s), subject to an opt-in right of the non-pursuing party after proof of clinical activity.

All costs incurred for agreed indications, including research, development, sales and marketing expense, are shared equally between us and UCB. Upon marketing approval, we and UCB will co-promote dapirolizumab pegol and share profits equally.

A summary of development expense related to the UCB collaboration agreement is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Total UCB collaboration development expense	$	15.6	$	16.1	$	33.2	$	33.0
Biogen's share of UCB development expense reflected in research and development expense in our condensed consolidated statements of income	7.8		8.1		16.6		16.5

Sage Therapeutics, Inc.

In November 2020 we entered into a global collaboration and license agreement with Sage to jointly develop and commercialize BIIB125 (zuranolone) for the potential treatment of major depressive disorder and postpartum depression and BIIB124 (SAGE-324) for the potential treatment of essential tremor with potential in other neurological conditions such as epilepsy.

Under this collaboration, both companies will share equal responsibility and costs for development as well as profits and losses for commercialization in the U.S. Outside of the U.S., we are responsible for development and commercialization, excluding Japan, Taiwan and South Korea, with respect to zuranolone and may pay Sage potential tiered royalties in the high teens to low twenties.

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A summary of development and sales and marketing expense related to this collaboration is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Total Sage collaboration development expense	$	50.8	$	54.0	$	89.5	$	93.8
Biogen's share of Sage development expense reflected in research and development expense in our condensed consolidated statements of income	25.3		27.0		44.7		46.9
Total Sage sales and marketing expense incurred by the collaboration	23.0		10.5		41.4		15.8
Biogen's share of Sage sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income	11.5		5.2		20.7		7.9

Denali Therapeutics Inc.

In August 2020 we entered into a collaboration and license agreement with Denali to co-develop and co-commercialize Denali's small molecule inhibitors of leucine-rich repeat kinase 2 (LRRK2) for Parkinson's disease. Under this collaboration, both companies share responsibility and costs for global development based on specified percentages as well as profits and losses for commercialization in the U.S. and China. Outside the U.S. and China we are responsible for commercialization and may pay Denali potential tiered royalties.

In addition to the LRRK2 program, we also have an exclusive option to license two preclinical programs from Denali’s Transport Vehicle platform, including its Antibody Transport Vehicle (ATV): ATV enabled anti-amyloid beta program and a second program utilizing its Transport Vehicle technology. Further, we have the right of first negotiation on two additional ATV-enabled therapeutics for indications within specific neurodegenerative diseases, should Denali decide to seek a collaboration for such programs.

A summary of development expense related to this collaboration is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Total Denali collaboration development expense	$	23.2	$	10.4	$	38.1	$	18.7
Biogen's share of Denali development expense reflected in research and development expense in our condensed consolidated statements of income	13.2		6.2		22.1		11.2

Sangamo Therapeutics, Inc.

In February 2020 we entered into a collaboration and license agreement with Sangamo to develop and commercialize ST-501 for tauopathies, including Alzheimer's disease; ST-502 for synucleinopathies, including Parkinson’s disease; a third neuromuscular disease target; and up to nine additional neurological disease targets to be identified and selected within a five-year period. The companies are leveraging Sangamo’s proprietary zinc finger protein technology delivered via adeno-associated virus to modulate the expression of key genes involved in neurological diseases.

Under this collaboration, we may pay Sangamo tiered royalties on potential net sales of any products developed under this collaboration in the high single digit to sub-teen percentages.

A summary of development expense related to this collaboration is as follows:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(In millions)	2022		2021		2022		2021
Total Sangamo collaboration development expense	$	2.6	$	5.4	$	10.9	$	10.2
Biogen's share of Sangamo development expense reflected in research and development expense in our condensed consolidated statements of income	1.6		3.4		7.1		7.6

InnoCare Pharma Limited

In July 2021 we entered into a collaboration and license agreement with InnoCare Pharma Limited (InnoCare) for orelabrutinib, an oral small molecule Bruton’s tyrosine kinase inhibitor for the potential treatment of MS. Orelabrutinib is currently being studied in a multi-country, placebo-controlled Phase 2 trial in relapsing-remitting MS. Under the terms of the collaboration, we have exclusive rights to orelabrutinib in the field of MS worldwide and certain autoimmune diseases outside of China (including Hong Kong, Macau and Taiwan), while InnoCare retains

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exclusive worldwide rights to orelabrutinib in the field of oncology and certain autoimmune diseases in China (including Hong Kong, Macau and Taiwan).

In connection with the closing of this transaction in August 2021 we made an upfront payment of $125.0 million that was recorded as research and development expense in our condensed consolidated statements of income. We may also pay InnoCare up to approximately $812.5 million in potential development milestones and potential commercial payments should this collaboration achieve certain development, commercial milestones and sales thresholds. In addition, we may pay InnoCare tiered royalties on potential net sales of any products developed under this collaboration in the low to high teen percentages.

Other Research and Discovery Arrangements

These arrangements may include the potential for future milestone payments based on the achievement of certain clinical and commercial development payable over a period of several years.

Other

For the three and six months ended June 30, 2022, we recorded $18.0 million and $37.5 million, respectively, as research and development expense in our condensed consolidated statements of income related to other research and discovery related arrangements, compared to $77.2 million in each of the prior year comparative periods.

Samsung Bioepis Co., Ltd.

Joint Venture Agreement

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

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 condensed consolidated statements of income.

Upon investment, the equity method of accounting required us to identify and allocate differences between the fair value of our investment and the carrying value of our interest in the underlying net assets of the investee. These basis differences were being amortized over their economic life until the completion of the sale in April 2022, as discussed above. The total basis difference was approximately $675.0 million and related to inventory, developed technology, IPR&D and deferred tax balances. The basis differences related to inventory were amortized, net of tax, over their estimated useful lives of 1.5 years, and the basis differences related to developed technology and IPR&D for marketed products were being amortized, net of tax, over their estimated useful lives of 15 years.

For the three and six months ended June 30, 2022, we recognized net income on our investment of $5.9 million and $2.6 million, respectively, reflecting our share of Samsung Bioepis' operating profits, net of tax totaling $13.0 million and $17.0 million, respectively, offset by amortization of basis differences totaling $7.1 million and $14.4 million, respectively. These amounts reflect our share of results prior to the sale of Samsung Bioepis as the results are recognized one quarter in arrears. 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.

For the three and six months ended June 30, 2021, we recognized net income on our investment of $34.3 million and $16.1 million, respectively, reflecting our share of Samsung Bioepis' operating income, net of tax totaling $41.6 million and $30.6 million, respectively, and amortization of basis differences totaling $7.3 million and $14.5 million, respectively.

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As of December 31, 2021, the carrying value of our investment in Samsung Bioepis totaled 713.3 billion South Korean won ($599.9 million), which is classified as a component of investments and other assets in our condensed consolidated balance sheets. In connection with the sale of Samsung Bioepis, the carrying value of our investment was reduced to zero.

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements.

2019 Development and Commercialization Agreement

In December 2019 we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilar products, BYOOVIZ (ranibizumab-nuna), a ranibizumab biosimilar referencing LUCENTIS, and SB15, a proposed aflibercept biosimilar referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia. Samsung Bioepis will be responsible for development and will supply both products to us at a pre-specified gross margin of approximately 45.0%.

In connection with this transaction, we made an upfront payment of $100.0 million to Samsung Bioepis in January 2020, of which $63.0 million was recorded as research and development expense in our condensed consolidated statements of income in 2019 and $37.0 million was recorded as intangible assets, net in our condensed consolidated balance sheets in 2019.

During the third quarter of 2021 we accrued $15.0 million in milestone payments related to the approval of BYOOVIZ in the U.S., the E.U. and the United Kingdom (U.K.), that were capitalized within intangible assets, net in our condensed consolidated balance sheets. We may also pay Samsung Bioepis up to approximately $180.0 million in additional development, regulatory and sales-based milestones.

We also acquired an option to extend the term of our 2013 commercial agreement for BENEPALI, IMRALDI and FLIXABI by an additional five years, subject to payment of an option exercise fee of $60.0 million, and obtained an option to acquire exclusive rights to commercialize these products in China.

2013 Commercial Agreement

We reflect revenue on sales of BENEPALI, IMRALDI and FLIXABI to third parties in product revenue, net in our condensed consolidated statements of income and record the related cost of revenue and sales and marketing expense in our condensed consolidated statements of income to their respective line items when these costs are incurred.

We share 50.0% of the profit or loss related to our commercial agreement with Samsung Bioepis, which is recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income. For the three and six months ended June 30, 2022, we recognized net profit-sharing expense of $58.3 million and $122.7 million, respectively, to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits, compared to a net profit-sharing expense of $69.9 million and $138.4 million, respectively, in the prior year comparative periods.

Other Services

Simultaneous with the formation of Samsung Bioepis, we also entered into a technical development services agreement, a manufacturing agreement and a license agreement with Samsung Bioepis. Revenue related to these services is reflected in revenue from collaborative and other relationships as a component of other revenue in our condensed consolidated statements of income.

Amounts receivable from Samsung Bioepis related to the agreements discussed above were $3.1 million and $4.1 million as of June 30, 2022 and December 31, 2021, respectively. Amounts payable to Samsung Bioepis related to the agreements discussed above were $121.1 million and $148.7 million as of June 30, 2022 and December 31, 2021, respectively.

For additional information on our collaboration arrangements with Samsung Bioepis and our other significant collaboration arrangements, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.

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18. INVESTMENTS IN VARIABLE INTEREST ENTITIES

Consolidated Variable Interest Entities

Our condensed consolidated financial statements include the financial results of variable interest entities in which we are the primary beneficiary. The following are our significant variable interest entities.

Neurimmune SubOne AG

We have a collaboration and license agreement with Neurimmune for the development and commercialization of antibodies for the potential treatment of Alzheimer's disease, including ADUHELM (as amended, the Neurimmune Agreement). We are responsible for the development, manufacturing and commercialization of all collaboration products. The Neurimmune Agreement is effective for the longer of the duration of certain patents relating to a licensed product or 12 years from the first commercial sale of a licensed product.

We consolidate the results of Neurimmune as we determined that we are the primary beneficiary of Neurimmune because we have the power through the collaboration to direct the activities that most significantly impact the entity’s economic performance and we are required to fund 100.0% of the research and development costs incurred in support of the collaboration.

In June 2021 ADUHELM was granted accelerated approval by the FDA. Under the terms of the Neurimmune Agreement, we were required to pay Neurimmune a milestone payment of $100.0 million related to the launch of ADUHELM in the U.S. During the second quarter of 2021 we made this $100.0 million payment, which was recognized as a charge to net income (loss) attributable to noncontrolling interests, net of tax in our condensed consolidated statements of income. In addition, during the second quarter of 2021 we recognized net profit-sharing income of $45.0 million to reflect Eisai's 45.0% share of the $100.0 million milestone payment, which was recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income.

During the second quarter of 2021 we recorded a net deferred tax asset in Switzerland of approximately $490.0 million on Neurimmune's tax basis in ADUHELM, the realization of which is dependent on future sales of ADUHELM. During the fourth quarter of 2021, due to reduced future expected revenue associated with ADUHELM, we recorded a valuation allowance of approximately $390.0 million. During the first quarter of 2022, upon issuance of the final NCD related to ADUHELM, we recorded an additional valuation allowance of approximately $85.0 million to reduce the net value of this deferred tax asset to zero. These adjustments to our deferred tax assets and their valuation allowances are each recorded with an equal and offsetting amount assigned to net income (loss) attributable to noncontrolling interests, net of tax in our condensed consolidated statements of income, resulting in a zero net impact to net income attributable to Biogen Inc.

Excluding the impact of the Neurimmune deferred tax asset, the assets and liabilities of Neurimmune are not significant to our condensed consolidated financial position or results of operations as it is a research and development organization. We have provided no financing to Neurimmune other than contractually required amounts.

For additional information on our collaboration arrangements with Eisai, please read Note 17, Collaborative and Other Relationships, to these condensed consolidated financial statements.

Unconsolidated Variable Interest Entities

We have relationships with various variable interest entities that we do not consolidate as we lack the power to direct the activities that significantly impact the economic success of these entities. These relationships include investments in certain biotechnology companies and research collaboration agreements.

As of June 30, 2022 and December 31, 2021, the carrying value of our investments in certain biotechnology companies representing potential unconsolidated variable interest entities totaled $23.5 million and $24.6 million, respectively. Our maximum exposure to loss related to these variable interest entities is limited to the carrying value of our investments.

We have also entered into research collaboration agreements with certain variable interest entities where we are required to fund certain development activities. These development activities are included in research and development expense in our condensed consolidated statements of income as they are incurred. We have provided no financing to these variable interest entities other than previous contractually required amounts.

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For additional information on our investments in Neurimmune and other variable interest entities, please read Note 19, Investments in Variable Interest Entities, to our consolidated financial statements included in our 2021 Form 10-K.

19. LITIGATION

We are currently involved in various claims and legal proceedings, including the matters described below. For information as to our accounting policies relating to claims and legal proceedings, including use of estimates and contingencies, please read Note 1, Summary of Significant Accounting Policies, to our consolidated financial statements included in our 2021 Form 10-K.

With respect to some loss contingencies, an estimate of the possible loss or range of loss cannot be made until management has further information, including, for example, (i) which claims, if any, will survive dispositive motion practice; (ii) information to be obtained through discovery; (iii) information as to the parties' damages claims and supporting evidence; (iv) the parties’ legal theories; and (v) the parties' settlement positions.

The claims and legal proceedings in which we are involved also include challenges to the scope, validity or enforceability of the patents relating to our products, pipeline or processes and challenges to the scope, validity or enforceability of the patents held by others. These include claims by third parties that we infringe their patents. An adverse outcome in any of these proceedings could result in one or more of the following and have a material impact on our business or consolidated results of operations and financial position: (i) loss of patent protection; (ii) inability to continue to engage in certain activities; and (iii) payment of significant damages, royalties, penalties and/or license fees to third parties.

Loss Contingencies

ADUHELM Securities Litigation

We and certain current and former officers are named as defendants in actions filed by shareholders on November 13, 2020 (the November 2020 Securities Action) and February 7, 2022 (the February 2022 Securities Action), and pending in the U.S. District Court for the District of Massachusetts. The actions allege violations of federal securities laws under 15 U.S.C §78j(b) and §78t(a) and 17 C.F.R. §240.10b-5 and seek declarations of the actions as class actions and monetary relief. We have filed a motion to dismiss the November 2020 Securities Action, which is pending. An estimate of the possible loss or range of loss in these actions cannot be made at this time.

Derivative Action

We and members of the Board of Directors are named as defendants in an action filed by a shareholder on February 9, 2022, in the U.S. District Court for the District of Massachusetts. The action alleges violations of federal securities laws under 15 U.S.C. §78n(a) and 17 C.F.R. §240 14.a-9, breaches of fiduciary duties and waste of corporate assets, and seeks declaratory and injunctive relief, monetary relief to Biogen, and attorneys’ fees and costs to the plaintiff. The court has stayed the case pending the resolution of the February 2022 Securities Action. An estimate of the possible loss or range of loss cannot be made at this time.

IMRALDI Patent Litigation

In September 2018 Fresenius Kabi Deutschland GmbH (Fresenius Kabi) commenced proceedings for damages and injunctive relief against Biogen France SAS in the Tribunal de Grande Instance de Paris (the French proceeding) and in November 2018 against Biogen GmbH in the Düsseldorf Regional Court (the German proceeding), alleging that IMRALDI, the adalimumab biosimilar product of Samsung Bioepis that Biogen has commercialized in Europe, infringes national counterparts of European Patent No. 3 148 510 (the EP '510 Patent, expiring in May 2035). Fresenius Kabi later added European Patent 3 145 488 (the EP ‘488 Patent, expiring in May 2035) to both actions and no hearing has been set in either. In June 2022 the Technical Boards of Appeal (TBA) of the European Patent Office (EPO) affirmed the revocation of the EP ‘510 Patent. The EPO has scheduled a hearing on the validity of the EP ‘488 Patent for October 2022.

In June 2020 Fresenius Kabi commenced proceedings in Denmark's Maritime and Commercial High Court alleging that IMRALDI infringes the Danish counterpart of the EP '488 Patent and a Danish utility model. In September 2021 the Court ruled that the patent and utility model are invalid and not infringed. Fresenius Kabi has appealed to the High Court of Eastern Denmark and the appeal is pending.

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In July 2020 the Danish Patent Board of Appeal revoked the Danish utility models that Fresenius Kabi had asserted against Biogen and Fresenius Kabi has appealed to the Danish Maritime and Commercial High Court. No hearing has been scheduled.

In July 2019 Gedeon Richter Nyrt commenced proceedings for damages and injunctive relief against Biogen GmbH in the Düsseldorf Regional Court alleging infringement of the German counterpart of European Patent No. 3 212 667, which expires in October 2035. The case has been stayed pending proceedings in the EPO seeking to invalidate the patent. In November 2020 Gedeon Richter Nyrt commenced additional proceedings against Biogen GmbH in the Düsseldorf Regional Court alleging infringement of a German utility model. In October 2021 Biogen filed cancellation proceedings in respect of the German utility model and the infringement proceedings have been stayed pending the outcome of the cancellation proceedings.

An estimate of the possible loss or range of loss in the IMRALDI patent litigation described above cannot be made at this time.

Qui Tam Litigation

Biogen has reached an agreement in principle to resolve previously disclosed litigation pending in the U.S. District Court for the District of Massachusetts alleging violations of the federal False Claims Act and state law counterparts. The litigation was filed by Michael Bawduniak on behalf of the U.S. and certain states and unsealed in 2015. The U.S. has not intervened in the case. The agreement in principle contemplates Biogen making a payment of $900.0 million. The agreement in principle does not include any admission of liability and is subject to the negotiation of final settlement documents and agreements with the named government entities.

Dispute with Former Convergence Shareholders

In November and December 2019 Shareholder Representative Services LLC, on behalf of the former shareholders of Convergence, sent us correspondence asserting claims of $200.0 million for alleged breach of the contract under which we acquired Convergence. We dispute the claims.

ERISA Class Action Litigation

In September 2020 the U.S. District Court for the District of Massachusetts consolidated two cases filed against us in July and August 2020 by participants in the Biogen 401(k) Savings Plan alleging breach of fiduciary duty under ERISA. Plaintiffs seek a declaration of the action as a class action and monetary and other relief. An estimate of the possible loss or range of loss cannot be made at this time.

Humana Patient Assistance Litigation

In September 2021 Humana Inc. (Humana) filed suit against us in the U.S. District Court for the District of Massachusetts alleging damages related to our providing MS patients with free medications and making charitable contributions to non-profit organizations that assist MS patients. Humana alleges violation of the federal RICO Act and state laws and seeks statutory treble damages, attorneys' fees and costs. We filed a motion to dismiss, which is pending. An estimate of the possible loss cannot be made at this time.

Other Matters

Government Investigations

The U.S. House of Representatives Committees on Oversight and Reform and Energy and Commerce and the Office of Inspector General of the U.S. Department of Health and Human Services have announced investigations relating to ADUHELM. In addition, the Company has received a civil investigative demand from the Federal Trade Commission and a subpoena from the Securities and Exchange Commission seeking information relating to ADUHELM, including healthcare sites, ADUHELM’s approval and ADUHELM’s marketing.

TECFIDERA Patent Matters

In 2017 to 2020 we filed patent infringement proceedings relating to TECFIDERA Orange-Book listed patents pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act (the Delaware Actions), against Accord Healthcare Inc., Alkem Laboratories Ltd., Amneal Pharmaceuticals LLC, Cipla Limited, Graviti Pharmaceuticals Pvt. Ltd., Hetero USA, Inc., Lupin Atlantis Holdings SA, Macleods Pharmaceuticals, Ltd., MSN Laboratories Pvt. Ltd., Pharmathen S.A., Prinston Pharmaceutical Inc., Sandoz Inc., Shilpa Medicare Limited, Slayback Pharma LLC, Sun Pharmaceutical Industries, Ltd., Sun Pharmaceutical

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Industries, Inc., Sun Pharma Global FZE, Torrent Pharmaceuticals Ltd., TWi Pharmaceuticals, Inc., Windlas Healthcare Pvt. Ltd. and Zydus Pharmaceuticals (USA) Inc. (collectively, the Delaware Defendants) in the U.S. District Court for the District of Delaware (the Delaware Court) and against Mylan (the West Virginia Action) in the U.S. District Court for the Northern District of West Virginia (the West Virginia Court).

In November 2021 the Federal Circuit affirmed the West Virginia Court judgment that the asserted claims of our U.S. Patent No. 8,399,514 (the '514 Patent) are invalid for lack of written description and in June 2022 we filed a petition for a writ of certiorari to the United States Supreme Court seeking review of the Federal Circuit's decision.

The Delaware Court entered judgment for the Delaware Defendants on the grounds that the judgment of the West Virginia Court applies to the Delaware Actions under principles of collateral estoppel. The appeals in the Delaware Actions are stayed pending any final action by the United States Supreme Court with respect to the judgment in the West Virginia Action.

In July 2018 Mylan Pharmaceuticals, Inc. (Mylan) filed a petition with the U.S. Patent Trial and Appeal Board (PTAB) for inter partes review of the '514 Patent. In November 2021 the Federal Circuit ruled that the PTAB decision upholding the patentability of the ‘514 patent was moot, but in April 2022 the Federal Circuit vacated that ruling and stayed the appeal pending any final action by the United States Supreme Court with respect to the judgment in the West Virginia Action.

TYSABRI Patent Revocation Matters

In November 2017 Swiss Pharma International AG, affiliated with the Polpharma Group, filed an action in the Commercial Court of Rome to invalidate the Italian counterpart of the European Patent No. 1 485 127 (the EP '127 Patent) which covers administration of natalizumab (TYSABRI) to treat MS and expires in February 2023. A hearing has been set for November 2022.

In August 2020 Polpharma Biologics S.A., also affiliated with the Polpharma Group, brought an action in the Polish Patent Office to revoke our Polish Patent No. 215263, which corresponds to the EP '127 Patent and expires in February 2023. The action was suspended by the Polish Patent Office in April 2021 pending examination of our amended patent claims.

In June 2021 Polpharma Biologics S.A., Sandoz B.V. and Sandoz AG filed an action in the District Court of the Hague, Netherlands to invalidate the Dutch counterpart of our European Patent 2 676 967 (the EP '967 Patent), which expires in 2027 and covers methods of treatment using natalizumab (TYSABRI) and pre-treatment testing of patients. A hearing has been set for September 2022.

In July 2021 the EPO revoked the EP ‘967 Patent. A hearing on our appeal to the TBA of the EPO is set for December 2022.

In September 2021 Polpharma Biologics S.A., Sandoz AG, Sandoz Limited and Sandoz GmbH filed an action in the English High Court to revoke the U.K. counterpart of the EP ‘967 Patent and seeking a declaration that the patent would not be infringed by the marketing of Polpharma’s proposed natalizumab biosimilar. A hearing has been set for February 2023.

Annulment Proceedings in the General Court of the European Union relating to TECFIDERA

Pharmaceutical Works Polpharma SA (Polpharma) and Mylan Ireland Ltd. (Mylan Ireland) each filed actions in the General Court of the European Union (Polpharma in October 2018 and Mylan Ireland in November 2020) to annul the European Medicines Agency's (EMA) decision not to validate their applications to market generic versions of TECFIDERA on the grounds that TECFIDERA benefits from regulatory data protection. On May 5, 2021, the European General Court annulled the EMA's non-validation decision with respect to Polpharma. We have appealed the decision to the European Court of Justice and the appeal is pending. The case brought by Mylan Ireland has been stayed.

Product Liability and Other Legal Proceedings

We are also involved in product liability claims and other legal proceedings generally incidental to our normal business activities. While the outcome of any of these proceedings cannot be accurately predicted, we do not believe the ultimate resolution of any of these existing matters would have a material adverse effect on our business or financial condition.

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Next: Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS