BIOGEN INC. - Annual Report: 2019 (Form 10-K)

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the anticipated amount, timing and accounting of revenues; contingent, milestone, royalty and other payments under licensing, collaboration, acquisition or divestiture agreements; tax positions and contingencies; collectability of receivables; pre-approval inventory; cost of sales; research and development costs; compensation and other selling, general and administrative expenses; amortization of intangible assets; foreign currency exchange risk; estimated fair value of assets and liabilities; and impairment assessments;

•	expectations, plans and prospects relating to sales, pricing, growth and launch of our marketed and pipeline products;

•	the timing, outcome and impact of administrative, regulatory, legal and other proceedings related to our patents and other proprietary and intellectual property rights, tax audits, assessments and settlements, pricing matters, sales and promotional practices, product liability and other matters;

•	patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity;

•	the potential impact of increased product competition in the markets in which we compete, including increased competition from generics, biosimilars, prodrugs and products approved under abbreviated regulatory pathways;

•	our plans and investments in our core and emerging growth areas, as well as implementation of our corporate strategy;

•	the drivers for growing our business, including our plans and intention to commit resources relating to research and development programs and business development opportunities, as well as the potential benefits and results of, and the anticipated timing to complete, certain business development transactions;

•	our ability to finance our operations and business initiatives and obtain funding for such activities;

•	the costs and timing of potential clinical trials, filings and approvals, and the potential therapeutic scope of the development and commercialization of our and our collaborators’ pipeline products;

•	adverse safety events involving our marketed products, generic or biosimilar versions of our marketed products or any other products from the same class as one of our products;

•	the potential impact of healthcare reform in the United States (U.S.) and measures being taken worldwide designed to reduce healthcare costs and limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our products;

•	our manufacturing capacity, use of third-party contract manufacturing organizations, plans and timing relating to changes in our manufacturing capabilities and activities in new or existing manufacturing facilities;

•	the impact of the continued uncertainty of the credit and economic conditions in certain countries in Europe and our collection of accounts receivable in such countries;

•	the potential impact on our results of operations and liquidity of the United Kingdom's (U.K.) departure from the European Union (E.U.);

•	lease commitments, purchase obligations and the timing and satisfaction of other contractual obligations; and

•	the impact of new laws, including the Swiss Federal Act on Tax Reform and AHV Financing, regulatory requirements, judicial decisions and accounting standards.

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•	“RITUXAN” refers to both RITUXAN (the trade name for rituximab in the U.S., Canada and Japan) and MabThera (the trade name for rituximab outside the U.S., Canada and Japan); and

•	"ELOCTATE" refers to both ELOCTATE (the trade name for Antihemophilic Factor (recombinant), Fc Fusion Protein in the U.S., Canada and Japan) and ELOCTA (the trade name for Antihemophilic Factor (recombinant), Fc Fusion Protein in the E.U.).

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•	The appointment of Alfred Sandrock, Jr., M.D., Ph.D. as Executive Vice President, Research and Development; and

•	The appointment of Alphonse Galdes, Ph.D., as Executive Vice President, Pharmaceutical Operations and Technology.

•	In May 2019, at the 71st annual meeting of the American Academy of Neurology (AAN) in Philadelphia, PA, we presented re-analyzed pooled images from the Phase 3 DEFINE and CONFIRM studies that showed that treatment with TECFIDERA significantly slowed the rate of whole brain volume loss by 35.9% during the second year of treatment compared to placebo.

•	In September 2019, at the 35th Congress of the European Committee for Treatment and Research in MS (ECTRIMS) and 24th Annual Conference of Rehabilitation in MS in Stockholm, Sweden, we presented new 10-year results from the ongoing Phase 3 ENDORSE extension study and comparative effectiveness analyses of TECFIDERA that support the consistent, long-term benefits of treatment with TECFIDERA.

•	In January 2019 the first patient was enrolled in the global Phase 3b NOVA study evaluating the efficacy and safety of extended interval dosing (EID; every six weeks) for natalizumab compared to standard interval dosing in patients with RMS.

•	In May 2019, at the 71st annual meeting of the AAN in Philadelphia, PA, we presented updated safety analyses from the TOUCH database safety analysis evaluating EID of natalizumab (of approximately every six weeks) compared to every four-week dosing based on the TOUCH prescribing program database.

•	In September 2019, at the 35th Congress of ECTRIMS and 24th Annual Conference of Rehabilitation in MS in Stockholm, Sweden, we presented new data from the observational, open-label, single-arm STRIVE study that support the real-world long-term effectiveness of TYSABRI in patients with early RMS, who are within three years from diagnosis and are anti-JC virus antibody negative.

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In September 2019, at the 35th Congress of ECTRIMS and 24th Annual Conference of Rehabilitation in MS in Stockholm, Sweden, we presented new data from two real-world observational studies that provide further support that exposure to interferon beta treatment, including AVONEX and PLEGRIDY, before conception and/or during pregnancy is not expected to have an adverse effect on pregnancy or infant growth outcomes.

•	In October 2019 the European Medicines Agency (EMA) updated the summaries of product characteristics for AVONEX and PLEGRIDY to remove pregnancy contraindications and, where clinically needed, to allow use during pregnancy and breastfeeding in women with RMS.

•	In May 2019, at the 71st annual meeting of the AAN in Philadelphia, PA, we presented updated safety and exploratory efficacy results from the ongoing open-label EVOLVE-MS-1 study of VUMERITY in RMS.

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In May 2019 we presented new interim data from the EVOLVE-MS-1 study at the annual meeting of the Consortium of Multiple Sclerosis Centers in Seattle, WA. These data indicated that VUMERITY was generally well tolerated and significantly reduced disease activity in newly diagnosed RMS patients and those previously treated with interferons or glatiramer acetate. Treatment discontinuations due to gastrointestinal events occurred at a low rate over one year.

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In July 2019 we and Alkermes plc announced positive topline results from EVOLVE-MS-2, a large, randomized, double-blind, five-week, Phase 3 study of VUMERITY for RMS, compared to TECFIDERA. VUMERITY was statistically superior to TECFIDERA on the study's pre-specified primary endpoint, with patients treated with VUMERITY self-reporting significantly fewer days of key gastrointestinal symptoms with intensity scores ≥ 2 on the Individual Gastrointestinal Symptom and Impact Scale, as compared to TECFIDERA (p=0.0003).

•	In September 2019, at the 35th Congress of ECTRIMS and 24th Annual Conference of Rehabilitation in MS in Stockholm, Sweden, we presented interim data from the Phase 3 EVOLVE-MS-1 study that support the potential of VUMERITY as a novel oral fumarate.

•	In November 2019, at the 27th Annual Meeting of the European Charcot Foundation in Italy, we presented results from the Phase 3 EVOLVE-MS-2 study demonstrating the improved patient-assessed gastrointestinal tolerability of VUMERITY compared to TECFIDERA.

•	In May 2019 the first participant was dosed in the Phase 1 study of BIIB091 in MS.

•	In December 2019 dosing began for the final multiple ascending dose cohort in the Phase 1 study of BIIB091 in MS.

•	In March 2019 we and our collaboration partner Eisai announced the decision to discontinue the global Phase 3 trials, ENGAGE and EMERGE, designed to evaluate the efficacy and safety of aducanumab in patients with mild cognitive impairment due to AD and mild AD dementia.

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In October 2019 we and our collaboration partner Eisai announced that we plan to pursue regulatory approval for aducanumab in the U.S. and that the Phase 3 EMERGE study met its primary endpoint showing a significant reduction in clinical decline. We believe that results from a subset of patients in the Phase 3 ENGAGE study who received sufficient exposure to high dose aducanumab support the findings from EMERGE. The decision to file is based on a new analysis, conducted in consultation with the FDA, of a larger dataset from the Phase 3 EMERGE and ENGAGE trials that were discontinued in March 2019 following a futility analysis.

•	In December 2019, at the 12th Clinical Trials on Alzheimer's Disease annual meeting in San Diego, CA, we presented topline results from the Phase 3 EMERGE and ENGAGE trials of aducanumab.

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•	In May 2019 our collaboration partner Eisai dosed the first patient in the global Phase 3 study (Clarity AD) of BAN2401 in early AD.

•	In September 2019 we completed enrollment of the Phase 2 study of gosuranemab for early AD.

•	In February 2019 SPINRAZA was approved by the China National Medical Products Association for the treatment of 5q SMA.

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In April 2019 we presented new data illustrating the rapidly progressive nature of SMA in adults, adolescents and older children. We also presented data from the NURTURE study, highlighting the benefits of pre-symptomatic treatment and findings on the role of neurofilament as a potential biomarker for predicting motor function in SMA. These data were presented at the Muscular Dystrophy Association Clinical and Scientific Conference in Orlando, FL.

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In April 2019 data from CS2/CS12, an open-label study of the safety and tolerability of SPINRAZA in individuals with later-onset SMA, were published in the peer-reviewed journal Neurology, the medical journal of the AAN. The data showed that individuals with later-onset SMA, treated with SPINRAZA, regained motor function that had been previously lost and that treatment stabilized their disease activity leading to improvements in activities of daily living.

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In May 2019, at the 71st annual meeting of the AAN in Philadelphia, PA, we presented data from the NURTURE study that demonstrated that pre-symptomatic infants with SMA treated with SPINRAZA over three years achieved motor milestones that are more consistent with normal childhood development, as well as interim results from the ENDEAR/CHERISH/SHINE open-label extension study that showed that treatment with SPINRAZA, particularly when initiated earlier, leads to progressive motor milestone improvements and increased survival rates for individuals with infantile-onset SMA.

•	In May 2019 The National Institute for Health and Care Excellence (NICE) in the U.K. recommended funding for SPINRAZA on the National Health Service. The positive recommendation is for the treatment of infants, children and adults with 5q SMA, including pre-symptomatic and symptomatic SMA Types 1, 2 and 3.

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In June and July 2019 we presented new results from the NURTURE study, adding data to the longest study of SMA in pre-symptomatic infants (n=25). The data reported, after up to 45.1 months of analysis, continued to demonstrate efficacy and safety in patients treated pre-symptomatically with SPINRAZA in comparison to the natural history of SMA. These new data also showed that patients treated with SPINRAZA had continuous improvement, with the majority of patients achieving motor milestones within timeframes consistent with normal development. These data were presented at the Cure SMA Annual SMA Conference in Anaheim, CA and the 5th Congress of the European Academy of Neurology in Oslo, Norway.

•	In September 2019 we announced that we plan to initiate DEVOTE, a new Phase 2/3 study evaluating whether a higher dose of SPINRAZA can offer even greater efficacy in treating SMA, as well as the safety and tolerability of SPINRAZA, when administered at a higher dose.

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In September 2019 we presented new data further demonstrating the safety and efficacy of treatment with SPINRAZA in individuals with later-onset SMA at the 13th Congress of the European Paediatric Neurology Society in Athens, Greece. An integrated analysis from SHINE, an open-label extension study for patients with SMA who participated in prior SPINRAZA studies, found that children with later-onset SMA (Type 2 or Type 3) experienced improvements or stabilization in one or more measures of motor function for up to nearly six years, in contrast to the expected decline observed in natural history cohorts.

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In October 2019 the journal Neuromuscular Disorders published data from NURTURE, the first study investigating a treatment targeting the underlying cause of SMA in infants treated pre-symptomatically. Data from the NURTURE study demonstrated that infants who initiated treatment with SPINRAZA prior to the onset of clinical symptoms attained unparalleled results compared to the natural history of the disease. These published results from the NURTURE study were previously presented at the 2019 Cure SMA Annual

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•	In March 2019 the first patient was dosed in the Phase 3 VALOR study of tofersen in adults with ALS with a confirmed superdioxide dismutate 1 (SOD1) mutation.

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In May 2019 we presented interim results of the Phase 1/2 study of tofersen. The data demonstrated a statistically significant reduction in SOD1 protein levels and a numerical trend towards slowing of clinical decline in SOD1-ALS patients treated with tofersen compared to placebo. The data were presented at the 71st annual meeting of the AAN in Philadelphia, PA and The European Network for the Cure of ALS meeting in Tours, France.

•	In June 2019 the first patient was dosed in the Phase 1 study of BIIB100 in sporadic ALS.

•	In May 2019 we completed enrollment of the Phase 2 study of BIIB054 for Parkinson's disease.

•	In August 2019 the first patient in the Phase 1 study of BIIB094, an ASO targeting leucine-rich repeat kinase 2 (LRRK2) for Parkinson's disease, was dosed.

•	In November 2019 we completed enrollment of the Phase 3 STAR study of timrepigene emparvovec for CHM.

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In June 2019 our collaboration partner UCB presented interim results from the Phase 2b study of dapirolizumab pegol (DZP) in patients with active SLE despite standard-of-care treatment. The primary endpoint of the study, which was to demonstrate a dose response at 24 weeks on the British Isles Lupus Assessment Group-based Composite Lupus Assessment (p=0.07), was not met. The study did demonstrate consistent and potentially meaningful improvements for the majority of clinical endpoints in patients treated with DZP compared with placebo. In addition, biomarker data demonstrated evidence of proof of biology. DZP was well tolerated and demonstrated an acceptable safety profile. The data were presented at the European Congress of Rheumatology (EULAR) 2019 in Madrid, Spain.

•	In May 2019 we completed enrollment of the Phase 2 LILAC study of BIIB059 for CLE and SLE.

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In December 2019 we announced positive top-line results from the Phase 2 LILAC study evaluating the efficacy and safety of BIIB059 in CLE and SLE. The CLE part of the study met its primary endpoint (p<0.001) by demonstrating a dose response of BIIB059 on the percent change from baseline in the Cutaneous Lupus Erythematosus Disease Area and Severity Index Activity (CLASI-A) score at week 16 in individuals with CLE. Study participants with CLE treated with 50 mg, 150 mg and 450 mg of BIIB059 experienced reductions in CLASI-A scores of 40.9% (p=0.008), 48.0% (p=0.001) and 42.5% (p=0.001), respectively, versus 14.5% with placebo. CLASI-A is a well-defined and reliable outcome measure that has been shown to detect meaningful change in CLE skin disease activity.

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•	In June 2019 the FDA granted BIIB104 fast track designation for CIAS.

•	In October 2019 we dosed the first patient in the Phase 2 study of BIIB093 for brain contusion.

•	In June 2019 we presented real-world evidence confirming the safety and efficacy of BENEPALI, IMRALDI and FLIXABI and the high adherence of patients to treatment. The data were presented at EULAR 2019 in Madrid, Spain.

•	In October 2019 we presented new data highlighting real-world evidence confirming the safety and efficacy of IMRALDI and FLIXABI for patients with inflammatory bowel disease. These data were presented at the United European Gastroenterology Week 2019 in Barcelona, Spain.

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In June 2019 Roche announced positive topline results for NOBILITY, a Phase 2 study investigating the safety and efficacy of GAZYVA for adults with proliferative lupus nephritis. The study met its primary endpoint, showing GAZYVA, in combination with standard of care (mycophenolate mofetil or mycophenolic acid and corticosteroids), demonstrated enhanced efficacy compared to placebo plus standard of care alone in achieving complete renal response at one year. In addition, GAZYVA met key secondary endpoints showing improved overall renal responses (complete and partial renal response) and serologic markers of disease activity as compared to placebo.

•	In September 2019 Roche announced that the FDA granted breakthrough therapy designation to GAZYVA for adults with lupus nephritis. This designation was granted based on data from the Phase 2 NOBILITY study in adult patients with proliferative lupus nephritis, as discussed above.

•	In August 2019 we discontinued the Phase 2b study of BG00011 (STX-100) for the potential treatment of idiopathic pulmonary fibrosis (IPF) due to safety concerns.

•	In September 2019 we and our collaboration partner Eisai announced the decision to discontinue the global Phase 3 studies (MISSION AD1 and MISSION AD2) of the investigational oral BACE (beta amyloid cleaving enzyme) inhibitor elenbecestat (development code: E2609) in patients with early AD.

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In December 2019 we announced that the Phase 2 PASSPORT study investigating gosuranemab in individuals with progressive supranuclear palsy (PSP) did not meet its primary endpoint. Based on these results, we discontinued development of gosuranemab in PSP and other primary tauopathies. Safety results of the Phase 2 PASSPORT study were generally consistent with previous studies of gosuranemab. We will continue our ongoing Phase 2 TANGO study of gosuranemab for mild cognitive impairment due to AD or mild AD, given differences in disease pathology.

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(1)	Interferon includes product revenues from AVONEX and PLEGRIDY.

(2)

For 2019, 2018 and 2017 other includes product revenues from FAMPYRA, FUMADERM, BENEPALI and FLIXABI. For 2019 and 2018 other also includes product revenues from IMRALDI, which was launched in Europe in October 2018. For 2019 other also includes product revenues from VUMERITY, which was available in the U.S. in November 2019. For 2018 and 2017 other also includes product revenues from ZINBRYTA, which was voluntary withdrawn from the market in March 2018. For 2017 other also includes product revenues from ALPROLIX and ELOCTATE through January 31, 2017. No product revenues for ALPROLIX and ELOCTATE were recognized subsequent to February 1, 2017, the effective date of the spin-off of our hemophilia business.

(3)	Anti-CD20 therapeutic programs include revenues from RITUXAN, RITUXAN HYCELA, GAZYVA and OCREVUS.

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(1)	In addition to patent protection, certain of our products are entitled to regulatory exclusivity in the U.S. and the E.U. expected until the dates set forth below:

(2)	For additional information, please read Note 20, Litigation, to our consolidated financial statements included in this report.

(3)	This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2024.

(4)	This patent was revoked in a European opposition. This decision is being appealed. This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2029.

(5)	This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2024.

(6)	This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2028.

(7)	Reflects SPCs granted in most European countries and pediatric extension in some countries.

(8)	This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2026.

(9)	This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2026.

(10)	This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2031.

(11)	This patent is subject to granted SPCs in certain European countries, which extended the patent term in those countries to 2031.

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•	safety or efficacy issues;

•	our ability to maintain a positive reputation among patients, healthcare providers and others, which may be impacted by our pricing and reimbursement decisions;

•	the introduction or greater acceptance of competing products, including generics, biosimilars, prodrugs and products approved under abbreviated regulatory pathways;

•	limitations and additional pressures on product pricing or price increases, including those resulting from governmental or regulatory requirements, increased competition or changes in, or implementation of, reimbursement policies and practices of payors and other third parties; or

•	adverse legal, administrative, regulatory or legislative developments.

•	the introduction of a new gene therapy product that was approved in the U.S. in May 2019 for the treatment of SMA, and other products in development that, if successfully developed and approved, may compete with SPINRAZA in the SMA market, including potential oral products;

•	our limited marketing experience within certain SMA markets, which may impact our ability to develop additional relationships with the associated medical and scientific community; and

•	the lack of readiness of healthcare providers within certain SMA markets to treat patients with SMA.

•	changes in, and implementation of, federal, state or foreign government regulations or private third-party payors’ reimbursement policies;

•	pressure by employers on private health insurance plans to reduce costs;

•	consolidation and increasing assertiveness of payors, including managed care organizations, health insurers, pharmacy benefit managers, government health administration authorities, private health insurers and other organizations, seeking price discounts or rebates in connection with the placement of our

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•	our value-based contracting program pursuant to which we aim to tie the pricing of our products to their clinical values by either aligning price to patient outcomes or adjusting price for patients who discontinue therapy for any reason, including efficacy or tolerability concerns.

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•	the introduction of more efficacious, safer, less expensive or more convenient alternatives to our MS products, including our own products and products of our collaborators;

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the introduction of biosimilars, follow-on products, generic versions of branded MS products, prodrugs or products approved under abbreviated regulatory pathways, which would be significantly less costly than our products to bring to market and would be offered for sale at lower prices, and could result in a significant percentage of the sales of our products being lost to such biosimilars, follow-on products, generic versions of branded MS products, prodrugs or products approved under abbreviated regulatory pathways;

•	the off-label use by physicians of therapies indicated for other conditions to treat MS patients;

•	patient dynamics, including the size of the patient population and our ability to attract and maintain new and current patients to our therapies;

•	damage to physician and patient confidence in any of our MS products, generic or biosimilars of our MS products or any other product from the same class as one of our products, or to our sales and reputation as a result of label changes or adverse experiences or events that may occur with patients treated with our MS products or generic or biosimilars of our MS products;

•	inability to obtain appropriate pricing and reimbursement for our MS products compared to our competitors in key international markets; or

•	our ability to obtain and maintain patent, data or market exclusivity for our MS products.

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•	we may be unable to control the resources our collaborators, joint venture partners or third parties devote to our programs, products or product candidates;

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disputes may arise under an agreement, including with respect to the achievement and payment of milestones or ownership of rights to technology developed with our collaborators, joint venture partners or other third parties, and the underlying agreement with our collaborators, joint venture partners or other third parties may fail to provide us with significant protection or may fail to be effectively enforced if the collaborators, joint ventures partners or third parties fail to perform;

•	the interests of our collaborators, joint venture partners or third parties may not always be aligned with our interests, and such parties may not pursue regulatory approvals or market a product in the same manner or to the same extent that we would, which could adversely affect our revenues;

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third-party relationships, joint ventures and collaborations often require the parties to cooperate, and failure to do so effectively could adversely affect product sales, or the clinical development or regulatory approvals of products under joint control, could result in termination of the research, development or commercialization of product candidates or could result in litigation or arbitration;

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any failure on the part of our collaborators, joint venture partners or other third parties to comply with applicable laws, regulatory requirements and/or applicable contractual obligations in the marketing, sale and maintenance of the marketing authorization of our products or to fulfill any responsibilities our collaborators, joint venture partners or other third parties may have to protect and enforce any intellectual property rights underlying our products could have an adverse effect on our revenues as well as involve us in possible legal proceedings; and

•	any improper conduct or actions on the part of our collaborators, joint venture partners or other third parties could subject us to civil or criminal investigations and monetary and injunctive penalties, impact the accuracy and timing of our financial reporting and/or adversely impact our ability to conduct business, our operating results and our reputation.

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new laws, regulations or judicial decisions, or new interpretations of existing laws, regulations or judicial decisions, related to health care availability, pricing or marketing practices, compliance with wage and hour laws and other employment practices, method of delivery, payment for health care products and services, compliance with health information and data privacy and security laws and regulations, tracking and reporting payments and other transfers of value made to physicians and teaching hospitals, extensive anti-bribery and anti-corruption prohibitions, product serialization and labeling requirements and used product take-back requirements;

•	changes in the FDA and foreign regulatory approval processes that may delay or prevent the approval of new products and result in lost market opportunity;

•	government shutdowns or relocations may result in delays to the review and approval process, slowing the time necessary for new drug candidates to be reviewed and/or approved, which may adversely affect our business;

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requirements that provide for increased transparency of clinical trial results and quality data, such as the EMA's clinical transparency policy, which could impact our ability to protect trade secrets and competitively-sensitive information contained in approval applications or could be misinterpreted leading to reputational damage, misperception or legal action, which could harm our business; and

•	changes in FDA and foreign regulations that may require additional safety monitoring, labeling changes, restrictions on product distribution or use or other measures after the introduction of our products to market, which could increase our costs of doing business, adversely affect the future permitted uses of approved products or otherwise adversely affect the market for our products.

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•	less favorable intellectual property or other applicable laws;

•	the introduction or greater acceptance of competing products, including generics, biosimilars, prodrugs and products approved under abbreviated regulatory pathways;

•	the inability to obtain necessary foreign regulatory or pricing approvals of products in a timely manner;

•	limitations and additional pressures on our ability to obtain and maintain product pricing or receive price increases, including those resulting from governmental or regulatory requirements;

•	the inability to successfully complete subsequent or confirmatory clinical trials in countries where our experience is limited;

•	longer payment and reimbursement cycles and uncertainties regarding the collectability of accounts receivable;

•	fluctuations in foreign currency exchange rates that may adversely impact our revenues, net income and value of certain of our investments;

•	difficulties in staffing and managing international operations;

•	the imposition of governmental controls;

•	diverse data privacy and protection requirements;

•	increasingly complex standards for complying with foreign laws and regulations that may differ substantially from country to country and may conflict with corresponding U.S. laws and regulations;

•	the far-reaching anti-bribery and anti-corruption legislation in the U.K., including the Bribery Act, and elsewhere and escalation of investigations and prosecutions pursuant to such laws;

•	the effects of the implementation of the U.K.’s departure from the E.U., known as Brexit;

•	compliance with complex import and export control laws;

•	restrictions on direct investments by foreign entities and trade restrictions;

•	greater political or economic instability;

•	changes in tax laws;

•	the imposition of tariffs or embargoes and other trade restrictions, including the recent tariffs imposed by the U.S. and China and the possibility of additional tariffs or other trade restrictions relating to trade between the two countries; and

•	the impact of public health epidemics on employees and the global economy, such as the coronavirus currently impacting China and elsewhere.

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Risks of Reliance on Third Parties and Single Source Providers. We rely on third-party suppliers and manufacturers for many aspects of our manufacturing process for our products and product candidates. In some cases, due to the unique manner in which our products are manufactured, we rely on single source providers of raw materials and manufacturing supplies. These third parties are independent entities subject to their own unique operational and financial risks that are outside of our control. These third parties may not perform their obligations in a timely and cost-effective manner or in compliance with applicable regulations, and they may be unable or unwilling to increase production capacity commensurate with demand for our existing or future products. Finding alternative providers could take a significant amount of time and involve significant expense due to the specialized nature of the services and the need to obtain regulatory approval of any significant changes to our suppliers or manufacturing methods. We cannot be certain that we could reach agreement with alternative providers or that the FDA or other regulatory authorities would approve our use of such alternatives.

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Risks Relating to Compliance with cGMP. We and our third-party providers are generally required to maintain compliance with cGMP and other stringent requirements and are subject to inspections by the FDA and comparable agencies in other jurisdictions to confirm such compliance. Any delay, interruption or other issues that arise in the manufacture, fill-finish, packaging or storage of our products as a result of a failure of our facilities or the facilities or operations of third parties to pass any regulatory agency inspection could significantly impair our ability to develop and commercialize our products. Significant noncompliance could also result in the imposition of monetary penalties or other civil or criminal sanctions and damage our reputation.

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Global Bulk Supply Risks. We rely on our principal manufacturing facilities for the production of drug substance for our large molecule products and product candidates. Our global bulk supply of these products and product candidates depends on the uninterrupted and efficient operation of these facilities, which could be adversely affected by equipment failures, labor shortages, natural disasters, power failures, cyber-attacks and numerous other factors. In addition, we are building a large-scale biologics manufacturing facility in Solothurn, Switzerland, which we expect to be partially operational by the end of 2020. However, there can be no assurance that we will be able to meet our expected timeline. If there are delays in bring

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Risk of Product Loss. The manufacturing process for our products is extremely susceptible to product loss due to contamination, oxidation, equipment failure or improper installation or operation of equipment or vendor or operator error. Even minor deviations from normal manufacturing processes could result in reduced production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in our products or manufacturing facilities, we may need to close our manufacturing facilities for an extended period of time to investigate and remediate the contaminant.

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Reliance on Third Parties. We are dependent on the efforts of Samsung Bioepis and other third parties over whom we have limited or no control in the development and manufacturing of biosimilars products. In addition, following the divestiture of our Hillerød, Denmark manufacturing operations, we are dependent on FUJIFILM for the manufacture of biosimilar products. If Samsung Bioepis, FUJIFILM or other third parties fail to perform successfully, we may not realize the anticipated benefits of our investment in Samsung Bioepis;

•	Regulatory Compliance. Biosimilar products may face regulatory hurdles or delays due to the evolving and uncertain regulatory and commercial pathway of biosimilars products in certain jurisdictions;

•	Intellectual Property and Regulatory Challenges. Biosimilar products may face extensive patent clearances, patent infringement litigation, injunctions or regulatory challenges, which could prevent the commercial launch of a product or delay it for many years or result in imposition of monetary damages, penalties or other civil sanctions and damage our reputation;

•	Failure to Gain Market and Patient Acceptance. Market success of biosimilar products will be adversely affected if patients, physicians and/or payors do not accept biosimilar products as safe and efficacious products offering a more competitive price or other benefit over existing therapies;

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Ability to Provide Adequate Supply. Manufacturing biosimilars is complex. If we encounter any manufacturing or supply chain difficulties, we may be unable to meet higher than anticipated demand. In addition, following the divestiture of our Hillerød, Denmark manufacturing operations, we are dependent on FUJIFILM for the manufacture of biosimilar products. FUJIFILM may not perform their obligations in a timely and cost effective manner or in compliance with applicable regulations and may be unable or unwilling to increase production capacity commensurate with demand for our existing or future biosimilar products;

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Competitive Challenges. Biosimilar products face significant competition, including from innovator products and from biosimilar products offered by other companies. In some jurisdictions, local tendering processes may restrict biosimilar products from being marketed and sold in those jurisdictions. The number of competitors in a jurisdiction, the timing of approval and the ability to market biosimilar products successfully in a timely and cost-effective manner are additional factors that may impact our success and/or the success of Samsung Bioepis in this business area; and

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Legal and Regulatory Requirements. Any improper conduct or actions on the part of Samsung Bioepis or our joint venture partner, Samsung BioLogics, could damage our reputation and be distracting to management. In particular, Samsung BioLogics is currently subject to an ongoing criminal investigation, which may impact the operations of Samsung Bioepis and its business or divert the attention of the Samsung Bioepis management team from its ongoing operations and business.

•	the cost of restructurings or other initiatives to streamline our operations and reallocate resources;

•	impairments with respect to investments, fixed assets and long-lived assets, including in-process research and development (IPR&D) and other intangible assets;

•	inventory write-downs for failed quality specifications, charges for excess or obsolete inventory and charges for inventory write downs relating to product suspensions, expirations or recalls;

•	changes in the fair value of contingent consideration;

•	bad debt expenses and increased bad debt reserves;

•	outcomes of litigation and other legal or administrative proceedings, regulatory matters and tax matters;

•	milestone payments under license and collaboration agreements;

•	payments in connection with acquisitions, divestitures and other business development activities; and

•	failure to meet certain contractual commitments, including, for example, the minimum batch production commitment guarantees we have provided as part of the transaction with FUJIFILM.

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•	increase our vulnerability to general adverse economic and industry conditions;

•	limit our ability to access capital markets and incur additional debt in the future;

•	require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for other purposes, including business development efforts, research and development and mergers and acquisitions; and

•	limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, thereby placing us at a competitive disadvantage compared to our competitors that have less debt.

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•	800,000 square feet in Cambridge, MA, which is comprised of offices for our corporate headquarters and other administrative and development functions and laboratories, of which 289,000 square feet is subleased by multiple companies for general office space, laboratories and manufacturing facilities; and

•	357,000 square feet of office space in Weston, MA, of which 174,000 square feet is subleased through the remaining term of our lease agreement.

•	357,000 square feet of laboratory and office space;

•	188,000 square foot multi-purpose facility, including an ASO manufacturing suite and administrative space;

•	175,000 square feet related to a large-scale biologics manufacturing facility;

•	105,000 square feet related to a small-scale biologics manufacturing facility;

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•	84,000 square feet of warehouse space and utilities;

•	70,000 square feet related to a parenteral fill-finish facility; and

•	43,000 square feet related to a large-scale purification facility.

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(1)	On February 1, 2017, we completed the spin-off of our hemophilia business. Our consolidated results of operations and financial condition reflect the financial results of our hemophilia business for all periods through January 31, 2017.

(2)	Product revenues, net reflect the impact of the following product launches:

•	Commercial sales of VUMERITY in the U.S. began in the fourth quarter of 2019.

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•	Commercial sales of SPINRAZA in the U.S. began in the fourth quarter of 2016 and in rest of world markets beginning in the first quarter of 2017.

•	Under our collaboration agreement with AbbVie Inc. (AbbVie), we began to recognize revenues on sales of ZINBRYTA to third parties in the E.U. in the third quarter of 2016. In March 2018 we and AbbVie announced the voluntary worldwide withdrawal of ZINBRYTA for RMS.

•	Under our commercial agreement with Samsung Bioepis, we began to recognize revenues on sales of BENEPALI and FLIXABI to third parties in certain countries in Europe in the first and third quarters of 2016, respectively, and began to recognize revenues on sales of IMRALDI to third parties in certain countries in Europe in the fourth quarter of 2018.

•	We stopped recognizing revenues from ALPROLIX and ELOCTATE effective February 1, 2017, upon the completion of the spin-off of our hemophilia business.

(3)	Total cost and expenses included the following charges:

•	Pre-tax research and development expenses related to upfront and milestone payments made upon entering into strategic agreements or achievement of specified development milestones totaling $253.8 million, $602.7 million, $494.0 million, $167.6 million and $158.2 million in 2019, 2018, 2017, 2016 and 2015, respectively.

•	Impairment charges related to certain acquired intangible assets totaling $215.9 million, $366.1 million, $359.4 million and $12.2 million in 2019, 2018, 2017 and 2016, respectively. For additional information, please read Note 6, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.

•	Pre-tax research and development expenses of $486.2 million in 2018 related to the 2018 Ionis Agreement. For additional information on our collaboration arrangements with Ionis, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

•	Pre-tax charges to acquired IPR&D totaling $112.5 million and $120.0 million in 2018 and 2017, respectively, for upfront payments made upon the closing of our asset purchase transactions, as the underlying assets had not yet reached technological feasibility.

•	Pre-tax charge of $454.8 million in 2016 related to our January 2017 settlement and license agreement with Forward Pharma A/S (Forward Pharma).

•	Pre-tax restructuring and other exit-related costs totaling $1.5 million, $12.0 million, $0.9 million, $103.6 million and $93.4 million in 2019, 2018, 2017, 2016 and 2015, respectively.

(4)	Income tax expense included the following activities:

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Income tax expense in 2019 reflects a benefit of approximately $205.0 million related to an internal reorganization of certain intellectual property rights and the impact of the enactment of a new taxing regime in the country and certain cantons of Switzerland, which we refer to as Swiss Tax Reform, offset by a $68.9 million tax expense related to the divestiture of our subsidiary that owned our Hillerød, Denmark manufacturing operations. For additional information, please read Note 16, Income Taxes, to our consolidated financial statements included in this report.

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Income tax expense in 2018 reflects a net increase to expense of approximately $125.0 million recognized upon finalization of our estimates related to the Transition Toll Tax, the remeasurement of our deferred tax assets and liabilities, the impact of electing to record deferred taxes on GILTI and other aspects of the 2017 Tax Act. For additional information, please read Note 16, Income Taxes, to our consolidated financial statements included in this report.

•	Income tax expense in 2017 includes a $1,173.6 million estimate pursuant to SEC Staff Accounting Bulletin No. 118. Our estimate included $989.6 million associated with the Transition Toll Tax and $184.0 million related to the impact of remeasuring our deferred tax balances to reflect the new federal statutory rate and other changes to U.S. tax law.

(5)	Net income (loss) attributable to noncontrolling interests, net of tax included the following activities:

•	Pre-tax charges of $50.0 million and $150.0 million for the years ended December 31, 2018 and 2017, respectively, for payments made under the terms of the Neurimmune Agreement in exchange for reductions in the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including royalties payable on potential commercial sales of aducanumab.

•	A pre-tax charge of $60.0 million for the year ended December 31, 2015, for a milestone payment due to Neurimmune upon the enrollment of the first patient in a Phase 3 study of aducanumab.

(6)	Total Biogen Inc. shareholders' equity reflects the repurchase of approximately 63.4 million shares of our common stock at a cost of approximately $17.6 billion between December 31, 2015 and December 31, 2019:

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•	During 2019 we repurchased and retired approximately 14.7 million and 8.9 million shares of our common stock at a cost of approximately $3.7 billion and $2.1 billion under our March 2019 Share Repurchase Program and our 2018 Share Repurchase Program, respectively.

•	During 2018 we repurchased and retired approximately 4.3 million and 10.5 million shares of our common stock at a cost of approximately $1.4 billion and $3.0 billion under our 2018 Share Repurchase Program and a program authorized by our Board of Directors in July 2016 for the repurchase of up to $5.0 billion of our common stock (2016 Share Repurchase Program), respectively.

•	During 2017 we repurchased and retired approximately 3.7 million shares of our common stock at a cost of approximately $1.0 billion under our 2016 Share Repurchase Program.

•	During 2017 we repurchased approximately 1.2 million shares of our common stock at a cost of $365.4 million under a program authorized by our Board of Directors in February 2011 for the repurchase of up to 20.0 million shares of our common stock.

•	During 2016 we repurchased and retired approximately 3.3 million shares of our common stock at a cost of approximately $1.0 billion under our 2016 Share Repurchase Program.

•	During 2015 we repurchased and retired approximately 16.8 million shares of our common stock at a cost of $5.0 billion under a program authorized by our Board of Directors in May 2015 for the repurchase of up to $5.0 billion of our common stock.

(7)	Notes payable, less current portion reflect:

•	Our 2017 repayment of our 6.875% Senior Notes that were issued in 2008 with an aggregate principal amount of $550.0 million; and

•	The issuance of our senior unsecured notes for an aggregate principal amount of $6.0 billion in September 2015.

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Medicaid rebates relate to our estimated obligations to states under established reimbursement arrangements. Rebate accruals are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability which is included in other current liabilities. Our liability for Medicaid rebates consists of estimates for claims that a state will make for the current quarter, claims for prior quarters that have been estimated for which an invoice has not been received, invoices received for claims from the prior quarters that have not been paid and an estimate of potential claims that will be made for inventory that exists in the distribution channel at period end.

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Governmental rebates or chargebacks, including VA and PHS discounts, represent our estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at prices lower than the list prices we charge to wholesalers which provide those products. The wholesaler charges us for the difference between what the wholesaler pays for the products and the ultimate selling price to the qualified healthcare providers. Rebate and chargeback reserves are established in the same period as the related revenue is recognized, resulting in a reduction in product revenue and accounts receivable. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider from the wholesaler, and we generally issue credits for such amounts within a few weeks of the wholesaler notifying us about the resale. Our reserves for VA, PHS and chargebacks consist of amounts that we expect to issue for inventory that exists at the wholesalers that we expect will be sold to qualified healthcare providers and chargebacks that wholesalers have claimed for which we have not issued a credit.

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Managed care rebates represent our estimated obligations to third parties, primarily pharmacy benefit managers. Rebate accruals are recorded in the same period the related revenue is recognized, resulting in a reduction of product revenue and the establishment of a liability which is included in accrued expenses and other current liabilities. These rebates result from performance-based goals, formulary position and price increase limit allowances (price protection). The calculation of the accrual for these rebates is based on an estimate of the customer’s buying patterns and the resulting applicable contractual rebate rate(s) to be earned over a contractual period.

•	Copay assistance represents financial assistance to qualified patients, assisting them with prescription drug co-payments required by insurance. The calculation of the accrual for copay is based on an estimate of claims and the cost per claim that we expect to receive associated with inventory that exists in the distribution channel at period end.

•	Other governmental rebates, non-U.S. pharmaceutical taxes or applicable allowances primarily relate to mandatory rebates and discounts in international markets where government-sponsored healthcare systems are the primary payors for healthcare.

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(i)	our share of pre-tax profits and losses in the U.S. for RITUXAN and GAZYVA; and

(ii)	other revenues from anti-CD20 therapeutic programs, which primarily consist of our share of pre-tax co-promotion profits on RITUXAN in Canada and royalty revenues on sales of OCREVUS.

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•	Level 1 — Fair values are determined utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access;

•	Level 2 — Fair values are determined by utilizing quoted prices for identical or similar assets and liabilities in active markets or other market observable inputs such as interest rates, yield curves, foreign currency spot rates and option pricing valuation models; and

•	Level 3 — Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

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Clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue under ASC 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in ASC 606 should be applied, including recognition, measurement, presentation and disclosure requirements;

•	Adds unit-of-account guidance to ASC 808, Collaborative Arrangements, to align with the guidance in ASC 606 (that is, a distinct good or service) when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of ASC 606; and

•	Precludes a company from presenting transactions with collaborative arrangement participants that are not directly related to sales to third parties with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer.

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(1)	Represents sublease income expected to be received for the vacated manufacturing facility in Cambridge, MA, the vacated portion of our Weston, MA facility and other facilities throughout the world.

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•	$1.5 billion aggregate principal amount of 2.90% Senior Notes due September 15, 2020, valued at 99.792% of par;

•	$1.0 billion aggregate principal amount of 3.625% Senior Notes due September 15, 2022, valued at 99.920% of par;

•	$1.75 billion aggregate principal amount of 4.05% Senior Notes due September 15, 2025, valued at 99.764% of par; and

•	$1.75 billion aggregate principal amount of 5.20% Senior Notes due September 15, 2045, valued at 99.294% of par.

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(a)

MSUs granted during 2019 include awards granted in conjunction with our annual awards made in February 2019 and MSUs granted in conjunction with the hiring of employees. These grants reflect the target number of shares eligible to be earned at the time of grant. MSUs granted in 2019 also reflect an adjustment based upon the final performance multiplier in relation to shares granted in 2018, 2017 and 2016.

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(a)	PSUs settled in stock granted in 2019 include awards granted in conjunction with our annual awards made in February 2019 and PSUs granted in conjunction with the hiring of employees. These grants reflect the target number of shares eligible to be earned at the time of grant.

(a)	PSUs settled in cash granted in 2019 include awards granted in conjunction with our annual awards made in February 2019 and PSUs granted in conjunction with the hiring of employees. These grants reflect the target number of shares eligible to be earned at the time of grant.

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(a)	RSUs granted in 2019 primarily represent RSUs granted in conjunction with our annual awards made in February 2019 and awards made in conjunction with the hiring of new employees. RSUs granted in 2019 also include approximately 15,000 RSUs granted to our Board of Directors.

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(a)	Net income and net income attributable to Biogen Inc. for 2019 include:

•	Pre-tax gains (losses) related to changes in the fair value of our strategic investments of $376.1 million, ($174.2) million, ($4.6) million and $2.8 million for the first, second, third and fourth quarters, respectively.

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•	Impairment charges related to certain intangible assets of $215.9 million in the third quarter. For additional information, please read Note 6, Intangible Assets and Goodwill, to these consolidated financial statements.

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A total net loss in our consolidated statements of income of approximately $124.2 million related to the sale of all the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM. This loss included a pre-tax loss of $55.3 million and a tax expense of $68.9 million related to this transaction. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read, Note 3, Divestitures, to these consolidated financial statements.

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An expense of $63.0 million was recorded in research and development expense in our consolidated statements of income in the fourth quarter as we completed a transaction with Samsung Bioepis and secured the exclusive rights to commercialize two potential ophthalmology biosimilar products, SB11 referencing LUCENTIS and SB15 referencing EYLEA, in major markets worldwide, including the U.S., Canada, Europe, Japan and Australia. We also acquired an option to extend our existing commercial agreement with Samsung Bioepis for BENEPALI, IMRALDI and FLIXABI in Europe and obtained exclusive rights to commercialize these products in China. For additional information, please read, Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

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Losses (gains) related to the adjustments to the fair values of our contingent consideration obligations of $11.5 million, $(20.0) million, $(57.8) million and $2.6 million for the first, second, third and fourth quarters, respectively. For additional information on the valuation of our contingent consideration obligations, please read Note 7, Fair Value Measurements, to these consolidated financial statements.

•	A payment of $45.0 million to Ionis in the fourth quarter, as we exercised our option to obtain a worldwide, exclusive, royalty-bearing license from Ionis to develop and commercialize BIIB080. For additional information, please read, Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

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A payment of $38.5 million to Skyhawk in the first quarter as we entered into a collaboration and research and development services agreement with Skyhawk pursuant to which the companies are leveraging Skyhawk's SkySTAR technology platform with the goal of discovering innovative small molecule treatments for patients with neurological diseases, including MS and SMA. For additional information, please read, Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

(b)	Net income and net income attributable to Biogen Inc. for 2018 include:

•	Pre-tax (losses) gains related to changes in the fair value of our strategic investments of $(6.4) million, $5.4 million, $141.2 million and $(12.2) million for the first, second, third and fourth quarters, respectively.

•	Pre-tax charges to acquired IPR&D of $10.0 million, $75.0 million and $27.5 million for the first, second and third quarters, respectively, for upfront payments made upon closing of asset purchase transactions. For additional information, please read Note 2, Acquisitions, to these consolidated financial statements.

•	Pre-tax research and development expenses for the second quarter of $486.2 million related to the 2018 Ionis Agreement. For additional information, please read, Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

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Pre-tax charge to noncontrolling interests of $50.0 million for the second quarter for a payment to Neurimmune in exchange for a 5% reduction in the previously negotiated royalty rates payable on products developed under the Neurimmune Agreement, including royalties payable on potential commercial sales of aducanumab. For additional information, please read Note 19, Investments in Variable Interest Entities, to these consolidated financial statements.

•	Impairment charges related to certain intangible assets of $189.3 million and $176.8 million in the third and fourth quarters, respectively. For additional information, please read Note 6, Intangible Assets and Goodwill, to these consolidated financial statements.

•	Losses (gains) related to the adjustments to the fair values of our contingent consideration obligations of $(5.6) million, $1.9 million, $(87.9) million and $79.3 million for the first, second, third and fourth quarters,

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•	Net increase to income tax expense of $135.8 million for the fourth quarter reflecting the impact of electing to record deferred taxes on GILTI. For additional information, please read Note 16, Income Taxes, to these consolidated financial statements.

•	An upfront payment of $35.0 million to Ionis, as we exercised our option in the fourth quarter to obtain a worldwide, exclusive, royalty-bearing license from Ionis to develop and commercialize tofersen. For additional information, please read Note 18, Collaborative and Other Relationships, to these consolidated financial statements.

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