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

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements (condensed consolidated financial statements) and the accompanying notes beginning on page 7 of this quarterly report on Form 10-Q and our audited consolidated financial statements and the accompanying notes included in our 2023 Form 10-K. The results of operations of Reata, along with the estimated fair values of the assets acquired and liabilities assumed in the Reata acquisition, have been included in our condensed consolidated financial statements since the closing of the Reata acquisition on September 26, 2023.

EXECUTIVE SUMMARY

INTRODUCTION

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, co-developed treatments to address a defining pathology of Alzheimer’s disease and launched the first approved treatment to target a genetic cause of ALS. Through our 2023 acquisition of Reata we market the first and only drug approved in the U.S. and the E.U. for the treatment of Friedreich's Ataxia in adults and adolescents aged 16 years and older. We are focused on advancing our pipeline in neurology, specialized immunology and rare diseases. We support our drug discovery and development efforts through internal research and development programs and external collaborations.

Our marketed products include TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; SKYCLARYS for the treatment of Friedreich's Ataxia; QALSODY for the treatment of ALS; and FUMADERM for the treatment of severe plaque psoriasis.

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

We commercialize a portfolio of biosimilars of advanced biologics including BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe, as well as BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, in the U.S. and certain international markets. We also have exclusive rights to commercialize TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA. We continue to develop potential biosimilar product SB15, a proposed aflibercept biosimilar referencing EYLEA. We continue to evaluate strategic options for our biosimilars business.

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

We seek to ensure an uninterrupted supply of medicines to patients around the world. To that end, we continually review our manufacturing capacity, capabilities, processes and facilities. In order to support our future growth and drug development pipeline, we expanded our large molecule production capacity and built a large-scale biologics manufacturing facility in Solothurn, Switzerland. In the second quarter of 2021 a portion of this facility (the first manufacturing suite) received a GMP multi-product license from the SWISSMEDIC and was placed into service. The second manufacturing suite became operational in the first quarter of 2024. Solothurn has been approved for the manufacture of LEQEMBI by the FDA. We believe that the Solothurn facility will support our anticipated near to mid-term needs for the manufacturing of biologic assets. The plant represents a significant increase in our overall manufacturing capacity and is not yet being fully utilized, resulting in our recording of excess capacity charges. If we are unable to fully utilize our manufacturing facilities, we will incur additional excess capacity charges which would have a negative effect on our financial condition and results of operations.

In the longer term, our revenue growth will depend upon the successful clinical development, regulatory approval and launch of new commercial products as well as additional indications for our existing products, our ability to obtain

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

BUSINESS ENVIRONMENT

The biopharmaceutical industry and the markets in which we operate are intensely competitive. Many of our competitors are working to develop or have commercialized products similar to those we market or are developing and have considerable experience in undertaking clinical trials and in obtaining regulatory approval to market pharmaceutical products. In addition, the commercialization of certain of our own approved products, products of our collaborators and pipeline product candidates may negatively impact future sales of our existing products.

Our products and revenue streams continue to face increasing competition in many markets from generic versions, prodrugs and biosimilars of existing products as well as products approved under abbreviated regulatory pathways. Such products are likely to be sold at substantially lower prices than branded products. Accordingly, the introduction of such products as well as other lower-priced competing products may significantly reduce both the price that we are able to charge for our products and the volume of products we sell, which will negatively impact our revenue. In addition, in some markets, when a generic or biosimilar version of one of our products is commercialized, it may be automatically substituted for our product and significantly reduce our revenue in a short period of time.

Sales of our products depend, to a significant extent, on the availability and extent of adequate coverage, pricing and reimbursement from government health administration authorities, private health insurers and other organizations. When a new pharmaceutical product is approved, the availability of government and private reimbursement for that product may be uncertain, as is the pricing and amount for which that product will be reimbursed.

Drug prices are under significant scrutiny in the markets in which our products are prescribed, for example the IRA has certain provisions related to drug pricing. We expect drug pricing and other health care costs to continue to be subject to intense political and societal pressures on a global basis.

Our failure to obtain or maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business, reputation, revenue and results of operations, could curtail or eliminate our ability to adequately fund research and development programs for the discovery and commercialization of new products and/or could cause a decline or volatility in our stock price.

In addition to the impact of competition, pricing actions and other measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, our sales and operations could also be affected by other risks of doing business internationally, including the impact of public health epidemics on employees, the global economy and the delivery of healthcare treatments, geopolitical events, supply chain disruptions, foreign currency exchange fluctuations, changes in intellectual property legal protections and changes in trade regulations and procedures.

For a detailed discussion on our business environment, please read Item 1. Business, in our 2023 Form 10-K. For additional information on our competition and pricing risks that could negatively impact our product sales, please read Item 1A. Risk Factors included in this report.

TECFIDERA

Multiple TECFIDERA generic entrants are now in North America, Brazil and certain E.U. countries and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and we expect that TECFIDERA revenue will continue to decline in the future.

Following a favorable March 2023 decision of the CJEU affirming TECFIDERA's right to regulatory data and marketing protection and the EC determination in May 2023 that TECFIDERA is entitled to an additional year of market protection for its pediatric indication, we believe that TECFIDERA is entitled to regulatory marketing protection in the E.U. until at least February 2, 2025, and are seeking to enforce this protection. As of March 31, 2024, some of the TECFIDERA generics have not yet fully exited some E.U. markets. We are closely monitoring this situation and working to enforce our legal right to market protection. In addition, we will continue to enforce our EP 2 653 873 patent related to TECFIDERA, which expires in 2028.

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

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BUSINESS UPDATE REGARDING MACROECONOMIC CONDITIONS AND OTHER DISRUPTIONS

Significant portions of our business are conducted in Europe, Asia and other international geographies. Factors such as global health outbreaks, adverse weather events, geopolitical events, inflation, labor or raw material shortages and other supply chain disruptions could result in product shortages or other difficulties and delays or increased costs in manufacturing our products.

CURRENT ECONOMIC CONDITIONS

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

GEOPOLITICAL TENSIONS

Global disputes and interruptions in international relationships, including tariffs, trade protection measures, import or export licensing requirements and the imposition of trade sanctions or similar restrictions by the U.S. or other governments, affect our ability to do business. For example, tensions between the U.S. and China have led to a series of tariffs and sanctions being imposed by the U.S. on imports from China mainland, as well as other business restrictions, with additional restrictive measures being proposed.

We, and the pharmaceutical industry, utilize China-based partners for certain raw materials, ingredients and components for our pharmaceutical products and their delivery devices. Engaging alternative suppliers may involve seeking additional regulatory approvals and be costly in terms of time and resources needed. For example, certain early processes related to our newly acquired SKYCLARYS product rely on a single supplier based in China. We are continuing to evaluate SKYCLARYS' supply chain and prioritizing actions to mitigate risks associated with its manufacturing and our ability to supply patients.

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

For example. sanctions and other restrictions have been levied on the government and businesses in Russia. Although we do not have affiliates or employees, in either Russia or Ukraine, we do provide various therapies to patients in Russia through a distributor. In addition, new government sanctions on the export of certain manufacturing materials to Russia may delay or limit our ability to get new products approved. The impact of the conflict on our operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflict between Russia and Ukraine, its impact on regional and global economic conditions and whether the conflict spreads or has effects on countries outside Ukraine and Russia.

We will continue to monitor the ongoing conflict between Russia and Ukraine as well as the military conflict in the Middle East and assess any potential impacts on our business, supply chain, partners or customers, as well as any factors that could have an adverse effect on our results of operations. Revenue generated from sales in Russia and Ukraine represent less than 2.0% of total revenue for the three months ended March 31, 2024 and 2023. Additionally, revenue generated from sales in the broader Middle East region represents less than 2.0% of total revenue for the three months ended March 31, 2024 and 2023.

CLIMATE-RELATED DISCLOSURES

In March 2024 the SEC adopted final rules designed to enhance disclosures related to the impacts of climate-related matters. The final rules require disclosures of material climate-related risks, activities to mitigate or adapt to such risks, information about our board of directors' oversight of climate-related risks and management’s role in managing material climate-related risks and information on any climate-related targets or goals that are material to our business, results of operations or financial condition. In addition, the E.U. and California have enacted similar legislation and regulations. We are currently evaluating the potential impact that these new rules and laws will have on our business.

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FINANCIAL HIGHLIGHTS

As described below under Results of Operations, our net income and diluted earnings per share attributable to Biogen Inc. for the three months ended March 31, 2024, compared to the three months ended March 31, 2023, reflects the following:

TOTAL REVENUE

Decreased

$172.5 million or 7.0%

DILUTED EARNINGS (LOSS) PER SHARE

Increased

$0.03 or 1.1%

PRODUCT REVENUE

Decreased

$51.4 million or 2.9%

• MS revenue decreased $49.3 million, or 4.4%

• Rare disease revenue decreased $19.4 million, or 4.4%

• The decrease in MS product revenue was primarily due to a decrease in TECFIDERA demand as a result of multiple TECFIDERA generic entrants in North America, Brazil and certain E.U. countries, a decrease in Interferon demand due to competition as patients transition to higher efficacy therapies and a decrease in U.S. TYSABRI revenue primarily driven by increased competition and higher discounts and allowances.

• The decrease in rare disease revenue was due to a decrease in rest of world SPINRAZA revenue resulting primarily from the timing of shipments, which we expect to largely normalize throughout the remainder of 2024. Rest of world patient numbers have generally remained stable through the first quarter of 2024. We also saw a modest negative impact from increased competition and the unfavorable impact of foreign currency exchange. The decrease was partially offset by global SKYCLARYS revenue of $78.0 million in the first quarter of 2024.

TOTAL COST AND EXPENSE

Decreased

$199.0 million or 9.8%

• Cost of sales decreased $120.6 million, or 18.2%

• R&D expense decreased $117.7 million, or 20.6%

• SG&A expense decreased $23.5 million, or 3.9%

• The decrease in cost of sales was primarily due to favorable product mix from decreased contract manufacturing revenue and lower idle capacity charges, offset in part by $44.1 million in amortization costs associated with the acquired SKYCLARYS inventory fair value step-up adjustment.

• The decrease in research and development expense was primarily driven by cost-reduction measures realized in 2024 in connection with our Fit for Growth program and clinical trial close out costs incurred in 2023 related to ADUHELM.

• The decrease in selling, general and administrative expense was primarily due to cost-reduction measures realized in 2024 in connection with our Fit for Growth program, offset by an increase in operational spending on sales and marketing activities in support of LEQEMBI and SKYCLARYS as we continue to expand our U.S. and international product launches.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

• Cash, cash equivalents and marketable securities totaled approximately $1.1 billion as of March 31, 2024, compared to approximately $1.0 billion as of December 31, 2023.

• We generated $553.2 million of net cash flow from operations for the three months ended March 31, 2024.

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RECENT DEVELOPMENTS

DEVELOPMENTS IN KEY COLLABORATIVE RELATIONSHIPS

LEQEMBI (lecanemab)

United States

• In March 2024 Eisai completed the submission of LEQEMBI supplemental BLA for monthly IV maintenance dosing for the treatment of early Alzheimer's disease to the FDA.

Rest of World

• In March 2024 Eisai announced that deliberations at the CHMP regarding the MAA in the E.U. for lecanemab have been rescheduled due to procedural reasons at the EMA.

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

OTHER KEY DEVELOPMENTS

QALSODY (tofersen)

In February 2024 we announced the CHMP of the EMA adopted a positive opinion recommending a MAA under exceptional circumstances for tofersen, for the treatment of adults with ALS associated with a mutation in the SOD1 gene. If authorized by the EC, tofersen will be the first treatment approved in the E.U. to target a genetic cause of ALS.

SKYCLARYS (omaveloxolone)

In February 2024 the EC approved SKYCLARYS in the E.U. for the treatment of FA in adults and adolescents aged 16 years and older. SKYCLARYS is the first treatment approved within the E.U. for this rare, genetic, progressive neurodegenerative disease.

SALE OF PRIORITY REVIEW VOUCHER

On April 24, 2024, we entered into a definitive agreement with a third party to sell a rare pediatric disease priority review voucher. In consideration for the PRV we received $103.0 million upon the closing of the PRV purchase.

DISCONTINUED PROGRAMS AND STUDIES

ACORDA COLLABORATION

In January 2024 we notified Acorda of our decision to terminate our collaboration and license agreement, effective January 1, 2025. As a result of this termination, Acorda will regain global commercialization rights to FAMPYRA. On April 1, 2024, Acorda filed for bankruptcy protection and announced its intention to sell substantially all its assets to a third party. We are evaluating the impact of these developments on the transition process for the FAMPYRA rights.

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RESULTS OF OPERATIONS

REVENUE

The following revenue discussion should be read in conjunction with Note 5, Revenue, to our condensed consolidated financial statements included in this report.

Revenue is summarized as follows:

						For the Three Months Ended March 31,
(In millions, except percentages)						2024												2023												$ Change						% Change
Product revenue:
United States						$	746.1					32.6		%				$	701.4					28.5		%				$	44.7					6.4		%
Rest of world						965.8						42.1						1,061.9						43.1						(96.1)						(9.0)
Total product revenue, net						1,711.9						74.7						1,763.3						71.6						(51.4)						(2.9)
Revenue from anti-CD20 therapeutic programs						394.0						17.2						399.5						16.2						(5.5)						(1.4)
Contract manufacturing, royalty and other revenue						184.6						8.1						300.2						12.2						(115.6)						(38.5)
Total revenue						$	2,290.5					100.0		%				$	2,463.0					100.0		%				$	(172.5)					(7.0)		%

nm Not meaningful

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PRODUCT REVENUE

Product revenue is summarized as follows:

						For the Three Months Ended March 31,
						2024																								2023
(In millions)						United States						Rest of World						Total						% Total						United States						Rest of World						Total						% Total						$ Change						% Change
Multiple Sclerosis						$	503.2					$	572.7					$	1,075.9					62.8		%				$	546.1					$	579.1					$	1,125.2					63.8		%				$	(49.3)					(4.4)		%
Rare Disease						225.9						198.0						423.9						24.8						146.7						296.6						443.3						25.2						(19.4)						(4.4)
Biosimilars						3.7						193.2						196.9						11.5						8.2						184.2						192.4						10.9						4.5						2.3
Other(1)						13.3						1.9						15.2						0.9						0.4						2.0						2.4						0.1						12.8						nm
Total product revenue, net						$	746.1					$	965.8					$	1,711.9					100.0		%				$	701.4					$	1,061.9					$	1,763.3					100.0		%				$	(51.4)					(2.9)		%

nm Not meaningful

(1) Other includes FUMADERM, ADUHELM and ZURZUVAE, which became commercially available in the U.S. during the fourth quarter of 2023.

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MULTIPLE SCLEROSIS

• Global TECFIDERA revenue decreased $20.2 million, from $274.5 million in 2023 to $254.3 million in 2024, or 7.4%, driven by a decrease in demand as a result of multiple TECFIDERA generic entrants in North America, Brazil and certain E.U. countries.

• Global Interferon revenue decreased $2.0 million, from $245.6 million in 2023 to $243.6 million in 2024, or 0.8%, driven by a decrease in demand as patients transition to higher efficacy therapies, partially offset by an favorable channel dynamics in U.S. Interferons.

• Global VUMERITY revenue increased $19.3 million, from $108.2 million in 2023 to $127.5 million in 2024, or 17.8%, primarily due to an increase in global demand and favorable channel dynamics and an increase in pricing in U.S. VUMERITY.

• Global TYSABRI revenue decreased $41.5 million, from $472.8 million in 2023 to $431.3 million in 2024, or 8.8%, primarily due to a decrease in U.S. TYSABRI revenue driven by increased competition and higher discounts and allowances.

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

In 2024 we expect total MS revenue will continue to decline as a result of increasing competition for many of our MS products in both the U.S. and rest of world markets. We are also aware of a biosimilar entrant of TYSABRI that was approved in the U.S. in August 2023 and the E.U. in September 2023. We believe that future sales of TYSABRI may be adversely affected by the entrance of this biosimilar.

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RARE DISEASE

• U.S. SPINRAZA revenue increased $1.8 million, from $146.7 million in 2023 to $148.5 million in 2024, or 1.2%, primarily due to favorable net pricing.

• Rest of world SPINRAZA revenue decreased $103.8 million, from $296.6 million in 2023 to $192.8 million in 2024, or 35.0%. The majority of this year-over-year decline was due to the timing of shipments, which we expect to largely normalize throughout the remainder of 2024. Rest of world patient numbers have generally remained stable through the first quarter of 2024. We also saw a modest negative impact from increased competition and the unfavorable impact of foreign currency exchange.

• Global SKYCLARYS revenue was $78.0 million in 2024, including $73.0 million of U.S. SKYCLARYS revenue, which we began recognizing during the fourth quarter of 2023 subsequent to our acquisition of Reata, and $5.0 million of rest of world SKYCLARYS revenue, which was approved in the E.U. and became commercially available during the first quarter of 2024.

Rare disease revenue includes sales from SPINRAZA, QALSODY, which became commercially available in the U.S. during the second quarter of 2023, and SKYCLARYS, which was obtained as part of our acquisition of Reata in September 2023.

SKYCLARYS became commercially available in the U.S. during the second quarter of 2023 and we began recognizing revenue from SKYCLARYS in the U.S. during the fourth quarter of 2023, subsequent to our acquisition of Reata. In February 2024 the EC approved SKYCLARYS in the E.U. for the treatment of FA in adults and adolescents aged 16 years and older, which became commercially available in the E.U. during the first quarter of 2024.

In 2024 we expect growth in rare disease revenue as we continue to launch SKYCLARYS in the U.S. We expect global SPINRAZA revenue to decrease by low single digits.

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BIOSIMILARS

• For the three months ended March 31, 2024, compared to the same period of 2023, the increase in biosimilar revenue was primarily due to channel dynamics, offset in part by a decrease in pricing due to competitive pressures.

Biosimilars revenue includes sales from BENEPALI, IMRALDI, FLIXABI and BYOOVIZ. In 2023 BYOOVIZ became commercially available in certain international markets. During the third quarter of 2023 the FDA approved TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, which we expect to become commercially available during 2024.

In 2024 we anticipate modest growth in revenue from our biosimilars business. We continue to work with our third-party contract manufacturers for IMRALDI and BENEPALI to address supply constraints. If not resolved these supply constraints could have an adverse impact on 2024 sales. In addition, one of our contract manufacturers for IMRALDI and BENEPALI entered into a proposed acquisition by a third party, which is expected to close at the end of 2024. We are currently evaluating the impact this will have on our biosimilars business and working to implement mitigation activities.

We continue to evaluate strategic options for our biosimilars business.

REVENUE FROM ANTI-CD20 THERAPEUTIC PROGRAMS

Our share of RITUXAN, including RITUXAN HYCELA, GAZYVA and LUNSUMIO collaboration operating profits in the U.S., royalty revenue on sales of OCREVUS and other revenue from anti-CD20 therapeutic programs are summarized in the table below. For purposes of this discussion, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN.

						For the Three Months Ended March 31,
(In millions)						2024						2023
Royalty revenue on sales of OCREVUS						$	302.7					$	283.6
Biogen’s share of pre-tax profits in the U.S. for RITUXAN, GAZYVA and LUNSUMIO						87.1						112.5
Other revenue from anti-CD20 therapeutic programs						4.2						3.4
Total revenue from anti-CD20 therapeutic programs						$	394.0					$	399.5

ROYALTY REVENUE ON SALES OF OCREVUS

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in royalty revenue on sales of OCREVUS was primarily due to sales growth of OCREVUS in the U.S.

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

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BIOGEN'S SHARE OF PRE-TAX PROFITS IN THE U.S. FOR RITUXAN, GAZYVA AND LUNSUMIO

For the three months ended March 31, 2024, compared to the same period in 2023, the decrease in our share of pre-tax profits in the U.S. for RITUXAN, GAZYVA and LUNSUMIO was primarily due to a decrease in sales of RITUXAN in the U.S. resulting from competition from multiple biosimilar products.

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.

OTHER REVENUE FROM ANTI-CD20 THERAPEUTIC PROGRAMS

Other revenue from anti-CD20 therapeutic programs consists of our share of pre-tax co-promotion profits from RITUXAN in Canada, royalty revenue on sales of LUNSUMIO outside the U.S. and royalty revenue on net sales of COLUMVI in the U.S., which became commercially available during the second quarter of 2023.

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

CONTRACT MANUFACTURING, ROYALTY AND OTHER REVENUE

Contract manufacturing, royalty and other revenue is summarized as follows:

						For the Three Months Ended March 31,
(In millions)						2024						2023
Contract manufacturing revenue						$	152.2					$	306.9
Royalty and other revenue						32.4						(6.7)
Total contract manufacturing, royalty and other revenue						$	184.6					$	300.2

CONTRACT MANUFACTURING REVENUE

For the three months ended March 31, 2024, compared to the same period in 2023, the decrease in contract manufacturing revenue was primarily driven by higher volumes in 2023 due to the timing of batch production, which includes batches related to LEQEMBI that we began recognizing in the first quarter of 2023 upon the accelerated approval of LEQEMBI in the U.S.

In addition, as part of the 2020 sale of our Hillerød, Denmark manufacturing operations to FUJIFILM, we provided FUJIFILM with certain minimum batch production commitment guarantees, including batches related to our contract manufacturing arrangements. As of December 31, 2023, these batch commitments have been satisfied and we expect that our contract manufacturing revenue will be lower in 2024, compared to 2023, as we are no longer supplying contract manufacturing customers using Hillerød in this manner.

ROYALTY AND OTHER REVENUE

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

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

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RESERVES FOR DISCOUNTS AND ALLOWANCES

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

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

						For the Three Months Ended March 31,
(In millions)						2024						2023
Contractual adjustments						$	665.7					$	629.9
Discounts						187.6						181.2
Returns						10.6						4.5
Total discounts and allowances						$	863.9					$	815.6

For the three months ended March 31, 2024, reserves for discounts and allowances as a percentage of gross product revenue was 33.2% compared to 31.4% in the prior year comparative period.

CONTRACTUAL ADJUSTMENTS

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

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in contractual adjustments was primarily due to higher Medicaid and government rebates in the U.S., partially offset by lower government rebates in rest of world.

DISCOUNTS

Discounts include trade term discounts and wholesaler incentives.

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in discounts was primarily driven by higher purchase and volume discounts for biosimilars.

RETURNS

Product return reserves are established for returns made by wholesalers. In accordance with contractual terms, wholesalers are permitted to return product for reasons such as damaged or expired product. The majority of wholesaler returns are due to product expiration. Provisions for estimated product returns are recognized in the period the related revenue is recognized, resulting in a reduction to product sales.

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in returns was primarily driven by higher return rates in the U.S.

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

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COST AND EXPENSE

A summary of total cost and expense is as follows:

						For the Three Months Ended March 31,
(In millions, except percentages)						2024						2023						$ Change						% Change
Cost of sales, excluding amortization and impairment of acquired intangible assets						$	542.2					$	662.8					$	(120.6)					(18.2)		%
Research and development						452.9						570.6						(117.7)						(20.6)
Selling, general and administrative						581.5						605.0						(23.5)						(3.9)
Amortization and impairment of acquired intangible assets						78.3						50.2						28.1						56.0
Collaboration profit sharing/(loss reimbursement)						65.6						57.1						8.5						14.9
Restructuring charges						11.5						9.6						1.9						19.8
Other (income) expense, net						93.7						69.4						24.3						35.0
Total cost and expense						$	1,825.7					$	2,024.7					$	(199.0)					(9.8)		%

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COST OF SALES, EXCLUDING AMORTIZATION AND IMPAIRMENT OF ACQUIRED INTANGIBLE ASSETS

						For the Three Months Ended March 31,
(In millions)						2024						2023
Product						$	377.7					$	481.4
Royalty						164.5						181.4
Total cost of sales						$	542.2					$	662.8

For the three months ended March 31, 2024, compared to the same period in 2023, the decrease in product cost of sales was primarily due to lower cost of sales associated with contract manufacturing revenue and lower idle capacity charges, offset in part by $44.1 million in SKYCLARYS amortization costs. Contract manufacturing revenue includes LEQEMBI inventory produced for Eisai, beginning in the first quarter of 2023 upon the accelerated approval of LEQEMBI in the U.S. Cost of sales as a percentage of revenue was adversely affected by LEQEMBI batches due to minimal margins.

As a result of our acquisition of Reata in September 2023 we recorded a fair value step-up adjustment related to the acquired inventory of SKYCLARYS of approximately $1.3 billion. This fair value step-up adjustment will be amortized to cost of sales within our condensed consolidated statements of income when the inventory is sold, which is expected to be within approximately 3 years from the acquisition date. For the three months ended March 31, 2024, amortization from the fair value step-up adjustment, associated with SKYCLARYS, as a result of inventory sold was approximately $44.1 million. For additional information on our acquisition of Reata, please read Note 2, Acquisitions**, to our condensed consolidated financial statements included in this report.**

Write Downs and Other Charges

For the three months ended March 31, 2023, we recorded approximately $44.8 million of aggregate gross idle capacity charges.

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

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RESEARCH AND DEVELOPMENT

Research and development expense, as a percentage of total revenue, was 19.8% and 23.2% for the three months ended March 31, 2024 and 2023, respectively. For the three months ended March 31, 2024, compared to the same period in 2023, the decrease in research and development was primarily driven by cost-reduction measures realized in 2024 in connection with our Fit for Growth program and clinical trial close out costs incurred in 2023 related to ADUHELM.

EARLY STAGE PROGRAMS

Q1 2024 vs. Q1 2023

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

• discontinuation of BIIB131 for the treatment of acute ischemic stroke; and

• discontinuation of BIIB135 for the treatment of MS.

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

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

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

LATE STAGE PROGRAMS

Q1 2024 vs. Q1 2023

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

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

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

• discontinuation of BIIB093 for large hemispheric infarction; and

• advancement of TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, from late stage to marketed upon the approval of TOFIDENCE in the U.S.

MARKETED PROGRAMS

Q1 2024 vs. Q1 2023

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

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

• decreased spend in LEQEMBI due to the timing of clinical spend.

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

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

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

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Research and development expense is reported above based on the following classifications. The development stage reported is based upon the program status when incurred. Therefore, the same program could be reflected in different development stages in the same year. For several of our programs, the research and development activities are part of our collaborative and other relationships. Our costs reflect our share of the total costs incurred.

• Research and discovery:** represents costs incurred to support our discovery research and translational science efforts.

• Early stage programs:** are programs in Phase 1 or Phase 2 development.

• Late stage programs:** are programs in Phase 3 development or in registration stage.

• Marketed products:** includes costs associated with product lifecycle management activities including, if applicable, costs associated with the development of new indications for existing products.

• Other research and development costs:** A significant amount of our research and development costs consist of indirect costs incurred in support of overall research and development activities and non-specific programs, including activities that benefit multiple programs, such as management costs, as well as depreciation, information technology and facility-based expenses. These costs are considered other research and development costs in the table above and are not allocated to a specific program or stage.

Excluding any milestone and upfront payments, we expect our core research and development expense to decrease in 2024, while continuing to invest in our pipeline. This is primarily due to the continued realization of our cost savings initiatives. We intend to continue committing significant resources to targeted research and development opportunities where there is a significant unmet need and where a drug candidate has the potential to be highly differentiated.

SELLING, GENERAL AND ADMINISTRATIVE

For the three months ended March 31, 2024, compared to the same period in 2023, selling, general and administrative expense decreased by approximately 3.9% primarily due to cost-reduction measures realized in 2024 in connection with our Fit for Growth program, offset by an increase in operational spending on sales and marketing activities in support of LEQEMBI and SKYCLARYS as we continue to expand our U.S. and international product launches. For the three months ended March 31, 2023, selling, general and administrative expense included a $31.0 million obligation to Eisai related to the termination of the co-promotion agreement for our MS products in Japan during the first quarter of 2023. General and administrative expense decreased by approximately $8.8 million, or 5.1%, in the first quarter of 2024, compared to the same period in 2023, due to cost-reduction measures. Excluding exit-related costs and acquisition-related expenses incurred during the first quarter of 2024, general and administrative expense decreased by approximately $19.3 million, or 11.3%.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions**, to our condensed consolidated financial statements included in this report.** For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.

AMORTIZATION AND IMPAIRMENT OF ACQUIRED INTANGIBLE ASSETS

Our amortization expense is based on the economic consumption and impairment of intangible assets. Our most significant amortizable intangible assets are related to TYSABRI, AVONEX, SPINRAZA, VUMERITY and SKYCLARYS, which was obtained as part of our acquisition of Reata in September 2023. For additional information on our acquisition of Reata, please read Note 2, Acquisitions**, to our condensed consolidated financial statements included in this report.**

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in amortization and impairment of acquired intangible assets was primarily due to amortization for the Reata acquisition acquired intangible assets associated with SKYCLARYS. For the three months ended March 31, 2024 and 2023, we had no impairment charges.

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

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COLLABORATION PROFIT SHARING/(LOSS REIMBURSEMENT)

Collaboration profit sharing/(loss reimbursement) primarily includes Samsung Bioepis' 50.0% share of the profit or loss related to our biosimilars 2013 commercial agreement with Samsung Bioepis. In the third quarter of 2023 we began recognizing collaboration profit sharing/(loss reimbursement) related to Sage's 50.0% share of income and expense in the U.S. related to ZURZUVAE for PPD.

For the three months ended March 31, 2024, we recognized net profit-sharing expense of $60.6 million to reflect Samsung Bioepis' 50.0% share of the net collaboration profits, compared to a net profit-sharing expense of $57.1 million in the prior year comparative period.

For the three months ended March 31, 2024, we recognized net profit-sharing expense of approximately $5.0 million to reflect Sage's 50.0% share of net collaboration results in the U.S. for ZURZUVAE for PPD.

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

RESTRUCTURING CHARGES

2023 FIT FOR GROWTH RESTRUCTURING PROGRAM

In July 2023 we initiated additional cost saving measures as part of our Fit for Growth program to reduce operating costs, while improving operating efficiency and effectiveness. The Fit for Growth program is expected to generate approximately $1.0 billion in gross operating expense savings by the end of 2025, some of which will be reinvested in various initiatives. The Fit for Growth program is currently estimated to include net headcount reductions of approximately 1,000 employees and we expect to incur restructuring charges ranging from approximately $260.0 million to $280.0 million.

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

						For the Three Months Ended March 31, 2024
(In millions)						Severance Costs						Accelerated Depreciation and Other Costs												Total
Selling, general and administrative						$	—					$	1.4											$	1.4
Research and development						—						4.9												4.9
Restructuring charges						9.3						—												9.3
Total charges						$	9.3					$	6.3											$	15.6

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

REATA INTEGRATION

Following the close of our Reata acquisition in September 2023, we implemented an integration plan designed to realize operating synergies through cost savings and avoidance. Under this initiative, we estimate we will incur total integration charges ranging from approximately $35.0 million to $40.0 million, related to severance and employment costs, which are expected to be paid by the end of 2024. These amounts were substantially incurred during 2023.

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

						For the three months ended March 31, 2024
(In millions)						Severance Costs						Accelerated Depreciation and Other Costs												Total
Selling, general and administrative						$	—					$	1.8											$	1.8
Research and development						—						2.7												2.7
Restructuring charges						2.2						—												2.2
Total charges						$	2.2					$	4.5											$	6.7

In connection with our acquisition of Reata we assumed responsibility for a single-tenant, build-to-suit building of approximately 327,400 square feet of office and laboratory space located in Plano, Texas, with an initial lease term of 16 years. We do not intend to occupy this building and are evaluating opportunities to sublease the property.

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

OTHER (INCOME) EXPENSE, NET

For the three months ended March 31, 2024, compared to the same period in 2023, the change in other (income) expense, net primarily reflects lower interest income driven by lower cash balances in 2024, compared to the same period in 2023, partially offset by a decrease in our net unrealized losses on our holdings in equity securities.

NET (GAINS) LOSSES IN EQUITY SECURITIES

For the three months ended March 31, 2024, net unrealized and realized losses on our holdings in equity securities were approximately $25.7 million and $4.9 million, respectively, compared to net unrealized and realized losses of approximately $76.5 million and $1.6 million, respectively, in the prior year comparative period.

• The net unrealized losses recognized during the three months ended March 31, 2024, primarily reflect a decrease in the aggregate fair value of our investments in Sage and Denali common stock of approximately $27.7 million, partially offset by an increase in the fair value of Sangamo common stock of approximately $1.4 million.

• 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.

INCOME TAX PROVISION

						For the Three Months Ended March 31,
(In millions, except percentages)						2024						2023
Income before income tax (benefit) expense						$	464.8					$	438.3
Income tax (benefit) expense						71.4						50.7
Effective tax rate						15.4		%				11.6		%

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

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in our effective tax rate includes the impact of a resolution of an uncertain tax matter in the prior year related to tax credits and the non-cash tax effects of changes in the value of our equity investments, where we recorded larger unrealized losses in the prior year.

PILLAR TWO

The OECD has issued model rules, which generally provide for a jurisdictional minimum effective tax rate of 15.0%. Various countries have or are in the process of enacting legislation intended to implement the principles effective

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January 1, 2024. Our income tax provision for the three months ended March 31, 2024, reflects currently enacted legislation and guidance related to the OECD model rules.

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

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our financial condition is summarized as follows:

(In millions, except percentages)						As of March 31, 2024						As of December 31, 2023						$ Change						% Change
Financial assets:
Cash and cash equivalents						$	1,074.4					$	1,049.9					$	24.5					2.3		%
Marketable securities — current						—						—						—						—
Marketable securities — non-current						—						—						—						—
Total cash, cash equivalents and marketable securities						$	1,074.4					$	1,049.9					$	24.5					2.3		%
Borrowings:
Current portion of term loan						$	250.0					$	150.0					$	100.0					66.7		%
Notes payable and term loan						6,290.1						6,788.2						(498.1)						(7.3)
Total borrowings						$	6,540.1					$	6,938.2					$	(398.1)					(5.7)		%
Working capital:
Current assets						$	6,756.2					$	6,859.3					$	(103.1)					(1.5)		%
Current liabilities						(3,222.8)						(3,434.3)						211.5						(6.2)
Total working capital						$	3,533.4					$	3,425.0					$	108.4					3.2		%

OVERVIEW

We have historically financed and expect to continue to fund our operating and capital expenditures primarily through cash flow earned through our operations, as well as our existing cash resources. We believe that generic and biosimilar competition for many of our key products, the continued overall decline of our MS business and our investments in the launch of key new products and the development of our pipeline will have a significant adverse impact on our future cash flow from operations.

We believe that our existing funds, when combined with cash generated from operations and our access to additional financing resources, if needed, are sufficient to satisfy our operating, working capital, strategic alliance, milestone payment, capital expenditure and debt service requirements for the foreseeable future. In addition, we may choose to opportunistically return cash to shareholders and pursue other business initiatives, including acquisition and licensing activities. We may also seek additional funding through a combination of new collaborative agreements, strategic alliances and additional equity and debt financings or from other sources should we identify a significant new opportunity.

In April 2024 we received the remaining $437.5 million payment from Samsung BioLogics related to the sale of Samsung Bioepis. Additionally, in 2024 we plan to repay the remaining $250.0 million balance of our 2023 Term Loan three-year tranche.

For additional information on certain risks that could negatively impact our financial position or future results of operations, please read Item 1A. Risk Factors and Item 3. Quantitative and Qualitative Disclosures About Market Risk included in this report.

LIQUIDITY

WORKING CAPITAL

Working capital is defined as current assets less current liabilities. Our working capital was $3.5 billion and $3.4 billion as of March 31, 2024 and December 31, 2023, respectively. The change in working capital reflects a decrease in total current assets of approximately $103.1 million and a decrease in total current liabilities of approximately $211.5 million. The changes in total current assets and total current liabilities were primarily driven by the following:

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CURRENT ASSETS

• $24.5 million increase in cash, cash equivalents and current marketable securities**;**

• $59.6 million decrease in accounts receivable, net related to our ongoing operations; and

• $16.7 million decrease in other current assets partially due to the sale of a portion of our short-term strategic investments.

CURRENT LIABILITIES

• $269.0 million decrease in accrued expense and other primarily due to the timing of our annual incentive compensation payment; and

• $100.0 million increase in current portion of debt due to the reclassification of $250.0 million from long-term to short-term related to the three-year tranche of our 2023 Term Loan, partially offset by the repayment of $150.0 million related to the 365-day tranche of our 2023 Term Loan.

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

CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

As of March 31, 2024, we had cash, cash equivalents and marketable securities totaling approximately $1.1 billion compared to approximately $1.0 billion as of December 31, 2023. The increase in the balance was primarily due to cash flows from operations, partially offset by $400.0 million of cash used for the repayment of our 2023 Term Loan.

Until required for another use in our business, we typically invest our cash reserves in bank deposits, certificates of deposit, commercial paper, corporate notes, U.S. and foreign government instruments, overnight reverse repurchase agreements and other interest-bearing marketable debt instruments in accordance with our investment policy. It is our policy to mitigate credit risk in our cash reserves and marketable securities by maintaining a well-diversified portfolio that limits the amount of exposure as to institution, maturity and investment type. We have experienced no significant limitations in our liquidity resulting from uncertainties in the banking sector.

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

(In millions)						March 31, 2024						December 31, 2023
Denali						$	205.4					$	273.6
Sage						117.0						135.3
Sangamo						7.1						7.9
Total						$	329.5					$	416.8

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

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

CASH FLOW

The following table summarizes our cash flow activity:

						For the Three Months Ended March 31,
(In millions, except percentages)						2024						2023						% Change
Net cash flow provided by (used in) operating activities						$	553.2					$	455.3					21.5		%
Net cash flow provided by (used in) investing activities						(66.0)						(953.0)						(93.1)
Net cash flow provided by (used in) financing activities						(439.6)						(43.4)						912.9

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OPERATING ACTIVITIES

Operating cash flow is derived by adjusting our net income for:

• non-cash operating items such as depreciation and amortization, impairment charges, unrealized (gain) loss on strategic investments and share-based compensation;

• changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations; and

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

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in net cash flow provided by operating activities was primarily due to lower employee-benefit payments made during the first quarter of 2024, as compared to the same period in 2023, timing of payments and changes in non-cash adjustments to net income. The increase was partially offset by an unfavorable change in inventory.

INVESTING ACTIVITIES

For the three months ended March 31, 2024, compared to the same period in 2023, the decrease in net cash flow used in investing activities was primarily due to higher net purchases of marketable securities in 2023.

FINANCING ACTIVITIES

For the three months ended March 31, 2024, compared to the same period in 2023, the increase in net cash flow used in financing activities was primarily due to the repayment of our 2023 Term Loan for $400.0 million during the first quarter of 2024.

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

CAPITAL RESOURCES

DEBT AND CREDIT FACILITIES

LONG-TERM DEBT AND TERM LOAN CREDIT AGREEMENTS

Our long-term obligations primarily consist of long-term debt related to our Senior Notes with final maturity dates ranging between 2025 and 2051. As of March 31, 2024, our outstanding balance related to long-term debt was $6,290.1 million.

In connection with our acquisition of Reata in September 2023 we entered into a $1.5 billion term loan credit agreement (2023 Term Loan). On the closing date of the Reata acquisition we drew $1.0 billion from the 2023 Term Loan, comprised of a $500.0 million floating rate 364-day tranche and a $500.0 million floating rate three-year tranche. The remaining unused commitment of $500.0 million was terminated. As of December 31, 2023, we repaid $350.0 million of the 364--day tranche. The remaining $150.0 million portion of the 364-day tranche was subsequently paid during the first quarter of 2024. Additionally, during the first quarter of 2024 we repaid $250.0 million of the three-year tranche. As of March 31, 2024, we had $250.0 million outstanding under the three-year tranche of the 2023 Term Loan.

2020 REVOLVING CREDIT FACILITY

In January 2020 we entered into a $1.0 billion, five-year senior unsecured revolving credit facility under which we are permitted to draw funds for working capital and general corporate purposes. The terms of the revolving credit facility include a financial covenant that requires us not to exceed a maximum consolidated leverage ratio. As of March 31, 2024 and December 31, 2023, we had no outstanding borrowings and were in compliance with all covenants under this facility.

For a summary of the fair and carrying values of our outstanding borrowings as of March 31, 2024 and December 31, 2023, please read Note 8, Fair Value Measurements, to our condensed consolidated financial statements included in this report.

For additional information on our Senior Notes and credit facility please read, Note 13, Indebtedness, to our consolidated financial statements included in our 2023 Form 10-K.

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SHARE REPURCHASE PROGRAMS

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, 2024 and 2023. Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of March 31, 2024.

CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

CONTRACTUAL OBLIGATIONS

Our contractual obligations primarily consist of our obligations under non-cancellable operating leases, long-term debt obligations and defined benefit and other purchase obligations, excluding amounts related to uncertain tax positions, funding commitments, contingent development, regulatory and commercial milestone payments and contingent payments, as described below.

In addition, certain of our collaboration and licensing arrangements include royalty payment obligations. For additional information on our royalty payments please read, Note 22, Commitments and Contingencies, to our consolidated financial statements included in our 2023 Form 10-K.

There have been no material changes in our contractual obligations since December 31, 2023.

CONTINGENT DEVELOPMENT, REGULATORY AND COMMERCIAL MILESTONE PAYMENTS

Based on our development plans as of March 31, 2024, we could trigger potential future milestone payments to third parties of up to approximately $5.1 billion, including approximately $1.0 billion in development milestones, approximately $0.4 billion in regulatory milestones and approximately $3.7 billion in commercial milestones, as part of our various collaborations, including licensing and development programs. Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones. Because the achievement of these milestones was not considered probable as of March 31, 2024, such contingencies have not been recorded in our financial statements. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory or commercial milestones.

If certain clinical and commercial milestones are met, we may pay up to approximately $82.5 million in milestones in 2024 under our current agreements. This excludes potential opt-in payments.

OTHER FUNDING COMMITMENTS

As of March 31, 2024, we have several ongoing clinical studies in various clinical trial stages. Our most significant clinical trial expenditures are to CROs. The contracts with CROs are generally cancellable, with notice, at our option. We recorded accrued expense of approximately $40.6 million in our condensed consolidated balance sheets for expenditures incurred by CROs as of March 31, 2024. We have approximately $607.3 million in cancellable future commitments based on existing CRO contracts as of March 31, 2024.

TAX RELATED OBLIGATIONS

We exclude liabilities pertaining to uncertain tax positions from our summary of contractual obligations as we cannot make a reliable estimate of the period of cash settlement with the respective taxing authorities. As of March 31, 2024, we have approximately $160.4 million of liabilities associated with uncertain tax positions.

As of March 31, 2024 and December 31, 2023, we have accrued income tax liabilities of approximately $421.3 million and $419.5 million, respectively, under the Transition Toll Tax. Of the amounts accrued as of March 31, 2024, approximately $187.3 million is expected to be paid within one year. The Transition Toll Tax is being paid in installments over an eight-year period, which started in 2018, and will not accrue interest.

NEW ACCOUNTING STANDARDS

For a discussion of new accounting standards please read Note 1, Summary of Significant Accounting Policies, to our condensed consolidated financial statements included in this report.

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CRITICAL ACCOUNTING ESTIMATES

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

There have been no material changes to our critical accounting estimates since our 2023 Form 10-K. For a discussion of our other critical accounting estimates, please read Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2023 Form 10-K.