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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 March 31, 2023


☐			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 April 24, 2023, was 144,742,305 shares.

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BIOGEN INC.

FORM 10-Q — Quarterly Report

For the Quarterly Period Ended March 31, 2023

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		Page
PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Statements of Income — For the Three Months Ended March 31, 2023 and 2022	7

	Condensed Consolidated Statements of Comprehensive Income — For the Three Months Ended March 31, 2023 and 2022	8

	Condensed Consolidated Balance Sheets — As of March 31, 2023 and December 31, 2022	9

	Condensed Consolidated Statements of Cash Flow — For the Three Months Ended March 31, 2023 and 2022	10

	Condensed Consolidated Statements of Equity — For the Three Months Ended March 31, 2023 and 2022	11

	Notes to Condensed Consolidated Financial Statements	13

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	43

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	60

Item 4.	Controls and Procedures	62

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	64

Item 1A.	Risk Factors	64

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	79

Item 6.	Exhibits	80

Signatures		81

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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, reimbursement 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 or competing 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 and other global health outbreaks 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 U.S., including the IRA, 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 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

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

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

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

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DEFINED TERMS


2022 Form 10-K			Annual Report on Form 10-K for the year ended December 31, 2022
2020 Share Repurchase Program			Board of Directors authorized program to repurchase up to $5.0 billion of our common stock
300 Binney Street			300 Binney Street, Cambridge, MA
Advisory Committee			Peripheral and Central Nervous System Drugs Advisory Committee
AI			Artificial Intelligence
ALS			Amyotrophic Lateral Sclerosis
AOCI			Accumulated Other Comprehensive Income (Loss)
ASO			Antisense Oligonucleotide
ASU			Accounting Standards Update
ATV			Antibody Transport Vehicle
BLA			Biologics License Application
CCPA			California Consumer Privacy Act
CEO			Chief Executive Officer
cGMP			current Good Manufacturing Practices
CHMP			Committee for Medicinal Products for Human Use
CJEU			Court of Justice of the European Union
CLE			Cutaneous Lupus Erythematosus
CLL			Chronic Lymphocytic Leukemia
CMS			Centers for Medicare & Medicaid Services
Convergence			Convergence Pharmaceuticals Ltd.
CROs			Contract Research Organizations
Denali			Denali Therapeutics Inc.
DPN			Diabetic Painful Neuropathy
EC			European Commission
Eisai			Eisai Co., Ltd.
EMA			European Medicines Agency
EPO			European Patent Office
ERISA			Employee Retirement Income Security Act of 1974
E.U.			European Union
FASB			Financial Accounting Standards Board
FCPA			Foreign Corrupt Practices Act
FDA			U.S. Food and Drug Administration
FDIC			Federal Deposit Insurance Corporation
Genentech			Genentech, Inc.
GILTI			Global Intangible Low Tax Income
GloBE			Global Anti-Base Erosion
GMP			Good Manufacturing Practice
Humana			Humana Inc.
IPR&D			In-process research and development
Ionis			Ionis Pharmaceuticals Inc.
IRA			Inflation Reduction Act of 2022
LRRK2			Leucine-Rich Repeat Kinase 2
MAA			Marketing Authorization Application
MDD			Major Depressive Disorder

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DEFINED TERMS (continued)


MS			Multiple Sclerosis
Mylan Ireland			Mylan Ireland Ltd.
NDA			New Drug Application
Neurimmune			Neurimmune SubOne AG
NMPA			National Medicinal Products Administration
OECD			Organization for Economic Co-operation and Development
OIG			Office of Inspector General
PDUFA			Prescription Drug User Fee Act
PMDA			Pharmaceuticals and Medical Devices Agency
Polpharma			Polpharma SA
PPACA			Patient Protection and Affordable Care Act
PPD			Postpartum Depression
PPMS			Primary Progressive MS
RMS			Relapsing MS
RRMS			Relapsing-Remitting MS
RTP			Research Triangle Park
Sage			Sage Therapeutics, Inc.
Samsung Bioepis			Samsung Bioepis Co., Ltd.
Samsung BioLogics			Samsung BioLogics Co., Ltd.
Sangamo			Sangamo Therapeutics, Inc.
SG&A			Selling, General and Administrative
SLE			Systemic Lupus Erythematosus
SMA			Spinal Muscular Atrophy
SOD1			Superoxide Dismutase 1
SVB			Silicon Valley Bank
SWISSMEDIC			Swiss Agency for Therapeutic Products
TBA			Technical Boards of Appeal
TGN			Trigeminal Neuralgia
Transition Toll Tax			A one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings
U.K.			United Kingdom
U.S.			United States
U.S. GAAP			Accounting Principles Generally Accepted in the U.S.
VA			Veterans Administration

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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 March 31,
	2023		2022
Revenue:
Product, net	$	1,763.3	$	2,066.3
Revenue from LEQEMBI Collaboration	(18.9)		—
Revenue from anti-CD20 therapeutic programs	399.5		399.4
Contract manufacturing, royalty and other revenue	319.1		66.1
Total revenue	2,463.0		2,531.8
Cost and expense:
Cost of sales, excluding amortization and impairment of acquired intangible assets	662.8		753.9
Research and development	570.6		551.7
Selling, general and administrative	605.0		634.9
Amortization and impairment of acquired intangible assets	50.2		66.9
Collaboration profit sharing/(loss reimbursement)	57.1		(117.3)
(Gain) loss on fair value remeasurement of contingent consideration	—		(7.1)

Restructuring charges	9.6		38.1

Other (income) expense, net	69.4		263.3
Total cost and expense	2,024.7		2,184.4
Income before income tax expense and equity in loss of investee, net of tax	438.3		347.4
Income tax (benefit) expense	50.7		125.6
Equity in (income) loss of investee, net of tax	—		3.3
Net income	387.6		218.5
Net income (loss) attributable to noncontrolling interests, net of tax	(0.3)		(85.3)
Net income attributable to Biogen Inc.	$	387.9	$	303.8

Net income per share:
Basic earnings per share attributable to Biogen Inc.	$	2.69	$	2.06
Diluted earnings per share attributable to Biogen Inc.	$	2.67	$	2.06

Weighted-average shares used in calculating:
Basic earnings per share attributable to Biogen Inc.	144.4		147.1
Diluted earnings per share attributable to Biogen Inc.	145.2		147.6

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 March 31,
	2023		2022
Net income attributable to Biogen Inc.	$	387.9	$	303.8
Other comprehensive income:
Unrealized gains (losses) on securities available for sale, net of tax	5.7		(9.7)
Unrealized gains (losses) on cash flow hedges, net of tax	(35.4)		15.9
Gains (losses) on net investment hedges, net of tax	—		6.2
Unrealized gains (losses) on pension benefit obligation, net of tax	0.5		0.9
Currency translation adjustment	22.1		(21.8)
Total other comprehensive income (loss), net of tax	(7.1)		(8.5)
Comprehensive income (loss) attributable to Biogen Inc.	380.8		295.3
Comprehensive income (loss) attributable to noncontrolling interests, net of tax	(0.3)		(85.3)
Comprehensive income (loss)	$	380.5	$	210.0

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 March 31, 2023		As of December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	2,898.2	$	3,419.3
Marketable securities	2,143.1		1,473.5
Accounts receivable, net	1,634.4		1,705.0
Due from anti-CD20 therapeutic programs	393.8		431.4
Inventory	1,281.0		1,344.4
Other current assets	1,412.0		1,417.6
Total current assets	9,762.5		9,791.2
Marketable securities	978.2		705.7
Property, plant and equipment, net	3,300.9		3,298.6
Operating lease assets	399.1		403.9
Intangible assets, net	1,813.3		1,850.1
Goodwill	5,751.8		5,749.0
Deferred tax asset	1,211.8		1,226.4
Investments and other assets	1,380.8		1,529.2
Total assets	$	24,598.4	$	24,554.1
LIABILITIES AND EQUITY
Current liabilities:

Taxes payable	$	235.5	$	259.9
Accounts payable	491.2		491.5
Accrued expense and other	2,288.2		2,521.4
Total current liabilities	3,014.9		3,272.8
Notes payable	6,282.7		6,281.0
Deferred tax liability	251.3		334.7
Long-term operating lease liabilities	327.0		333.0
Other long-term liabilities	935.5		944.2
Total liabilities	10,811.4		11,165.7
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	91.2		73.3
Accumulated other comprehensive income (loss)	(172.0)		(164.9)
Retained earnings	16,854.4		16,466.5
Treasury stock, at cost	(2,977.1)		(2,977.1)
Total Biogen Inc. shareholders’ equity	13,796.6		13,397.9
Noncontrolling interests	(9.6)		(9.5)
Total equity	13,787.0		13,388.4
Total liabilities and equity	$	24,598.4	$	24,554.1

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 Three Months Ended March 31,
	2023		2022
Cash flow from operating activities:
Net income	$	387.6	$	218.5
Adjustments to reconcile net income to net cash flow from operating activities:
Depreciation and amortization	112.3		143.1

Excess and obsolescence charges related to inventory	17.4		281.5

Share-based compensation	75.6		67.6
Contingent consideration	—		(7.1)
Deferred income taxes	(64.5)		1.0
(Gain) loss on strategic investments	79.6		191.1
(Gain) loss on equity method investments	—		3.3


Other	31.4		43.3
Changes in operating assets and liabilities, net:
Accounts receivable	77.2		(87.5)
Due from anti-CD20 therapeutic programs	37.6		22.9
Inventory	27.9		(142.6)
Accrued expense and other current liabilities	(295.0)		(461.6)
Income tax assets and liabilities	65.0		101.9
Other changes in operating assets and liabilities, net	(96.8)		(213.6)
Net cash flow provided by (used in) operating activities	455.3		161.8
Cash flow from investing activities:
Purchases of property, plant and equipment	(66.6)		(57.9)
Proceeds from sales and maturities of marketable securities	406.7		543.6
Purchases of marketable securities	(1,321.2)		(1,133.5)




Acquisitions of intangible assets	(5.0)		—
Proceeds from sales of strategic investments	33.8		—
Other	(0.7)		(0.2)
Net cash flow provided by (used in) investing activities	(953.0)		(648.0)
Cash flow from financing activities:

Payments related to issuance of stock for share-based compensation arrangements, net	(60.1)		(20.8)



Net (distribution) contribution to noncontrolling interest	0.2		0.2
Other	16.5		4.1
Net cash flow provided by (used in) financing activities	(43.4)		(16.5)
Net increase (decrease) in cash and cash equivalents	(541.1)		(502.7)
Effect of exchange rate changes on cash and cash equivalents	20.0		(9.4)
Cash and cash equivalents, beginning of the period	3,419.3		2,261.4
Cash and cash equivalents, end of the period	$	2,898.2	$	1,749.3

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, December 31, 2022	—	$	—	167.9	$	0.1	$	73.3	$	(164.9)		$	16,466.5		(23.8)	$	(2,977.1)	$	13,397.9	$	(9.5)	$	13,388.4
Net income	—	—		—	—		—		—			387.9			—	—		387.9		(0.3)		387.6
Other comprehensive income (loss), net of tax	—	—		—	—		—		(7.1)			—			—	—		(7.1)		—		(7.1)

Capital contribution from noncontrolling interest	—	—		—	—		—		—			—			—	—		—		0.2		0.2


Issuance of common stock under stock option and stock purchase plans	—	—		0.1	—		20.1		—			—			—	—		20.1		—		20.1
Issuance of common stock under stock award plan	—	—		0.6	—		(80.2)		—			—			—	—		(80.2)		—		(80.2)
Compensation related to share-based payments	—	—		—	—		78.9		—			—			—	—		78.9		—		78.9
Other	—	—		—	—		(0.9)		—			—			—	—		(0.9)		—		(0.9)
Balance, March 31, 2023	—	$	—	168.6	$	0.1	$	91.2	$	(172.0)		$	16,854.4		(23.8)	$	(2,977.1)	$	13,796.6	$	(9.6)	$	13,787.0

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	—	—		—	—		—		—			303.8			—	—		303.8		(85.3)		218.5
Other comprehensive income (loss), net of tax	—	—		—	—		—		(8.5)			—			—	—		(8.5)		—		(8.5)

Capital contribution from noncontrolling interest	—	—		—	—		—		—			—			—	—		—		0.2		0.2


Issuance of common stock under stock option and stock purchase plans	—	—		0.1	—		18.9		—			—			—	—		18.9		—		18.9
Issuance of common stock under stock award plan	—	—		0.4	—		(39.7)		—			—			—	—		(39.7)		—		(39.7)
Compensation related to share-based payments	—	—		—	—		70.4		—			—			—	—		70.4		—		70.4
Other	—	—		—	—		1.2		—			—			—	—		1.2		—		1.2
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

See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


Note 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 innovative therapies for people living with serious and complex diseases worldwide. We have a broad portfolio of medicines to treat MS, have introduced the first approved treatment for SMA and co-developed two treatments to address a defining pathology of Alzheimer's disease. We are focused on advancing our pipeline in neurology, neuropsychiatry, specialized immunology and rare diseases. We support our drug discovery and development efforts through internal research and development programs and external collaborations.

Our marketed products include TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; ADUHELM for the treatment of Alzheimer's disease; and FUMADERM for the treatment of severe plaque psoriasis. We also collaborate with Eisai on the commercialization of LEQEMBI for the treatment of Alzheimer's disease, which was granted accelerated approval by the FDA in January 2023. We have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, CLL and other conditions; 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 PPMS and RMS; LUNSUMIO, which was granted accelerated approval in the U.S. during the fourth quarter of 2022 for the treatment of relapsed or refractory follicular lymphoma; glofitamab, an investigational bispecific antibody for the potential treatment of non-Hodgkin's lymphoma; and have the option to add other potential anti-CD20 therapies, pursuant to our collaboration arrangements with Genentech, a wholly-owned member of the Roche Group.

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

We also commercialize biosimilars of advanced biologics including BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe, as well as BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, in the U.S. We continue to develop potential biosimilar products including BIIB800, a proposed tocilizumab biosimilar referencing ACTEMRA, and SB15, a proposed aflibercept biosimilar referencing EYLEA.

For additional information on our collaboration arrangements, please read Note 16, Collaborative and Other Relationships, to these unaudited condensed consolidated financial statements (condensed consolidated financial statements). For additional information on our collaboration arrangements with Genentech, please read Note 19, Collaborative and Other Relationships, to our audited consolidated financial statements included in our 2022 Form 10-K.

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 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 2022 Form 10-K. Our accounting policies are described in the Notes to Consolidated Financial Statements in our 2022 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 months ended March 31, 2023, 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 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 FASB 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 FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): 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. We elected to early adopt this standard on a prospective basis during the third quarter of 2022. Upon adoption, we recorded an immaterial amount in other (income) expense, net in our condensed consolidated statements of income, as a result of removing the impact of the remaining contractual sale restrictions from the fair value measurement of certain shares in Sage.

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Note 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. 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. The first payment of approximately $812.5 million was received in April 2023 and the second payment of approximately $437.5 million is due at the second anniversary of the closing of this transaction.

Prior to the sale, the carrying value of our investment in Samsung Bioepis totaled $581.6 million. During the second quarter of 2022 we recognized a pre-tax gain of approximately $1.5 billion related to this transaction, which was recorded in other (income) expense, net in our condensed consolidated statements of income. This pre-tax gain included reclassifications from AOCI 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 elected the fair value option and measured the payments due to us from Samsung BioLogics at fair value. As of March 31, 2023, the estimated fair values of the first and second payments using risk-adjusted discount rates of 5.9% and 5.8%, respectively, were approximately $809.9 million and $411.6 million, respectively. These payments have been classified as Level 3 measurements and are reflected in other current assets and investments and other assets, respectively, in our condensed consolidated balance sheets.

For the three months ended March 31, 2023, we recognized a gain of approximately $11.1 million and $6.2 million to reflect the changes in fair value related to the first and second payments due to us, respectively. These changes were recorded in other (income) expense, net in our condensed consolidated statements of income.

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


Note 3:			Restructuring

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 estimate we will incur total restructuring charges of approximately $135.0 million, primarily related to severance. These amounts were substantially incurred during 2022. As of March 31, 2023, $28.0 million remained in our restructuring reserve and payments are expected to be made through 2026.

For the three months ended March 31, 2023 and 2022, we recognized $9.6 million and $38.1 million, respectively, of net pre-tax restructuring charges, of which approximately $7.1 million and $27.7 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.

In September 2022 we entered into an agreement to partially terminate a portion of our lease located at 300 Binney Street, as well as to reduce the lease term for the majority of the remaining space. This resulted in a gain of approximately $5.3 million, which was recorded within restructuring charges in our condensed consolidated statements of income during the third quarter of 2022. For additional information on our 300 Binney Street lease modification, please read Note 12, Leases, to our consolidated financial statements included in our 2022 Form 10-K.

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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, we recognized approximately $10.4 million of accelerated depreciation expense, which was recorded in restructuring charges in our condensed consolidated statements of income for the three months ended March 31, 2022. In May 2022 we entered into a lease assignment agreement whereby we assigned our remaining lease obligations to an external third party. As a result of the lease assignment, we derecognized the related operating lease obligation and right-of-use asset during the second quarter of 2022.

For the three months ended March 31, 2023, we recognized other restructuring costs of approximately $2.5 million, which were recorded in restructuring charges in our condensed consolidated statements of income. Other restructuring costs include items such as facility closure costs, employee non-severance expense, asset write-offs and other costs.

Charges and spending related to our workforce reductions is summarized as follows:


	For the Three Months Ended March 31,
(In millions)	2023			2022
Restructuring reserve as of December 31	$	35.9		$	—
Expense	7.1			27.7
Payment	(15.6)			(6.2)
Foreign currency and other adjustments	0.6			—
Restructuring reserve as of March 31	$	28.0	—	$	21.5

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Note 4:			Revenue

Product Revenue

Revenue by product is summarized as follows:


	For the Three Months Ended March 31,
	2023						2022
(In millions)	United States		Rest of World		Total		United States		Rest of World		Total
Multiple Sclerosis (MS):
TECFIDERA	$	74.7	$	199.8	$	274.5	$	117.1	$	292.8	$	409.9
VUMERITY	93.5		14.7		108.2		125.2		2.8		128.0
Total Fumarate	168.2		214.5		382.7		242.3		295.6		537.9
AVONEX	102.6		69.8		172.4		148.0		81.6		229.6
PLEGRIDY	29.9		43.3		73.2		34.3		45.7		80.0
Total Interferon	132.5		113.1		245.6		182.3		127.3		309.6
TYSABRI	245.4		227.4		472.8		284.5		236.3		520.8
FAMPYRA	—		24.1		24.1		—		26.2		26.2
Subtotal: MS	546.1		579.1		1,125.2		709.1		685.4		1,394.5

Spinal Muscular Atrophy:
SPINRAZA	146.7		296.6		443.3		163.3		309.2		472.5

Biosimilars:
BENEPALI	—		109.0		109.0		—		114.7		114.7
IMRALDI	—		54.4		54.4		—		57.1		57.1
FLIXABI	—		20.4		20.4		—		22.5		22.5
BYOOVIZ	8.2		0.4		8.6		—		—		—
Subtotal: Biosimilars	8.2		184.2		192.4		—		194.3		194.3




Other(1)	0.4		2.0		2.4		2.8		2.2		5.0
Total product revenue	$	701.4	$	1,061.9	$	1,763.3	$	875.2	$	1,191.1	$	2,066.3

(1) Other includes FUMADERM and ADUHELM.

We recognized revenue from two wholesalers accounting for 27.3% and 7.4% of gross product revenue for the three months ended March 31, 2023, and 26.3% and 10.5% of gross product revenue for the three months ended March 31, 2022.

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, 2022	$	153.8	$	857.7	$	23.5	$	1,035.0
Current provisions relating to sales in current year	182.3		638.0		3.5		823.8
Adjustments relating to prior years	(1.1)		(8.1)		1.0		(8.2)
Payments/credits relating to sales in current year	(94.0)		(261.8)		(1.0)		(356.8)
Payments/credits relating to sales in prior years	(73.3)		(368.1)		(7.4)		(448.8)
Balance, March 31, 2023	$	167.7	$	857.7	$	19.6	$	1,045.0

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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 March 31, 2023		As of December 31, 2022
Reduction of accounts receivable	$	137.8	$	143.4
Component of accrued expense and other	907.2		891.6
Total revenue-related reserves	$	1,045.0	$	1,035.0

Revenue from LEQEMBI Collaboration

In January 2023 the FDA granted accelerated approval of LEQEMBI, which became commercially available in the U.S. during the first quarter of 2023. Upon commercialization, we began recognizing commercial profits and losses related to the LEQEMBI Collaboration Agreement on a net basis as a separate component of total revenue within our condensed consolidated income statements, as we are not the principal.

For the three months ended March 31, 2023, we recognized a reduction to revenue of approximately $18.9 million, reflecting our net profit-share of the LEQEMBI Collaboration results in the U.S.

For additional information on our collaboration arrangements with Eisai, please read Note 16, Collaborative and Other Relationships, to these condensed consolidated financial statements.

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 March 31,
(In millions)	2023		2022
Royalty revenue on sales of OCREVUS	$	283.6	$	252.3
Biogen’s share of pre-tax profits in the U.S. for RITUXAN, GAZYVA and LUNSUMIO	112.5		143.2
Other revenue from anti-CD20 therapeutic programs	3.4		3.9
Total revenue from anti-CD20 therapeutic programs	$	399.5	$	399.4

For additional information on our collaboration arrangements with Genentech, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K.

Contract Manufacturing, Royalty and Other Revenue

Contract manufacturing, royalty and other revenue is summarized in the table below.


	For the Three Months Ended March 31,
(In millions)	2023		2022
Contract manufacturing revenue	$	306.9	$	47.5
Royalty and other revenue	12.2		18.6
Total contract manufacturing, royalty and other revenue	$	319.1	$	66.1

Contract Manufacturing Revenue

Contract manufacturing revenue primarily reflects amounts earned under contract manufacturing agreements with our strategic customers. During the first quarter of 2023 we began recognizing contract manufacturing revenue for LEQEMBI, upon accelerated approval of LEQEMBI in the U.S. Prior to accelerated approval, contract manufacturing amounts related to LEQEMBI were recognized in research and development within our condensed consolidated income statements.

Royalty and Other Revenue

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

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For additional information on our license arrangements with Samsung Bioepis, please read Note 16, Collaborative and Other Relationships, to these condensed consolidated financial statements.


Note 5:			Inventory

The components of inventory are summarized as follows:


(In millions)	As of March 31, 2023		As of December 31, 2022
Raw materials	$	432.4	$	413.2
Work in process	684.9		751.9
Finished goods	205.9		200.4
Total inventory	$	1,323.2	$	1,365.5

Balance Sheet Classification:
Inventory	$	1,281.0	$	1,344.4
Investments and other assets	42.2		21.1
Total inventory	$	1,323.2	$	1,365.5

During the first quarter of 2022 we wrote-off approximately $275.0 million of inventory related to ADUHELM, as a result of the final NCD, which was recognized in cost of sales within our condensed consolidated statements of income for the three months ended March 31, 2022. We recognized approximately $136.0 million related to Eisai's 45.0% share of these charges in collaboration profit sharing/(loss reimbursement) within our condensed consolidated statements of income for the three months ended March 31, 2022. As of March 31, 2023 and December 31, 2022, the carrying value of our ADUHELM inventory was immaterial.

For additional information on our collaboration arrangements with Eisai, please read Note 16, Collaborative and Other Relationships, to these condensed consolidated financial statements.


Note 6:			Intangible Assets and Goodwill

Intangible Assets

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


		As of March 31, 2023						As of December 31, 2022
(In millions)	Estimated Life	Cost		Accumulated Amortization		Net		Cost		Accumulated Amortization		Net
Completed technology	4-28 years	$	7,428.7	$	(5,679.4)	$	1,749.3	$	7,415.3	$	(5,629.2)	$	1,786.1

Trademarks and trade names	Indefinite	64.0		—		64.0		64.0		—		64.0
Total intangible assets		$	7,492.7	$	(5,679.4)	$	1,813.3	$	7,479.3	$	(5,629.2)	$	1,850.1

Amortization and Impairments

For the three months ended March 31, 2023, amortization and impairment of acquired intangible assets totaled $50.2 million, compared to $66.9 million in the prior year comparative period. The decrease was primarily due to a lower rate of amortization for acquired intangible assets. For the three months ended March 31, 2023 and 2022, we had no impairment charges.

Completed Technology

Completed technology primarily relates to our other marketed products and programs acquired through asset acquisitions, licenses and business combinations.

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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 March 31, 2023
2023 (remaining nine months)	$	165.0
2024	195.0
2025	190.0
2026	175.0
2027	170.0
2028	165.0

Goodwill

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


(In millions)	As of March 31, 2023
Goodwill, December 31, 2022	$	5,749.0

Other	2.8
Goodwill, March 31, 2023	$	5,751.8

As of March 31, 2023, we had no accumulated impairment losses related to goodwill. Other includes adjustments related to foreign currency exchange rate fluctuations.

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Note 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 March 31, 2023
(In millions)	Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	2,406.6	$	—	$	2,406.6	$	—
Marketable debt securities:
Corporate debt securities	1,704.2		—		1,704.2		—
Government securities	1,285.0		—		1,285.0		—
Mortgage and other asset backed securities	132.1		—		132.1		—
Marketable equity securities	678.1		678.1		—		—
Other current assets:
Receivable from Samsung BioLogics(1)	809.9		—		—		809.9
Derivative contracts	35.1		—		35.1		—
Other assets:
Plan assets for deferred compensation	34.1		—		34.1		—
Receivable from Samsung BioLogics(1)	411.6		—		—		411.6
Total	$	7,496.7	$	678.1	$	5,597.1	$	1,221.5
Liabilities:
Derivative contracts	$	39.8	$	—	$	39.8	$	—

Total	$	39.8	$	—	$	39.8	$	—

(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, 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	$	2,847.6	$	—	$	2,847.6	$	—
Marketable debt securities:
Corporate debt securities	1,231.6		—		1,231.6		—
Government securities	810.3		—		810.3		—
Mortgage and other asset backed securities	137.3		—		137.3		—
Marketable equity securities	791.1		791.1		—		—
Other current assets:
Receivable from Samsung BioLogics(1)	798.8		—		—		798.8
Other assets:
Derivative contracts	63.0		—		63.0		—
Plan assets for deferred compensation	32.8		—		32.8		—
Receivable from Samsung BioLogics(1)	405.4		—		—		405.4
Total	$	7,117.9	$	791.1	$	5,122.6	$	1,204.2
Liabilities:
Derivative contracts	$	26.0	$	—	$	26.0	$	—

Total	$	26.0	$	—	$	26.0	$	—

The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities was determined through third-party pricing services. During the third quarter of 2022 we elected to early adopt ASU 2022-03 on a prospective basis, which resulted in removing the impact of contractual sale restrictions from the fair value measurement of our remaining Sage common stock subject to certain holding period restrictions. As of December 31, 2022, our entire investment in the common stock of Sage was classified as a Level 1 measurement. Prior to the adoption of this standard, the fair value of Level 2 instruments classified as marketable equity securities represented a portion of our investment in the common stock of Sage and was valued using an option pricing valuation model.

Our investments in the common stock of Sangamo and Denali had holding period restrictions that expired during 2022. As of December 31, 2022, the fair values of our investments in Sangamo and Denali common stock were classified as Level 1 measurements.

Although the contractual holding period restrictions on our investments in Denali, Sage and Sangamo have expired, our ability to liquidate these investments may be limited by the size of our interest, the volume of market related activity, our concentrated level of ownership and potential restrictions resulting from our status as a collaborator. Therefore, we may realize significantly less than the current value of such investments.

For additional information on our investments in Denali, Sangamo and Sage common stock, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K.

There have been no material impairments of our assets measured and carried at fair value as of March 31, 2023 and December 31, 2022. In addition, there have been no changes to our valuation techniques as of March 31, 2023 and December 31, 2022.

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 2022 Form 10-K.

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Level 3 Assets and Liabilities Held at Fair Value

There were no transfers of assets or liabilities into or out of Level 3 as of March 31, 2023 and December 31, 2022.

Contingent Consideration Obligations

In connection with our acquisition of Convergence, we agreed to make additional payments based upon the achievement of certain milestone events. The following table provides a roll forward of the fair value of our contingent consideration obligations, which were classified as Level 3 measurements:


(In millions)	For the three months ended March 31, 2022
Fair value, beginning of period	$	209.1
Changes in fair value	(7.1)

Fair value, end of period	$	202.0

Changes in the fair value of our contingent consideration obligations are recorded in (gain) loss on fair value remeasurement of contingent consideration in our condensed consolidated statements of income.

During the fourth quarter of 2022 we discontinued further development efforts related to vixotrigine for the potential treatment of TGN and DPN, resulting in a reduction of our contingent consideration obligations of approximately $195.4 million, reducing the fair value of vixotrigine to zero.

For the three months ended March 31, 2022, the changes in fair value of our contingent consideration obligations were primarily due to an increase in 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.

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 March 31, 2023				As of December 31, 2022
(In millions)	Fair Value		Carrying Value		Fair Value		Carrying Value

4.050% Senior Notes due September 15, 2025	$	1,711.6	$	1,745.2	$	1,699.9	$	1,744.7
2.250% Senior Notes due May 1, 2030	1,262.2		1,493.1		1,219.0		1,492.9
5.200% Senior Notes due September 15, 2045	1,130.2		1,100.4		1,033.2		1,100.3
3.150% Senior Notes due May 1, 2050	1,043.7		1,473.9		989.0		1,473.8
3.250% Senior Notes due February 15, 2051	493.2		470.1		469.1		469.3
Total	$	5,640.9	$	6,282.7	$	5,410.2	$	6,281.0

The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources. The changes in the fair values of our Senior Notes as of March 31, 2023, compared to December 31, 2022, are primarily related to decreases in U.S. treasury yields used to value our Senior Notes since December 31, 2022. For additional information related to our Senior Notes, please read Note 13, Indebtedness, to our consolidated financial statements included in our 2022 Form 10-K.

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Note 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 March 31, 2023		As of December 31, 2022
Commercial paper	$	64.0	$	177.2
Overnight reverse repurchase agreements	300.3		59.0
Money market funds	2,042.3		2,581.5
Short-term debt securities	—		29.9
Total	$	2,406.6	$	2,847.6

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.

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 March 31, 2023
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable debt securities
Corporate debt securities:
Current	$	1,287.6	$	0.1	$	(4.4)	$	1,283.3
Non-current	423.4		1.0		(3.5)		420.9
Government securities:
Current	863.5		0.1		(4.2)		859.4
Non-current	426.1		1.0		(1.5)		425.6
Mortgage and other asset backed securities:
Current	0.4		—		—		0.4
Non-current	132.9		0.1		(1.3)		131.7
Total marketable debt securities	$	3,133.9	$	2.3	$	(14.9)	$	3,121.3

Marketable equity securities
Marketable equity securities, current	$	87.7	$	—	$	(19.8)	$	67.9
Marketable equity securities, non-current	1,001.1		—		(390.9)		610.2
Total marketable equity securities	$	1,088.8	$	—	$	(410.7)	$	678.1

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	As of December 31, 2022
(In millions)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Marketable debt securities
Corporate debt securities:
Current	$	936.2	$	—	$	(4.9)	$	931.3
Non-current	305.3		0.1		(5.1)		300.3
Government securities:
Current	547.1		0.1		(5.0)		542.2
Non-current	271.4		—		(3.3)		268.1
Mortgage and other asset backed securities:
Current	—		—		—		—
Non-current	139.1		0.1		(1.9)		137.3
Total marketable debt securities	$	2,199.1	$	0.3	$	(20.2)	$	2,179.2

Marketable equity securities

Marketable equity securities, non-current	$	1,133.8	$	—	$	(342.7)	$	791.1
Total marketable equity securities	$	1,133.8	$	—	$	(342.7)	$	791.1

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 March 31, 2023				As of December 31, 2022
(In millions)	Estimated Fair Value		Amortized Cost		Estimated Fair Value		Amortized Cost
Due in one year or less	$	2,143.1	$	2,151.5	$	1,473.5	$	1,483.3
Due after one year through five years	962.2		965.8		694.4		703.7
Due after five years	16.0		16.6		11.3		12.1
Total marketable debt securities	$	3,121.3	$	3,133.9	$	2,179.2	$	2,199.1

The average maturity of our marketable debt securities classified as available-for-sale as of March 31, 2023 and December 31, 2022, was approximately 9 months and 8 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 March 31,
(In millions)	2023		2022
Proceeds from maturities and sales	$	406.7	$	543.6
Realized gains	0.1		—
Realized losses	0.7		0.6

Realized losses for the three months ended March 31, 2023, primarily relate to sales of U.S. treasuries and corporate bonds. Realized losses for the three months ended March 31, 2022, primarily relate to sales of corporate bonds, agency mortgage-backed securities and other asset-backed securities.

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Strategic Investments

As of March 31, 2023 and December 31, 2022, our strategic investment portfolio was comprised of investments totaling $733.6 million and $846.0 million, respectively, which are included in 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 decrease in our strategic investment portfolio as of March 31, 2023, was primarily due to a decrease in the fair value of our investments in Denali, Sangamo and Ionis common stock.

For additional information on our investments in Denali, Sangamo, Sage and Ionis common stock, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K.


Note 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 March 31, 2023 and December 31, 2022, had durations of 1 to 18 months and 1 to 12 months, respectively. These contracts have been designated as cash flow hedges and unrealized gains and losses on the portion of these foreign currency forward contracts and foreign currency options that are included in the effectiveness test are reported in AOCI. Realized gains and losses of such contracts and options are recognized in revenue when the sale of product in the currency being hedged is recognized and in operating expense when the expense in the currency being hedged is recorded. We recognize all cash flow hedge reclassifications from AOCI 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 and foreign currency options that were entered into to hedge forecasted revenue and operating expense is summarized as follows:


	Notional Amount
(In millions)	As of March 31, 2023		As of December 31, 2022
Euro	$	1,854.8	$	1,495.5
British pound	124.3		162.8
Swiss franc	248.2		—

Canadian dollar	43.3		57.2
Total foreign currency contracts and options	$	2,270.6	$	1,715.5

The pre-tax portion of the fair value of these foreign currency forward contracts and foreign currency options that were included in AOCI in total equity is summarized as follows:



(In millions)	As of March 31, 2023		As of December 31, 2022
Unrealized gains	$	8.8	$	29.9
Unrealized (losses)	(39.0)		(21.3)
Net unrealized gains (losses)	$	(30.2)	$	8.6

We expect the net unrealized losses of approximately $30.2 million to be settled over the next 18 months, of which approximately $30.0 million of these net unrealized losses are expected to be settled over the next 12 months, with any amounts in AOCI 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

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its contractual obligations. As of March 31, 2023 and December 31, 2022, credit risk did not materially change the fair value of our foreign currency forward contracts and forward currency options.

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


For the Three Months Ended March 31,
Net Gains/(Losses) Reclassified from AOCI into Operating Income (in millions)					Net Gains/(Losses) Recognized in Operating Income (in millions)
Location	2023		2022		Location	2023		2022
Revenue	$	17.6	$	20.9	Revenue	$	1.6	$	(6.5)
Operating expense	(0.5)		(0.3)		Operating expense	(2.1)		(0.1)

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%.

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 AOCI 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.

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


For the Three Months Ended March 31,
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		Location		2022		Location	2022
Gains (losses) on net investment hedges(1)	$	10.1	Gains (losses) on net investment hedges(1)		$	(3.3)	Other (income) expense(1)	$	(1.1)

(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 16, 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 $1,436.3 million and $1,238.8 million as of March 31, 2023 and December 31, 2022, respectively. Net gains of $1.8 million and net losses of $12.2 million related to these contracts were recorded as a component of other (income) expense, net for the three months ended March 31, 2023 and 2022, respectively.

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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 March 31, 2023		As of December 31, 2022
Cash Flow Hedging Instruments:
Asset derivative instruments	Other current assets	$	12.3	$	37.9
	Investments and other assets	0.1		—
Liability derivative instruments	Accrued expense and other	31.9		18.4
	Other long-term liabilities	0.3		—






Other Derivative Instruments:
Asset derivative instruments	Other current assets	22.7		25.1
Liability derivative instruments	Accrued expense and other	7.6		7.6


Note 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 $2,218.2 million and $2,165.7 million as of March 31, 2023 and December 31, 2022, respectively. For the three months ended March 31, 2023, depreciation expense totaled $62.1 million compared to $76.3 million in the prior year comparative period.

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 March 31, 2023 and December 31, 2022, we had approximately $721.2 million and $711.1 million, respectively, capitalized as construction in progress related to this facility. Solothurn has been approved for the manufacture of ADUHELM and LEQEMBI by the FDA. In the second quarter of 2021 a portion of the Solothurn manufacturing facility was placed into service and we estimate the second manufacturing suite will be operational by the end of 2023.

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Note 11:			Equity

Share Repurchases

In October 2020 our Board of Directors authorized our 2020 Share Repurchase Program, which is a program to repurchase up to $5.0 billion of our common stock. Our 2020 Share Repurchase Program does not have an expiration date. All share repurchases under our 2020 Share Repurchase Program will be retired. There were no share repurchases of our common stock during the three months ended March 31, 2023 and 2022. Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of March 31, 2023.

Accumulated Other Comprehensive Income (Loss)

The following tables summarize the changes in AOCI, net of tax by component:


	March 31, 2023
(In millions)	Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax		Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax		Unrealized Gains (Losses) on Pension Benefit Obligation, Net of Tax		Currency Translation Adjustments		Total
Balance, December 31, 2022	$	(15.7)	$	15.1	$	(1.1)	$	(163.2)	$	(164.9)
Other comprehensive income (loss) before reclassifications	5.3		(20.3)		0.5		22.1		7.6
Amounts reclassified from AOCI	0.4		(15.1)		—		—		(14.7)
Net current period other comprehensive income (loss)	5.7		(35.4)		0.5		22.1		(7.1)
Balance, March 31, 2023	$	(10.0)	$	(20.3)	$	(0.6)	$	(141.1)	$	(172.0)


	March 31, 2022
(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	(10.2)		34.4		5.1		0.9		(21.8)		8.4
Amounts reclassified from AOCI	0.5		(18.5)		1.1		—		—		(16.9)
Net current period other comprehensive income (loss)	(9.7)		15.9		6.2		0.9		(21.8)		(8.5)
Balance, March 31, 2022	$	(11.9)	$	69.7	$	31.7	$	(43.9)	$	(160.8)	$	(115.2)

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The following table summarizes the amounts reclassified from AOCI:


(In millions)		Amounts Reclassified from AOCI					Income Statement Location
	For the Three Months Ended March 31,
	2023			2022
Gains (losses) on securities available for sale		$	(0.5)		$	(0.6)		Other (income) expense
		0.1			0.1			Income tax (benefit) expense

Gains (losses) on cash flow hedges		17.6			20.9			Revenue
		(0.5)			(0.3)			Operating expense
		(0.1)			(0.1)			Other (income) expense
		(1.9)			(2.0)			Income tax (benefit) expense

Gains (losses) on net investment hedges(1)		—			(1.1)			Other (income) expense



Total reclassifications, net of tax		$	14.7		$	16.9


Note 12:			Earnings per Share

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


	For the Three Months Ended March 31,
(In millions)	2023		2022
Numerator:
Net income attributable to Biogen Inc.	$	387.9	$	303.8
Denominator:
Weighted average number of common shares outstanding	144.4		147.1
Effect of dilutive securities:

Time-vested restricted stock units	0.6		0.3
Market stock units	0.1		0.1
Performance stock units settled in stock	0.1		0.1
Dilutive potential common shares	0.8		0.5
Shares used in calculating diluted earnings per share	145.2		147.6

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

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Note 13:			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 March 31,
(In millions)	2023		2022
Research and development	$	31.3	$	25.7
Selling, general and administrative	50.1		46.1

Subtotal	81.4		71.8
Capitalized share-based compensation costs	(3.3)		(2.8)
Share-based compensation expense included in total cost and expense	78.1		69.0
Income tax effect	(14.7)		(12.8)
Share-based compensation expense included in net income attributable to Biogen Inc.	$	63.4	$	56.2

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


	For the Three Months Ended March 31,
(In millions)	2023		2022
Market stock units	$	2.2	$	5.9
Time-vested restricted stock units	61.7		51.3


Performance stock units settled in stock	9.5		8.3
Performance stock units settled in cash	2.5		1.4
Employee stock purchase plan	4.7		4.9
Stock options(1)	0.8		—
Subtotal	81.4		71.8
Capitalized share-based compensation costs	(3.3)		(2.8)
Share-based compensation expense included in total cost and expense	$	78.1	$	69.0

(1) During the fourth quarter of 2022 we granted stock options. For additional information, please read Note 16, Share-Based Payments, to our consolidated financial statements included in our 2022 Form 10-K.

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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Note 14:			Income Taxes

Inflation Reduction Act

In August 2022 the IRA was signed into law in the U.S. The IRA introduced new tax provisions, including a 15.0% corporate alternative minimum tax and a 1.0% excise tax on stock repurchases. The provisions of the IRA are effective for periods after December 31, 2022. The IRA did not result in any material adjustments to our income tax provision or net deferred tax assets as of March 31, 2023 and December 31, 2022. We expect additional guidance and regulations to be issued in future periods and will continue to assess its potential impact on our business and results of operations as further information becomes available.

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 March 31,
	2023		2022
Statutory rate	21.0	%	21.0	%
State taxes	1.3		(0.4)
Taxes on foreign earnings	(5.6)		(10.8)
Tax credits	(6.6)		(2.5)
Purchased intangible assets	0.4		0.6



GILTI	0.5		0.3





Neurimmune tax impacts	—		24.2

Other	0.6		3.8
Effective tax rate	11.6	%	36.2	%

Changes in Tax Rate

For the three months ended March 31, 2023, compared to the same period in 2022, the decrease in our effective tax rate, excluding the impact of the net Neurimmune deferred tax asset, as discussed below, includes the resolution of an uncertain tax matter in the current quarter related to tax credits and the non-cash tax effects of changes in the value of our equity investments. The tax effects of this change in value of our equity investments are recorded discretely since changes in value of equity investments cannot be forecasted.

Neurimmune Deferred Tax Asset

This adjustment to our net deferred tax asset is 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 our collaboration arrangement with Neurimmune, please read Note 17, 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 2013.

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.

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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 $450.0 million related to the unrecognized

tax benefits related to Neurimmune's tax basis in ADUHELM, as discussed above, in the next 12 months as a result of various audit closures, settlements and expiration of the statute of limitations. 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.


Note 15:			Other Consolidated Financial Statement Detail

Other (Income) Expense, Net

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


	For the Three Months Ended March 31,
(In millions)	2023		2022


Interest income	$	(80.9)	$	(2.9)
Interest expense	62.5		66.1
(Gains) losses on investments, net	77.7		191.1
Foreign exchange (gains) losses, net	10.7		8.3
Other, net	(0.6)		0.7
Total other (income) expense, net	$	69.4	$	263.3

The (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.

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 March 31,
(In millions)	2023		2022
Net (gains) losses recognized on equity securities	$	78.1	$	190.7
Less: Net (gains) losses realized on equity securities	1.6		(0.2)
Net unrealized (gains) losses recognized on equity securities	$	76.5	$	190.9

The net unrealized losses recognized during the three months ended March 31, 2023, primarily reflect a decrease in the aggregate fair value of our investments in Denali, Sangamo and Ionis common stock of approximately $100.0 million, partially offset by an increase in the fair value of Sage common stock of approximately $23.8 million.

The net unrealized losses recognized during the three months ended March 31, 2022, primarily reflect a decrease in the aggregate fair value of our investments in Denali, Sage and Sangamo common stock of approximately $205.5 million, partially offset by an increase in the fair value of Ionis common stock of approximately $19.0 million.

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Accrued Expense and Other

Accrued expense and other consists of the following:


(In millions)	As of March 31, 2023		As of December 31, 2022

Revenue-related reserves for discounts and allowances	$	907.2	$	891.6
Employee compensation and benefits	187.2		395.6
Collaboration expense	265.5		277.9
Royalties and licensing fees	183.9		209.4


Other	744.4		746.9
Total accrued expense and other	$	2,288.2	$	2,521.4

Other Long-term Liabilities

Other long-term liabilities were $935.5 million and $944.2 million as of March 31, 2023 and December 31, 2022, respectively, and included accrued income taxes totaling $552.5 million and $541.7 million, respectively.


Note 16:			Collaborative and Other Relationships

Genentech, Inc. (Roche Group)

We have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, CLL and other conditions; RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of PPMS and RMS; LUNSUMIO (mosunetuzumab), which was granted accelerated approval in the U.S. during the fourth quarter of 2022 for the treatment of relapsed or refractory follicular lymphoma; glofitamab, an investigational bispecific antibody for the potential treatment of non-Hodgkin's lymphoma; and have the option to add other potential anti-CD20 therapies, pursuant to our collaboration arrangements with Genentech, a wholly-owned member of the Roche Group. For purposes of this footnote, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN.

RITUXAN

Genentech and its affiliates are responsible for the worldwide manufacture of RITUXAN as well as all development and commercialization activities as follows:

*•*U.S.: We have co-exclusively licensed our rights to develop, commercialize and market RITUXAN in the U.S.

*•*Canada: We have co-exclusively licensed our rights to develop, commercialize and market RITUXAN in Canada.

GAZYVA

The Roche Group and its sub-licensees maintain sole responsibility for the development, manufacture and commercialization of GAZYVA in the U.S. The level of gross sales of GAZYVA in the U.S. has impacted our percentage of the co-promotion profits for RITUXAN and LUNSUMIO, as summarized in the table below.

OCREVUS

Pursuant to the terms of our collaboration arrangements with Genentech, we receive a tiered royalty on U.S. net sales from 13.5% and increasing up to 24.0% if annual net sales exceed $900.0 million. There will be a 50.0% reduction to these royalties if a biosimilar to OCREVUS is approved in the U.S.

In addition, we receive a gross 3.0% royalty on net sales of OCREVUS outside the U.S., with the royalty period lasting 11 years from the first commercial sale of OCREVUS on a country-by-country basis.

The commercialization of OCREVUS does not impact the percentage of the co-promotion profits we receive for RITUXAN, LUNSUMIO or GAZYVA. Genentech is solely responsible for development and commercialization of OCREVUS and funding future costs. Genentech cannot develop OCREVUS in CLL, non-Hodgkin's lymphoma or rheumatoid arthritis.

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OCREVUS royalty revenue is based on our estimates from third-party and market research data of OCREVUS sales occurring during the corresponding period. Differences between actual and estimated royalty revenue will be adjusted for in the period in which they become known, which is generally expected to be the following quarter.

LUNSUMIO (mosunetuzumab)

In January 2022 we exercised our option with Genentech to participate in the joint development and commercialization of LUNSUMIO. Under our collaboration with Genentech, we were responsible for 30.0% of development costs for LUNSUMIO prior to FDA approval and will be entitled to a tiered share of co-promotion operating profits and losses in the U.S., as summarized in the table below. In addition, we receive low single-digit royalties on sales of LUNSUMIO outside the U.S.

In December 2022 LUNSUMIO was granted accelerated approval by the FDA for the treatment of relapsed or refractory follicular lymphoma. Prior to regulatory approval, we record our share of the expense incurred by the collaboration for the development of anti-CD20 products in research and development expense and pre-commercialization costs within selling, general and administrative expense in our condensed consolidated statements of income. After an anti-CD20 product is approved, we record our share of the development and sales and marketing expense related to that product as a reduction of our share of pre-tax profits in revenue from anti-CD20 therapeutic programs.

Profit-sharing Formulas

RITUXAN and LUNSUMIO Profit Share

Our current pretax co-promotion profit-sharing formula for RITUXAN and LUNSUMIO in the U.S. provides for a 30.0% share on the first $50.0 million of combined co-promotion operating profits earned each calendar year. As a result of the FDA approval of LUNSUMIO our share of the combined annual co-promotion profits for RITUXAN and LUNSUMIO in excess of $50.0 million varies upon the following events, as summarized in the table below:




After LUNSUMIO Approval until the First Threshold Date	37.5	%
After First Threshold Date until the Second Threshold Date	35.0	%
After Second Threshold Date	30.0	%

First Threshold Date means the earlier of (i) the first day of the calendar quarter following the date U.S. gross sales of GAZYVA within any consecutive 12-month period have reached $500.0 million or (ii) the first date in any calendar year in which U.S. gross sales of LUNSUMIO have reached $150.0 million.

Second Threshold Date means the later of (i) the first date the gross sales in any calendar year in which U.S. gross sales of LUNSUMIO reach $350.0 million and (ii) January 1 of the calendar year following the calendar year in which the First Threshold Date occurs.

In March 2023 the First Threshold Date was achieved. As a result, beginning in April 2023 the pre-tax profit share for RITUXAN and LUNSUMIO will be 35.0%.

GAZYVA Profit Share

Our current pretax profit-sharing formula for GAZYVA provides for a 35.0% share on the first $50.0 million of operating profits earned each calendar year. Our share of annual co-promotion profits in excess of $50.0 million varies upon the following events, as summarized in the table below:



Until Second GAZYVA Threshold Date	37.5	%
After Second GAZYVA Threshold Date	35.0	%

Second GAZYVA Threshold Date means the first day of the calendar quarter following the date U.S. gross sales of GAZYVA within any consecutive 12-month period have reached $500.0 million. The second GAZYVA threshold date can be achieved regardless of whether GAZYVA has been approved in a non-CLL indication.

In March 2023 the Second GAZYVA Threshold Date was achieved. As a result, beginning in April 2023 the pre-tax profit share for GAZYVA will be 35.0%.

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Eisai Co., Ltd.

As of March 31, 2023, we accrued a $31.0 million payable to Eisai related to the termination of an agreement whereby Eisai co-promoted or distributed our MS products in certain Asia-Pacific markets and settings. The termination fee is included in selling, general and administrative expense in our condensed consolidated statements of income for the three months ended March 31, 2023.

LEQEMBI (lecanemab) Collaboration

We have a collaboration agreement with Eisai to jointly develop and commercialize LEQEMBI (lecanemab), an anti-amyloid antibody for the potential treatment of Alzheimer's disease (the LEQEMBI Collaboration).

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

In January 2023 the FDA granted accelerated approval of LEQEMBI, which became commercially available in the U.S. during the first quarter of 2023. Upon commercialization, we began recognizing commercial profits and losses related to the LEQEMBI Collaboration Agreement on a net basis. As we are not the principal on sales transactions related to LEQEMBI, our 50.0% share of the revenue and operating expense is recorded on a net basis in revenue from LEQEMBI Collaboration, which is a separate component of revenue within our condensed consolidated statements of income.

For the three months ended March 31, 2023, we recognized a reduction to revenue of approximately $18.9 million, reflecting our net profit-share of the LEQEMBI Collaboration results in the U.S. This amount is included in revenue from LEQEMBI Collaboration within our condensed consolidated statements of income.

During the first quarter of 2023, upon commercialization of LEQEMBI, we began recognizing our share of U.S. revenue, cost of sales and selling and marketing expense in revenue from LEQEMBI Collaboration within our condensed consolidated income statements. Our share of LEQEMBI development expense will continue to be recorded within research and development expense and, until commercial approval on a region by region basis, non-U.S. selling and marketing expense will continue to be recorded in selling, general and administrative expense within our condensed consolidated statements of income. A summary of development and sales and marketing expense related to the LEQEMBI Collaboration is as follows:


	For the Three Months Ended March 31,
(In millions)	2023		2022
Total development expense incurred by the collaboration related to the advancement of LEQEMBI	$	107.9	$	77.0
Biogen's share of the LEQEMBI Collaboration development expense reflected in research and development expense in our condensed consolidated statements of income	54.0		38.5
Total sales and marketing expense incurred by the LEQEMBI Collaboration(1)	10.5		15.9
Biogen's share of the LEQEMBI Collaboration sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income(1)	5.3		8.0

(1) Beginning in the first quarter of 2023 reimbursement to Eisai for our share of U.S. LEQEMBI selling, general and administrative expense is recognized in revenue from LEQEMBI Collaboration within our condensed consolidated statements of income.

ADUHELM Collaboration Agreement

The LEQEMBI 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).

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 in 2019, Eisai was reimbursing us for 45.0% of development and sales and marketing expense incurred by the collaboration for the advancement of ADUHELM.

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In March 2022 we amended our ADUHELM Collaboration Agreement with Eisai. As of the amendment date, we have sole decision making and commercialization rights worldwide on ADUHELM, and beginning January 1, 2023, Eisai receives only a tiered royalty based on net sales of ADUHELM, and no longer participates in sharing ADUHELM's global profits and losses. Eisai's share of development, commercialization and manufacturing expense was limited to $335.0 million for the period from January 1, 2022 to December 31, 2022, which was achieved as of December 31, 2022. Once this limit was achieved, we became responsible for all ADUHELM related costs.

A summary of development expense and sales and marketing expense related to our initial ADUHELM Collaboration Agreement is as follows:


	For the Three Months Ended March 31,
(In millions)		2022
Total ADUHELM Collaboration development expense		$	44.2
Biogen's share of ADUHELM Collaboration development expense reflected in research and development expense in our condensed consolidated statements of income		24.3
Total sales and marketing expense incurred by the ADUHELM Collaboration Agreement		95.0
Biogen's share of ADUHELM Collaboration sales and marketing expense reflected in selling, general and administrative expense and collaboration profit sharing/(loss reimbursement) in our condensed consolidated statements of income		50.9

ADUHELM C**o-promotion Profits and Losses

Under our initial ADUHELM Collaboration Agreement, we recognized revenue on sales of ADUHELM in the U.S. to third parties as a component of product revenue in our condensed consolidated statements of income. We also recorded the related cost of revenue and sales and marketing expense in our condensed consolidated statements of income as these costs were incurred. Payments made to and received from Eisai for its 45.0% share of the co-promotion profits or losses in the U.S. were recognized in collaboration profit sharing/(loss reimbursement) in our condensed consolidated statements of income. For the three months ended March 31, 2022, we recognized a net reduction to our operating expense of approximately $181.7 million to reflect Eisai's 45.0% share of net collaboration losses in the U.S.

During the first quarter of 2022, as a result of the final NCD, we recorded approximately $275.0 million of charges associated with the write-off of inventory and purchase commitments in excess of forecasted demand related to ADUHELM. Additionally, for the three months ended March 31, 2022, we recorded approximately $45.0 million of aggregate gross idle capacity charges related to ADUHELM. These charges were recorded in cost of sales within our condensed consolidated statements of income. We recognized approximately $160.0 million related to Eisai's 45.0% share of these charges in collaboration profit sharing/(loss reimbursement) within our condensed consolidated statements of income for the three months ended March 31, 2022.

Amounts receivable from Eisai related to the agreements discussed above were approximately $72.6 million and $88.0 million as of March 31, 2023 and December 31, 2022, respectively. Amounts payable to Eisai related to the agreements discussed above were $137.8 million and $81.2 million as of March 31, 2023 and December 31, 2022, respectively.

For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K.

UCB

We have a collaboration agreement with UCB, effective November 2003, to jointly develop and commercialize dapirolizumab pegol, an anti-CD40L pegylated Fab, for the potential treatment of SLE 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. If marketing approval is obtained, both companies will co-promote dapirolizumab pegol and share profits and losses equally.

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


	For the Three Months Ended March 31,
(In millions)	2023		2022
Total UCB collaboration development expense	$	18.3	$	17.6
Biogen's share of UCB collaboration development expense reflected in research and development expense in our condensed consolidated statements of income	9.2		8.8

Sage Therapeutics, Inc.

In November 2020 we entered into a global collaboration and license agreement with Sage to jointly develop and commercialize zuranolone for the potential treatment of MDD and PPD 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. We may pay Sage milestones totaling $225.0 million upon the first commercial sale of zuranolone, for the potential treatment of MDD and PPD, in the U.S.

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


	For the Three Months Ended March 31,
(In millions)	2023		2022
Total Sage collaboration development expense	$	34.8	$	38.7
Biogen's share of Sage collaboration development expense reflected in research and development expense in our condensed consolidated statements of income	17.4		19.4
Total Sage sales and marketing expense incurred by the collaboration	38.2		18.4
Biogen's share of Sage collaboration sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income	19.1		9.2

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 LRRK2 for Parkinson's disease. 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 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. In April 2023 we exercised our option with Denali to license the ATV-enabled anti-amyloid beta program. In connection with this exercise, we will assume responsibility for all development and commercial activities and associated expenses related to the program. In addition, we will make a one-time option exercise payment to Denali and, should certain milestones be achieved, may pay Denali additional development and commercial milestone payments and royalties based on future net sales.

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.

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


	For the Three Months Ended March 31,
(In millions)	2023		2022
Total Denali collaboration development expense	$	16.6	$	14.9
Biogen's share of Denali collaboration development expense reflected in research and development expense in our condensed consolidated statements of income	10.0		8.9

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

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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.

In March 2023 we terminated our collaboration and license agreement with Sangamo.

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


	For the Three Months Ended March 31,
(In millions)	2023		2022
Total Sangamo collaboration development expense	$	5.1	$	8.3
Biogen's share of Sangamo collaboration development expense reflected in research and development expense in our condensed consolidated statements of income	2.3		5.5

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

In July 2021 we entered into a collaboration and license agreement with InnoCare Pharma Limited for orelabrutinib, an oral small molecule Bruton's tyrosine kinase inhibitor for the potential treatment of MS. This license and collaboration agreement was later terminated in February 2023.

For the three months ended March 31, 2023, we recorded $0.2 million as research and development expense in our condensed consolidated statements of income related to other research and discovery related arrangements, compared to $19.5 million in the prior year comparative period.

Samsung Bioepis Co., Ltd.

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 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 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 sharing/(loss reimbursement) in our condensed consolidated statements of income. For the three months ended March 31, 2023, we recognized net profit-sharing expense of $57.1 million to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits, compared to a net profit-sharing expense of $64.4 million in the prior year comparative period.

Other Services

Simultaneous with the formation of Samsung Bioepis, we also entered into a license agreement with Samsung Bioepis. Under the license agreement, we granted Samsung Bioepis an exclusive license to use, develop, manufacture and commercialize biosimilar products created by Samsung Bioepis using Biogen product-specific technology. In exchange, we receive single digit royalties on biosimilar products developed and commercialized by

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Samsung Bioepis. Royalty revenue under the license agreement is recognized as a component of contract manufacturing, royalty and other revenue in our condensed consolidated statements of income.

Amounts receivable from Samsung Bioepis related to the agreements discussed above were $6.3 million and $2.0 million as of March 31, 2023 and December 31, 2022, respectively. Amounts payable to Samsung Bioepis related to the agreements discussed above were $32.2 million and $40.5 million as of March 31, 2023 and December 31, 2022, respectively.

For additional information on our collaboration arrangements with Samsung Bioepis and our other significant collaboration arrangements, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2022 Form 10-K.


Note 17:			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. Our royalty rates payable on products developed under the Neurimmune Agreement, including royalty rates payable on commercial sales of ADUHELM, range from the high single digits to sub-teens.

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

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 March 31, 2023 and December 31, 2022, the carrying value of our investments in certain biotechnology companies representing potential unconsolidated variable interest entities totaled $28.0 million and $27.8 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.

For additional information on our investments in Neurimmune and other variable interest entities, please read Note 20, Investments in Variable Interest Entities, to our consolidated financial statements included in our 2022 Form 10-K.

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Note 18:			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 2022 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. If an estimate of the possible loss or range of loss can be made at this time, it is included in the potential loss contingency description below.

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

In March 2023 the United States District Court for the District of Massachusetts (the District Court) dismissed the previously disclosed shareholder action related to ADUHELM that had been filed in February 2022 against us and certain current and former officers. The second previously disclosed shareholder action related to ADUHELM, filed in November 2022 and dismissed by the District Court in September 2021, remains on appeal to the U.S. Court of Appeals for the First Circuit. Both actions alleged violations of federal securities laws under 15 U.S.C §78j(b) and §78t(a) and 17 C.F.R. §240.10b-5.

Derivative Action

We and members of the Board of Directors are named as defendants in derivative actions filed by shareholders in February and July 2022, in the U.S. District Court for the District of Massachusetts. The actions allege violations of federal securities laws under 15 U.S.C. §78n(a) and 17 C.F.R. §240 14.a-9, and breaches of fiduciary duties and waste of corporate assets, and seek declaratory and injunctive relief, monetary relief payable to Biogen, and attorneys’ fees and costs payable to the plaintiffs. The District Court has stayed both cases.

IMRALDI Patent Litigation

In June 2022 Fresenius Kabi Deutschland GmbH (Fresenius Kabi) filed a claim for damages and injunctive relief against Biogen France SAS in the Tribunal de Grande Instance de Paris, alleging that IMRALDI, the adalimumab biosimilar product of Samsung Bioepis that Biogen commercializes in Europe, infringes the French counterpart of European Patent 3 145 488 (the EP ‘488 Patent), which expires in May 2035. In August 2022 Fresenius Kabi filed a claim for damages and injunctive relief against Biogen GmbH in the Düsseldorf Regional Court, alleging infringement of the German counterpart of the EP '488 Patent. A hearing in the Düsseldorf Regional Court has been set for December 2023. No hearing has been set in the French action.

In July 2019 Gedeon Richter Nyrt (Gedeon Richter) filed a claim 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 (the EP '667 Patent), which expires in October 2035. The case has been stayed pending review by the TBA of the EPO of the EPO's decision revoking the '667 Patent. The TBA has set a hearing for July 2023.

In November 2020 Gedeon Richter filed a claim for damages and injunctive relief against Biogen GmbH in the Düsseldorf Regional Court, alleging infringement of a German utility model corresponding to the EP '667 Patent, which expires in October 2025. The proceeding has been stayed pending the outcome of proceedings that Biogen has filed in the German Patent and Trademark Office to cancel the utility model, and the utility model was cancelled in March 2023.

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Dispute with Former Convergence Shareholders

In 2015 Biogen acquired Convergence, a U.K. company. 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.

Humana Patient Assistance Litigation

In March 2023 the District Court for the District of Massachusetts dismissed the previously disclosed action filed against us by Humana in September 2020. Humana had alleged damages related to our providing MS patients with free medications and making charitable contributions to non-profit organizations that assist MS patients and had alleged violations of the federal RICO Act and state laws.

Distributor Matter

In December 2022 we terminated our distribution agreement with the distributor of products for Biogen in various countries in the Middle East and northern Africa. The former distributor has asserted breach of contract. No suit has been filed.

Genentech Litigation

In February 2023 Genentech, Inc. filed suit against us in the U.S. District Court for the Northern District of California, alleging that it is owed royalties on sales of TYSABRI that occurred after the expiration of a patent licensed by Genentech to Biogen, together with interest and costs. No trial date has been set.

Other Matters

Government Investigation

The Company has received subpoenas from the Securities and Exchange Commission seeking information relating to ADUHELM, including healthcare sites and ADUHELM’s approval.

TYSABRI Biosimilar Patent Matter

In September 2022, following Sandoz Inc.'s announcement that the FDA had accepted its biologics license application for a proposed biosimilar referring to TYSABRI, we filed an action in the U.S. District Court for the District of Delaware against Sandoz Inc., other Sandoz entities and Polpharma Biologics S.A. under the Biologics Price Competition and Innovation Act, 42 U.S.C. §262, seeking a declaratory judgment of patent infringement. No trial has been set.

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

Pharmaceutical Works Polpharma and Mylan Ireland each filed actions in the General Court of the European Union (the General Court) (Polpharma in October 2018 and Mylan Ireland in November 2020) to annul the EMA's 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. On March 16, 2023, the European Court of Justice set aside the judgment of the General Court and dismissed Polpharma's action.

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