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

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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 8 of this quarterly report on Form 10-Q and our audited consolidated financial statements and the accompanying notes included in our 2024 Form 10-K.

The results of operations of HI-Bio, along with the estimated fair values of the assets acquired and liabilities assumed in the acquisition, have been included in our condensed consolidated financial statements since the closing of the HI-Bio acquisition on July 2, 2024.

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. 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. We market the first and only drug approved in the U.S., the E.U. and certain international markets for the treatment of FA in adults and adolescents aged 16 years and older. We are focused on advancing our pipeline in neurology, specialized immunology and rare diseases. We support our drug discovery and development efforts through internal research and development programs, external collaborations and acquisitions.

Our marketed products include TECFIDERA, VUMERITY, AVONEX, PLEGRIDY and TYSABRI for the treatment of MS; SPINRAZA for the treatment of SMA; SKYCLARYS for the treatment of FA; and QALSODY for the treatment of ALS.

We also have collaborations with Eisai on the commercialization of LEQEMBI for the treatment of Alzheimer's disease and Supernus on the commercialization of ZURZUVAE for the treatment of PPD. We have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, CLL and other conditions; RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL; GAZYVA for the treatment of CLL, follicular lymphoma and, following its approval in October 2025, lupus nephritis; 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; FLIXABI, an infliximab biosimilar referencing REMICADE; and BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, in certain international markets. We also have commercialization rights related to OPUVIZ, an aflibercept biosimilar referencing EYLEA, in certain international markets.

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 regularly review our manufacturing capacity, capabilities, processes and facilities. In order to support our future growth and drug development pipeline, we expanded our large molecule production capacity and built a large-scale biologics manufacturing facility in Solothurn, Switzerland. Solothurn is operational and has been approved for the manufacture of LEQEMBI. We believe that the Solothurn facility will support our anticipated near to mid-term needs for the manufacturing of biologic assets. The plant represents a significant increase in our overall manufacturing capacity. Additionally, we continue to invest to modernize, automate and support the capacity requirements for our pipeline and existing products at our existing manufacturing facilities in RTP, North Carolina. 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 and maintain patents and other rights related to our marketed products, assets originating from our research and development efforts and/or successful execution of external business development opportunities.

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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. 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 the introduction of new originator therapies, generics, biosimilars of existing products and products approved under abbreviated regulatory pathways. Some of these 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 has, and in the future, may significantly reduce both the price that we are able to charge for our products and the volume of products we sell, which can 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, including the ability for the U.S. government to set prices for certain drugs in Medicare. We expect drug pricing and other healthcare costs will continue to be subject to political and societal pressures on a global basis. As the policy environment remains dynamic, we will continue to monitor how uncertainty with respect to how the U.S. and foreign tariffs and the U.S. and international pricing may impact our business in the future.

Additionally, our ability to set the price for our products varies significantly from country to country and, as a result, so can the price or reimbursement of our products. Governments may use a variety of cost-containment measures to control the cost of products, including price cuts, mandatory rebates, value-based pricing and reference pricing (i.e., referencing prices in other countries and using those reference prices to set a price).

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, tariffs, 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 2024 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 European countries and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and we expect that TECFIDERA revenue will continue to decline. We are defending the validity of our EP 2 653 873 patent related to TECFIDERA which expires in 2028 in opposition proceedings before the Technical Boards of Appeal of the European Patent Office in November 2025. We are also engaged in litigation in Europe to defend and enforce national counterparts of our EP 2 653 873 patent, with mixed results as we have been unsuccessful in enjoining generic entry in several significant European markets.

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

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TYSABRI

A biosimilar entrant of TYSABRI was approved in the U.S. and the E.U. in 2023. We expect that future sales of TYSABRI will continue to be adversely affected by the entrance of this biosimilar in certain international markets.

GOODWILL

We review our goodwill for impairment annually, as of October 31, and whenever events or changes in circumstances indicate that the carrying value of the goodwill may not be recoverable. As part of this analysis, we compare the fair value of our one reporting unit to its carrying value through the assessment of qualitative, and, if necessary, quantitative factors. If the carrying value of the net assets assigned to the reporting unit exceeds the fair value of our reporting unit, we will record an impairment loss equal to the difference. As of our most recent annual impairment analysis, we had no accumulated impairment losses related to goodwill.

An interim goodwill impairment test based on quantitative factors may be required if adverse events indicate an impairment might be present. We monitor changes to our share price between annual impairment tests, and we believe that general deterioration in macroeconomic and industry-specific conditions may not be indicators of a goodwill impairment, as such conditions may not represent a significant adverse change to our underlying operating performance, cash flows, financial condition or liquidity. Should our market capitalization decline below the carrying value of our net assets for a sustained period, we would consider the length and severity of the decline and the reason for the decline when assessing whether potential goodwill impairment exists.

For additional information on goodwill, please read Note 7, Intangible Assets and Goodwill, to our condensed consolidated financial statements included in this report.

BUSINESS UPDATE REGARDING MACROECONOMIC CONDITIONS AND OTHER POTENTIAL 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, tariffs, inflation, labor or raw material shortages and other supply chain disruptions could result in product shortages or other difficulties and delays or increased costs in manufacturing our products.

Economic conditions remain uncertain as markets continue to be impacted in part by elevated inflation, higher interest rates, extreme weather events, global supply chain uncertainties and risks associated with geopolitical conflicts. Global supply chain disruptions, such as strikes, work stoppages, port congestion, port closures, trade restrictions, capacity constraints and other logistical problems, may affect our ability to do business.

INTERNATIONAL TRADE

Global disputes and interruptions in international relationships, including tariffs, trade protection measures, embargoes, import or export licensing requirements and the imposition of trade sanctions or similar restrictions, may affect our ability to do business and the costs that we incur in providing products to our patients.

The U.S. has imposed a baseline tariff on imports from all countries, subject to certain exceptions. Trade-related 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 and retaliatory tariffs imposed by China on U.S. imports.

The U.S. Secretary of Commerce has further initiated an investigation to determine the effects on the national security of imports of pharmaceuticals and pharmaceutical ingredients, including finished drug products, medical countermeasures, critical inputs such as active pharmaceutical ingredients, key starting materials and derivative products of those items, under Section 232 of the Trade Expansion Act of 1962.

There is a high degree of uncertainty concerning what future steps countries and economic blocs will take in response to changes in global trade rules and economics.

We have significant manufacturing presence in the U.S. While our portfolio is evolving, approximately three quarters of our 2024 U.S. product revenue was attributable to products which were largely manufactured in the U.S. However, we, and the pharmaceutical industry, do utilize partners and production facilities located outside the U.S. for certain raw materials, ingredients, processes and components for our pharmaceutical products and their delivery devices. Engaging alternative suppliers may involve seeking additional regulatory approvals and incurring additional costs and risks associated with new suppliers. This may be costly in terms of time and resources needed or result in delays.

Key products that are currently manufactured mainly outside the U.S. are TECFIDERA, VUMERITY and LEQEMBI. In 2024 we initiated a technology transfer process to enable us to manufacture LEQEMBI in the U.S.

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Although certain starting materials for SKYCLARYS rely on a single supplier based in China, the manufacturing process, including active pharmaceutical ingredients and drug substance, is primarily conducted in the U.S.

We are working to mitigate potential exposure from tariffs across our network.

We currently do not expect a material impact in 2025 from potential tariffs as previously announced by the U.S. Administration during 2025, even if the exemption for pharmaceuticals were to be removed. This is based on the expected timing of any potential tariffs, our manufacturing footprint, and our inventory levels and positioning, although the actual impact of tariffs on our business and financial condition may differ materially from our current expectations. We will continue to monitor the current and future global tariff landscape as it evolves.

GEOPOLITICAL TENSIONS

The ongoing geopolitical tensions related to Russia's invasion of Ukraine and the military conflict in the Middle East have resulted in global business disruptions and economic volatility. For example, sanctions and other restrictions have been levied on the government and businesses in Russia. Although we do not have affiliates or employees in either Russia or Ukraine, we do provide various therapies to patients in Russia through a distributor. 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 1.0% of total revenue for the three and nine months ended September 30, 2025 and 2024. Additionally, revenue generated from sales in the Middle East region represents less than 2.0% of total revenue for the three and nine months ended September 30, 2025 and 2024.

INFLATION REDUCTION ACT OF 2022

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 for the three and nine months ended September 30, 2025 and 2024. Preliminary guidance has been issued by the IRS and we expect additional guidance and regulations to be issued in future periods. We continue to assess its potential impact on our business and results of operations as further information becomes available.

The IRA also contains substantial drug pricing reforms that may have a significant impact on the pharmaceutical industry in the U.S. This includes the following:

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

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

(iii) to incentivize biosimilar development, the IRA provides an 8.0% Medicare Part B add-on payment for qualifying biosimilar products for a five-year period; and

(iv) Medicare Part D redesign which replaces the current coverage gap provisions and establishes a $2,000 cap for out-of-pocket costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for up to 10.0% of costs up to the $2,000 cap and up to 20.0% after that cap is reached. Manufacturers that qualify as either specified or specified small manufacturers will phase-in the new manufacturer liability for prescription drug costs over a 7-year period from 2025 to 2031 for certain Medicare Part D drugs dispensed to certain beneficiaries. In April 2024 CMS informed us that we qualified for the specified manufacturer exception pertaining to the Medicare Part D redesign.

We expect the IRA's drug pricing controls and Medicare Part D redesign may have an adverse impact on our full-year sales, particularly for our products that are more substantially reliant on Medicare reimbursement. We anticipate the IRA Medicare Part D redesign will have a modest net unfavorable impact to our 2025 revenue, ranging from approximately $50.0 million to $100.0 million, concentrated in our SKYCLARYS and MS portfolio product revenue, approximately a third of which could be associated with SKYCLARYS.

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The degree of impact from this legislation on our business depends on a number of forthcoming implementation actions by regulatory authorities, which may be further impacted by other legislative acts that may modify or replace the IRA, such as the OBBBA, as discussed below. The full extent of the IRA's impacts on our sales and, in turn, our business, remains uncertain.

2025 LEGISLATION AND TAX REFORM

On July 4, 2025, the U.S. signed into law the H.R.1 legislation formally titled "An Act to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14", commonly referred to as the OBBBA.

The OBBBA contains tax provisions, such as the permanent extension or revision of certain expiring provisions of the Tax Cuts and Jobs Act enacted in 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The provisions of the OBBBA have multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

The OBBBA did not result in any material adjustments to our total income tax provision for the three and nine months ended September 30, 2025, and we have adjusted our deferred tax balances to reflect the impacts of the OBBBA enactment. However, given the complexity of tax laws, related regulations and interpretations, our current estimates may require revision as additional information becomes available regarding the application of the OBBBA provisions.

The OBBBA also enacts significant potential changes to Medicaid funding and rescinds or does not continue elements of the PPACA. The OBBBA implements additional eligibility rules on government health plans, expands administrative procedures around enrollment, modifies how states can obtain federal funding for Medicaid and no longer extends ACA premium subsidies. Additional federal and state guidance is expected to be issued in order to implement these OBBBA provisions, most of which have effective dates in 2027 and 2028.

At this time, we are unable to determine the overall impact that the OBBBA will have on our business, results of operations and financial condition, or the impact the OBBBA will have on the pharmaceutical industry as a whole because any such impact will depend upon developing interpretations of the OBBBA provisions and implementing regulations, which may be material.

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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 September 30, 2025, compared to the three months ended September 30, 2024, reflects the following:


TOTAL REVENUE

Increased

$68.9 million or 2.8%


DILUTED EARNINGS PER SHARE

Increased

$0.51 or 19.2%


PRODUCT REVENUE, NET

Increased

$77.5 million or 4.4%

MS revenue increased $7.6 million, or 0.7%
Rare disease revenue increased $38.5 million, or 7.8%
The increase in MS product revenue was primarily due to an increase in U.S. VUMERITY driven by higher demand, timing of shipments and favorable pricing dynamics, partially offset by a decrease in global TECFIDERA demand due to increased competition outside the U.S. from generic competition. MS product revenue in the U.S. also benefited from favorable commercial mix and approximately $38.0 million of favorable changes in estimates from discounts and allowances.
The increase in rare disease product revenue was primarily due to our new product launches, including global SKYCLARYS revenue of $132.9 million and global QALSODY revenue of $26.4 million in the third quarter of 2025.
ZURZUVAE revenue of $55.3 million in the third quarter of 2025 was driven by the continued launch in the U.S.


TOTAL COST AND EXPENSE

Decreased

$37.4 million or 1.9%

Cost of sales increased $35.7 million, or 5.6%
R&D expense decreased $80.1 million, or 15.5%
SG&A expense increased $6.4 million, or 1.1%
The increase in cost of sales was primarily due to a charge recorded during the third quarter of 2025 of approximately $104.3 million related to a litigation matter and higher SKYCLARYS inventory step-up amortization costs, partially offset by lower cost of contract manufacturing revenue driven by the timing of batch releases and lower inventory write-offs during the third quarter of 2025.
The decrease in R&D expense was primarily driven by continued cost reduction measures realized in connection with our portfolio prioritization initiatives and our Fit for Growth program, offset in part by higher spend on clinical trials, including litifilimab and felzartamab. Higher clinical trial spend related to litifilimab was offset by $50.0 million in R&D funding received from Royalty Pharma.
The increase in SG&A expense was primarily due to increases 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 $4.0 billion as of September 30, 2025, compared to approximately $2.4 billion as of December 31, 2024.
We generated approximately $1.7 billion of net cash flow from operations for the nine months ended September 30, 2025, compared to approximately $2.1 billion in the prior year comparative period.
The year-over-year reduction in net cash flow from operations was due in part to higher worldwide tax payments in 2025 of approximately $840.7 million driven by the timing of estimated payments.
In May 2025 we issued our 2025 Senior Notes for an aggregate principal amount of $1.75 billion. In June 2025 we used the net proceeds to redeem our 4.050% Senior Notes due September 15, 2025, prior to maturity.

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RECENT DEVELOPMENTS

2025 ACQUISITIONS, COLLABORATIVE AND OTHER RELATIONSHIPS

ALCYONE THERAPEUTICS, INC.

In September 2025 we entered into a definitive agreement to acquire all of the issued and outstanding shares of Alcyone Therapeutics, Inc., a clinical-stage biotechnology company focused on pediatric care through precision CNS therapeutics and dosing platforms. Alcyone's lead asset is ThecaFlex DRx, an implantable subcutaneous port and catheter device being investigated for the intrathecal delivery of ASOs, which is designed to provide an alternative to repeat lumbar punctures in chronic intrathecal administration of medicines.

We have agreed to pay an upfront cash payment of $85.0 million upon closing, plus additional potential amounts payable upon the achievement of certain milestones related to the development and regulatory approval of ThecaFlex DRx for administering SPINRAZA and additional pipeline products.

We plan to account for this proposed acquisition as an asset acquisition as the value being acquired primarily relates to a single asset and plan to record the upfront payment within acquired in-process research and development, upfront and milestone expense within our condensed consolidated statements of income upon the completion of this proposed acquisition. We anticipate the proposed acquisition to close during the fourth quarter of 2025, subject to the satisfaction of customary closing conditions. Under the terms of this proposed acquisition, we expect to oversee the end-to-end development, manufacturing and commercialization of ThecaFlex DRx.

Alcyone's remaining therapeutic assets would be divested from Alcyone into Neela Therapeutics, Inc., a newly formed independent company, prior to the closing of this proposed acquisition. We anticipate to make a convertible debt investment of up to $5.0 million in Neela Therapeutics. Inc.

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

CITY THERAPEUTICS, INC. COLLABORATION

In May 2025 we entered into a strategic research arrangement with City Therapeutics to develop select novel RNAi therapies. Through this arrangement, City Therapeutics will leverage its next-generation RNAi engineering technologies to develop an RNAi trigger molecule combined with our proprietary drug delivery technology. The collaboration will initially focus on a single target that mediates key CNS diseases, utilizing tissue enhanced delivery technologies with the aim of allowing for systemic administration of medicines. We will be responsible for IND-enabling studies and global clinical development along with any regulatory submissions and all activities related to commercialization.

In connection with the closing of this transaction we made an upfront payment of $16.0 million to City Therapeutics, which was recognized as acquired in-process research and development, upfront and milestone expense within our condensed consolidated statements of income for the nine months ended September 30, 2025, and invested $30.0 million in exchange for a City Therapeutics convertible note, representing a minority equity interest in City Therapeutics, if converted. This convertible note was recorded as a component of investments and other assets within our condensed consolidated balance sheets as of September 30, 2025.

For additional information on our strategic research arrangement with City Therapeutics, please read Note 19, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.

STOKE THERAPEUTICS, INC. COLLABORATION

In February 2025 we entered into a collaboration and license agreement with Stoke to co-develop and commercialize zorevunersen, an investigational ASO that targets the SCN1A gene for the potential treatment of Dravet syndrome, a rare form of genetic epilepsy associated with refractory seizures and neurodevelopmental impairments. Zorevunersen dosed its first patient in August 2025, advancing zorevunersen to a global Phase 3 trial. Under the terms of this agreement, Stoke will continue to lead global development and retain exclusive development and commercialization rights for zorevunersen in the U.S., Canada and Mexico and we will have exclusive rights to commercialize zorevunersen in the rest of the world.

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In connection with the closing of this transaction we made an upfront payment of $165.0 million to Stoke, which was recognized as acquired in-process research and development, upfront and milestone expense within our condensed consolidated statements of income for the nine months ended September 30, 2025.

We also have an exclusive option to license certain future follow-on ASO products targeting the SCN1A gene in all territories worldwide other than the U.S., Canada and Mexico, in exchange for separate milestone, cost sharing and royalty considerations.

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

ROYALTY PHARMA FUNDING ARRANGEMENT

In February 2025 we entered into a funding agreement with Royalty Pharma under which we will receive up to $200.0 million in 2025 and up to $50.0 million in 2026 to co-fund our development costs for the litifilimab program. As there is a substantive transfer of risk to the financial partner for the amount invested, the development funding will be recognized by us as an obligation to perform contractual services. We plan to recognize this funding as a reduction to research and development expense within our condensed consolidated statements of income, proportionate to the related expense. For the three and nine months ended September 30, 2025, we recorded reductions to research and development expense of $50.0 million and $150.0 million, respectively, within our condensed consolidated statements of income.

If the litifilimab clinical trials are successful for the indications based on the applicable clinical trials, upon regulatory approval in the U.S. or certain major markets in the world, Royalty Pharma will be eligible to receive approval-based fixed milestone payments of up to a total of $250.0 million. The milestone payments due upon approval will be recorded as a component of other (income) expense, net within our condensed consolidated statements of income, when incurred.

If litifilimab receives regulatory approval, Royalty Pharma will be eligible to receive royalties of a mid-single digit percentage of the applicable net sales. Royalties on net sales will be recorded as cost of sales within our condensed consolidated statements of income.

For additional information on our funding arrangement with Royalty Pharma, please read Note 19, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.

DEVELOPMENTS IN KEY COLLABORATIVE RELATIONSHIPS

LEQEMBI (lecanemab)

United States

Key developments related to LEQEMBI in the U.S. consisted of the following:

In August 2025 the FDA approved the BLA for LEQEMBI subcutaneous autoinjector (IQLIK) for weekly maintenance dosing.
In January 2025 the FDA approved LEQEMBI monthly IV maintenance dosing for the treatment of early Alzheimer's disease.

Rest of World

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

In October 2025 Health Canada issued a Notice of Compliance with Conditions for LEQEMBI for the treatment of adult patients with a clinical diagnosis of mild cognitive impairment or mild dementia due to Alzheimer's disease who are either apolipoprotein E ε4 non-carriers or heterozygotes and who have confirmed amyloid pathology.
In September 2025 the National Medical Products Administration in China approved LEQEMBI monthly IV maintenance dosing for the treatment of early Alzheimer's disease.
In September 2025 the Therapeutic Goods Administration of Australia approved LEQEMBI for adults who are either apolipoprotein E ε4 non-carriers or heterozygous carriers.
In June 2025 we filed a request for arbitration in the International Court of Arbitration of the International Chamber of Commerce seeking adoption of a budget and commercialization plan for the European Territory that allocates commercialization activities to Biogen and Eisai in an equitable fashion taking into account our respective capabilities and provides a meaningful role for each party.

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In April 2025 the EC approved LEQEMBI in the E.U. for the treatment of adult patients with a clinical diagnosis of mild cognitive impairment and mild dementia due to Alzheimer's disease who are apolipoprotein E ε4 non-carriers or heterozygotes with confirmed amyloid pathology.

ZURZUVAE (zuranolone)

In September 2025 the EC approved ZURZUVAE in the E.U. for the treatment of PPD in adults following childbirth, offering the first and only treatment indicated for PPD in the E.U.
In August 2025 the Medicines and Healthcare products Regulatory Agency in the U.K. granted marketing authorization for ZURZUVAE for moderate to severe PPD in the U.K.

SALANERSEN (BIIB115)

In June 2025 we announced positive topline results from the Phase 1b study of salanersen, an ASO being developed for the treatment of SMA. Interim Phase 1b data shows children with SMA previously treated with gene therapy experienced a substantial slowing of neurodegeneration and clinically meaningful improvements in motor function following initiation of salanersen. We are currently engaging with regulators about the possibility of advancing salanersen to a Phase 3 registrational study.

OTHER KEY DEVELOPMENTS

FELZARTAMAB

In June 2025 we announced the initiation of dosing in the global Phase 3 PREVAIL study. This study will evaluate the efficacy and safety of the investigational drug felzartamab compared to placebo on proteinuria and preservation of kidney function in adults diagnosed with IgAN. In connection with the initiation of this dosing we accrued a $30.0 million milestone payment to MorphoSys, which was subsequently paid in July 2025. Additionally, in June 2025 we announced the initiation of dosing in the global Phase 3 PROMINENT study. This study will evaluate the efficacy and safety of the investigational drug felzartamab compared to tacrolimus in adults diagnosed with PMN.
In March 2025 we announced the initiation of dosing in the global Phase 3 TRANSCEND study. This study will evaluate the efficacy and safety of the investigational drug felzartamab compared to placebo in adult kidney transplant recipients diagnosed with late AMR. In connection with the initiation of this dosing we paid a $35.0 million milestone payment to MorphoSys in April 2025.

SPINRAZA (nusinersen)

In September 2025 the FDA issued a CRL for the supplemental NDA for a higher dose regimen of nusinersen for the treatment of SMA. The CRL requested an update to the technical information to be included in the Chemistry Manufacturing and Controls module of the supplemental NDA and did not cite any deficiencies in the clinical data of the high dose regimen. The CRL provided options for resolution and we have announced a plan to resubmit the application promptly based upon readily available information.
In January 2025 the FDA accepted for review the supplemental NDA and the EMA validated the application for a higher dose regimen of nusinersen for SMA. The higher dose regimen of nusinersen comprises a more rapid loading regimen, two 50 mg-doses 14 days apart, and higher maintenance regimen, 28 mg, every four months, compared to the currently approved dose of SPINRAZA.

SKYCLARYS (omaveloxolone)

In June 2025 we announced the initiation of dosing in the global Phase 3 BRAVE study. This study will evaluate the efficacy and safety of omaveloxolone in children with FA between the ages of two and sixteen years old.
In April 2025 SKYCLARYS was approved by the Medicines and Healthcare products Regulatory Agency in the U.K. and in Brazil. In March 2025 SKYCLARYS was approved by Health Canada.

QALSODY (tofersen)

In July 2025 the Medicines and Healthcare products Regulatory Agency in the U.K. approved QALSODY for the treatment of ALS in adults who have a mutation in the SOD1 gene.
In March 2025 Health Canada issued marketing authorization with conditions for QALSODY for the treatment of ALS in adults who have a mutation in the SOD1 gene. The authorization is conditional, pending the results of trials to verify its clinical benefit.

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BIIB080

In April 2025 the FDA granted Fast Track designation to BIIB080, an investigational ASO therapy targeting tau for the potential treatment of Alzheimer's disease.

DISCONTINUED PROGRAMS AND STUDIES

SALE OF TOFIDENCE

In March 2025 we completed the sale of our regulatory and commercial rights in the U.S. for TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, to Organon. Under the terms of this transaction, we received a payment of approximately $51.0 million in July 2025 and recognized a de minimis loss within our condensed consolidated statements of income for the nine months ended September 30, 2025.

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

CORPORATE MATTERS

2025 SENIOR NOTES

On May 12, 2025, we issued our 2025 Senior Notes for an aggregate principal amount of $1.75 billion. In June 2025 we used the net proceeds from the sale of our 2025 Senior Notes to redeem our 4.050% Senior Notes due September 15, 2025, prior to maturity.

For additional information relating to our 2025 Senior Notes, please read Note 13, Indebtedness, to our condensed consolidated financial statements included in this report.

NEW CORPORATE HEADQUARTERS LEASE

For additional information on our lease agreement, please read Note 12, Leases, to our condensed consolidated financial statements included in this report.

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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 September 30,
(In millions, except percentages)	2025				2024				$ Change		% Change
Product revenue, net:
United States	$	935.3	36.9	%	$	813.0	33.0	%	$	122.3	15.0	%
Rest of world	911.6		36.0		956.4		38.8		(44.8)		(4.7)
Total product revenue, net	1,846.9		72.9		1,769.4		71.8		77.5		4.4
Revenue from anti-CD20 therapeutic programs	493.9		19.4		446.2		18.1		47.7		10.7
Alzheimer's collaboration revenue(1)	42.7		1.7		18.6		0.8		24.1		129.6
Contract manufacturing, royalty and other revenue	151.2		6.0		231.6		9.3		(80.4)		(34.7)
Total revenue	$	2,534.7	100.0	%	$	2,465.8	100.0	%	$	68.9	2.8	%

	For the Nine Months Ended September 30,
(In millions, except percentages)	2025				2024				$ Change		% Change
Product revenue, net:
United States	$	2,630.2	34.5	%	$	2,405.8	33.3	%	$	224.4	9.3	%
Rest of world	2,821.9		37.1		2,975.1		41.2		(153.2)		(5.1)
Total product revenue, net	5,452.1		71.6		5,380.9		74.5		71.2		1.3
Revenue from anti-CD20 therapeutic programs	1,339.4		17.6		1,284.7		17.8		54.7		4.3
Alzheimer's collaboration revenue(1)	130.6		1.7		33.2		0.5		97.4		293.4
Contract manufacturing, royalty and other revenue	689.1		9.1		522.4		7.2		166.7		31.9
Total revenue	$	7,611.2	100.0	%	$	7,221.2	100.0	%	$	390.0	5.4	%

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

PRODUCT REVENUE

Product revenue is summarized as follows:


	For the Three Months Ended September 30,
	2025								2024
(In millions, except percentages)	United States		Rest of World		Total		% Total		United States		Rest of World		Total		% Total		$ Change		% Change









Multiple Sclerosis	$	642.9	$	418.6	$	1,061.5	57.5	%	$	546.0	$	507.9	$	1,053.9	59.6	%	$	7.6	0.7	%





Rare Disease	235.1		298.2		533.3		28.9		240.4		254.4		494.8		28.0		38.5		7.8







Biosimilars	2.0		194.8		196.8		10.6		4.3		192.3		196.6		11.1		0.2		0.1




Other(1)	55.3		—		55.3		3.0		22.3		1.8		24.1		1.3		31.2		129.5
Total product revenue, net	$	935.3	$	911.6	$	1,846.9	100.0	%	$	813.0	$	956.4	$	1,769.4	100.0	%	$	77.5	4.4	%

	For the Nine Months Ended September 30,
	2025								2024
(In millions, except percentages)	United States		Rest of World		Total		% Total		United States		Rest of World		Total		% Total		$ Change		% Change
Multiple Sclerosis	$	1,790.7	$	1,331.0	$	3,121.7	57.2	%	$	1,631.6	$	1,648.0	$	3,279.6	60.9	%	$	(157.9)	(4.8)	%
Rare Disease	700.9		938.7		1,639.6		30.1		703.8		749.0		1,452.8		27.0		186.8		12.9
Biosimilars	8.8		550.5		559.3		10.3		19.1		572.5		591.6		11.0		(32.3)		(5.5)
Other(1)	129.8		1.7		131.5		2.4		51.3		5.6		56.9		1.1		74.6		131.1
Total product revenue, net	$	2,630.2	$	2,821.9	$	5,452.1	100.0	%	$	2,405.8	$	2,975.1	$	5,380.9	100.0	%	$	71.2	1.3	%

(1) Other includes ZURZUVAE, FUMADERM and ADUHELM.

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MULTIPLE SCLEROSIS

Global VUMERITY revenue increased $56.5 million, from $158.1 million in 2024 to $214.6 million in 2025, or 35.7%, primarily due to an increase in U.S. VUMERITY driven by higher demand, timing of shipments and favorable pricing dynamics, as well as a favorable change in estimate of approximately $13.0 million related to rebates and discounts in the U.S.
Global TYSABRI revenue increased $25.7 million, from $406.1 million in 2024 to $431.8 million in 2025, or 6.3%, primarily due to higher net pricing in the U.S. and a favorable change in estimate related to rebates and discounts in the U.S., partially offset by a decrease in global TYSABRI demand due to increased competition, including the impacts from a biosimilar entrant of TYSABRI in Europe.
Global Interferon revenue increased $9.4 million, from $237.5 million in 2024 to $246.9 million in 2025, or 4.0%, primarily due to a favorable change in estimate of approximately $18.0 million related to rebates and discounts. This increase was partially offset by a decrease in rest of world Interferon revenue as patients continue to transition to higher efficacy therapies.
Global TECFIDERA revenue decreased $64.6 million, from $232.8 million in 2024 to $168.2 million in 2025, or 27.7%, driven by a decrease in demand resulting from multiple TECFIDERA generic entrants.

Global VUMERITY revenue increased $114.3 million, from $451.4 million in 2024 to $565.7 million in 2025, or 25.3%, primarily due to an increase in U.S. VUMERITY driven by higher demand and a favorable change in estimate of approximately $40.0 million related to rebates and discounts in the U.S., partially offset by charges related to the IRA redesign.
Global TYSABRI revenue decreased $31.7 million, from $1,299.6 million in 2024 to $1,267.9 million in 2025, or 2.4%, primarily due to increased competition in rest of world, including the impacts from a biosimilar entrant of TYSABRI in Europe. The decrease was partially offset by a favorable change in estimate of approximately $16.0 million related to rebates and discounts and favorable inventory dynamics in the U.S.
Global Interferon revenue decreased $12.1 million, from $732.0 million in 2024 to $719.9 million in 2025, or 1.7%, driven by a decrease in demand as patients transition to higher efficacy therapies, offset in part by a favorable change in estimate of approximately $32.0 million related to rebates and discounts in the U.S.
Global TECFIDERA revenue decreased $171.4 million, from $739.3 million in 2024 to $567.9 million in 2025, or 23.2%, driven by a decrease in demand as a result of multiple TECFIDERA generic entrants.

MS revenue includes sales from TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA. Effective January 1, 2025, our collaboration and license agreement for FAMPYRA global commercialization rights was terminated and we expect to recognize minimal revenue in 2025.

In 2025 we expect total MS revenue will continue to decline as a result of increasing competition for many of our MS products in both the U.S. and rest of world markets. We expect TECFIDERA revenue will be adversely impacted by accelerating generic competition in certain markets in the E.U. for at least the remainder of the year. Additionally, a biosimilar entrant of TYSABRI was approved in the U.S. and the E.U. in 2023. We expect that future sales of TYSABRI will continue to be adversely affected by the entrance of this biosimilar in certain international markets.

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RARE DISEASE

U.S. SPINRAZA revenue increased $0.1 million, from $153.1 million in 2024 to $153.2 million in 2025, or 0.1%.
Rest of world SPINRAZA revenue decreased $7.5 million, from $228.3 million in 2024 to $220.8 million in 2025, or 3.3%, partially due to lower demand and pricing adjustments during the third quarter of 2025, partially offset by the favorable impact of foreign currency exchange.
Global SKYCLARYS revenue increased $30.6 million, from $102.3 million in 2024 to $132.9 million in 2025, or 29.9%, primarily related to an increase in rest of world sales volumes driven by the continued launch in Europe and certain markets in the Middle East, partially offset by an unfavorable Medicare-related adjustment in the U.S. during the third quarter of 2025 resulting from the IRA redesign.
Global QALSODY revenue increased $15.3 million, from $11.1 million in 2024 to $26.4 million in 2025, or 137.8%, primarily related to an increase in rest of world sales volumes driven by the continued launch in international markets.

U.S. SPINRAZA revenue decreased $2.0 million, from $458.9 million in 2024 to $456.9 million in 2025, or 0.4%.
Rest of world SPINRAZA revenue increased $40.8 million, from $692.9 million in 2024 to $733.7 million in 2025, or 5.9%, partially due to a one-time VAT refund received in 2025 of approximately $18.1 million and the timing of shipments in rest of world markets, partially offset by lower demand and the unfavorable impact of foreign currency exchange.
Global SKYCLARYS revenue increased $106.8 million, from $280.3 million in 2024 to $387.1 million in 2025, or 38.1%, primarily related to an increase in rest of world sales volumes driven by the continued launch in Europe and certain markets in the Middle East.
Global QALSODY revenue increased $41.2 million, from $20.7 million in 2024 to $61.9 million in 2025, or 199.0%, primarily related to an increase in rest of world sales volumes driven by the continued launch in international markets.

Rare disease revenue includes sales from SPINRAZA, QALSODY and SKYCLARYS, which became commercially available in the E.U. during the first quarter of 2024.

In 2025 we expect growth in rare disease revenue as we continue to launch SKYCLARYS in the U.S., Europe and in certain rest of world markets. We anticipate global SPINRAZA revenue growth to be relatively flat in 2025.

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BIOSIMILARS

For the three months ended September 30, 2025, compared to the same period of 2024, the increase in biosimilar revenue was primarily due to an increase in pricing driven by a one-time VAT refund received during the third quarter of 2025. The increase was offset by a decrease in sales volumes related to IMRALDI.
For the nine months ended September 30, 2025, compared to the same period in 2024, the decrease in biosimilar revenue was primarily due to a decrease in sales volumes related to IMRALDI, the unfavorable impact of foreign currency exchange and a decrease in pricing due to competitive pressures in Europe.

Biosimilars revenue includes sales from BENEPALI, IMRALDI, FLIXABI, BYOOVIZ and TOFIDENCE. In 2025 we completed the sale of our rights to TOFIDENCE and BYOOVIZ.

We continue to work with our third-party contract manufacturers for IMRALDI and BENEPALI to address supply constraints. If not resolved these supply constraints could have an adverse impact on 2025 sales. In addition, one of our contract manufacturers for IMRALDI and BENEPALI was acquired by a third party in December 2024. We have evaluated the impact this will have on our biosimilars business and have mitigation activities in progress designed to ensure supply continuity.

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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 September 30,				For the Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Royalty revenue on sales of OCREVUS	$	386.4	$	346.8	$	1,029.0	$	985.8
Biogen’s share of pre-tax profits in the U.S. for RITUXAN, GAZYVA and LUNSUMIO	101.0		94.8		292.4		285.3
Other revenue from anti-CD20 therapeutic programs	6.5		4.6		18.0		13.6
Total revenue from anti-CD20 therapeutic programs	$	493.9	$	446.2	$	1,339.4	$	1,284.7

ROYALTY REVENUE ON SALES OF OCREVUS

For the three and nine months ended September 30, 2025, compared to the same periods in 2024, the increases in royalty revenue on sales of OCREVUS were 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.

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

For the three and nine months ended September 30, 2025, compared to the same periods in 2024, the increases in our share of pre-tax profits in the U.S. for RITUXAN, GAZYVA and LUNSUMIO were primarily due to increases in sales volumes of GAZYVA of 8.7% and 12.9%, respectively.

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.

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.

ALZHEIMER'S COLLABORATION REVENUE

Alzheimer's collaboration revenue consists of our 50.0% share of LEQEMBI product revenue, net and cost of sales, including royalties, as we are not the principal. We began recognizing Alzheimer's collaboration revenue upon the accelerated approval of LEQEMBI in the U.S. during the first quarter of 2023.

For the three and nine months ended September 30, 2025, we recognized Alzheimer's collaboration revenue of approximately $42.7 million and $130.6 million, respectively, compared to $18.6 million and $33.2 million, respectively, in the prior year comparative periods. The increases were primarily due to higher sales volumes driven by the continued launch of LEQEMBI in the U.S. and international markets.

Additionally, for the nine months ended September 30, 2025, Alzheimer's collaboration revenue reflects the favorable impact from the timing of shipments to China during the second quarter of 2025 as we optimized our global inventory positions.

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CONTRACT MANUFACTURING, ROYALTY AND OTHER REVENUE

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


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Contract manufacturing revenue	$	141.5	$	221.9	$	648.8	$	474.1
Royalty and other revenue	9.7		9.7		40.3		48.3
Total contract manufacturing, royalty and other revenue	$	151.2	$	231.6	$	689.1	$	522.4

CONTRACT MANUFACTURING REVENUE

Contract manufacturing revenue primarily reflects amounts earned under contract manufacturing agreements with our strategic customers and batches of LEQEMBI related to our collaboration with Eisai.

For the three months ended September 30, 2025, compared to the same period in 2024, the decrease in contract manufacturing revenue was primarily due to lower manufacturing batch releases during the third quarter of 2025 driven by the acceleration of timing for manufacturing batch releases during the first half of 2025, as discussed below.

For the nine months ended September 30, 2025, compared to the same period in 2024, the increase in contract manufacturing revenue was primarily driven by the accelerated timing of certain batch commitments related to our contract manufacturing business during the first half of 2025 in preparation for expected plant maintenance activities in the fourth quarter of 2025.

Full-year contract manufacturing revenue for 2025 is anticipated to remain relatively flat when compared to 2024, due in part to planned plant maintenance activities in the fourth quarter of 2025.

ROYALTY AND OTHER REVENUE

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

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

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.

The degree of impact from this legislation on our business depends on a number of forthcoming implementation actions by regulatory authorities, which may be further impacted by other legislative acts that may modify or replace the IRA, such as the OBBBA. The full extent of the IRA's impacts on our sales and, in turn, our business, remains uncertain.

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


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Contractual adjustments	$	632.2	$	643.2	$	1,970.6	$	1,971.1
Discounts	213.7		207.8		609.2		612.7
Returns	3.5		5.4		21.7		28.7
Total discounts and allowances	$	849.4	$	856.4	$	2,601.5	$	2,612.5

For the three and nine months ended September 30, 2025, reserves for discounts and allowances as a percentage of gross product revenue were 31.2% and 32.0%, respectively, compared to 32.6% and 32.4%, respectively, in the prior year comparative periods.

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 and nine months ended September 30, 2025, compared to the same periods in 2024, the decreases in contractual adjustments were driven by favorable changes in estimates of approximately $45.0 million and $105.0 million, respectively, primarily due to lower managed care rebates, as well as lower co-pay assistance and Medicaid rebates in the U.S., offset in part by higher Medicare manufacturer reserves driven by the IRA Medicare Part D redesign and higher government rebates in rest of world.

DISCOUNTS

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

For the three months ended September 30, 2025, compared to the same period in 2024, the increase in discounts was primarily driven by higher volume discounts in the U.S. and rest of world for TYSABRI, partially offset by lower purchase discounts in rest of world.

For the nine months ended September 30, 2025, compared to the same period in 2024, the decrease in discounts was primarily driven by lower purchase discounts in rest of world and lower volume discounts for U.S. biosimilars, partially offset by higher volume discounts in the U.S. for TYSABRI.

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 and nine months ended September 30, 2025, compared to the same periods in 2024, the decreases in returns were primarily driven by lower returns in the U.S., partially offset by higher returns in rest of world.

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 September 30,
(In millions, except percentages)	2025		2024		$ Change		% Change
Cost of sales, excluding amortization and impairment of acquired intangible assets	$	674.4	$	638.7	$	35.7	5.6	%
Research and development	436.1		516.2		(80.1)		(15.5)
Acquired in-process research and development, upfront and milestone expense	2.1		26.5		(24.4)		(92.1)
Selling, general and administrative	594.8		588.4		6.4		1.1
Amortization and impairment of acquired intangible assets	135.7		130.3		5.4		4.1
Collaboration profit sharing/(loss reimbursement)	87.2		69.3		17.9		25.8
(Gain) loss on fair value remeasurement of contingent consideration	5.6		23.8		(18.2)		(76.5)

Restructuring charges	7.4		6.8		0.6		8.8

Other (income) expense, net	34.1		14.8		19.3		130.4
Total cost and expense	$	1,977.4	$	2,014.8	$	(37.4)	(1.9)	%

	For the Nine Months Ended September 30,
(In millions, except percentages)	2025		2024		$ Change		% Change
Cost of sales, excluding amortization and impairment of acquired intangible assets	$	1,908.7	$	1,726.9	$	181.8	10.5	%
Research and development	1,269.2		1,467.0		(197.8)		(13.5)
Acquired in-process research and development, upfront and milestone expense	249.4		42.5		206.9		486.8
Selling, general and administrative	1,751.1		1,723.7		27.4		1.6
Amortization and impairment of acquired intangible assets	378.4		295.5		82.9		28.1
Collaboration profit sharing/(loss reimbursement)	220.3		197.3		23.0		11.7
(Gain) loss on fair value remeasurement of contingent consideration	28.4		23.8		4.6		19.3

Restructuring charges	42.0		24.9		17.1		68.7
Gain on sale of priority review voucher, net	—		(88.6)		88.6		nm
Other (income) expense, net	151.2		193.7		(42.5)		(21.9)
Total cost and expense	$	5,998.7	$	5,606.7	$	392.0	7.0	%

nm Not meaningful

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


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
(In millions)	2025		2024		2025		2024
Product	$	384.0	$	468.2	$	1,261.2	$	1,204.3
Royalty	290.4		170.5		647.5		522.6
Total cost of sales	$	674.4	$	638.7	$	1,908.7	$	1,726.9

PRODUCT COST OF SALES

For the three months ended September 30, 2025, compared to the same period in 2024, the decrease in product cost of sales was primarily due to lower cost of contract manufacturing revenue driven by the timing of batch releases and lower inventory write-offs, partially offset by higher SKYCLARYS inventory step-up amortization costs.

For the nine months ended September 30, 2025, compared to the same period in 2024, the increase in product cost of sales was primarily due to higher contract manufacturing revenue driven by the timing of batch releases and higher SKYCLARYS inventory step-up amortization costs, partially offset by lower inventory write-offs.

Contract manufacturing revenue includes LEQEMBI inventory produced for Eisai. Cost of sales as a percentage of revenue was adversely affected by LEQEMBI batches due to lower margins associated with this business.

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. This fair value step-up adjustment is being amortized to cost of sales within our condensed consolidated statements of income as the inventory is sold or used for clinical purposes. We expect this amount to be fully amortized by the end of 2028. For the three and nine months ended September 30, 2025, amortization from the fair value step-up adjustment was approximately $61.5 million and $165.4 million, respectively, compared to $48.4 million and $136.6 million, respectively, in the prior year comparative periods.

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. For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in our 2024 Form 10-K.

Write Downs and Other Charges

We had no significant gross idle capacity charges for the three and nine months ended September 30, 2025 and 2024.

ROYALTY COST OF SALES

For the three and nine months ended September 30, 2025, compared to the same periods in 2024, the increases in royalty cost of sales were primarily due to a charge recorded during the third quarter of 2025 of approximately $104.3 million related to a litigation matter. For additional information on our litigation matters, please read Note 21, Litigation, 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 17.2% and 20.9% for the three months ended September 30, 2025 and 2024, respectively.

For the three months ended September 30, 2025, compared to the same period in 2024, the decrease in research and development was primarily driven by continued cost reduction measures realized in connection with our portfolio prioritization initiatives and our Fit for Growth program as well as $42.5 million of equity-based compensation expense recognized in 2024 related to the HI-Bio acquisition. This decrease was offset in part by higher spend on clinical trials, including litifilimab and felzartamab. Higher clinical trial spend related to litifilimab was offset by $50.0 million in research and development funding received from Royalty Pharma.

EARLY STAGE PROGRAMS

Q3 2025 vs. Q3 2024

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

advancement of felzartamab for AMR, IgAN and PMN to late stage.

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

development of salanersen for the treatment of SMA

LATE STAGE PROGRAMS

Q3 2025 vs. Q3 2024

The increase in late stage program expense was driven by an increase in costs associated with:

the development of felzartamab for AMR, IgAN and PMN; and
development of litifilimab for the treatment of CLE and SLE, offset by Royalty Pharma funding of $50.0 million.

MARKETED PROGRAMS

Q3 2025 vs. Q3 2024

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

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

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

increased spend on SKYCLARYS for the treatment of pediatric FA.

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Research and development expense, as a percentage of total revenue, was 16.7% and 20.3% for the nine months ended September 30, 2025 and 2024, respectively.

For the nine months ended September 30, 2025, compared to the same period in 2024, the decrease in research and development was primarily driven by continued cost reduction measures realized in connection with our portfolio prioritization initiatives and our Fit for Growth program, approximately $48.5 million of step-up amortization related to SKYCLARYS inventory recorded in the second quarter of 2024 and approximately $42.5 million of equity-based compensation expense recognized in 2024 related to the HI-Bio acquisition. This decrease was offset in part by higher spend on clinical trials, including litifilimab and felzartamab. Higher clinical trial spend related to litifilimab was offset by $150.0 million in research and development funding received from Royalty Pharma.

EARLY STAGE PROGRAMS

YTD 2025 vs. YTD 2024

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

discontinuation of BIIB121 for the treatment of Angelman syndrome;
advancement of litifilimab for the treatment of CLE into late stage;
discontinuation of BIIB143 for the treatment of diabetic neuropathic pain; and
discontinuation of BIIB105 for the treatment of ALS.

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

development of BIIB080 for the treatment of Alzheimer's disease;
development of salanersen for the treatment of SMA;
development of felzartamab for IgAN and PMN prior to advancement to late stage; and
development of felzartamab for lupus nephritis.

LATE STAGE PROGRAMS

YTD 2025 vs. YTD 2024

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

development of felzartamab for AMR, IgAN and PMN; and
development of litifilimab for the treatment of CLE and SLE, offset by Royalty Pharma funding of $150.0 million.

MARKETED PROGRAMS

YTD 2025 vs. YTD 2024

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

decreased spend on LEQEMBI for the treatment of Alzheimer's disease; and
$48.5 million of step-up amortization related to SKYCLARYS inventory recorded in the prior year comparative period.

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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.

We expect our core research and development expense to decrease in 2025, due to our portfolio prioritization initiatives, our Fit for Growth program and the research and development funding received from Royalty Pharma. We intend to continue committing significant resources to targeted research and development opportunities while continuing to invest in our pipeline, such as our acquisition of HI-Bio in July 2024, where there is a significant unmet need and where a drug candidate has the potential to be highly differentiated.

ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT, UPFRONT AND MILESTONE EXPENSE

During the first quarter of 2025 we began presenting acquired in-process research and development, upfront and milestone expense as a separate line item in our condensed consolidated statements of income. Acquired in-process research and development, upfront and milestone expense includes costs incurred in connection with collaboration and license agreements such as upfront and milestone payments and, when applicable, premiums on equity securities and asset acquisitions of acquired in-process research and development, which were previously included in research and development expense.

For the nine months ended September 30, 2025, compared to the same period in 2024, the increase in acquired in-process research and development, upfront and milestone expense was primarily due to a $30.0 million milestone payment to MorphoSys accrued during the second quarter of 2025 in connection with the first patient dosed in a Phase 3 clinical trial of felzartamab for the treatment of IgAN, a $16.0 million upfront payment made to City Therapeutics in connection with the closing of our strategic research arrangement in May 2025, a $165.0 million upfront payment made to Stoke in connection with the closing of our collaboration and license agreement in February 2025, as well as a $35.0 million milestone payment to MorphoSys accrued during the first quarter of 2025 in connection with the first patient dosed in a Phase 3 clinical trial of felzartamab for the treatment of AMR.

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

SELLING, GENERAL AND ADMINISTRATIVE

For the three and nine months ended September 30, 2025, compared to the same periods in 2024, selling, general and administrative expense increased by approximately 1.1% and 1.6%, respectively, primarily due to increases 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. The increases were partially offset by the realization of our cost-reduction measures in connection with our Fit for Growth program.

We expect a slight increase in full-year 2025 selling, general and administrative expense, as compared to full-year 2024, due to continued spend related to LEQEMBI and SKYCLARYS product launches in the U.S. and international markets.

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.

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For the three and nine months ended September 30, 2025, amortization of acquired intangible assets, excluding impairment charges, totaled $135.7 million and $374.9 million, respectively, compared to $110.1 million and $275.3 million, respectively, in the prior year comparative periods. The increases were primarily due to amortization for the acquired intangible assets associated with SKYCLARYS and TYSABRI.

For the three months ended September 30, 2025, we had no impairment charges. For the nine months ended September 30, 2025, amortization and impairment of acquired intangible assets reflects the impact of a $3.5 million impairment charge related to a compound acquired from HI-Bio. For the three and nine months ended September 30, 2024, amortization and impairment of acquired intangible assets reflects impairment charges of approximately $20.2 million related to intangible assets associated with the termination of Samsung Bioepis' commercialization rights during the third quarter of 2024.

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.

COLLABORATION PROFIT SHARING/(LOSS REIMBURSEMENT)

Collaboration profit sharing/(loss reimbursement) includes Samsung Bioepis' 50.0% share of the profit or loss related to our biosimilars 2013 commercial agreement with Samsung Bioepis and collaboration profit sharing/(loss reimbursement) related to Supernus' 50.0% share of the profit or loss in the U.S. related to ZURZUVAE for PPD.

For the three and nine months ended September 30, 2025, we recognized net profit-sharing expense of approximately $66.5 million and $171.7 million, respectively, to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits, compared to net profit-sharing expense of approximately $60.3 million and $176.8 million, respectively, in the prior year comparative periods.

For the three and nine months ended September 30, 2025, we recognized net profit-sharing expense of approximately $20.7 million and $48.6 million, respectively, to reflect Supernus' 50.0% share of the net collaboration results in the U.S., compared to net profit-sharing expense of approximately $9.0 million and $20.5 million, respectively, in the prior year comparative periods.

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

(GAIN) LOSS ON FAIR VALUE REMEASUREMENT OF CONTINGENT CONSIDERATION

Consideration payable for certain of our business combinations include future payments that are contingent upon the occurrence of a particular event or events. We record an obligation for such contingent consideration payments at fair value on the acquisition date. We then revalue our contingent consideration obligations each reporting period. Changes in the fair value of our contingent consideration obligations, other than changes due to payments, are recognized as a (gain) loss on fair value remeasurement of contingent consideration in our condensed consolidated statements of income. In connection with our acquisition of HI-Bio in July 2024 we recorded contingent consideration obligations related to potential milestone payments.

For the three and nine months ended September 30, 2025, changes in fair value of our contingent consideration obligations were primarily due to the passage of time.

During the second quarter of 2025 the first milestone related to the fourth patient dosed in a phase 3 clinical trial of felzartamab for AMR was achieved, resulting in a $150.0 million milestone payment made to the former shareholders of HI-Bio, which was paid during the third quarter of 2025. In October 2025 the second milestone related to the fourth patient dosed in a phase 3 clinical trial of felzartamab for IgAN was achieved, resulting in a $150.0 million milestone payment to be made to the former shareholders of HI-Bio, which we expect will be paid during the fourth quarter of 2025.

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

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RESTRUCTURING CHARGES

2023 FIT FOR GROWTH RESTRUCTURING PROGRAM

In 2023 we initiated 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 1,400 employees and we expect to incur total restructuring charges of approximately $310.0 million, which were substantially achieved as of September 30, 2025.

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


	For the Three Months Ended September 30,
	2025						2024
(In millions)	Severance Costs		Accelerated Depreciation and Other Costs		Total		Severance Costs		Accumulated Depreciation and Other Costs		Total
Selling, general and administrative	$	—	$	0.4	$	0.4	$	—	$	9.1	$	9.1
Research and development	—		0.5		0.5		—		3.5		3.5
Restructuring charges	7.4		—		7.4		4.6		—		4.6
Total charges	$	7.4	$	0.9	$	8.3	$	4.6	$	12.6	$	17.2

	For the Nine Months Ended September 30,
	2025						2024
(In millions)	Severance Costs		Accelerated Depreciation and Other Costs		Total		Severance Costs		Accumulated Depreciation and Other Costs		Total
Selling, general and administrative	$	—	$	(2.8)	$	(2.8)	$	—	$	12.5	$	12.5
Research and development	—		6.9		6.9		—		10.6		10.6
Restructuring charges	41.6		—		41.6		20.2		—		20.2
Total charges	$	41.6	$	4.1	$	45.7	$	20.2	$	23.1	$	43.3

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

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 September 30, 2025, compared to the same period in 2024, the change in other (income) expense, net primarily reflects higher net gains on our holdings in equity securities in 2024, compared to net losses in 2025, as well as higher interest income in 2025 driven by higher cash balances.

For the nine months ended September 30, 2025, compared to the same period in 2024, the change in other (income) expense, net primarily reflects higher interest income in 2025 driven by higher cash balances.

We expect net interest expense will decrease as a result of higher interest income in 2025 driven by higher cash balances, partially offset by higher interest expense as a result of the issuance of our 2025 Senior Notes. For additional information related to our 2025 Senior Notes, please read Note 13, Indebtedness, to our condensed consolidated financial statements included in this report.

NET (GAINS) LOSSES IN EQUITY SECURITIES

For the three months ended September 30, 2025, net unrealized gains and realized losses on our holdings in equity securities were approximately $3.2 million and $7.0 million, respectively, compared to net unrealized and realized gains of approximately $28.2 million and $10.9 million, respectively, in the prior year comparative period.

The net unrealized gains recognized during the three months ended September 30, 2025, primarily reflect an increase in the aggregate fair value of our investment in Denali common stock of approximately $3.8 million.

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The net unrealized gains recognized during the three months ended September 30, 2024, primarily reflect an increase in the aggregate fair value of our investments in Denali and Sangamo common stock of approximately $53.3 million, partially offset by a decrease in the fair value of Sage common stock of approximately $22.7 million.

For the nine months ended September 30, 2025, net unrealized and realized losses on our holdings in equity securities were approximately $32.5 million and $1.6 million, respectively, compared to net unrealized losses and realized gains of approximately $27.3 million and $5.4 million, respectively, in the prior year comparative period.

The net unrealized losses recognized during the nine months ended September 30, 2025, primarily reflect a decrease in the aggregate fair value of our investment in Denali common stock of approximately $41.9 million, partially offset by an increase in the fair value of Sage common stock of approximately $23.0 million.
The net unrealized losses recognized during the nine months ended September 30, 2024, primarily reflect a decrease in the aggregate fair value of our investments in Sage common stock of approximately $90.2 million, partially offset by an increase in the fair value of Denali and Sangamo common stock of approximately $70.1 million.

INCOME TAX PROVISION


	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
(In millions, except percentages)	2025			2024			2025			2024
Income before income tax (benefit) expense	$	557.3		$	451.0		$	1,612.5		$	1,614.5
Income tax (benefit) expense	90.8			62.5			270.7			249.0
Effective tax rate	16.3		%	13.9		%	16.8		%	15.4		%

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 and nine months ended September 30, 2025, compared to the same periods in 2024, the increases in our effective tax rates were partially driven by changes in the territorial mix of our profitability, partially offset by the impact of the OBBBA enactment.

The nine months ended September 30, 2025, compared to the same period in 2024, also reflects the impacts of certain share-based compensation awards that vested during the first quarter of 2025 and a decrease in our estimate of Pillar Two minimum tax liabilities.

For the three and nine months ended September 30, 2024, our effective tax rates benefited from a decrease in our valuation allowance, partially offset by the impact of certain foreign uncertain tax positions.

PILLAR TWO

The OECD has issued model rules, which generally provide for a jurisdictional minimum effective tax rate of 15.0% as defined in those rules. Various countries have or are in the process of enacting legislation intended to implement the principles. Our income tax provision for the three and nine months ended September 30, 2025 and 2024, reflects currently enacted legislation and guidance related to the OECD model rules. This enacted legislation and guidance related to the OECD model rules did not result in any material adjustments to our income tax provision or income tax balances as of September 30, 2025 and December 31, 2024. On June 28, 2025, the G7 issued a statement stating that the G7 will work with the OECD to adjust the model rules such that the model rules would work side-by-side with the U.S. GILTI tax. At this stage, we do not believe the G7 statement impacts our financial results as of September 30, 2025.

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2025 OBBBA TAX PROVISIONS

On July 4, 2025, the U.S. signed into law the OBBBA. The OBBBA contains tax provisions, such as the permanent extension or revision of certain expiring provisions of the Tax Cuts and Jobs Act enacted in 2017, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The provisions of the OBBBA have multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.

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 September 30, 2025		As of December 31, 2024		$ Change		% Change
Financial assets:
Cash and cash equivalents	$	3,862.8	$	2,375.0	$	1,487.8	62.6	%
Marketable securities — current	97.6		—		97.6		nm

Total cash, cash equivalents and marketable securities	$	3,960.4	$	2,375.0	$	1,585.4	66.8	%
Borrowings:
Current portion notes payable	$	—	$	1,748.6	$	(1,748.6)	nm
Notes payable	6,285.1		4,547.2		1,737.9		38.2
Total borrowings	$	6,285.1	$	6,295.8	$	(10.7)	(0.2)	%
Working capital:
Current assets	$	8,936.6	$	7,456.8	$	1,479.8	19.8	%
Current liabilities	(3,290.0)		(5,528.8)		2,238.8		(40.5)
Total working capital	$	5,646.6	$	1,928.0	$	3,718.6	192.9	%

nm Not meaningful

OVERVIEW

We have historically financed and expect to continue to fund our operating and capital expenditures primarily through cash flow earned through our operations and borrowings, 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.

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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 $5.6 billion and $1.9 billion as of September 30, 2025 and December 31, 2024, respectively. The change in working capital reflects an increase in total current assets of approximately $1.5 billion and a decrease in total current liabilities of approximately $2.2 billion. The changes in total current assets and total current liabilities were primarily driven by the following:

CURRENT ASSETS

$1,585.4 million increase in cash, cash equivalents and current marketable securities;
$30.7 million decrease in accounts receivable, net related to our ongoing operations; and
$251.1 million decrease in inventory primarily due to timing of production.

CURRENT LIABILITIES

•$1.7 billion decrease in the current portion of notes payable due to the redemption of our 4.050% Senior Notes due September 15, 2025, during the second quarter of 2025 prior to maturity;

•$445.0 million decrease in taxes payable primarily due to the timing of tax payments; and

$34.1 million decrease in accrued expense and other primarily due to the timing of our annual incentive compensation payment and collaboration-related payments, partially offset by an increase in derivative contract liabilities.

CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

As of September 30, 2025, we had cash, cash equivalents and marketable securities totaling approximately $4.0 billion compared to approximately $2.4 billion as of December 31, 2024. The increase in the balance was primarily due to cash flows from operations, which includes $150.0 million of research and development funding received from Royalty Pharma, partially offset by worldwide tax payments of approximately $840.7 million, an upfront payment made to Stoke of $165.0 million in connection with the closing of our collaboration and license agreement, a milestone payment made to the former shareholders of HI-Bio of $150.0 million and a $46.0 million milestone and convertible note payment made in connection with our strategic research arrangement with City Therapeutics. During the second quarter of 2025 we received $1.75 billion in net proceeds from the issuance of our 2025 Senior Notes, which was offset by a $1.75 billion payment made for the redemption of our 4.050% Senior Notes due September 15, 2025, prior to maturity.

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)	September 30, 2025		December 31, 2024
Denali	$	103.9	$	145.8
Sage(1)	—		33.9

Total	$	103.9	$	179.7

(1) In July 2025 Sage was acquired by Supernus. Prior to this acquisition, we disposed of all of our shares of Sage common stock in a block trade.

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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*.* For additional information on our 2025 Senior Notes, please read Note 13, Indebtedness, to our condensed consolidated financial statements included in this report.

CASH FLOW

The following table summarizes our cash flow activity:


	For the Nine Months Ended September 30,
(In millions, except percentages)	2025		2024		% Change
Net cash flow provided by (used in) operating activities	$	1,692.7	$	2,114.6	(20.0)	%
Net cash flow provided by (used in) investing activities	(139.4)		(780.6)		(82.1)
Net cash flow provided by (used in) financing activities	(164.9)		(691.4)		(76.1)

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 in-process research and development.

For the nine months ended September 30, 2025, compared to the same period in 2024, the decrease in net cash flow provided by operating activities was primarily due to lower net income in 2025, which included $249.4 million of acquired in-process research and development, upfront and milestone payments, higher worldwide tax payments in 2025, as compared to the same period in 2024, of approximately $840.7 million and $287.4 million, respectively, driven by the timing of estimated payments, the timing of customer payments and higher employee-benefit payments made during the first quarter of 2025, compared to the same period in 2024. The decrease was offset in part by lower inventory levels and $150.0 million of research and development funding received from Royalty Pharma in 2025.

INVESTING ACTIVITIES

For the nine months ended September 30, 2025, compared to the same period in 2024, the change in net cash flow in investing activities was primarily due to the acquisition of HI-Bio for $1.15 billion in 2024, partially offset by cash proceeds received from the sale of TOFIDENCE of approximately $51.0 million during the third quarter of 2025, the 2024 receipt of $437.5 million from Samsung BioLogics related to the sale of our 49.9% equity interest in Samsung Bioepis and the 2024 receipt of $103.0 million from the sale of one of our two PRVs.

FINANCING ACTIVITIES

For the nine months ended September 30, 2025, compared to the same period in 2024, the change in net cash flow in financing activities was primarily due to $1.75 billion in net proceeds received from the issuance of our 2025 Senior Notes, which was offset by a $1.75 billion payment made for the redemption of our 4.050% Senior Notes due September 15, 2025, as well as the first $150.0 million milestone payment made to the former shareholders of HI-Bio, which was paid during the third quarter of 2025. Net cash flow used in financing activities during the nine months ended September 30, 2024, included the repayment of our 2023 Term Loan for $650.0 million.

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

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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 2030 and 2055. As of September 30, 2025, our outstanding balance related to long-term debt was $6.3 billion, net of discounts and debt offering costs.

2025 SENIOR NOTES

For additional information relating to our 2025 Senior Notes, please read Note 13, Indebtedness, to our condensed consolidated financial statements included in this report.

2023 TERM LOAN

In connection with our acquisition of Reata in September 2023 we entered into a $1.5 billion term loan credit agreement. 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 repaid during the first quarter of 2024.

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

2024 REVOLVING CREDIT FACILITY

In August 2024 we entered into a $1.5 billion, five-year senior unsecured revolving credit facility under which we are permitted to draw funds for working capital and general corporate purposes. The terms of the revolving credit facility include a financial covenant that requires us not to exceed a maximum consolidated leverage ratio. This revolving credit facility replaced the revolving credit facility that we entered into in January 2020. As of September 30, 2025 and December 31, 2024, 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 September 30, 2025 and December 31, 2024, please read Note 8, Fair Value Measurements, to our condensed consolidated financial statements included in this report.

For additional information on our credit facility please read, Note 13, Indebtedness, to our consolidated financial statements included in our 2024 Form 10-K.

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 shares repurchased under our 2020 Share Repurchase Program were retired. There were no share repurchases of our common stock during the three and nine months ended September 30, 2025 and 2024. Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of September 30, 2025.

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, research and development funding arrangements with third parties, contingent development, regulatory and commercial milestone payments and contingent payments, as described below.

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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 2024 Form 10-K.

In March 2025 we entered into a lease agreement with MIT Investment Management Company and BioMed Realty for the lease of approximately 580,000 square feet of office and research and development space located at 75 Broadway, Cambridge, Massachusetts, which will be used as our new global corporate headquarters, as well as integrating our research and development and technical operations teams alongside our North American commercial organization. As part of a multi-year real estate consolidation plan that is expected to result in a reduction of approximately 40% of our real estate footprint in Massachusetts, this new lease is intended to replace two existing leases, both in Cambridge, Massachusetts, including our current corporate headquarters. We expect the initial lease term of approximately 15.5 years to commence on May 31, 2028. The estimated minimum lease payments as a result of the new lease total approximately $1.5 billion over the initial lease term. We have an option to extend the lease for three extension periods of five years each and one six month short-term extension, at then market-based rates. We will account for this lease as a right-of-use asset and lease liability upon the lease commencement date.

Aside from our new lease agreement, there have been no material changes in our contractual obligations, including those related to our other lease agreements, since December 31, 2024.

CONTINGENT CONSIDERATION RELATED TO BUSINESS COMBINATIONS

In connection with our acquisition of HI-Bio in July 2024 we may make additional payments based upon the achievement of certain milestone events. We recognized the contingent consideration obligations associated with this acquisition at its fair value on the acquisition date and we revalue this obligation each reporting period. We may pay up to a total of $650.0 million in contingent development and regulatory milestone payments. The acquisition-date fair value of these milestones was approximately $485.1 million.

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

CONTINGENT DEVELOPMENT, REGULATORY AND COMMERCIAL MILESTONE PAYMENTS

Based on our development plans as of September 30, 2025, we could make potential future milestone payments to third parties of up to approximately $3.8 billion, including approximately $0.5 billion in development milestones, approximately $0.6 billion in regulatory milestones and approximately $2.7 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 September 30, 2025, 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 research milestones are met, we may pay up to approximately $6.0 million in additional milestones in 2025 under our current agreements, excluding opt-in payments.

OTHER FUNDING COMMITMENTS

As of September 30, 2025, 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 $43.4 million in our condensed consolidated balance sheets for expenditures incurred by CROs as of September 30, 2025. We have approximately $484.5 million in cancellable future commitments based on existing CRO contracts as of September 30, 2025.

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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 September 30, 2025, we have approximately $168.7 million of liabilities associated with uncertain tax positions.

As of December 31, 2024, we had accrued income tax liabilities of approximately $234.0 million under the Transition Toll Tax, which was subsequently paid in full in April 2025.

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.

CRITICAL ACCOUNTING ESTIMATES

The preparation of our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP, 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 2024 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 2024 Form 10-K.

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