UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20172019
OR
oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-19311
biogenlogostandarda10.jpgbiogenlogoa05.jpg
BIOGEN INC.
(Exact name of registrant as specified in its charter)
Delaware 33-0112644
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
225 Binney Street, Cambridge, MA02142
(617) (617679-2000
(Address, including zip code, and telephone number, including
area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0005 par valueBIIBTheNasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:    YesxNoo
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files):    YesxNoo
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act:
Large accelerated filer
x 
Accelerated filero
Non-accelerated filero
 
Smaller reporting companyo
(Do not check if a smaller reporting company) 
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):.    Yes  o No x
The number of shares of the issuer’s Common Stock, $0.0005 par value, outstanding as of October 20, 201721, 2019, was 211,476,936180,441,878 shares.
 

BIOGEN INC.
FORM 10-Q — Quarterly Report
For the Quarterly Period Ended September 30, 20172019
TABLE OF CONTENTS
 
  Page
   
Item 1.Financial Statements (unaudited) 
   
 
   
 
   
 
   
 
   
 
   
Item 2.
   
Item 3.
   
Item 4.
 
PART II — OTHER INFORMATION
   
Item 1.
   
Item 1A.
   
Item 2.
   
Item 6.
  



NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 (the Act) with the intention of obtaining the benefits of the “Safe Harbor” provisions of the Act. These forward-looking statements may be accompanied by such words as “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “potential,” “possible,” “will”“will,” "would" and other words and terms of similar meaning. Reference is made in particular to forward-looking statements regarding:
the anticipated amount, timing and accounting of revenues,revenues; contingent, payments, milestone, royalty and other payments under licensing, collaboration, acquisition or acquisition agreements,divestiture agreements; tax positions and contingencies,contingencies; collectability of receivables,receivables; pre-approval inventory,inventory; cost of sales,sales; research and development costs,costs; compensation and other selling, general and administrative expenses,expenses; amortization of intangible assets,assets; foreign currency exchange risk,risk; estimated fair value of assets and liabilitiesliabilities; and impairment assessments;
expectations, plans and prospects relating to sales, pricing, growth and launch of our marketed and pipeline products;
the potential impact of increased product competition in the markets in which we compete;
patent terms, patent term extensions, patent office actions and expected availability and period of regulatory exclusivity;
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;
the drivers for growing our business, including our plans and intent to commit resources relating to business development opportunities and research and development programs;
the anticipated benefits and the potential costs and expenses related to our corporate restructurings or other initiatives to streamline our operations and reallocate resources;
our manufacturing capacity, use of third-party contract manufacturing organizations and plans and timing relating to the expansion of our manufacturing capabilities, including anticipated investments and activities in new manufacturing facilities;
the potential impact on our results of operations and liquidity of the United Kingdom's (U.K.) intent to voluntarily depart from the European Union (E.U.);
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 of healthcare reform in the United States (U.S.) and measures being taken worldwide designed to reduce healthcare costs to limit the overall level of government expenditures, including the impact of pricing actions and reduced reimbursement for our 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 anticipated benefits, costspotential impact of increased product competition in the markets in which we compete, including increased competition from generics, biosimilars, prodrugs and tax treatment of the spin-offother products approved under abbreviated regulatory pathways;
our plans and investments in our core and emerging growth areas, as well as implementation of our hemophilia business;corporate strategy;
lease commitments, purchase obligationsthe 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 timingpotential benefits and satisfactionresults of, other contractual obligations;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 or generic or biosimilar versions of our marketed 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, including anticipated investments, 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.) intent to voluntarily depart 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.

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

NOTE REGARDING COMPANY AND PRODUCT REFERENCES
References in this report to:
“Biogen,” the “company,” “we,” “us” and “our” refer to Biogen Inc. and its consolidated subsidiaries; and
“RITUXAN” refers to both RITUXAN (the trade name for rituximab in the U.S., Canada and Japan) and MabThera (the trade name for rituximab outside the U.S., Canada and Japan); 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.).
NOTE REGARDING TRADEMARKS
AVONEX®, PLEGRIDY®, RITUXAN®, RITUXAN HYCELA®, SPINRAZA®, TECFIDERA®, TYSABRI® and ZINBRYTA® are registered trademarks of Biogen.
BENEPALITM, CIRARAFLIXABITM, FLIXABITM, FUMADERMTM and IMRALDITM are trademarks of Biogen. ALPROLIX®,ELOCTATE®,
ENBREL®, FAMPYRATM, GAZYVA®, HUMIRA®, OCREVUS®, REMICADE®, RITUXAN HYCELASkySTARTM and other trademarks referenced in this report are the property of their respective owners.

PART I FINANCIAL INFORMATION


BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited, in millions, except per share amounts)
 
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
2017 2016 2017 20162019 2018 2019 2018
Revenues:              
Product, net$2,622.5
 $2,539.6
 $7,642.3
 $7,315.0
$2,894.7
 $2,780.1
 $8,455.0
 $8,061.1
Revenues from anti-CD20 therapeutic programs406.5
 317.6
 1,144.2
 996.3
595.8
 511.7
 1,689.6
 1,445.3
Other48.8
 98.6
 180.4
 265.5
109.6
 147.2
 562.0
 420.2
Total revenues3,077.8
 2,955.8
 8,966.9
 8,576.8
3,600.1
 3,439.0
 10,706.6
 9,926.6
Cost and expenses:              
Cost of sales, excluding amortization of acquired intangible assets370.0
 416.9
 1,120.8
 1,100.2
Cost of sales, excluding amortization and impairment of acquired intangible assets430.0
 460.8
 1,508.3
 1,327.8
Research and development446.4
 529.0
 1,666.0
 1,439.4
540.4
 507.9
 1,588.9
 1,985.6
Selling, general and administrative433.8
 462.7
 1,363.1
 1,452.4
554.5
 497.7
 1,709.8
 1,515.2
Amortization of acquired intangible assets108.9
 99.7
 674.9
 281.4
Acquired in-process research and development
 
 120.0
 
Amortization and impairment of acquired intangible assets283.9
 281.9
 422.2
 493.2
Collaboration profit (loss) sharing35.2
 4.7
 82.5
 (0.9)60.2
 47.5
 181.8
 129.2
Loss on divestiture of Hillerød, Denmark manufacturing operations(17.7) 
 95.5
 
(Gain) loss on fair value remeasurement of contingent consideration30.0
 5.9
 61.2
 18.8
(57.8) (87.9) (66.3) (91.6)
Restructuring charges
 11.6
 
 21.3
0.3
 6.0
 1.5
 9.2
Acquired in-process research and development
 27.5
 
 112.5
Total cost and expenses1,424.3
 1,530.5
 5,088.5
 4,312.6
1,793.8
 1,741.4
 5,441.7
 5,481.1
Income from operations1,653.5
 1,425.3
 3,878.4
 4,264.2
1,806.3
 1,697.6
 5,264.9
 4,445.5
Other income (expense), net(43.6) (58.1) (149.4) (169.4)(27.3) 115.1
 132.6
 39.6
Income before income tax expense and equity in loss of investee, net of tax1,609.9
 1,367.2
 3,729.0
 4,094.8
1,779.0
 1,812.7
 5,397.5
 4,485.1
Income tax expense383.8
 337.0
 892.6
 1,047.0
211.3
 369.8
 881.9
 956.0
Equity in loss of investee, net of tax
 
 
 
21.8
 
 66.8
 
Net income1,226.1
 1,030.2
 2,836.4
 3,047.8
1,545.9
 1,442.9
 4,448.8
 3,529.1
Net income (loss) attributable to noncontrolling interests, net of tax
 (2.7) (0.1) (5.8)
 (1.5) 
 45.2
Net income attributable to Biogen Inc.$1,226.1
 $1,032.9
 $2,836.5
 $3,053.6
$1,545.9
 $1,444.4
 $4,448.8
 $3,483.9
       
Net income per share:              
Basic earnings per share attributable to Biogen Inc.$5.80
 $4.72
 $13.32
 $13.95
$8.40
 $7.17
 $23.38
 $16.86
Diluted earnings per share attributable to Biogen Inc.$5.79
 $4.71
 $13.30
 $13.92
$8.39
 $7.15
 $23.35
 $16.83
       
Weighted-average shares used in calculating:              
Basic earnings per share attributable to Biogen Inc.211.4
 218.9
 213.0
 219.0
184.0
 201.4
 190.3
 206.6
Diluted earnings per share attributable to Biogen Inc.211.8
 219.4
 213.3
 219.4
184.2
 201.9
 190.5
 207.0










See accompanying notes to these unaudited condensed consolidated financial statements.

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited, in millions)
 
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
2017 2016 2017 20162019 2018 2019 2018
Net income attributable to Biogen Inc.$1,226.1
 $1,032.9
 $2,836.5
 $3,053.6
$1,545.9
 $1,444.4
 $4,448.8
 $3,483.9
Other comprehensive income:              
Unrealized gains (losses) on securities available for sale, net of tax1.0
 (5.4) 6.6
 1.6
0.1
 (0.2) 10.3
 (1.8)
Unrealized gains (losses) on cash flow hedges, net of tax(35.5) 1.3
 (162.3) (17.0)59.1
 5.2
 38.1
 109.0
Gains (losses) on net investment hedges21.2
 
 46.9
 
Unrealized gains (losses) on pension benefit obligation, net of tax
 0.4
 (0.5) 1.3
0.8
 (0.2) 1.5
 0.2
Currency translation adjustment43.9
 (14.4) 146.7
 (62.8)79.4
 8.5
 51.3
 (38.8)
Total other comprehensive income (loss), net of tax9.4
 (18.1) (9.5) (76.9)160.6
 13.3
 148.1
 68.6
Comprehensive income attributable to Biogen Inc.1,235.5
 1,014.8
 2,827.0
 2,976.7
1,706.5
 1,457.7
 4,596.9
 3,552.5
Comprehensive income (loss) attributable to noncontrolling interests, net of tax
 (2.6) (0.1) (5.7)
 (1.5) (0.4) 45.2
Comprehensive income$1,235.5
 $1,012.2
 $2,826.9
 $2,971.0
$1,706.5
 $1,456.2
 $4,596.5
 $3,597.7




































































See accompanying notes to these unaudited condensed consolidated financial statements.

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in millions, except per share amounts)
 
As of September 30,
2017
 As of December 31,
2016
As of September 30,
2019
 As of December 31,
2018
ASSETS
Current assets:      
Cash and cash equivalents$1,548.1
 $2,326.5
$2,343.9
 $1,224.6
Marketable securities1,960.2
 2,568.6
2,093.5
 2,313.4
Accounts receivable, net1,567.5
 1,441.6
1,933.5
 1,958.5
Due from anti-CD20 therapeutic programs518.0
 300.6
582.3
 526.9
Inventory1,007.2
 1,001.6
751.8
 929.9
Other current assets967.0
 1,093.3
743.2
 687.6
Total current assets7,568.0
 8,732.2
8,448.2
 7,640.9
Marketable securities3,062.0
 2,829.4
1,813.9
 1,375.9
Property, plant and equipment, net2,995.9
 2,501.8
3,138.1
 3,601.2
Operating lease assets422.0
 
Intangible assets, net4,019.4
 3,808.3
3,392.4
 3,120.0
Goodwill4,127.5
 3,669.3
5,746.1
 5,706.4
Deferred tax asset3,284.5
 2,153.9
Investments and other assets1,300.4
 1,335.8
1,238.8
 1,690.6
Total assets$23,073.2
 $22,876.8
$27,484.0
 $25,288.9
LIABILITIES AND EQUITY
Current liabilities:      
Current portion of notes payable and other financing arrangements$573.2
 $4.7
Current portion of notes payable$1,495.3
 $
Taxes payable121.3
 231.9
125.6
 63.5
Accounts payable298.7
 279.8
382.2
 370.5
Accrued expenses and other2,455.2
 2,903.5
2,429.1
 2,861.2
Total current liabilities3,448.4
 3,419.9
4,432.2
 3,295.2
Notes payable and other financing arrangements5,938.3
 6,512.7
Notes payable4,458.2
 5,936.5
Deferred tax liability120.7
 93.1
2,820.4
 1,636.2
Long-term operating lease liabilities410.5
 
Other long-term liabilities716.9
 722.5
1,370.9
 1,389.4
Total liabilities10,224.3
 10,748.2
13,492.2
 12,257.3
Commitments and contingencies

 



 


Equity:      
Biogen Inc. shareholders’ equity:      
Preferred stock, par value $0.001 per share
 

 
Common stock, par value $0.0005 per share0.1
 0.1
0.1
 0.1
Additional paid-in capital59.2
 

 
Accumulated other comprehensive loss(329.4) (319.9)(92.3) (240.4)
Retained earnings16,107.7
 15,071.6
17,065.2
 16,257.0
Treasury stock, at cost(2,977.1) (2,611.7)(2,977.1) (2,977.1)
Total Biogen Inc. shareholders’ equity12,860.5
 12,140.1
13,995.9
 13,039.6
Noncontrolling interests(11.6) (11.5)(4.1) (8.0)
Total equity12,848.9
 12,128.6
13,991.8
 13,031.6
Total liabilities and equity$23,073.2
 $22,876.8
$27,484.0
 $25,288.9
See accompanying notes to these unaudited condensed consolidated financial statements.

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in millions)
 For the Nine Months
Ended September 30,
 2017 2016
Cash flows from operating activities:   
Net income$2,836.4
 $3,047.8
Adjustments to reconcile net income to net cash flows from operating activities:   
Depreciation, amortization and acquired in-process research and development992.0
 505.3
Share-based compensation97.4
 117.8
Deferred income taxes(39.7) (56.8)
Other126.9
 45.3
Changes in operating assets and liabilities, net:   
Accounts receivable(225.8) (238.1)
Inventory(170.3) (155.1)
Accrued expenses and other current liabilities(504.5) (175.5)
Income tax assets and liabilities170.5
 (147.4)
Other changes in operating assets and liabilities, net(250.2) 62.0
Net cash flows provided by operating activities3,032.7
 3,005.3
Cash flows from investing activities:   
Proceeds from sales and maturities of marketable securities4,472.6
 5,185.8
Purchases of marketable securities(4,093.9) (5,631.7)
Contingent consideration related to Fumapharm AG acquisition(900.0) (900.0)
Acquired in-process research and development(120.0) 
Purchases of property, plant and equipment(636.8) (434.0)
Acquisitions of intangible assets(910.4) (110.4)
Other(5.1) (12.8)
Net cash flows used in investing activities(2,193.6) (1,903.1)
Cash flows from financing activities:   
Purchases of treasury stock(1,365.4) (348.9)
Payments related to issuance of stock for share-based compensation arrangements, net(10.7) (12.4)
Net cash contribution to Bioverativ Inc.(302.7) 
Repayment of borrowings(3.2) (2.7)
Other10.1
 37.9
Net cash flows used in financing activities(1,671.9) (326.1)
Net (decrease) increase in cash and cash equivalents(832.8) 776.1
Effect of exchange rate changes on cash and cash equivalents54.4
 0.7
Cash and cash equivalents, beginning of the period2,326.5
 1,308.0
Cash and cash equivalents, end of the period$1,548.1
 $2,084.8








 For the Nine Months
Ended September 30,
 2019 2018
Cash flows from operating activities:   
Net income$4,448.8
 $3,529.1
Adjustments to reconcile net income to net cash flows from operating activities:   
Depreciation, amortization and impairments567.6
 686.9
Acquired in-process research and development
 112.5
Share-based compensation143.9
 119.0
Contingent consideration(66.3) (91.6)
Loss on divestiture of Hillerød, Denmark manufacturing operations95.5
 
Deferred income taxes28.4
 (44.8)
Unrealized (gain) loss on strategic investments(189.8) (136.9)
Loss on equity method investment63.5
 
Other87.4
 68.7
Changes in operating assets and liabilities, net:   
Accounts receivable(2.4) (254.0)
Inventory47.3
 (31.9)
Accrued expenses and other current liabilities(109.1) 100.7
Income tax assets and liabilities64.6
 315.6
Other changes in operating assets and liabilities, net(61.0) (81.0)
Net cash flows provided by operating activities5,118.4
 4,292.3
Cash flows from investing activities:   
Proceeds from sales and maturities of marketable securities3,867.6
 7,994.7
Purchases of marketable securities(4,052.1) (6,093.8)
Contingent consideration paid related to Fumapharm AG acquisition(300.0) (1,200.0)
Acquisition of Nightstar Therapeutics plc, net of cash acquired(744.4) 
Proceeds from divestiture of Hillerød, Denmark manufacturing operations923.7
 
Purchases of property, plant and equipment(404.1) (544.7)
Acquired in-process research and development
 (112.5)
Acquisitions of intangible assets
 (3.0)
Purchase of Ionis Pharmaceuticals, Inc. stock
 (462.9)
Proceeds from sales of strategic investments476.0
 
Other(4.6) 1.2
Net cash flows used in investing activities(237.9) (421.0)
Cash flows from financing activities:   
Purchases of treasury stock(3,775.2) (3,000.0)
Payments related to issuance of stock for share-based compensation arrangements, net(16.9) (6.7)
Repayment of borrowings
 (3.2)
Net distribution to noncontrolling interest4.3
 (36.9)
Other43.8
 11.8
Net cash flows used in financing activities(3,744.0) (3,035.0)
Net increase (decrease) in cash and cash equivalents1,136.5
 836.3
Effect of exchange rate changes on cash and cash equivalents(17.2) (23.4)
Cash and cash equivalents, beginning of the period1,224.6
 1,573.8
Cash and cash equivalents, end of the period$2,343.9
 $2,386.7
See accompanying notes to these unaudited condensed consolidated financial statements.

BIOGEN INC. AND SUBSIDIARIES
8CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(unaudited, in millions)
 Preferred stock Common stock 
Additional
paid-in
capital
 
Accumulated
other
comprehensive
loss
 
Retained
earnings
 Treasury stock 
Total
Biogen Inc.
shareholders’
equity
 
Noncontrolling
interests
 
Total
equity
 Shares Amount Shares Amount    Shares Amount   
Balance, June 30, 2019
 $
 208.6
 $0.1
 $
 $(252.9) $16,182.8
 (23.8) $(2,977.1) $12,952.9
 $(4.1) $12,948.8
Net income            1,545.9
     1,545.9
 
 1,545.9
Other comprehensive income (loss), net of tax          160.6
       160.6
 
 160.6
Capital contribution by noncontrolling interest                  
 
 
Repurchase of common stock pursuant to the 2019 Share Repurchase Program, at cost              (3.1) (717.9) (717.9)   (717.9)
Retirement of common stock pursuant to the 2019 Share Repurchase Program, at cost    (3.1) 
 (55.1)   (662.8) 3.1
 717.9
 
   
Issuance of common stock under stock option and stock purchase plans    0.1
 
 7.3
         7.3
   7.3
Issuance of common stock under stock award plan    0.1
 
 
   (0.7)     (0.7)   (0.7)
Compensation related to share-based payments        47.8
         47.8
   47.8
Balance, September 30, 2019
 $
 205.7
 $0.1
 $
 $(92.3) $17,065.2
 (23.8) $(2,977.1) $13,995.9
 $(4.1) $13,991.8











See accompanying notes to these unaudited condensed consolidated financial statements.

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - (Continued)
(unaudited, in millions)
 Preferred stock Common stock 
Additional
paid-in
capital
 
Accumulated
other
comprehensive
loss
 
Retained
earnings
 Treasury stock 
Total
Biogen Inc.
shareholders’
equity
 
Noncontrolling
interests
 
Total
equity
 Shares Amount Shares Amount    Shares Amount   
Balance, December 31, 2018
 $
 221.0
 $0.1
 $
 $(240.4) $16,257.0
 (23.8) $(2,977.1) $13,039.6
 $(8.0) $13,031.6
Net income            4,448.8
     4,448.8
 
 4,448.8
Other comprehensive income (loss), net of tax          148.1
       148.1
 (0.4) 147.7
Capital contribution by noncontrolling interest                  
 4.3
 4.3
Repurchase of common stock pursuant to the 2019 Share Repurchase Program, at cost              (7.0) (1,627.8) (1,627.8)   (1,627.8)
Retirement of common stock pursuant to the 2019 Share Repurchase Program, at cost    (7.0) 
 (74.8)   (1,553.0) 7.0
 1,627.8
 
   
Repurchase of common stock pursuant to the 2018 Share Repurchase Program, at cost              (8.9) (2,147.4) (2,147.4)   (2,147.4)
Retirement of common stock pursuant to the 2018 Share Repurchase Program, at cost    (8.9) 
 (110.5)   (2,036.9) 8.9
 2,147.4
 
   
Issuance of common stock under stock option and stock purchase plans    0.2
 
 33.5
         33.5
   33.5
Issuance of common stock under stock award plan    0.4
 
 
   (50.7)     (50.7)   (50.7)
Compensation related to share-based payments        151.8
         151.8
   151.8
Balance, September 30, 2019
 $
 205.7
 $0.1
 $
 $(92.3) $17,065.2
 (23.8) $(2,977.1) $13,995.9
 $(4.1) $13,991.8




See accompanying notes to these unaudited condensed consolidated financial statements.

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - (Continued)
(unaudited, in millions)
 Preferred stock Common stock 
Additional
paid-in
capital
 
Accumulated
other
comprehensive
loss
 
Retained
earnings
 Treasury stock 
Total
Biogen Inc.
shareholders’
equity
 
Noncontrolling
interests
 
Total
equity
 Shares Amount Shares Amount    Shares Amount   
Balance, June 30, 2018
 $
 225.2
 $0.1
 $
 $(261.6) $15,499.5
 (23.8) $(2,977.1) $12,260.9
 $(7.2) $12,253.7
Net income            1,444.4
     1,444.4
 (1.5) 1,442.9
Other comprehensive income (loss), net of tax          13.3
       13.3
 
 13.3
Capital contribution by noncontrolling interest                  
 1.9
 1.9
Issuance of common stock under stock option and stock purchase plans    
 
 8.7
         8.7
   8.7
Issuance of common stock under stock award plan    
 
 (1.1)         (1.1)   (1.1)
Compensation related to share-based payments        40.2
   0.2
     40.4
   40.4
Balance, September 30, 2018
 $
 225.2
 $0.1
 $47.8
 $(248.3) $16,944.1
 (23.8) $(2,977.1) $13,766.6
 $(6.8) $13,759.8













See accompanying notes to these unaudited condensed consolidated financial statements.

BIOGEN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - (Continued)
(unaudited, in millions)
 Preferred stock Common stock 
Additional
paid-in
capital
 
Accumulated
other
comprehensive
loss
 
Retained
earnings
 Treasury stock 
Total
Biogen Inc.
shareholders’
equity
 
Noncontrolling
interests
 
Total
equity
 Shares Amount Shares Amount    Shares Amount   
Balance, December 31, 2017
 $
 235.3
 $0.1
 $97.8
 $(318.4) $15,810.4
 (23.8) $(2,977.1) $12,612.8
 $(14.7) $12,598.1
Net income            3,483.9
     3,483.9
 45.2
 3,529.1
Other comprehensive income (loss), net of tax          68.6
       68.6
 (0.3) 68.3
Capital contribution by noncontrolling interest                  
 13.0
 13.0
Distribution to noncontrolling interest                  
 (50.0) (50.0)
Repurchase of common stock pursuant to the 2016 Share Repurchase Program, at cost              (10.5) (3,000.0) (3,000.0)   (3,000.0)
Retirement of common stock pursuant to the 2016 Share Repurchase Program, at cost    (10.5) 
 (171.2)   (2,828.8) 10.5
 3,000.0
 
   
Issuance of common stock under stock option and stock purchase plans    0.1
 
 33.3
         33.3
   33.3
Issuance of common stock under stock award plan    0.3
 
 (39.9)         (39.9)   (39.9)
Compensation related to share-based payments        127.8
   0.2
     128.0
   128.0
Adoption of new accounting guidance          1.5
 478.4
     479.9
   479.9
Balance, September 30, 2018
 $
 225.2
 $0.1
 $47.8
 $(248.3) $16,944.1
 (23.8) $(2,977.1) $13,766.6
 $(6.8) $13,759.8



See accompanying notes to these unaudited condensed consolidated financial statements.

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)




1.    Summary of Significant Accounting Policies
References in these notes to "Biogen," the "company," "we," "us" and "our" refer to Biogen Inc. and its consolidated subsidiaries.
Business Overview
Biogen is a global biopharmaceutical company focused on discovering, developing manufacturing and delivering worldwide innovative therapies tofor people living with serious neurological and neurodegenerative diseases.diseases as well as related therapeutic adjacencies. Our core growth areas include multiple sclerosis (MS) and neuroimmunology, neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis (ALS), movement disorders, including Parkinson's disease and progressive supranuclear palsy, Alzheimer's disease (AD) and dementia and ophthalmology. We are also focused on discovering, developing and delivering worldwide innovative therapies in our emerging growth areas of immunology, neurocognitive disorders, acute neurology and pain. In addition, we commercialize biosimilars of advanced biologics. We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities.
Our marketed products include TECFIDERA, AVONEX, PLEGRIDY, TYSABRI ZINBRYTA and FAMPYRA for multiple sclerosis (MS),the treatment of MS, SPINRAZA for the treatment of spinal muscular atrophy (SMA)SMA and FUMADERM for the treatment of severe plaque psoriasis. We also have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions, RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL, GAZYVA indicated for the treatment of CLL and follicular lymphoma, OCREVUS indicated for the treatment of primary progressive MS (PPMS) and relapsing MS (RMS) and other potential anti-CD20 therapies under apursuant to our collaboration agreementarrangements with Genentech, Inc. (Genentech), a wholly-owned member of the Roche Group. For additional information on our collaboration arrangements with Genentech, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 (2018 Form 10-K).
We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities, particularly within areas of our scientific, manufacturing and technical capabilities. We intend to invest in the future across our core growth areas of MS and neuroimmunology, Alzheimer's disease (AD) and dementia, Parkinson's disease and movement disorders, and neuromuscular diseases including SMA and amyotrophic lateral sclerosis (ALS). Further, we see opportunities to invest in emerging growth areas such as pain, ophthalmology, neuropsychiatry and acute neurology. In addition, we are employing innovative technologies to discover potential treatments for rare and genetic disorders, including new ways of treating diseases through gene therapy.
Our innovative drug development and commercialization activities are complemented by our biosimilar therapiesproducts that expand access to medicines and reduce the cost burden for healthcare systems. We are leveraging our manufacturing capabilities and know-how to develop, manufacture and market biosimilars throughThrough Samsung Bioepis Co., Ltd. (Samsung Bioepis), our joint venture with Samsung BioLogics Co., Ltd. (Samsung Biologics). Under our commercial agreement,BioLogics), we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in the European Union (E.U.).
Hemophilia Spin-Off
On February 1, 2017, we completed the spin-off of For additional information on our hemophilia business, Bioverativ Inc. (Bioverativ)collaboration arrangement with Samsung Bioepis, please read Note 17, Collaborative and Other Relationships, as an independent, publicly traded company. Our consolidated results of operations and financial position included into these unaudited condensed consolidated financial statements reflect the financial results of our hemophilia business for all periods through January 31, 2017.
For additional information related to the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off, to these condensed(condensed consolidated financial statements.statements).
Basis of Presentation
In the opinion of management, the accompanying unauditedour condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of our financial statements for interim periods in accordance with accounting principles generally accepted in the United States (U.S. GAAP). The information included in this quarterly report on Form 10-Q should be read in conjunction with our audited consolidated financial statements and the accompanying notes included in our Annual Report on2018 Form 10-K for the year ended December 31, 2016 (2016 Form 10-K).10-K. Our accounting policies are described in the “Notes to Consolidated Financial Statements” in our 20162018 Form 10-K and updated, as necessary, in this Form 10-Q.report. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from our audited financial statements but does not include all disclosures required by U.S. GAAP. The results of operations for the three and nine months ended September 30, 20172019, are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.
We operate as one1 operating segment, focused on discovering, developing manufacturing and delivering worldwide therapies tofor people living with serious neurological and neurodegenerative diseases.diseases as well as related therapeutic adjacencies.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)


Consolidation
Our condensed consolidated financial statements reflect our financial statements, those of our wholly-owned subsidiaries and those of certain variable interest entities where we are the primary beneficiary. For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income (loss) attributable to noncontrolling interests in our condensed consolidated statements of income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties. Intercompany balances and transactions are eliminated in consolidation.
In determining whether we are the primary beneficiary of an entity, we apply a qualitative approach that determines whether we have both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. These considerations impact the way we account for our existing collaborative relationships and other arrangements. We continuously assess whether we are the primary beneficiary of a variable interest entity as changes to existing relationships or future transactions may result in us consolidating or deconsolidating one or more of our collaborators or partners.
Use of Estimates
The preparation of our condensed consolidated financial statements requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and methodologies. We base our estimates on historical experience and on various other assumptions that we believe to beare reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. Actual results may differ from these estimates under different assumptionsestimates.
Assets and Liabilities Held For Sale
Upon determining that a long-lived asset or conditions.disposal group meets the criteria to be classified as held for sale, we cease depreciation and separately present such assets and liabilities of the disposal group in our condensed consolidated balance sheet. We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. We assess the fair value of a long-lived asset or disposal group less any costs to sell each reporting period it remains classified as held for sale and recognize any subsequent changes as an adjustment to the carrying value of the asset or disposal group, as long as the remeasured carrying value does not exceed the carrying value less costs to sell of the asset or disposal group at the time it was initially classified as held for sale.
New Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies that we adopt as of the specified effective date. Unless otherwise discussed below, we do not believe that the impactadoption of recently issued standards that are not yet effective willhave or may have a material impact on our condensed consolidated financial positionstatements or results of operations upon adoption.disclosures.
We adoptedLeases
In February 2016 the following new standards effective January 1, 2017:
FASB issued Accounting Standards Update (ASU) No. 2016-06, Derivatives2016-02, Leases (Topic 842), a new standard issued to increase transparency and Hedging (Topic 815): Contingent Putcomparability among organizations related to their leasing activities. This standard established a right-of-use model that requires all lessees to recognize right-of-use assets and Call Options in Debt Instruments;
ASU No. 2016-07, Investments - Equity Methodlease liabilities on their balance sheet that arise from leases as well as provide disclosures with respect to certain qualitative and Joint Ventures (Topic 323): Simplifyingquantitative information related to a company's leasing arrangements to meet the Transitionobjective of allowing users of financial statements to assess the Equity Method of Accounting;amount, timing and
ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.
The adoption of these standards did not have a material impact on our financial position, results of operations or statement of cash flows; however, the adoption of ASU No. 2016-09 resulted in the reclassification of certain prior year amounts in our condensed consolidated statements uncertainty of cash flows to conform to our current year presentation. Specifically, amounts previously disclosed in net cash flows used in financing activities related to our excess tax benefitarising from share-based compensation have been reclassified to net cash flows provided by operating activities and amounts related to cash paid when withholding shares for tax withholding purposes, previously disclosed in net cash flows provided by operating activities, have been reclassified to net cash flows used in financing activities.leases.
For additional information related to these standards, please read Note 1, Summary of Significant Accounting Policies: New Accounting Pronouncements, to our consolidated financial statements included in our 2016 Form 10-K.
In May 2014 the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes all existing revenue recognition requirements, including most industry-specific guidance. The new standard requires a company to recognize revenue when it transfers goods or services to customers in an amount that reflects the consideration that the company expects to receive for those goods or services. The FASB has subsequently issued amendments to ASU No. 2014-09 that have the same effective date and transition date of


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)


The FASB subsequently issued the following amendments to ASU 2016-02 that have the same effective date and transition date: ASU No. 2018-01, Leases (Topic 842): Land Easement Practical Expedient for Transition to Topic 842, ASU No. 2018-10, Codification Improvements to Topic 842, Leases, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements, ASU No. 2018-20, Narrow-Scope Improvement for Lessors, and ASU No. 2019-01, Leases (Topic 842): Codification Improvements. We adopted these amendments with ASU 2016-02 (collectively, the new leasing standards) effective January 1, 2018. 2019.
We expect to adopt theseadopted the new leasing standards using the modified retrospective method.transition approach, as of January 1, 2019, with no restatement of prior periods or cumulative adjustment to retained earnings. Upon adoption, we elected the package of transition practical expedients, which allowed us to carry forward prior conclusions related to whether any expired or existing contracts are or contain leases, the lease classification for any expired or existing leases and initial direct costs for existing leases. We have performedalso elected the practical expedient to not reassess certain land easements and made an accounting policy election to not recognize leases with an initial term of 12 months or less within our condensed consolidated balance sheets and to recognize those lease payments on a reviewstraight-line basis in our condensed consolidated statements of income over the lease term. Upon adoption of the new leasing standards as comparedwe recognized an operating lease asset of approximately $463.0 million and a corresponding operating lease liability of approximately $526.0 million, which are included in our condensed consolidated balance sheet. The adoption of the new leasing standards did not have an impact on our condensed consolidated statements of income.
We determine if an arrangement is a lease at contract inception. Operating lease assets represent our right to use an underlying asset for the lease term and operating lease liabilities represent our current accounting policiesobligation to make lease payments arising from the lease. Operating lease assets and our reviewliabilities are recognized at the commencement date of customer contracts and collaborative relationships remains in process. Asthe lease based upon the present value of September 30, 2017, we have not identified any accounting changes that would materially impact the amount of reported revenues with respect to our product revenues and revenues from anti-CD20 therapeutic programs. During the fourth quarter of 2017 we plan to finalize our assessmentslease payments over the impactlease term. When determining the lease term, we include options to extend or terminate the lease when it is reasonably certain that these standards may have on our results of operations, financial position and disclosures.
In January 2016we will exercise that option. We use the FASB issued ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The new standard amends certain aspects of accounting and disclosure requirements of financial instruments, including the requirement that equity investments withimplicit rate when readily determinable fair values be measuredand use our incremental borrowing rate when the implicit rate is not readily determinable based upon the information available at fairthe commencement date in determining the present value with changes in fair valueof the lease payments. Our incremental borrowing rate is determined using a secured borrowing rate for the same currency and term as the associated lease.
The lease payments used to determine our operating lease assets may include lease incentives, stated rent increases and escalation clauses linked to rates of inflation when determinable and are recognized in a company's results of operations. The new standard does not apply to investments accounted for under the equity method of accounting or those that resultour operating lease assets in consolidation of the investee. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment adjusted for changes in observable prices. A financial liability that is measured at fair value in accordance with the fair value option is required to be presented separately in other comprehensive incomeour condensed consolidated balance sheets. In addition, our contracts contain lease and non-lease components. We separate lease payments for the portion of the total changeidentified assets from any non-lease payments included in the fair value resulting from changecontract. For certain equipment leases, such as vehicles, we apply a portfolio approach to effectively account for the operating lease assets and liabilities.
Our operating leases are reflected in operating lease assets, accrued expenses and other and in long-term operating lease liabilities in our condensed consolidated balance sheets. Lease expense for minimum lease payments is recognized on a straight-line basis over the instrument-specific credit risk. In addition,lease term.
We also have real estate lease agreements which are subleased to third parties. Operating leases for which we are the sublessor are included in accrued expenses and other and other long-term liabilities in our condensed consolidated balance sheets. We recognize sublease income on a valuation allowance should be evaluatedstraight-line basis over the lease term in our condensed consolidated statements of income.
For additional information on deferred tax assets related to available-for-sale debt securities in combination with other deferred tax assets. The new standard will be effective for us on January 1, 2018. Based on our current investment holdings, the adoption of this standard is not expectedthe new leasing standards, please read Note 11, Leases, to have a material impact on ourthese condensed consolidated financial position or results of operations; however, it will result in the reclassification of certain investments.statements.
In February 2016 the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from leases on their balance sheet and disclose qualitative and quantitative information about their leasing arrangements. The new standard will be effective for us on January 1, 2019. We are currently evaluating the impact that this standard may have on our results of operations, financial position and disclosures. The adoption of this standard is not expected to have a material impact on our net financial position, but may materially impact the reported amount of total assets and total liabilities.Credit Losses
In June 2016 the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.Instruments. The new standard changesFASB subsequently issued amendments to ASU 2016-13, which have the impairmentsame effective date and transition date of January 1, 2020. These standards require that credit losses be reported using an expected losses model for most financial assetsrather than the incurred losses model that is currently used, and certain other instruments. Under the new standard, entities holding financial assets and net investment in leases that are not accounted for at fair value through net income areestablishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, these standards now require allowances to be presented at the net amount expected to be collected. An allowance for credit losses will be a valuation account that will be deducted fromrecorded instead of reducing the amortized cost basis of the financial assetinvestment. These standards limit the amount of credit losses to presentbe recognized for available-for-sale debt securities to the netamount by which carrying value atexceeds fair value and requires the amount expected to be collected on the financial asset. The new standard will be effective for us on January 1, 2020. The adoptionreversal of this standard is not expected to have a material impact on our financial position or results of operations.previously recognized credit losses if fair value increases.
In August 2016 the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard clarifies certain aspects of the statement of cash flows, including the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, distributions received from equity method investees and beneficial interests in securitization transactions. The new standard also clarifies that an entity should determine each separately identifiable source or use within the cash receipts and cash payments on the basis of the nature of the underlying cash flows. In situations in which cash receipts and payments have aspects of more than one class of cash flows and cannot be separated by source or use, the appropriate classification should depend on the activity that is likely to be the predominant source or use of cash flows for the item. The new standard will be effective for us on January 1, 2018. The adoption of this standard is not expected to have a material impact on our statements of cash flows upon adoption.
In October 2016 the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfer of Assets Other Than Inventory. The new standard eliminates the deferral of the tax effects of intra-entity transfers of an asset other than inventory. Under the new standard, entities should recognize the income tax consequences on an intra-entity transfer of an asset other than inventory when the transfer occurs. The new standard will be effective for us on January 1, 2018. We expect to adopt this standard using the modified retrospective method applied through a


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(unaudited, continued)


cumulative-effect adjustment directly to retained earnings asBased on the composition of the beginning of the period of adoption. The adoption of this standard is expected to have a material impact on our netinvestment portfolio and other financial position; however, the final effect ofassets, current market conditions and historical credit loss activity, the adoption of this standard will depend on the nature and amount of future transactions.
In January 2017 the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The new standard clarifies the definition of a business and provides a screen to determine when an integrated set of assets and activities is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The new standard will be effective for us on January 1, 2018; however, we have adopted this standard as of January 1, 2017, with prospective application to any business development transaction.
In January 2017 the FASB issued ASU No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test of Goodwill Impairment. The new standard eliminates Step 2 from the goodwill impairment test. Under the amendments in ASU No. 2017-04, an entity should recognize an impairment charge for the amount by which the carrying amount of a reporting unit exceeds that reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The new standard will be effective for us on January 1, 2020; however, early adoption is permitted. We intend to early adopt this standard as of October 31, 2017, during our annual review of goodwill. The adoption of this standardthese standards is not expected to have a material impact on our consolidated financial position orand results of operations.operations and related disclosures.
In March 2017 the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The new standard will require that an employer disaggregate the service cost component from the other components of net benefit cost. The new standard also provides explicit guidance on how to present the service cost component and the other components of net benefit cost in the income statement and allow only the service cost component of net benefit cost to be eligible for capitalization. The other components of the net periodic benefit cost must be presented separately from the line items that include service cost and outside of any subtotal of operating income on the condensed consolidated statements of income. The new standard will be effective for us on January 1, 2018. The adoption of this standard is not expected to have a material impact on our financial position or results of operations.Debt Securities
In March 2017 the FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The newSecurities. This standard amends the amortization period for certain purchased callable debt securities held at a premium by shortening the amortization period for the premium to the earliest call date. The newThis standard will bebecame effective for us on January 1, 2019.2019, and was adopted using a modified retrospective transition approach. The adoption of this standard did not result in a significant adjustment to our marketable debt securities.
Fair Value Measurements
In August 2018 the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. This standard modifies certain disclosure requirements on fair value measurements. This standard will become effective for us on January 1, 2020. We do not expect that the adoption of this standard will have a material impact on our disclosures.
Derivative Instruments and Hedging Activities
In October 2018 the FASB issued ASU No. 2018-16, Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes. This standard permits the use of the OIS rate based on the SOFR as a United States (U.S.) benchmark interest rate for hedge accounting purposes under Accounting Standards Codification (ASC) 815, Derivative and Hedging. This standard became effective for us on January 1, 2019, and did not have an impact on our condensed consolidated results of operations or financial position.
Collaborative Arrangements
In November 2018 the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. This standard makes targeted improvements for collaborative arrangements as follows:
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.
This standard will become effective for us on January 1, 2020; however, early adoption is permitted. A retrospective transition approach is required for either all contracts or only for contracts that are not completed at the date of initial application of ASC 606, with a cumulative adjustment to opening retained earnings, as of January 1, 2018. We are currently evaluating the potential impact that this standard may have on our consolidated financial position, and results of operations.operations and related disclosures.
In May 2017 the FASB issued ASU No. 2017-09, Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting. The new standard provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The new standard will be effective for us on January 1, 2018; however, early adoption is permitted. The adoption of this standard is not expected to have a material impact on our financial position or results of operations.
In August 2017 the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. The new standard provides guidance to better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The new standard expands and refines hedge accounting for both non-financial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The new standard will be effective for us on January 1, 2019; however, early adoption is permitted. The adoption of this standard is not expected to have a material impact on our financial position or results of operations.


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2.        Acquisitions
Acquisition of Nightstar Therapeutics plc
On May 15, 2017,June 7, 2019, we completed an asset purchaseour acquisition of all of the outstanding shares of Nightstar Therapeutics plc (NST), a clinical-stage gene therapy company focused on adeno-associated virus treatments for inherited retinal disorders. As a result of this acquisition, we added two mid-to late-stage clinical assets, as well as preclinical programs, in ophthalmology. These assets include BIIB111 (formerly known as NSR-REP1), which is in Phase 3 candidate, CIRARA (nowdevelopment for the potential treatment of choroideremia, a rare, degenerative, X-linked inherited retinal disorder that leads to blindness and currently has no approved treatments, and BIIB112 (formerly known as BIIB093)NSR-RPGR), from Remedy Pharmaceuticals Inc. (Remedy). The target indicationwhich is in Phase 2/3 development for BIIB093the potential treatment of X-linked retinitis pigmentosa, which is large hemispheric infarction (LHI), a severe form of ischemic stroke where brain swelling (cerebral edema) often leads to a disproportionately large share of stroke-related morbidity and mortality. The U.S. Food and Drug Administration (FDA) recently granted BIIB093 Orphan Drug designation for severe cerebral edema in patientsrare inherited retinal disease with acute ischemic stroke. The FDA has also granted BIIB093 Fast Track designation. no currently approved treatments.
Under the terms of the purchase agreement,this acquisition, we will have responsibilitypaid NST shareholders $25.50 in cash for the future developmenteach issued and commercialization of BIIB093outstanding NST share, which totaled $847.6 million. In addition, we paid $4.6 million in cash for equity compensation, which is attributable to pre-combination services and have agreed to pay Remedy certain development and sales based milestone payments, which are substantially payable upon or after regulatory approval,is reflected as well as royalties on future commercial sales. Remedy will share in the cost of development for the target indication for BIIB093 in LHI stroke.
We accounted for this transaction as an asset acquisition as we did not acquire any employees from Remedy nor did we acquire any significant processes required in the development of BIIB093. Upon closinga component of the transaction, we madetotal purchase price paid. The fair value of equity compensation attributable to the post-combination service period was $26.2 million, of which $18.4 million was recognized as a $120.0charge to selling, general and administrative expense with the remaining $7.8 million upfront payment, which was recorded as acquired in-processa charge to research and development expense in our condensed consolidated statements of incomeincome. These amounts were associated with the accelerated vesting of stock options previously granted to NST employees and were fully paid in cash as BIIB093 has not yet reached technological feasibility.
3.    Hemophilia Spin-Off
On February 1, 2017, we completed the spin-off of our hemophilia business, Bioverativ,June 30, 2019. We funded this acquisition through available cash and accounted for it as an independent, publicly traded company trading underacquisition of a business.
The following table summarizes the symbol "BIVV"estimated fair values of the separately identifiable assets acquired and liabilities assumed as of June 7, 2019:
(In millions) 
Cash and cash equivalents$107.8
Marketable securities7.5
In-process research and development intangible assets700.0
Goodwill112.6
Deferred tax liability(77.0)
Other, net1.3
Total purchase price$852.2

Our estimate of the fair value of the in-process research and development (IPR&D) programs acquired was determined through a probability adjusted discounted cash flow analysis utilizing a discount rate of 12.5%. This valuation was primarily driven by the value associated with BIIB111. The fair value associated with BIIB111 was $480.0 million. We have recorded an additional IPR&D asset related to BIIB112 of $220.0 million. Some of the more significant assumptions utilized in our asset valuations included the estimated net cash flows for each year for each asset or product, including net revenues, cost of sales, research and development and other operating expenses, the potential regulatory and commercial success risks, competitive trends impacting the asset and each cash flow stream as well as other factors. These fair value measurements were based on significant inputs not observable in the market and thus represent Level 3 fair value measurements.
We have recognized goodwill in relation to the fair value associated with NST workforce's expertise and early research in retinal disorders. We also recognized goodwill in relation to the establishment of a deferred tax liability for the acquired IPR&D intangible assets, which have no tax basis. This deferred tax liability is net of the related impacts on the Nasdaq Global Select Market. The spin-off was accomplished throughdeferred taxes for global intangible low-taxed income (GILTI). Goodwill that is tax deductible for GILTI purposes is approximately $35.0 million.
Our preliminary estimate of the distributionfair value of all the then outstanding sharesspecifically identifiable assets acquired and liabilities assumed as of common stockthe date of Bioverativacquisition is subject to Biogen shareholders, who received one sharethe finalization of Bioverativ common stock for every two shares of Biogen common stock they owned. The separationmanagement’s analysis related to certain matters, such as preparing and distribution was structured to be tax-free for shareholders for federalsubmitting certain income tax purposes. Bioverativ assumed alland non-income tax filings and returns. The final determination of our rightsthese fair values will be completed as additional information becomes available but no later than one year from the date of acquisition. Although the final determination may result in asset and obligations under our collaboration agreement with Swedish Orphan Biovitrum AB and our collaboration and license agreement with Sangamo Biosciences Inc.liability fair values that are different
In connection with the distribution, Biogen and Bioverativ entered into a separation agreement and various other agreements (including a transition services agreement, a tax matters agreement, a manufacturing and supply agreement, an employee matters agreement, an intellectual property matters agreement and certain other commercial agreements). These agreements govern the separation and distribution and the relationship between the two companies going forward. They also provide for the performance of services by each company for the benefit of the other for a period of time. In addition, under the terms of the separation agreement, Bioverativ is obligated to indemnify us for liabilities that may exist relating to its business activities, whether incurred prior to or after the distribution, including any pending or future litigation.
The services under these agreements generally commenced on February 1, 2017 (the distribution date), and are expected to terminate within 12 months of the distribution date, with the exception of the manufacturing and supply agreement, which has an initial term of five years, with a five year extension at Bioverativ's sole discretion and a further five year extension with Bioverativ's and our consent.


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than the preliminary estimates of these amounts, it is not expected that those differences will be material to our financial position.
Pro forma results of operations as a result of this acquisition have not been presented as this acquisition is not material to our condensed consolidated statements of income. Subsequent to the acquisition date, our results of operations include the results of operations of NST.
3.        Divestitures
Divestiture of Hillerød, Denmark Manufacturing Operations
On August 1, 2019, we completed our sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM Corporation (FUJIFILM). Upon the closing of this transaction, we received approximately $881.9 million in cash, which is subject to the finalization of certain working capital adjustments and may be further adjusted based on other contractual terms, which are discussed below. We determined that the operations disposed of in this transaction did not meet the criteria to be classified as discontinued operations under the applicable guidance.
As part of this transaction, we have provided FUJIFILM with certain minimum batch production commitment guarantees. There is a risk that the minimum contractual batch production commitments will not be met. Based upon current estimates we expect to incur an adverse commitment obligation of approximately $114.0 million associated with such guarantees. We may adjust this estimate based upon changes in business conditions, which may result in the recognition of additional losses. We also may be obligated to indemnify FUJIFILM for liabilities that existed relating to certain business activities incurred prior to the closing of this transaction.
In addition, we may earn certain contingent payments based on future manufacturing activities at the Hillerød facility. For the disposition of a business, our policy is to recognize contingent consideration when the consideration is realizable. We currently believe the probability of earning these payments is remote and therefore we did not include these contingent payments in our calculation of the fair value of the operations.
As part of this transaction, we entered into certain manufacturing services agreements with FUJIFILM pursuant to which FUJIFILM will use the Hillerød facility to produce commercial products for us, such as TYSABRI, as well as other third-party products.
In connection with the distribution we made a net cash contribution to Bioverativ, during the first quarter of 2017, totaling $302.7 million. The following table summarizes the assets and liabilities that were charged against equity as a result of the spin-off of our hemophilia business:
(In millions) 
Assets 
Cash$302.7
Accounts receivable144.7
Inventory116.1
Property, plant and equipment, net20.2
Intangible assets, net56.8
Goodwill314.1
Other, net53.7
Assets transferred, net$1,008.3
  
Liabilities 
Accrued expenses and other current liabilities$87.8
Other long-term liabilities67.7
Liabilities transferred, net$155.5
Under the manufacturing and supply agreement, we manufacture and supply certain products and materials to Bioverativ. For the three and nine months ended September 30, 2017,this transaction we recognized $5.0a total net loss of approximately $160.2 million and $12.1 million, respectively, in revenues in relation to these services, which is reflected as a component of other revenues in our condensed consolidated statements of income. This loss included a pre-tax loss of $95.5 million, which reflects a decrease of $17.7 million to our previously recorded pre-tax loss. The loss recognized was based on exchange rates and business conditions on the closing date of this transaction, and included costs to sell our Hillerød, Denmark manufacturing operations of approximately $11.2 million and our estimate of the fair value of an adverse commitment of $114.0 million associated with the guarantee of future minimum batch production at the Hillerød facility. The value of this adverse commitment was determined using a probability-weighted estimate of future manufacturing activity. We also recorded $4.5a tax expense of $64.7 million and $11.1related to this transaction.
In addition, we sold to FUJIFILM $41.8 million asof raw materials that were remaining at the Hillerød facility on the closing date of this transaction. These materials were sold at cost, of sales in relation to these services during the three and nine months ended September 30, 2017, respectively.which approximates fair value.
Pursuant to the terms of our agreements with Bioverativ, upon completionOur estimate of the spin-off, we distributed ALPROLIX and ELOCTATE on behalf of Bioverativ until Bioverativ obtained appropriate regulatory authorizations in certain countries, including a Biologics License Application transfer in the United States (U.S.), which was received in September 2017. Accordingly, commencing October 2017, we ceased distribution of ALPROLIX and ELOCTATE on behalf of Bioverativ under this arrangement. Under this arrangement, we distributed these products as an agent of Bioverativ and also provided related cash management services in connection with sales transactions, including the collection of receivables and the remittance of applicable discounts and allowances. Our consolidated financial position and results of operations did not reflect recognition of activity or balances related to these transactions.
Amounts earned under the non-manufacturing and supply related transaction service agreements are recorded as a reduction of costs and expenses in their respective expense line items, primarily in selling, general and administrative expenses, in our condensed consolidated statements of income. For the three and nine months ended September 30, 2017, these amounts were not significant.
Hemophilia related product revenues reflected in our condensed consolidated statements of income for the nine months ended September 30, 2017, totaled $74.4 million, as compared to $217.0 million and $604.7 million for the three and nine months ended September 30, 2016, respectively. Results for the nine months ended September 30, 2017, only reflect hemophilia-related product revenues through January 31, 2017.
Patents
Prior to the spin-off of our hemophilia business, we were awarded various methods of treatment and composition of matter patents related to ELOCTATE and ALPROLIX. Upon completionfair value of the spin-off, these patents were transferred toadverse commitment is a Level 3 measurement and is based on forecasted batch production at the patent portfolio of Bioverativ.Hillerød facility.


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4.    ReservesRevenues
Product Revenues
Revenues by product are summarized as follows:
 For the Three Months
Ended September 30,
(In millions)2019 2018
 
United
States
 
Rest of
World
 Total 
United
States
 
Rest of
World
 Total
Multiple Sclerosis (MS):           
TECFIDERA$842.0
 $280.4
 $1,122.4
 $842.1
 $247.9
 $1,090.0
Interferon*360.3
 169.7
 530.0
 421.5
 168.6
 590.1
TYSABRI263.0
 220.6
 483.6
 253.0
 217.2
 470.2
FAMPYRA
 24.2
 24.2
 
 22.5
 22.5
Subtotal: MS product revenues1,465.3
 694.9
 2,160.2
 1,516.6
 656.2
 2,172.8
            
Spinal Muscular Atrophy:    
     
SPINRAZA236.7
 310.4
 547.1
 223.9
 243.8
 467.7
            
Biosimilars:    
     
BENEPALI
 115.9
 115.9
 
 123.4
 123.4
IMRALDI
 49.3
 49.3
 
 
 
FLIXABI
 18.4
 18.4
 
 11.4
 11.4
Subtotal: Biosimilar product revenues
 183.6
 183.6
 
 134.8
 134.8
            
Other:           
FUMADERM
 3.8
 3.8
 
 4.8
 4.8
Total product revenues$1,702.0
 $1,192.7
 $2,894.7
 $1,740.5
 $1,039.6
 $2,780.1
*Interferon includes AVONEX and PLEGRIDY.

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 For the Nine Months
Ended September 30,
(In millions)2019 2018
 
United
States
 
Rest of
World
 Total 
United
States
 
Rest of
World
 Total
Multiple Sclerosis (MS):           
TECFIDERA$2,429.5
 $841.9
 $3,271.4
 $2,396.8
 $766.9
 $3,163.7
Interferon*1,067.3
 518.0
 1,585.3
 1,237.5
 528.4
 1,765.9
TYSABRI772.3
 647.0
 1,419.3
 768.2
 631.3
 1,399.5
FAMPYRA
 71.2
 71.2
 
 69.9
 69.9
ZINBRYTA
 
 
 
 1.4
 1.4
Subtotal: MS product revenues4,269.1
 2,078.1
 6,347.2
 4,402.5
 1,997.9
 6,400.4
            
Spinal Muscular Atrophy:           
SPINRAZA690.6
 863.2
 1,553.8
 617.8
 636.5
 1,254.3
            
Biosimilars:           
BENEPALI
 360.2
 360.2
 
 359.9
 359.9
IMRALDI
 132.3
 132.3
 
 
 
FLIXABI
 49.9
 49.9
 
 29.2
 29.2
Subtotal: Biosimilar product revenues
 542.4
 542.4
 
 389.1
 389.1
            
Other:           
FUMADERM
 11.6
 11.6
 
 17.3
 17.3
Total product revenues$4,959.7
 $3,495.3
 $8,455.0
 $5,020.3
 $3,040.8
 $8,061.1

*Interferon includes AVONEX and PLEGRIDY.
We recognized revenues from two wholesalers accounting for Discounts28.7% and Allowances18.4% of gross product revenues for the three months ended September 30, 2019, and 30.1% and 17.0% of gross product revenues for the nine months ended September 30, 2019.
We recognized revenues from two wholesalers accounting for 30.7% and 19.3% of gross product revenues for the three months ended September 30, 2018, and 32.4% and 18.0% of gross product revenues for the nine months ended September 30, 2018.
An analysis of the change in reserves for discounts and allowances is summarized as follows:
(In millions)Discounts 
Contractual
Adjustments
 Returns Total
Balance, as of December 31, 2018$127.8
 $888.8
 $34.7
 $1,051.3
Current provisions relating to sales in current year480.3
 2,149.7
 16.1
 2,646.1
Adjustments relating to prior years(0.4) (46.7) 4.6
 (42.5)
Payments/credits relating to sales in current year(349.3) (1,510.0) (0.7) (1,860.0)
Payments/credits relating to sales in prior years(129.3) (564.4) (15.4) (709.1)
Balance, as of September 30, 2019$129.1
 $917.4
 $39.3
 $1,085.8


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(unaudited, continued)
(In millions)Discounts 
Contractual
Adjustments
 Returns Total
Balance, as of December 31, 2016$71.6
 $482.7
 $51.2
 $605.5
Current provisions relating to sales in current year422.0
 1,681.2
 20.0
 2,123.2
Adjustments relating to prior years(0.2) 11.2
 (8.6) 2.4
Payments/credits relating to sales in current year(320.1) (1,227.1) (0.1) (1,547.3)
Payments/credits relating to sales in prior years(70.4) (431.6) (17.2) (519.2)
Balance, as of September 30, 2017$102.9
 $516.4
 $45.3
 $664.6

The total reserves above, which are included in our condensed consolidated balance sheets, are summarized as follows:
(In millions)As of
September 30,
2019
 As of
December 31,
2018
Reduction of accounts receivable, net$201.6
 $176.6
Component of accrued expenses and other884.2
 874.7
Total revenue-related reserves$1,085.8
 $1,051.3

Revenues from Anti-CD20 Therapeutic Programs
Revenues from anti-CD20 therapeutic programs are summarized as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Biogen’s share of pre-tax profits in the U.S. for RITUXAN, RITUXAN HYCELA and GAZYVA$393.2
 $358.0
 $1,161.2
 $1,066.6
Other revenues from anti-CD20 therapeutic programs202.6
 153.7
 528.4
 378.7
Total revenues from anti-CD20 therapeutic programs$595.8
 $511.7
 $1,689.6
 $1,445.3

For additional information on our collaboration arrangements with Genentech, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K.
Other Revenues
Other revenues are summarized as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Revenues from collaborative and other relationships:       
(Loss) profit earned under our 50% share of the co-promotion losses on ZINBRYTA in the U.S. with AbbVie$0.3
 $(0.7) $(0.2) $(7.9)
Revenues earned under our technical development agreement, manufacturing services agreements and royalty revenues on biosimilar products with Samsung Bioepis12.9
 48.1
 89.9
 80.7
Other royalty and corporate revenues:    

 

Royalty3.3
 7.9
 9.9
 35.8
Other corporate93.1
 91.9
 462.4
 311.6
Total other revenues$109.6
 $147.2
 $562.0
 $420.2

Other corporate revenues primarily reflect amounts earned under contract manufacturing agreements with our strategic partners, including Bioverativ Inc. (Bioverativ). During the three and nine months ended September 30, 2019, we recognized $65.6 million and $306.9 million, respectively, in revenues under the manufacturing and supply agreement with Bioverativ entered into in connection with the spin-off of our hemophilia business, compared to $36.5 million and $131.1 million, respectively, in the prior year comparative periods.
During the third quarter of 2019 we amended our agreement with a contract manufacturing customer. Under the amended agreement, we will license certain of our manufacturing-related intellectual property to the customer. We will be eligible to receive $500.0 million in a series of three payments. The first payment is due upon a regulatory achievement related to the customer’s product manufactured using our manufacturing-related intellectual property, with subsequent payments payable upon the first and second anniversaries of the regulatory achievement. We do not expect to recognize any amounts related to this arrangement in 2019 as we do not expect the regulatory achievement to occur until 2020. If we earn this payment, we expect to allocate the consideration between the license for the manufacturing-related intellectual property and the manufacturing product supply services.

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(In millions)As of
September 30,
2017
 As of
December 31,
2016
Reduction of accounts receivable$197.4
 $166.9
Component of accrued expenses and other467.2
 438.6
Total reserves$664.6
 $605.5

For additional information on our collaboration arrangement with Samsung Bioepis, please read Note 17, Collaborative and Other Relationships, to these condensed consolidated financial statements. For additional information on our collaboration arrangement with AbbVie Inc., please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K. For additional information on our manufacturing and supply agreement with Bioverativ, please read Note 3, Hemophilia Spin-Off, to our consolidated financial statements included in our 2018 Form 10-K.
5.    Inventory
The components of inventory are summarized as follows:
(In millions)As of
September 30,
2019
 As of
December 31,
2018
Raw materials$159.3
 $196.3
Work in process421.7
 606.7
Finished goods170.8
 133.5
Total inventory$751.8
 $936.5
    
Balance Sheet Classification:   
Inventory$751.8
 $929.9
Investments and other assets
 6.6
Total inventory$751.8
 $936.5

(In millions)As of
September 30,
2017
 As of
December 31,
2016
Raw materials$208.1
 $170.4
Work in process647.6
 698.7
Finished goods175.5
 170.3
Total inventory$1,031.2
 $1,039.4
    
Balance Sheet Classification:   
Inventory$1,007.2
 $1,001.6
Investments and other assets24.0
 37.8
Total inventory$1,031.2
 $1,039.4
In the first quarter of 2019 we sold to Bioverativ hemophilia-related inventory on hand with a cost basis totaling $173.5 million pursuant to the terms of the manufacturing and supply agreement with Bioverativ entered into in connection with the spin-off of our hemophilia business.
Long-term inventory, which primarily consists of work in process, is included in investments and other assets in our condensed consolidated balance sheets.
Balances in the table above asDivestiture of September 30, 2017, also reflect the eliminationHillerød, Denmark Manufacturing Operations
On August 1, 2019, we completed our sale of certain amounts transferred to Bioverativ in connection with the completionall of the spin-offoutstanding shares of our hemophilia business. Balances transferredsubsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to Bioverativ related toFUJIFILM. This transaction included the sale of $14.0 million of work in process and finished goods inventory totaled $84.5inventory.
In addition, we sold to FUJIFILM approximately $41.8 million and $31.6 million, respectively. of raw materials that were remaining at the Hillerød facility on the closing date of this transaction. These materials were sold at cost, which approximates fair value.

For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to these condensed consolidated financial statements.

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6.    Intangible Assets and Goodwill
Intangible Assets
Intangible assets, net of accumulated amortization, impairment charges and adjustments, are summarized as follows:
   As of September 30, 2019 As of December 31, 2018
(In millions)
Estimated
Life
 Cost 
Accumulated
Amortization
 Net Cost 
Accumulated
Amortization
 Net
Out-licensed patents13-23 years $543.3
 $(542.5) $0.8
 $543.3
 $(542.3) $1.0
Developed 
technology
15-28 years 3,005.3
 (2,764.6) 240.7
 3,005.3
 (2,734.8) 270.5
In-process research and developmentIndefinite until commercialization 954.8
 
 954.8
 476.0
 
 476.0
Trademarks and 
tradenames
Indefinite 64.0
 
 64.0
 64.0
 
 64.0
Acquired and in-licensed rights 
and patents
4-18 years 3,638.7
 (1,506.6) 2,132.1
 3,638.7
 (1,330.2) 2,308.5
Total intangible assets  $8,206.1
 $(4,813.7) $3,392.4
 $7,727.3
 $(4,607.3) $3,120.0
   As of September 30, 2017 As of December 31, 2016
(In millions)
Estimated
Life
 Cost 
Accumulated
Amortization
 Net Cost 
Accumulated
Amortization
 Net
Out-licensed patents13-23 years $543.3
 $(532.7) $10.6
 $543.3
 $(523.6) $19.7
Developed 
technology
15-23 years 3,005.3
 (2,675.8) 329.5
 3,005.3
 (2,634.3) 371.0
In-process research and developmentIndefinite until commercialization 680.6
 
 680.6
 648.0
 
 648.0
Trademarks and 
tradenames
Indefinite 64.0
 
 64.0
 64.0
 
 64.0
Acquired and in-licensed rights 
and patents
4-18 years 4,002.6
 (1,067.9) 2,934.7
 3,481.7
 (776.1) 2,705.6
Total intangible assets  $8,295.8
 $(4,276.4) $4,019.4
 $7,742.3
 $(3,934.0) $3,808.3
Balances in the table above as of September 30, 2017, reflect the elimination of certain amounts transferred to Bioverativ in connection with the completion of the spin-off of our hemophilia business. For additional information relating to the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off, to these condensed consolidated financial statements. In-process research and development balances include adjustments related to foreign currency exchange rate fluctuations.
For the three and nine months ended September 30, 2017,2019, amortization and impairment of acquired intangible assets totaled $108.9$283.9 million and $674.9$422.2 million, respectively, as compared to $99.7$281.9 million and $281.4$493.2 million, respectively, in the prior year comparative periods.
Amortization and impairments of acquired intangible assets for the three and nine months ended September 30, 2019, reflects the impact of a $215.9 million impairment charge related to certain IPR&D assets associated with the Phase 2b study of BG00011 (STX-100) for the potential treatment of idiopathic pulmonary fibrosis (IPF), which was discontinued during the third quarter of 2019, as discussed below.
Amortization of acquired intangible assets for the three and nine months ended September 30, 2017, includes $30.4 million and $413.4 million, respectively,2018, reflects the impact of amortization and impairment charges related to certain IPR&D assets associated with our vixotrigine (BIIB074) program totaling $189.3 million, as discussed below.
Amortization of acquired intangible assets, excluding impairment charges, totaled $68.0 million and $206.3 million for the three and nine months ended September 30, 2019, respectively, compared to $92.6 million and $303.9 million, respectively, in the prior year comparative periods.
The decrease in amortization of acquired intangible assets, excluding impairment charges, was primarily due to a net overall decrease in our expected rate of amortization for acquired intangible assets. This decrease was primarily due to lower amortization subsequent to the impairment in the fourth quarter of 2018 of the U.S. and rest of world licenseslicense to Forward Pharma A/S' (Forward Pharma) intellectual property, including Forward Pharma's intellectual property related to TECFIDERA, as further discussed below.and higher expected lifetime revenues of TYSABRI.
Developed Technology
Developed technology primarily relates to our AVONEX product, which was recorded in connection with the merger of Biogen, Inc. and IDEC Pharmaceuticals Corporation in 2003. The net book value of this asset as of September 30, 2017,2019, was $322.5$236.6 million.
IPR&D
IPR&D represents the fair value assigned to research and development assets that we acquired as part of a business combination and had not yet reached technological feasibility at the date of acquisition. We review amounts capitalized as acquired IPR&D for impairment annually, as of October 31, and whenever events or changes in circumstances indicate to us that the carrying value of the assets might not be recoverable.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

In connection with our acquisition of NST on June 7, 2019, we acquired IPR&D programs with an estimated fair value of $700.0 million. For additional information on our acquisition of NST, please read Note 2, Acquisitions, to these condensed consolidated financial statements.
BG00011
During the third quarter of 2019 we discontinued the Phase 2b study of BG00011 for the potential treatment of IPF due to safety concerns. As a result, we recognized an impairment charge of approximately $215.9 million during the third quarter of 2019 to reduce the fair value of the IPR&D intangible asset to zero. We also adjusted the value of our contingent consideration obligations related to this asset resulting in a gain of $61.2 million in the third quarter of 2019.
Vixotrigine
During the third quarter of 2018 we completed the Phase 2b study of vixotrigine for the potential treatment of painful lumbosacral radiculopathy (PLSR). The study did not meet its primary or secondary efficacy endpoints and we discontinued development of vixotrigine for the potential treatment of PLSR. As a result, we recognized an impairment charge of approximately $60.0 million during the third quarter of 2018 to reduce the fair value of the IPR&D intangible asset to zero.
In addition, we delayed the initiation of the Phase 3 studies of vixotrigine for the potential treatment of trigeminal neuralgia (TGN) as we awaited the outcome of ongoing interactions with the U.S. Food and Drug Administration (FDA) regarding the design of the Phase 3 studies, a more detailed review of the data from the Phase 2b study of vixotrigine for the potential treatment of PLSR and insights from the Phase 2 study of vixotrigine for the potential treatment of small fiber neuropathy. We reassessed the fair value of the TGN program using reduced expected lifetime revenues, higher expected clinical development costs and a lower cumulative probability of success. As a result of that assessment, we recognized an impairment charge of $129.3 million during the third quarter of 2018 to reduce the fair value of the TGN IPR&D intangible asset to $41.8 million at that date. We also adjusted the value of our contingent consideration obligations related to the TGN program to reflect the lower cumulative probabilities of success resulting in a gain of $89.6 million in the third quarter of 2018.
The IPR&D impairment charges were included in amortization of acquired intangible assets and the gain resulting from the remeasurement of our contingent consideration obligation was recorded in (gain) loss on fair value remeasurement of contingent consideration in our condensed consolidated statements of income. The fair values of the intangible assets and contingent consideration obligations were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements and inputs including estimated revenues, costs and probabilities of success.
Acquired and In-licensed Rights and Patents
Acquired and in-licensed rights and patents primarily relate to our acquisition of all remaining rights to TYSABRI from Elan Pharma International Ltd., an affiliate of Elan Corporation plc. The net book value of this asset as of September 30, 2017, was $2,293.9 million. The increase in acquiredAcquired and in-licensed rights and patents during the nine months ended September 30, 2017, reflects the $50.0 million and $40.0 million milestone payments due to Ionis Pharmaceuticals, Inc., which became payable upon the approval of SPINRAZA for the treatment of SMA in the E.U. and Japan, respectively, the $25.0 million milestone payment due to Samsung Bioepis, which became payable upon the approval of IMRALDI, an adalimumab biosimilar referencing HUMIRA, in the E.U. and net amounts related toalso includes our TECFIDERA license rights, as described below.
TECFIDERA License Rights
In January 2017 we entered into a settlement and license agreement among Biogen Swiss Manufacturing GmbH, Biogen International Holding Ltd., Forward Pharma and certain related parties, which was effective as of February 1, 2017. Pursuant to the agreement, we obtained U.S. and rest of world licenseslicense to Forward Pharma's intellectual property, including Forward Pharma's intellectual property related to TECFIDERA. In exchange,TECFIDERA, and other amounts related to our other marketed products and other programs acquired through business combinations. The net book value of the TYSABRI asset as of September 30, 2019, was $1,889.6 million and the net book value of the TECFIDERA asset as of September 30, 2019, was $45.6 million. For additional information on our TECFIDERA license rights, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in our 2018 Form 10-K.
Estimated Future Amortization of Intangible Assets
Our amortization expense is based on the economic consumption and impairment of intangible assets. Our most significant intangible assets are related to our TYSABRI, AVONEX, SPINRAZA and TECFIDERA products and other programs acquired through business combinations. Annually, during our long-range planning cycle, we agreed to pay Forward Pharma $1.25 billionperform an analysis of anticipated lifetime revenues of our TYSABRI, AVONEX, SPINRAZA and TECFIDERA products. This analysis is also updated whenever events or changes in cash. Duringcircumstances would significantly affect the fourth quarteranticipated lifetime revenues of 2016, we recognized a pre-tax chargeany of these products. Impairments are recorded in the period in which they are incurred.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)


$454.8 million related to this agreement, representing the fair value of our license to Forward Pharma’s intellectual property for the period April 2014, when we started selling TECFIDERA, through December 31, 2016. For additional information related to this agreement, please read Note 21, Commitments and Contingencies, to our consolidated financial statements included in our 2016 Form 10-K.
We paid the $1.25 billion in February 2017 and recognized an intangible asset of $795.2 million. The asset represented the fair value of the U.S. and rest of world licenses to Forward Pharma’s intellectual property related to TECFIDERA revenues for the period January 2017, the month in which we entered into this agreement, through December 2020, the last month before royalty payments could first commence pursuant to this agreement.
We have two intellectual property disputes with Forward Pharma, one in the U.S. and one in the E.U., concerning intellectual property related to TECFIDERA. In March 2017 the U.S. intellectual property dispute was decided in our favor. Forward Pharma has appealed to the U.S. Court of Appeals for the Federal Circuit and the appeal is pending. For additional information related to these disputes, please read Note 19, Litigation, to these condensed consolidated financial statements.
As we prevailed in the U.S. proceeding in March 2017, we evaluated the recoverability of the U.S. asset acquired from Forward Pharma and recorded an impairment charge to adjust the carrying value of the acquired U.S. asset to fair value reflecting the impact of the developments in the U.S. legal dispute. We also continue to amortize the remaining net book value of the U.S. and rest of world intangible assets in our condensed consolidated statements of income utilizing an economic consumption model.
Estimated Future Amortization of Intangible Assets
Our amortization expense is based on the economic consumption of intangible assets. Our most significant intangible assets are related to our TECFIDERA, AVONEX and TYSABRI products. Annually, during our long-range planning cycle, we perform an analysis of anticipated lifetime revenues of TECFIDERA, AVONEX and TYSABRI. This analysis is also updated whenever we determine events or changes in circumstances would significantly affect the anticipated lifetime revenues of either product. Our most recent long rangelong-range planning cycle was completed in the thirdsecond quarter of 2017.
2019. Based upon the above,this most recent analysis, the estimated future amortization of acquired intangible assets for the next five years is expected to be as follows:
(In millions)As of
September 30,
2019
2019 (remaining three months)$65.0
2020255.0
2021215.0
2022215.0
2023220.0
2024210.0
(In millions)As of
September 30,
2017
2017 (remaining three months)$106.8
2018421.3
2019404.0
2020389.6
2021256.6
2022244.7

Goodwill
The following table provides a roll forward of the changes in our goodwill balance:
(In millions)As of
September 30,
2019
Goodwill, beginning of period$5,706.4
Increase in goodwill112.6
Elimination of goodwill allocated to Hillerød, Denmark manufacturing operations(69.5)
Other(3.4)
Goodwill, end of period$5,746.1

(In millions)As of
September 30,
2017
Goodwill, beginning of period$3,669.3
Elimination of goodwill allocated to our hemophilia business(314.1)
Increase to goodwill762.4
Other9.9
Goodwill, end of period$4,127.5
The increase in goodwill during the nine months ended September 30, 2019, was related to our acquisition of NST. For additional information on our acquisition of NST, please read Note 2, Acquisitions, to these condensed consolidated financial statements.

The elimination of goodwill represents an allocation based upon the relative fair value of our Hillerød, Denmark manufacturing operations. In connection with the divestiture of our Hillerød, Denmark manufacturing operations, our remaining goodwill was reviewed for impairment, and based upon this review, no impairments were recognized. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to these condensed consolidated financial statements.
As of September 30, 2019, we had 0 accumulated impairment losses related to goodwill.
Other includes changes related to foreign currency exchange rate fluctuations.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

The elimination of goodwill represents an allocation based upon the relative enterprise fair value of the hemophilia business as of the distribution date. For additional information relating to the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off, to these condensed consolidated financial statements.
The increase in goodwill during the nine months ended September 30, 2017, was related to $900.0 million in contingent milestones achieved (exclusive of $137.6 million in tax benefits) and payable to the former shareholders of Fumapharm AG or holders of their rights. Other includes changes in foreign currency exchange rates. For additional information related to future contingent payments to the former shareholders of Fumapharm AG or holders of their rights, please read Note 21, Commitments and Contingencies, to our consolidated financial statements included in our 2016 Form 10-K.
As of September 30, 2017, we had no accumulated impairment losses related to goodwill.

7.    Fair Value Measurements
The tables below present information about our assets and liabilities that are regularly measured and carried at fair value and indicate the level within the fair value hierarchy of the valuation techniques we utilized to determine such fair value:
As of September 30, 2019 (In millions)Total 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:       
Cash equivalents$1,655.8
 $
 $1,655.8
 $
Marketable debt securities:       
Corporate debt securities2,702.2
 
 2,702.2
 
Government securities868.2
 
 868.2
 
Mortgage and other asset backed securities337.0
 
 337.0
 
Marketable equity securities336.7
 18.5
 318.2
 
Derivative contracts161.7
 
 161.7
 
Plan assets for deferred compensation26.3
 
 26.3
 
Total$6,087.9
 $18.5
 $6,069.4
 $
Liabilities:       
Derivative contracts$9.8
 $
 $9.8
 $
Contingent consideration obligations343.5
 
 
 343.5
Total$353.3
 $
 $9.8
 $343.5
As of September 30, 2017 (In millions)Total 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:       
Cash equivalents$1,184.3
 $
 $1,184.3
 $
Marketable debt securities:       
Corporate debt securities2,584.7
 
 2,584.7
 
Government securities1,870.0
 
 1,870.0
 
Mortgage and other asset backed securities567.5
 
 567.5
 
Marketable equity securities11.8
 11.8
 
 
Derivative contracts1.6
 
 1.6
 
Plan assets for deferred compensation30.1
 
 30.1
 
Total$6,250.0
 $11.8
 $6,238.2
 $
Liabilities:       
Derivative contracts$106.2
 $
 $106.2
 $
Contingent consideration obligations522.1
 
 
 522.1
Total$628.3
 $
 $106.2
 $522.1


18
As of December 31, 2018 (In millions)Total 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:       
Cash equivalents$705.5
 $
 $705.5
 $
Marketable debt securities:       
Corporate debt securities2,459.2
 
 2,459.2
 
Government securities969.6
 
 969.6
 
Mortgage and other asset backed securities260.5
 
 260.5
 
Marketable equity securities615.4
 51.7
 563.7
 
Derivative contracts66.9
 
 66.9
 
Plan assets for deferred compensation25.4
 
 25.4
 
Total$5,102.5
 $51.7
 $5,050.8
 $
Liabilities:       
Derivative contracts$24.6
 $
 $24.6
 $
Contingent consideration obligations409.8
 
 
 409.8
Total$434.4
 $
 $24.6
 $409.8

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

As of December 31, 2016 (In millions)Total 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Assets:       
Cash equivalents$2,039.6
 $
 $2,039.6
 $
Marketable debt securities:       
Corporate debt securities2,663.8
 
 2,663.8
 
Government securities2,172.5
 
 2,172.5
 
Mortgage and other asset backed securities561.7
 
 561.7
 
Marketable equity securities24.9
 24.9
 
 
Derivative contracts61.0
 
 61.0
 
Plan assets for deferred compensation34.5
 
 34.5
 
Total$7,558.0
 $24.9
 $7,533.1
 $
Liabilities:       
Derivative contracts$13.6
 $
 $13.6
 $
Contingent consideration obligations467.6
 
 
 467.6
Total$481.2
 $
 $13.6
 $467.6
There have been no material0 impairments of our assets measured and carried at fair value during the three and nine months ended September 30, 2017.2019. In addition, there were no0 changes in valuation techniques or inputs utilized or transfers between fair value measurement levels during the three and nine months ended September 30, 2017.2019. The fair valuesvalue of Level 2 instruments classified as cash equivalents, and marketable debt securities and our marketable equity security investment in Ionis Pharmaceuticals, Inc. (Ionis) were determined through third partythird-party pricing services.services or an option pricing valuation model. For additional information on our June 2018 investment in Ionis common stock, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K. For a description of our validation procedures related to prices provided by third partythird-party pricing

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

services and our option pricing valuation model, please read Note 1, Summary of Significant Accounting Policies:Policies - Fair Value Measurements, to our consolidated financial statements included in our 20162018 Form 10-K.
Debt Instruments
The fair and carrying values of our debt instruments, which are Level 2 liabilities, are summarized as follows:
 As of September 30, 2019 As of December 31, 2018
(In millions)
Fair
Value
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
2.900% Senior Notes due September 15, 2020$1,509.9
 $1,495.3
 $1,489.5
 $1,480.8
3.625% Senior Notes due September 15, 20221,037.8
 996.3
 1,000.4
 995.5
4.050% Senior Notes due September 15, 20251,888.8
 1,739.1
 1,745.1
 1,737.8
5.200% Senior Notes due September 15, 20452,054.2
 1,722.8
 1,802.6
 1,722.4
Total$6,490.7
 $5,953.5
 $6,037.6
 $5,936.5

 As of September 30, 2017 As of December 31, 2016
(In millions)
Fair
Value
 
Carrying
Value
 
Fair
Value
 
Carrying
Value
Notes payable to Fumedica AG$3.2
 $3.3
 $6.1
 $6.0
6.875% Senior Notes due March 1, 2018561.7
 553.1
 583.7
 558.5
2.900% Senior Notes due September 15, 20201,536.2
 1,486.5
 1,521.5
 1,485.3
3.625% Senior Notes due September 15, 20221,049.4
 994.0
 1,026.6
 993.2
4.050% Senior Notes due September 15, 20251,867.0
 1,735.9
 1,796.0
 1,734.8
5.200% Senior Notes due September 15, 20452,030.8
 1,721.9
 1,874.5
 1,721.5
Total$7,048.3
 $6,494.7
 $6,808.4
 $6,499.3
The fair value of our notes payable to Fumedica AG was estimated using market observable inputs, including current interest and foreign currency exchange rates. The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources. For additional information related toon our debt instruments, please read Note 11, 12, Indebtedness, to our consolidated financial statements included in our 20162018 Form 10-K.

Contingent Consideration Obligations
In connection with our acquisitions of Convergence Pharmaceuticals Ltd., Stromedix Inc. (Stromedix) and Biogen International Neuroscience GmbH in 2015, 2012 and 2010, respectively, we agreed to make additional payments based upon the achievement of certain milestone events. The following table provides a roll forward of the fair values of our contingent consideration obligations, which includes Level 3 measurements:
19
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Fair value, beginning of period$401.3
 $499.9
 $409.8
 $523.6
Changes in fair value(57.8) (87.9) (66.3) (91.6)
Payments
 
 
 (20.0)
Fair value, end of period$343.5
 $412.0
 $343.5
 $412.0

As of September 30, 2019 and December 31, 2018, $196.0 million and $265.0 million, respectively, of the fair value of our total contingent consideration obligations was reflected as a component of other long-term liabilities in our condensed consolidated balance sheets with the remaining balance reflected as a component of accrued expenses and other.
For the three and nine months ended September 30, 2019, changes in the fair value of our contingent consideration obligations were primarily due to the discontinuation of the Phase 2b study of BG00011 for the potential treatment of IPF resulting in a reduction of our contingent consideration obligations of $61.2 million, partially offset by a decrease in interest rates used to revalue our contingent consideration liabilities and the passage of time.
For the three and nine months ended September 30, 2018, changes in the fair value of our contingent consideration obligations were primarily due to lower cumulative probabilities of success related to our vixotrigine program for the potential treatment of TGN, an increase in interest rates used to revalue our contingent consideration liabilities and the passage of time. In addition, we dosed our first patient in the Phase 2b study of BG00011 for the potential treatment of IPF in September 2018 and paid an $81.5 million milestone payment to the former shareholders of Stromedix during the fourth quarter of 2018.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

Contingent Consideration Obligations
The following table provides a roll forward of the fair values of our contingent consideration obligations that includes Level 3 measurements:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2017 2016 2017 2016
Fair value, beginning of period$492.1
 $515.7
 $467.6
 $506.0
Additions
 
 
 
Changes in fair value30.0
 5.9
 61.2
 18.8
Payments
 
 (6.7) (3.2)
Fair value, end of period$522.1
 $521.6
 $522.1
 $521.6
As of September 30, 2017 and December 31, 2016, approximately $280.0 million and $246.8 million, respectively, of our contingent consideration obligations valued using Level 3 measurements were reflected as components of other long-term liabilities in our condensed consolidated balance sheets with the remaining balances reflected as a component of accrued expenses and other.

8.    Financial Instruments
The following table summarizes our financial assets with maturities of less than 90 days from the date of purchase included in cash and cash equivalents on the accompanyingin our condensed consolidated balance sheets:
(In millions)As of
September 30,
2019
 As of
December 31,
2018
Commercial paper$255.9
 $231.2
Overnight reverse repurchase agreements176.9
 
Money market funds1,103.2
 279.5
Short-term debt securities119.8
 194.8
Total$1,655.8
 $705.5
(In millions)As of
September 30,
2017
 As of
December 31,
2016
Commercial paper$126.4
 $31.0
Overnight reverse repurchase agreements42.0
 
Money market funds871.1
 741.7
Short-term debt securities144.8
 1,266.9
Total$1,184.3
 $2,039.6

The carrying values of our commercial paper, including accrued interest, overnight reverse repurchase agreements, money market funds and short-term debt securities approximate fair value due to their short-term maturities.
Our marketable equity securities gains (losses) are recorded in other income (expense), net in our condensed consolidated statements of income. The following tables summarize our marketable debt and equity securities, classified as available-for-sale:securities:
As of September 30, 2017 (In millions)
Fair
Value
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Amortized
Cost
As of September 30, 2019 (In millions)Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Corporate debt securities              
Current$1,042.9
 $0.2
 $(0.4) $1,043.1
$1,655.9
 $1.5
 $
 $1,657.4
Non-current1,541.8
 2.2
 (2.1) 1,541.7
1,040.4
 4.7
 (0.3) 1,044.8
Government securities              
Current916.0
 
 (0.8) 916.8
435.6
 0.5
 (0.1) 436.0
Non-current954.0
 0.4
 (3.4) 957.0
431.8
 0.8
 (0.4) 432.2
Mortgage and other asset backed securities              
Current1.3
 
 
 1.3
0.1
 
 
 0.1
Non-current566.2
 1.3
 (1.4) 566.3
335.7
 1.6
 (0.4) 336.9
Total marketable debt securities$5,022.2
 $4.1
 $(8.1) $5,026.2
$3,899.5
 $9.1
 $(1.2) $3,907.4
Marketable equity securities, non-current$11.8
 $
 $(2.6) $14.4
$218.8
 $120.7
 $(2.8) $336.7
20
As of December 31, 2018 (In millions)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Corporate debt securities       
Current$1,608.4
 $
 $(0.9) $1,607.5
Non-current854.9
 0.7
 (3.9) 851.7
Government securities       
Current706.1
 0.1
 (0.4) 705.8
Non-current264.0
 0.1
 (0.3) 263.8
Mortgage and other asset backed securities       
Current0.1
 
 
 0.1
Non-current260.5
 0.4
 (0.5) 260.4
Total marketable debt securities$3,694.0
 $1.3
 $(6.0) $3,689.3
Marketable equity securities, non-current$496.2
 $127.7
 $(8.5) $615.4


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

As of December 31, 2016 (In millions)
Fair
Value
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Amortized
Cost
Corporate debt securities       
Current$1,408.6
 $0.2
 $(0.6) $1,409.0
Non-current1,255.2
 1.2
 (4.7) 1,258.7
Government securities       
Current1,156.0
 0.2
 (0.3) 1,156.1
Non-current1,016.5
 0.5
 (3.4) 1,019.4
Mortgage and other asset backed securities       
Current4.0
 
 
 4.0
Non-current557.7
 0.8
 (2.2) 559.1
Total marketable debt securities$5,398.0
 $2.9
 $(11.2) $5,406.3
Marketable equity securities, non-current$24.9
 $0.7
 $(9.3) $33.5

Summary of Contractual Maturities: Available-for-Sale Securities
The estimated fair value and amortized cost of our marketable debt securities available-for-sale by contractual maturity are summarized as follows:
 As of September 30, 2019 As of December 31, 2018
(In millions)Amortized
Cost
 Estimated
Fair Value
 Amortized
Cost
 
Estimated
Fair Value
Due in one year or less$2,091.6
 $2,093.5
 $2,314.6
 $2,313.4
Due after one year through five years1,686.0
 1,691.7
 1,235.9
 1,232.7
Due after five years121.9
 122.2
 143.5
 143.2
Total available-for-sale securities$3,899.5
 $3,907.4
 $3,694.0
 $3,689.3
 As of September 30, 2017 As of December 31, 2016
(In millions)
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
Due in one year or less$1,960.2
 $1,961.2
 $2,568.6
 $2,569.1
Due after one year through five years2,792.9
 2,795.7
 2,552.6
 2,559.7
Due after five years269.1
 269.3
 276.8
 277.5
Total available-for-sale securities$5,022.2
 $5,026.2
 $5,398.0
 $5,406.3

The average maturity of our marketable debt securities available-for-sale as of September 30, 20172019 and December 31, 2016, was2018, were approximately 1715 months and 12 months, respectively.
Proceeds from Marketable Debt Securities
The proceeds from maturities and sales of marketable debt securities and resulting realized gains and losses are summarized as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Proceeds from maturities and sales$611.8
 $1,192.0
 $3,867.6
 $7,994.7
Realized gains$0.7
 $0.4
 $2.3
 $3.0
Realized losses$(0.1) $(0.6) $(0.7) $(10.8)
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2017 2016 2017 2016
Proceeds from maturities and sales$888.1
 $2,362.2
 $4,472.6
 $5,185.8
Realized gains$0.3
 $1.1
 $2.7
 $2.1
Realized losses$(1.2) $(1.1) $(4.4) $(2.7)

Strategic Investments
As of September 30, 20172019 and December 31, 2016,2018, our strategic investment portfolio was comprised of investments totaling $84.9$394.5 million and $99.9$676.3 million, respectively, which areis included in investments and other assets in our condensed consolidated balance sheets. sheet.
Our strategic investment portfolio includes investments in equity securities of certain biotechnology companies, and investmentswhich are reflected within our disclosures included in Note 7, Fair Value Measurements, to these condensed consolidated financial statements, venture capital funds where the underlying investments are in equity securities of certain biotechnology companies.companies and non-marketable equity securities.

Our investments in equity securities include shares of Ionis common stock acquired in June 2018. This investment is classified as a Level 2 marketable security due to certain holding period restrictions and is remeasured each reporting period and carried at fair value. The effect of the holding period restrictions on our investment in Ionis common stock valuation are estimated using an option pricing valuation model. The most significant assumptions within the model are the term of the restrictions and the stock price volatility, which is based upon historical volatility of similar companies. We also use a constant maturity risk-free interest rate to match the remaining term of the restrictions on our investment in Ionis common stock and a dividend yield of zero based upon the fact that Ionis and similar companies generally have not historically granted cash dividends. The remainder of our investments in equity securities of certain publicly-traded biotechnology companies are regularly measured and carried at fair value and classified as Level 1.
The decrease in our strategic investment portfolio for the nine months ended September 30, 2019, primarily reflects our sale of a portion of our investment in Ionis common stock for approximately $382.0 million as well as our sale of our investment in a non-marketable equity security, partially offset by an increase in the fair value of our remaining investment in Ionis common stock.
For additional information on our June 2018 investment in Ionis common stock, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K.

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9.    Derivative Instruments
Foreign Currency Forward Contracts - Hedging Instruments
Due to the global nature of our operations, portions of our revenues and operating expenses are recorded in currencies other than the U.S. dollar. The value of revenues and operating expenses measured in U.S. dollars is therefore subject to changes in foreign currency exchange rates. In order to mitigate these changes, we use foreign currency forward contracts to lock in exchange rates associated with a portion of our forecasted international revenues and operating expenses.
Foreign currency forward contracts in effect as of September 30, 20172019 and December 31, 2016,2018, had durations of 1 to 2115 months and 1 to 1812 months, respectively. These contracts have been designated as cash flow hedges and accordingly, to the extent effective, any unrealized gains or losses on the portion of these foreign currency forward contracts that are included in the effectiveness test are reported in accumulated other comprehensive income (loss) (referred to as AOCI in the tables below). Realized gains and losses for the effective portion of such contracts are recognized in revenuerevenues when the sale of product in the currency being hedged is recognized and in operating expenses when the expense in the currency being hedged is recorded. ToWe recognize all cash flow hedge reclassifications from accumulated other comprehensive income and fair value changes of excluded portions in the extent ineffective, hedge transaction gains and losses are reportedsame line item in otherour condensed consolidated statements of income (expense), net.that has been impacted by the hedged item.
The notional value of foreign currency forward contracts that were entered into to hedge forecasted revenues and operating expenses is summarized as follows:
 Notional Amount
(In millions)As of
September 30,
2019
 As of
December 31,
2018
Euro$1,943.7
 $1,701.4
British pound60.9
 215.3
Swiss franc36.9
 131.4
Japanese yen29.8
 98.8
Canadian dollar25.0
 92.2
Total foreign currency forward contracts$2,096.3
 $2,239.1
 Notional Amount
Foreign Currency: (In millions)As of
September 30,
2017
 As of
December 31,
2016
Euro$1,573.4
 $871.7
British pound39.7
 
Canadian dollar19.7
 
Swiss franc5.1
 
Total foreign currency forward contracts$1,637.9
 $871.7

The pre-tax portion of the fair value of these foreign currency forward contracts that waswere included in accumulated other comprehensive income (loss) in total equity reflected net lossesgains of $113.0$65.7 million and net gains of $49.8$27.3 million as of September 30, 20172019 and December 31, 2016,2018, respectively. We expect all contracts outstanding asthe net gains of September 30, 2017,$65.7 million to be settled over the next 2115 months, of which $59.8 million of these gains are expected to be settled over the next 12 months, with any amounts in accumulated other comprehensive income (loss) to be reported as an adjustment to revenuerevenues or operating expense.expenses. We consider the impact of our and our counterparties’ credit risk on the fair value of the contracts as well as the ability of each party to execute its contractual obligations. As of September 30, 20172019 and December 31, 2016,2018, credit risk did not change the fair value of our foreign currency forward contracts.
The following tables summarize the effect of foreign currency forward contracts designated as hedging instruments onin our condensed consolidated statements of income:
For the Three Months Ended September 30,
Net Gains/(Losses)
Reclassified from AOCI into Operating Income (in millions)
 
Net Gains/(Losses)
Recognized in Operating Income (in millions)
Location 2019 2018 Location 2019 2018
Revenues $35.2
 $(8.4) Revenues $0.8
 $0.3
Operating expenses $(0.8) $(0.3) Operating expenses $0.4
 $0.4

For the Three Months Ended September 30,
Net Gains/(Losses)
Reclassified from AOCI into Operating Income
(Effective Portion)
 
Net Gains/(Losses)
Recognized into Net Income
(Ineffective Portion)
Location 2017 2016 Location 2017 2016
Revenue $(18.8) $(5.2) Other income (expense) $0.7
 $(0.6)
Operating expenses $0.5
 $(0.2) Other income (expense) $0.2
 $


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)


For the Nine Months Ended September 30,
Net Gains/(Losses)
Reclassified from AOCI into Operating Income
(Effective Portion)
 
Net Gains/(Losses)
Recognized into Net Income
(Ineffective Portion)
Net Gains/(Losses)
Reclassified from AOCI into Operating Income (in millions)
Net Gains/(Losses)
Reclassified from AOCI into Operating Income (in millions)
 
Net Gains/(Losses)
Recognized in Operating Income (in millions)
Location 2017 2016 Location 2017 2016 2019 2018 Location 2019 2018
Revenue $(15.1) $(0.7) Other income (expense) $6.7
 $3.4
Revenues $79.8
 $(51.7) Revenues $8.2
 $7.3
Operating expenses $0.7
 $(0.4) Other income (expense) $(0.1) $(0.3) $(2.0) $0.6
 Operating expenses $(0.8) $


Interest Rate Contracts - Hedging Instruments
We have entered into interest rate swap contracts on certain borrowing transactions to manage our exposure to interest rate changes.
In connection with the issuance of our 2.90% Senior Notes, due September 15, 2020, we entered into interest rate swaps with an aggregate notional amount of $675.0 million, which expire on September 15, 2020. The interest rate swap contracts are designated as hedges of the fair value changes in theour 2.90% Senior Notes due September 15, 2020 attributable to changes in interest rates. The carrying value of our 2.90% Senior Notes as of September 30, 2019 and December 31, 2018, includes approximately $2.1 million and $14.5 million, respectively, related to changes in the fair value of these interest rate swap contracts. Since the specific terms and notional amount of the swaps match the debt being hedged, it is assumed to be a highly effective hedge and all changes in the fair value of the swaps are recorded as a component of our 2.90% Senior Notes due September 15, 2020 with no net impact recorded in income. Any net interest payments made or received on the interest rate swap contracts are recognizedrecorded as a component of interest expense in our condensed consolidated statements of income.
Net Investment Hedges - Hedging Instruments
In February 2012 we entered into a joint venture agreement with Samsung BioLogics, establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar products. In June 2018 we exercised our option under our joint venture agreement to increase our ownership percentage in Samsung Bioepis from approximately 5% to approximately 49.9%. The share purchase transaction was completed in November 2018 and, upon closing, we paid 759.5 billion South Korean won ($676.6 million) to Samsung BioLogics. Our investment in the equity of Samsung Bioepis is exposed to the currency fluctuations in the South Korean won.
In order to mitigate the currency fluctuations between the U.S. dollar and South Korean won, we have entered into foreign currency forward contracts. Foreign currency forward contracts in effect as of September 30, 2019, had remaining durations of one month. These contracts have been designated as net investment hedges. We recognize changes in the spot exchange rate in accumulated other comprehensive income (loss). The pre-tax portion of the fair value of these foreign currency forward contracts that were included in accumulated other comprehensive income (loss) in total equity reflected net gains of $41.6 million and net losses of $3.8 million as of September 30, 2019 and December 31, 2018, respectively. We exclude fair value changes related to the forward rate from our hedging relationship and will amortize the forward points in other income (expense), net in our condensed consolidated statements of income over the term of the contract. The pre-tax portion of the fair value of the forward points that were included in accumulated other comprehensive income (loss) in total equity reflected gains of $8.8 million and $7.3 million as of September 30, 2019 and December 31, 2018, respectively.
The following tables summarize the effect of our net investment hedge in our condensed consolidated financial statements:
For the Three Months Ended September 30,
Net Gains/(Losses)
Recognized in Other Comprehensive Income (Effective Portion) (in millions)
 
Net Gains/(Losses)
Recognized in Other Comprehensive Income (Amounts Excluded from Effectiveness Testing)
(in millions)
 
Net Gains/(Losses)
Recognized in Net Income
(Amounts Excluded from Effectiveness Testing) (in millions)
Location 2019 2018 Location 2019 2018 Location 2019 2018
Gains (losses) on net investment hedge $22.0
 $
 Gains (losses) on net investment hedge $1.4
 $
 Other income (expense) $2.2
 $

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

For the Nine Months Ended September 30,
Net Gains/(Losses)
Recognized in Other Comprehensive Income (Effective Portion) (in millions)
 
Net Gains/(Losses)
Recognized in Other Comprehensive Income (Amounts Excluded from Effectiveness Testing)
(in millions)
 
Net Gains/(Losses)
Recognized in Net Income
(Amounts Excluded from Effectiveness Testing) (in millions)
Location 2019 2018 Location 2019 2018 Location 2019 2018
Gains (losses) on net investment hedge $45.4
 $
 Gains (losses) on net investment hedge $8.1
 $
 Other income (expense) $6.6
 $
For additional information on our collaboration arrangement with Samsung Bioepis, please read Note 17, Collaborative and Other Relationships, to these condensed consolidated financial statements.
Foreign Currency Forward Contracts - Other Derivatives
We also enter into other foreign currency forward contracts, usually with durations of one month or less, to mitigate the foreign currency risk related to certain balance sheet positions. We have not elected hedge accounting for these transactions.
The aggregate notional amount of these outstanding foreign currency forward contracts was $366.2$848.4 million and $902.1$735.1 million as of September 30, 20172019 and December 31, 2016,2018, respectively. Net gainslosses of $1.2$10.3 million and $5.7$14.2 million related to these contracts were recognized as a component of other income (expense), net for the three and nine months ended September 30, 2017,2019, respectively, as compared to net lossesgains of $0.4$5.2 million and $16.6$4.8 million, respectively, in the prior year comparative periods.
Summary of Derivatives
While certain of our derivativesderivative instruments are subject to netting arrangements with our counterparties, we do not offset derivative assets and liabilities in our condensed consolidated balance sheets. The amounts in the table below would not be materially different if the derivative assets and liabilities were offset.
The following table summarizes the fair value and presentation in our condensed consolidated balance sheets of our outstanding derivatives,derivative instruments, including those designated as hedging instruments:
(In millions) Balance Sheet Location As of
September 30,
2019
 As of
December 31,
2018
Cash Flow Hedging Instruments:      
Asset derivative instruments Other current assets $152.2
 $65.8
  Investments and other assets $7.5
 $
Liability derivative instruments Accrued expenses and other $1.6
 $6.9
Fair Value Hedging Instruments:      
Liability derivative instruments Accrued expenses and other $2.1
 $14.5
Other Derivatives:      
Asset derivative instruments Other current assets $2.0
 $1.1
Liability derivative instruments Accrued expenses and other $6.1
 $3.2
  Fair Value
(In millions)Balance Sheet LocationAs of September 30, 2017
Hedging Instruments:  
Asset derivativesInvestments and other assets$0.3
Liability derivativesAccrued expenses and other$80.8
 Other long-term liabilities$24.2
Other Derivatives:  
Asset derivativesOther current assets$1.3
Liability derivativesAccrued expenses and other$1.2


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

  Fair Value
(In millions)Balance Sheet LocationAs of December 31, 2016
Hedging Instruments:  
Asset derivativesOther current assets$50.4
 Investments and other assets$6.6
Liability derivativesOther long-term liabilities$4.6
Other Derivatives:  
Asset derivativesOther current assets$4.0
Liability derivativesAccrued expenses and other$9.0

10.    Property, Plant and Equipment
Property, plant and equipment are recorded at historical cost, net of accumulated depreciation. Accumulated depreciation on property, plant and equipment was $1,580.6$1,555.3 million and $1,439.3$1,797.4 million as of September 30, 20172019 and December 31, 2016,2018, respectively. For the three and nine months ended September 30, 2019, depreciation expense totaled $45.5 million and $145.4 million, respectively, compared to $64.8 million and $194.0 million, respectively, in the prior year comparative periods.
Solothurn, Switzerland Facility
During the first quarter of 2016 we purchased land in Solothurn, Switzerland for 64.4 million Swiss Francs (approximately $62.5 million), where weWe are building a large-scale biologics manufacturing facility.facility in Solothurn, Switzerland. We expect this facility to be partially operational by the end of 2020. Upon completion, the facility will include 393,000 square feet related to a large-scale biologics manufacturing facility, 290,000 square feet of warehouse, utilities and support space and

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

51,000 square feet of administrative space. As of September 30, 20172019 and December 31, 2016,2018, we had $968.8 millionapproximately $1.8 billion and $481.5 million,$1.6 billion, respectively, capitalized as construction in progress related to the construction of this facility. As of September 30, 2017,2019, we had contractual commitments of approximately $235.0$63.7 million foroutstanding related to the construction of this facility.
Divestiture of Hillerød, Denmark Manufacturing Operations
11.    Equity
Total equity asOn August 1, 2019, we completed our sale of September 30, 2017, increased $720.3all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM. This transaction included $631.5 million compared to December 31, 2016. This increaseof property, plant and equipment, which was primarily driven by net income attributable to Biogen Inc.comprised of $2.8 billion, partially offset by share repurchases totaling approximately $1.4 billion, as described below,$312.5 million for buildings and an adjustment to retained earnings of $852.8$287.3 million reflectingfor machinery and equipment. For additional information on the spin-offdivestiture of our hemophilia business, as described inHillerød, Denmark manufacturing operations, please read Note 3, Hemophilia Spin-Off,Divestitures, to these condensed consolidated financial statements.
11.    Leases
We lease real estate, including laboratory and office space, and certain equipment.
Our leases have remaining lease terms ranging from less than one year to nine years. Certain leases include one or more options to renew, exercised at our sole discretion, with renewal terms that can extend the lease term from one year to six years.
In addition, we sublease certain real estate to third parties. Our sublease portfolio consists of operating leases, with remaining lease terms ranging from less than one year to nine years. Our subleases do not include an option to renew as they are coterminous with our operating leases.
All of our leases qualify as operating leases. The following table summarizes the presentation in our condensed consolidated balance sheets of our operating leases:
(In millions)Balance sheet location As of September 30, 2019
Assets:   
Operating lease assetsOperating lease assets $422.0
    
Liabilities   
Current operating lease liabilitiesAccrued expenses and other $70.6
Non-current operating lease liabilitiesLong-term operating lease liabilities 410.5
Total operating lease liabilities  $481.1

The following table summarizes the effect of lease costs in our condensed consolidated statements of income:
   For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)Income Statement Location 2019 2019
Operating lease costResearch and development $1.8
 $5.5
 Selling, general and administrative 21.3
 62.7
Sublease incomeSelling, general and administrative (6.2) (19.3)
 Other (income) expense, net (1.0) (2.9)
Net lease cost  $15.9
 $46.0


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

The minimum lease payments for the next five years and thereafter is expected to be as follows:

(In millions)
As of
September 30,
2019
2019 (remaining three months)$29.9
202080.0
202174.8
202271.5
202370.2
202467.3
Thereafter148.7
Total lease payments$542.4
Less: interest61.3
Present value of operating lease liabilities$481.1

Under the prior lease accounting guidance minimum rental commitments under non-cancelable leases, net of income from subleases, for each of the next five years and total thereafter as of December 31, 2018, were as follows:
(In millions)2019 2020 2021 2022 2023 Thereafter Total
Minimum lease payments$87.0
 $80.7
 $75.9
 $71.7
 $71.0
 $215.3
 $601.6
Less: income from subleases(1)
(26.8) (25.6) (23.7) (24.0) (24.3) (58.4) (182.8)
Net minimum lease payments$60.2
 $55.1
 $52.2
 $47.7
 $46.7
 $156.9
 $418.8
(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.
The weighted average remaining lease term and weighted average discount rate of our operating leases are as follows:
As of September 30, 2019
Weighted average remaining lease term in years7.2
Weighted average discount rate3.3%

Supplemental disclosure of cash flow information related to our operating leases included in cash flows provided by operating activities in our condensed consolidated statements of cash flows is as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2019
Cash paid for amounts included in the measurement of lease liabilities$23.5
 $70.3
Operating lease assets obtained in exchange for lease obligations$4.6
 $17.3

Divestiture of Hillerød, Denmark Manufacturing Operations
On August 1, 2019, we completed our sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM. This transaction included $2.2 million of operating lease assets and $2.2 million of operating lease liabilities. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to these condensed consolidated financial statements.

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(unaudited, continued)

12.    Equity
Share Repurchases
In March 2019 our Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock (2019 Share Repurchase Program). Our 2019 Share Repurchase Program does not have an expiration date. All share repurchases under our 2019 Share Repurchase Program will be retired. Under our 2019 Share Repurchase Program, we repurchased and retired approximately 3.1 million and 7.0 million shares of our common stock at a cost of approximately $717.9 million and $1.6 billion during the three and nine months ended September 30, 2019, respectively.
From October 1, 2019 through October 21, 2019, we repurchased and retired approximately 2.3 million shares of our common stock at a cost of approximately $508.6 million under our 2019 Share Repurchase Program. Approximately $2.9 billion remained available under our 2019 Share Repurchase Program as of October 21, 2019.
In August 2018 our Board of Directors authorized a program to repurchase up to $3.5 billion of our common stock (2018 Share Repurchase Program), which was completed as of June 30, 2019. All share repurchases under our 2018 Share Repurchase Program were retired. Under our 2018 Share Repurchase Program, we repurchased and retired approximately 8.9 million shares of our common stock at a cost of approximately $2.1 billion during the nine months ended September 30, 2019.
In July 2016 our Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock. This authorization does not have an expiration date.stock (2016 Share Repurchase Program), which was completed as of June 30, 2018. All share repurchases under this authorization will beour 2016 Share Repurchase Program were retired. Under this program,our 2016 Share Repurchase Program, we repurchased and retired 3.7approximately 10.5 million shares of our common stock at a cost of $1.0approximately $3.0 billion during the nine months ended September 30, 2017. We did not repurchase any shares2018.
Accumulated Other Comprehensive Income (Loss)
The following tables summarize the changes in accumulated other comprehensive income (loss), net of common stock under this program during the three months ended September 30, 2017. During the three and nine months ended September 30, 2016, we repurchased and retired 1.1 million shares of common stock at a cost of $348.9 million. As of September 30, 2017, approximately $3.0 billion remains available to repurchase shares under this authorization.
In February 2011 our Board of Directors authorized a program to repurchase up to 20.0 million shares of common stock, which was completed as of March 31, 2017. During the nine months ended September 30, 2017, we repurchased 1.3 million shares of common stock at a cost of $365.4 million under this program. We did not repurchase any shares of common stock under this program during the three and nine months ended September 30, 2016.

tax by component:
24
(In millions) Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Gains (Losses) on Net Investment Hedge Unfunded Status of Postretirement Benefit Plans, Net of Tax Currency Translation Adjustments Total
Balance, December 31, 2018 $(4.0) $34.7
 $3.5
 $(31.3) $(243.3) $(240.4)
Other comprehensive income (loss) before reclassifications 11.6
 115.8
 53.5
 1.5
 51.3
 233.7
Amounts reclassified from accumulated other comprehensive income (loss) (1.3) (77.7) (6.6) 
 
 (85.6)
Net current period other comprehensive income (loss) 10.3
 38.1
 46.9
 1.5
 51.3
 148.1
Balance, September 30, 2019 $6.3
 $72.8
 $50.4
 $(29.8) $(192.0) $(92.3)


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

Noncontrolling Interests
The following table reconciles equity (deficit) attributable to noncontrolling interests (NCI):
(In millions) Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Gains (Losses) on Net Investment Hedge Unfunded Status of Postretirement Benefit Plans, Net of Tax Currency Translation Adjustments Total
Balance, December 31, 2017 $(1.6) $(104.5) $
 $(36.8) $(175.5) $(318.4)
Amounts reclassified, net of tax, upon adoption of ASU No. 2016-01 1.5
 
 
 
 
 1.5
Balance, January 1, 2018 (0.1) (104.5) 
 (36.8) (175.5) (316.9)
Other comprehensive income (loss) before reclassifications (7.9) 58.3
 
 0.2
 (38.8) 11.8
Amounts reclassified from accumulated other comprehensive income (loss) 6.1
 50.7
 
 
 
 56.8
Net current period other comprehensive income (loss) (1.8) 109.0
 
 0.2
 (38.8) 68.6
Balance, September 30, 2018 $(1.9) $4.5
 $
 $(36.6) $(214.3) $(248.3)
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2017 2016 2017 2016
NCI, beginning of period$(11.6) $(0.1) $(11.5) $2.1
Net income (loss) attributable to NCI, net of tax
 (2.7) (0.1) (5.8)
Fair value of net assets and liabilities acquired and assigned to NCI
 
 
 0.9
Translation adjustment and other
 0.1
 
 0.1
NCI, end of period$(11.6) $(2.7) $(11.6) $(2.7)
12.    Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes inamounts reclassified from accumulated other comprehensive income (loss), net of tax by component:income:
(In millions)Income Statement Location Amounts Reclassified from Accumulated Other Comprehensive Income
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
 2019 2018 2019 2018
Gains (losses) on securities available for saleOther income (expense) $0.6
 $(0.1) $1.6
 $(7.7)
 Income tax benefit (expense) (0.1) 
 (0.3) 1.6
          
Gains (losses) on cash flow hedgesRevenues 35.2
 (8.4) 79.8
 (51.7)
 Operating expenses (0.8) (0.3) (2.0) 0.6
 Other income (expense) 0.1
 0.1
 0.2
 0.2
 Income tax benefit (expense) (0.1) 
 (0.3) 0.2
          
Gains (losses) on net investment hedgeOther income (expense) 2.2
 
 6.6
 
 Income tax benefit (expense) 
 
 
 
          
Total reclassifications, net of tax  $37.1
 $(8.7) $85.6
 $(56.8)

(In millions)Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Unfunded Status of Postretirement Benefit Plans, Net of Tax Translation Adjustments Total
Balance, as of December 31, 2016$(10.8) $57.8
 $(32.7) $(334.2) $(319.9)
Other comprehensive income (loss) before reclassifications5.5
 (176.5) (0.5) 146.7
 (24.8)
Amounts reclassified from accumulated other comprehensive income (loss)1.1
 14.2
 
 
 15.3
Net current period other comprehensive income (loss)6.6
 (162.3) (0.5) 146.7
 (9.5)
Balance, as of September 30, 2017$(4.2) $(104.5) $(33.2) $(187.5) $(329.4)

(In millions)Unrealized Gains (Losses) on Securities Available for Sale, Net of Tax Unrealized Gains (Losses) on Cash Flow Hedges, Net of Tax Unfunded Status of Postretirement Benefit Plans, Net of Tax Translation Adjustments Total
Balance, as of December 31, 2015$(0.8) $10.2
 $(37.8) $(195.6) $(224.0)
Other comprehensive income (loss) before reclassifications1.2
 (17.9) 1.3
 (62.8) (78.2)
Amounts reclassified from accumulated other comprehensive income (loss)0.4
 0.9
 
 
 1.3
Net current period other comprehensive income (loss)1.6
 (17.0) 1.3
 (62.8) (76.9)
Balance, as of September 30, 2016$0.8
 $(6.8) $(36.5) $(258.4) $(300.9)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

The following table summarizes the amounts reclassified from accumulated other comprehensive income:
(In millions)Income Statement LocationAmounts Reclassified from Accumulated Other Comprehensive Income
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
2017 2016 2017 2016
Gains (losses) on securities available for saleOther income (expense)$(0.9) $
 $(1.7) $(0.6)
 Income tax benefit (expense)0.3
 
 0.6
 0.2
         
Gains (losses) on cash flow hedgesRevenues(18.8) (5.2) (15.1) (0.7)
 Operating expenses0.5
 (0.2) 0.7
 (0.4)
 Other income (expense)0.1
 0.1
 0.2
 0.2
 Income tax benefit (expense)
 
 
 
         
Total reclassifications, net of tax $(18.8) $(5.3) $(15.3) $(1.3)

13.    Earnings per Share
Basic and diluted earnings per share are calculated as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Numerator:       
Net income attributable to Biogen Inc.$1,545.9
 $1,444.4
 $4,448.8
 $3,483.9
Denominator:       
Weighted average number of common shares outstanding184.0
 201.4
 190.3
 206.6
Effect of dilutive securities:       
Stock options and employee stock purchase plan
 
 
 
Time-vested restricted stock units0.1
 0.4
 0.1
 0.3
Market stock units0.1
 0.1
 0.1
 0.1
Performance stock units settled in stock
 
 
 
Dilutive potential common shares0.2
 0.5
 0.2
 0.4
Shares used in calculating diluted earnings per share184.2
 201.9
 190.5
 207.0
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2017 2016 2017 2016
Numerator:       
Net income attributable to Biogen Inc.$1,226.1
 $1,032.9
 $2,836.5
 $3,053.6
Denominator:       
Weighted-average number of common shares outstanding211.4
 218.9
 213.0
 219.0
Effect of dilutive securities:       
Stock options and employee stock purchase plan0.1
 0.1
 
 0.1
Time-vested restricted stock units0.2
 0.2
 0.2
 0.2
Market stock units0.1
 0.2
 0.1
 0.1
Dilutive potential common shares0.4
 0.5
 0.3
 0.4
Shares used in calculating diluted earnings per share211.8
 219.4
 213.3
 219.4

Amounts excluded from the calculation of net income per diluted share because their effects were anti-dilutive were insignificant.
The adjustments related to the spin-off of our hemophilia business did not have a material impact on the potentially dilutive securities to be considered in the calculation of diluted earnings per share of common stock.

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

14.     Share-based Payments
Share-based Compensation Expense
The following table summarizes share-based compensation expense included in our condensed consolidated statements of income:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Research and development$15.4
 $21.0
 $65.2
 $60.5
Selling, general and administrative34.2
 29.4
 116.8
 83.1
Subtotal49.6
 50.4
 182.0
 143.6
Capitalized share-based compensation costs(1.7) (3.5) (7.8) (9.7)
Share-based compensation expense included in total cost and expenses47.9
 46.9
 174.2
 133.9
Income tax effect(8.1) (7.7) (29.1) (21.8)
Share-based compensation expense included in net income attributable to Biogen Inc.$39.8
 $39.2
 $145.1
 $112.1


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2017 2016 2017 2016
Research and development$19.5
 $22.7
 $55.7
 $65.6
Selling, general and administrative23.6
 31.2
 71.9
 94.6
Restructuring charges
 
 
 (1.8)
Subtotal43.1
 53.9
 127.6
 158.4
Capitalized share-based compensation costs(2.5) (3.2) (7.6) (10.7)
Share-based compensation expense included in total cost and expenses40.6
 50.7
 120.0
 147.7
Income tax effect(10.9) (14.6) (31.8) (42.5)
Share-based compensation expense included in net income attributable to Biogen Inc.$29.7
 $36.1
 $88.2
 $105.2

The following table summarizes share-based compensation expense associated with each of our share-based compensation programs:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Market stock units$9.3
 $7.4
 $24.8
 $20.6
Time-vested restricted stock units37.9
 29.9
 104.4
 96.6
Cash settled performance units0.3
 5.8
 (0.3) 9.4
Performance units0.2
 3.0
 1.0
 4.2
Performance stock units settled in stock(1.1) 1.3
 13.0
 3.4
Performance stock units settled in cash1.3
 1.1
 3.2
 1.5
Employee stock purchase plan1.7
 1.9
 9.7
 7.9
NST stock options
 
 26.2
 
Subtotal49.6
 50.4
 182.0
 143.6
Capitalized share-based compensation costs(1.7) (3.5) (7.8) (9.7)
Share-based compensation expense included in total cost and expenses$47.9
 $46.9
 $174.2
 $133.9
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2017 2016 2017 2016
Market stock units$4.5
 $5.7
 $17.1
 $27.0
Time-vested restricted stock units26.7
 28.5
 81.2
 92.5
Cash settled performance units7.0
 7.9
 13.0
 12.7
Performance units3.2
 9.1
 8.9
 17.3
Employee stock purchase plan1.7
 2.7
 7.4
 8.9
Subtotal43.1
 53.9
 127.6
 158.4
Capitalized share-based compensation costs(2.5) (3.2) (7.6) (10.7)
Share-based compensation expense included in total cost and expenses$40.6
 $50.7
 $120.0
 $147.7

We estimate the fair value of our obligations associated with our performance units, and cash settled performance units and performance stock units settled in cash at the end of each reporting period through expected settlement. Cumulative adjustments to these obligations are recordedrecognized each quarter to reflect changes in the stock price and estimated outcome of the performance-related conditions.
Spin-off Related Equity Adjustments
PursuantStock option expense reflects the accelerated vesting of stock options previously granted to an employee matters agreement entered into in connection with the spin-offNST employees as a result of our hemophilia business and the provisionsacquisition of NST. For additional information on our existing share-based compensation arrangements, we made certain adjustmentsacquisition of NST, please read Note 2, Acquisitions, to the number and terms of our outstanding stock options, restricted stock units, cash settled performance units and other share-based awards to preserve the intrinsic value of the awards immediately before and after the spin-off. For purposes of the vesting of these equity awards, continued employment or service with Biogen or with Bioverativ was treated as continued employment for purposes of both Biogen’s and Bioverativ’s equity awards with the outstanding awards continuing to vest over their respective original vesting periods. Outstanding unvested awards for employees transferring to Bioverativ were converted to unvested Bioverativ awards.

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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

Adjustments to the number of our share-based compensation awards were made using an adjustment ratio based upon the weighted-average closing price of our common stock for the 10 calendar days prior to the effective date of the spin-off and the volume weighted-average prices for the 10 calendar days of our common stock following the effective date of the spin-off. For stock options, the exercise prices of the awards were modified to maintain the pre-spin intrinsic value of the awards in relation to the post-spin stock price of Biogen. The difference between the fair value of the awards based upon the adjustment ratio and the opening price on the distribution date was not material.
2017 Omnibus Equity Plan
In June 2017 our shareholders approved the Biogen Inc. 2017 Omnibus Equity Plan (2017 Omnibus Equity Plan) for share-based awards to our employees. Awards granted from the 2017 Omnibus Equity Plan may include stock options, shares of restricted stock, restricted stock units, performance shares, stock appreciation rights and other awards in such amounts and with such terms and conditions as may be determined by a committee of our Board of Directors, subject to the provisions of the plan. Shares of common stock available for grant under the 2017 Omnibus Equity Plan consist of 8.0 million shares reserved for this purpose, plus shares of common stock that remained available for grant under our 2008 Omnibus Equity Plan as of June 7, 2017 or that could again become available for grant if outstanding awards under the 2008 Omnibus Equity Plan as of June 7, 2017 are cancelled, surrendered or terminated in whole or in part. The 2017 Omnibus Equity Plan provides that awards other than stock options and stock appreciation rights will be counted against the total number of shares available under the plan in a 1.5-to-1 ratio.
We have not made any awards pursuant to the 2008 Omnibus Equity Plan since our shareholders approved the 2017 Omnibus Equity Plan, and do not intend to make any awards pursuant to the 2008 Omnibus Equity Plan in the future, except that unused shares under the 2008 Omnibus Equity Plan have been carried over for use under the 2017 Omnibus Equity Plan.condensed consolidated financial statements.
15.    Income Taxes
Tax Rate
A reconciliation between the U.S. federal statutory tax rate and our effective tax rate is summarized as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
 2019 2018 2019 2018
Statutory rate21.0 % 21.0 % 21.0 % 21.0 %
State taxes0.9
 0.6
 0.7
 0.7
Taxes on foreign earnings(5.0) (0.5) (4.7) (1.3)
Credits and net operating loss utilization(1.5) (1.0) (1.0) (0.8)
Purchased intangible assets0.4
 0.3
 0.4
 0.5
Divestiture of Denmark manufacturing operations
 
 1.5
 
Internal reorganization of certain intellectual property rights(1.5) 
 (2.1) 
GILTI1.6
 1.3
 1.6
 1.4
U.S. tax reform
 (0.6) 
 (0.3)
Swiss tax reform(3.1) 
 (1.0) 
Other permanent items(0.1) 0.3
 0.2
 0.3
Other(0.8) (1.0) (0.3) (0.2)
Effective tax rate11.9 % 20.4 % 16.3 % 21.3 %


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
 2017 2016 2017 2016
Statutory rate35.0 % 35.0 % 35.0 % 35.0 %
State taxes0.7
 1.1
 0.6
 1.0
Taxes on foreign earnings(11.4) (10.1) (11.4) (9.4)
Credits and net operating loss utilization(0.7) (1.4) (0.8) (1.3)
Purchased intangible assets1.2
 1.2
 1.3
 1.1
Manufacturing deduction(2.0) (1.8) (2.1) (1.7)
Other permanent items0.6
 0.2
 0.7
 0.5
Other0.4
 0.5
 0.6
 0.4
Effective tax rate23.8 % 24.7 % 23.9 % 25.6 %

Changes in Tax Rate
For the three and nine months ended September 30, 2017,2019, compared to the same periodsperiod in 2016,2018, the decrease in our effective tax rate was primarily due to the enactment of a lower relative percentagenew taxing regime in the country and certain cantons of Switzerland, which we refer to as Swiss Tax Reform. As a result of the impact of Swiss Tax Reform, in the three months ended September 30, 2019, we recorded an income tax benefit of approximately $54.3 million, resulting from a remeasurement of our earnings being recognizeddeferred tax assets and liabilities. In addition, in the U.S.,three months ended September 30, 2019, we recognized a highnet benefit for the impact of the internal reorganization of certain intellectual property rights and a net benefit of $15.8 million resulting from the finalization of tax jurisdiction, along withreturns in various jurisdictions related to the 2018 fiscal year. We also had a higher deduction for U.S. manufacturing activities. The geographic spliteffective tax rate in 2018 resulting from our sale of inventory, the tax effect of which had been included within prepaid taxes at January 1, 2018, at a higher effective tax rate than the 2018 statutory tax rate.
For the nine months ended September 30, 2019, compared to the same period in 2018, the decrease in our earningseffective tax rate was affected by milestone and upfront payments inprimarily due to the current yearcombination of the internal reorganization of certain intellectual property rights and the spin-offimpact of our hemophilia business,Swiss Tax Reform. This decrease was partially offset by growtha $64.7 million tax expense related to the divestiture of our subsidiary that owned our Hillerød, Denmark manufacturing operations. We also had a higher effective tax rate in 2018 resulting from our sale of inventory, the U.S. launchtax effect of SPINRAZA and increases in our revenues from anti-CD20 therapeutic programs inwhich had been included within prepaid taxes at January 1, 2018, at a higher effective tax rate than the U.S. In addition, in 20172018 statutory tax rate.
Although we are earningrecognizing a lower benefit fromloss on the orphan drug credit duedivestiture of our Hillerød, Denmark manufacturing operations, the divestiture requires us to write off certain deferred tax assets and resulted in a taxable gain in certain jurisdictions.
As a result of the FDA's approvalinternal reorganization of SPINRAZA.certain intellectual property rights, as of September 30, 2019, we recorded a deferred tax asset of $754.2 million and a deferred tax liability of $603.4 million.
Accounting for Uncertainty in Income Taxes
We and our subsidiaries are routinely examined by various taxing authorities. We file income tax returns in various U.S. states and in U.S. federal and other foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal tax examination for years before 2013 or state, local or non-U.S. income tax examinations for years before 2010.

The U.S. Internal Revenue Service and other national tax authorities routinely examine our intercompany transfer pricing with respect to intellectual property related transactions and it is possible that they may disagree with one or more positions we have taken with respect to such valuations.
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BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

We made payments totaling approximately $60.0 million toIt is reasonably possible that we will adjust the Danish Tax Authority (SKAT) for assessments received for fiscal 2009, 2011 and 2013 regarding withholding taxes and the treatment of certain intercompany transactions involving a Danish affiliate and anothervalue of our affiliates. We continueuncertain tax positions related to dispute the assessments for all of these periodscertain transfer pricing, collaboration and believe that the positions taken in our historical filings are valid.other issues as we receive additional information from various taxing authorities, including reaching settlements with such authorities.
16.    Other Consolidated Financial Statement Detail
Other Income (Expense), Net
Components of other income (expense), net, are summarized as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Interest income$30.5
 $26.0
 $90.8
 $81.4
Interest expense(45.8) (49.0) (141.4) (151.2)
Gain (loss) on investments, net(4.1) 141.1
 198.9
 132.0
Foreign exchange gains (losses), net(4.2) 0.2
 (4.7) (13.8)
Other, net(3.7) (3.2) (11.0) (8.8)
Total other income (expense), net$(27.3) $115.1
 $132.6
 $39.6

 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2017 2016 2017 2016
Interest income$20.6
 $16.4
 $54.2
 $43.0
Interest expense(61.8) (66.0) (188.8) (195.2)
Gain (loss) on investments, net(4.0) 0.8
 (15.0) (0.3)
Foreign exchange gains (losses), net6.7
 (4.9) 8.4
 (2.6)
Other, net(5.1) (4.4) (8.2) (14.3)
Total other income (expense), net$(43.6) $(58.1) $(149.4) $(169.4)
Other Current Assets
Other current assets include prepaid taxes totaling approximately $714.4 million and $817.0 million as of September 30, 2017 and December 31, 2016, respectively.
Accrued Expenses and Other
Accrued expenses and other consists of the following:
(In millions)As of
September 30,
2017
 As of
December 31,
2016
Current portion of contingent consideration obligations and milestones$611.5
 $580.8
Revenue-related reserves for discounts and allowances467.2
 438.6
Employee compensation and benefits241.9
 282.9
Collaboration expenses180.1
 130.9
Royalties and licensing fees190.8
 195.8
Construction in progress157.6
 134.0
Accrued TECFIDERA litigation settlement and license charges
 454.8
Other606.1
 685.7
Total accrued expenses and other$2,455.2
 $2,903.5
Pricing of TYSABRI in Italy - AIFA
In the first quarter of 2017, we reached an agreement with the Price and Reimbursement Committee of the Italian National Medicines Agency (Agenzia Italiana del Farmaco, or AIFA) resolving all of AIFA's claims relating to sales of TYSABRI in excess of the reimbursement limit for prior periods. As a result, in the first quarter of 2017 we recognized EUR41.8 million (approximately $45.0 million) in revenues for sales which were previously deferred. These amounts were previously accrued for and included in the table above in Other as of December 31, 2016.
For additional information regarding our agreement with AIFA relating to sales of TYSABRI in Italy, please read Note 20, Litigation, to our consolidated financial statements included in our 2016 Form 10-K.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)


Gain (loss) on investments, net, as reflected in the table above, relate to debt securities, equity securities of certain biotechnology companies, venture capital funds where the underlying investments are in equity securities of certain biotechnology companies and non-marketable equity securities.
The following table summarizes our gain (loss) on investments, net that relates to our equity securities held as of September 30, 2019:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Net gains (losses) recognized during the period on equity securities$(4.6) $141.2
 $197.3
 $139.7
Less: Net gains (losses) recognized during the period on equity securities sold during the period$4.4
 $
 $46.8
 $(0.5)
Unrealized gains (losses) recognized during the period on equity securities held as of September 30, 2019$(9.0) $141.2
 $150.5
 $140.2

Accrued Expenses and Other
Accrued expenses and other consists of the following:
(In millions)As of
September 30,
2019
 As of
December 31,
2018
Revenue-related reserves for discounts and allowances$884.2
 $874.7
Employee compensation and benefits259.5
 320.9
Royalties and licensing fees222.3
 224.7
Collaboration expenses188.7
 261.6
Current portion of contingent consideration obligations147.5
 444.8
Construction in progress49.5
 125.2
Other677.4
 609.3
Total accrued expenses and other$2,429.1
 $2,861.2

Other Long-term Liabilities
Other long-term liabilities were $1,370.9 million and $1,389.4 million as of September 30, 2019 and December 31, 2018, respectively, and included accrued income taxes totaling $801.7 million and $791.4 million, respectively.
17.    Collaborative and Other Relationships
Eisai Co., Ltd.
BAN2401 and Elenbecestat Collaboration
We have a collaboration agreement with Eisai Co., Ltd. (Eisai) to jointly develop and commercialize BAN2401, a monoclonal antibody that targets amyloid beta aggregates, and elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor, two Eisai product candidates for the potential treatment of AD (the BAN2401 and Elenbecestat Collaboration). 
In September 2019 we and Eisai announced the decision to discontinue the global Phase 3 trials, MISSION AD1 and MISSION AD2, designed to assess the efficacy and safety of elenbecestat in patients with mild cognitive impairment and mild AD. As a result of this decision, in the third quarter of 2019, we accrued approximately $48.0 million related to our share of the termination of various clinical trials and research and development contracts incurred under the BAN2401 and Elenbecestat Collaboration.
The BAN2401 and Elenbecestat Collaboration also provided Eisai with an option to jointly develop and commercialize aducanumab, our anti-amyloid beta antibody candidate for early AD (Aducanumab Option), and an option to jointly develop and commercialize one of our anti-tau monoclonal antibodies (Anti-Tau Option). In October

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)

2017 Eisai exercised its Aducanumab Option and we entered into a new collaboration agreement for the joint development and commercialization of aducanumab (Aducanumab Collaboration Agreement). Eisai has not yet exercised its Anti-Tau Option.
For additional information on our BAN2401 and Elenbecestat Collaboration, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K.
For the three and nine months ended September 30, 2019 and 2018, sales and marketing expense related to the BAN2401 and Elenbecestat Collaboration was immaterial.
A summary of development expense related to the BAN2401 and Elenbecestat Collaboration is as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Total development expense incurred by the collaboration related to the advancement of BAN2401 and elenbecestat$168.7
 $64.9
 $305.3
 $176.0
Biogen's share of BAN2401 and elenbecestat development expense reflected in research and development expense in our condensed consolidated statements of income$84.3
 $32.5
 $152.6
 $88.0

Aducanumab Collaboration Agreement
Under the Aducanumab Collaboration Agreement, we and Eisai will co-promote aducanumab with a region-based profit split and we lead the ongoing development of aducanumab.
In March 2019, based on a pre-specified futility analysis, we discontinued the global Phase 3 trials, EMERGE and ENGAGE, designed to evaluate the efficacy and safety of aducanumab in patients with early AD. A new analysis of a larger dataset from these trials, conducted in consultation with the FDA, showed that the Phase 3 EMERGE study met its pre-specified primary and secondary endpoints. On October 22, 2019, we and Eisai announced that we plan to pursue regulatory approval for aducanumab in the U.S.
For the period through March 31, 2018, we were responsible for 100% of development costs incurred by the collaboration for the advancement of aducanumab (aducanumab development expense). For the period April 1, 2018 through December 31, 2018, Eisai reimbursed us for 15% of aducanumab development expense incurred and, beginning January 1, 2019, is reimbursing us for 45% of aducanumab development expense incurred.
In the first quarter of 2019, as a result of the decision to discontinue the Phase 3 EMERGE and ENGAGE trials following the futility analysis, we accrued approximately $45.0 million related to the termination of various clinical trials and research and development contracts net of the expected 45% Eisai reimbursement of development costs incurred under the Aducanumab Collaboration Agreement.
Sales and marketing expense are shared in proportion to the same region-based profit split that will be utilized to co-promote aducanumab. For additional information on the Aducanumab Collaboration Agreement, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K.

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A summary of development and sales and marketing expense related to the Aducanumab Collaboration Agreement is as follows:
 For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions)2019 2018 2019 2018
Total aducanumab development expense$4.7
 $64.8
 $170.5
 $204.8
Biogen's share of aducanumab development expense reflected in research and development expense in our condensed consolidated statements of income$2.6
 $55.1
 $93.8
 $183.6
        
Total aducanumab sales and marketing expense incurred by the collaboration$0.1
 $12.1
 $21.3
 $33.3
Biogen's share of aducanumab sales and marketing expense reflected in selling, general and administrative expense in our condensed consolidated statements of income$
 $5.1
 $11.7
 $19.0

In addition, we and Eisai co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings and Eisai distributes AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets, excluding China.
Other Research and Discovery Arrangements
These arrangements may include the potential for future milestone payments based on the achievement of certain clinical and commercial development payable over a period of several years.
Skyhawk Therapeutics, Inc.
In January 2019 we entered into a collaboration and research and development services agreement with Skyhawk Therapeutics, Inc. (Skyhawk) pursuant to which the companies will leverage Skyhawk's SkySTAR technology platform with the goal of discovering innovative small molecule treatments for patients with neurological diseases, including MS and SMA. We will be responsible for the development and potential commercialization of any therapies resulting from this collaboration and we may also pay Skyhawk up to a total of approximately $2.0 billion in additional milestone payments as well as potential royalties on net commercial sales.
In connection with this agreement, we made an upfront payment of $74.0 million to Skyhawk, of which $38.5 million was recorded as research and development expense in our condensed consolidated statements of income and $35.5 million was recorded as prepaid research and development expenditures within investments and other assets in our condensed consolidated balance sheets and will be expensed as the services are provided.
Samsung Bioepis
Joint Venture Agreement
In February 2012 we entered into a joint venture agreement with Samsung BioLogics, establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar products. In June 2018 we exercised our option under our joint venture agreement to increase our ownership percentage in Samsung Bioepis from approximately 5% to approximately 49.9%. The share purchase transaction was completed in November 2018 and, upon closing, we paid 759.5 billion South Korean won ($676.6 million) to Samsung BioLogics. As of September 30, 2019, our ownership percentage remained at approximately 49.9%.
We recognize our share of the results of operations related to our investment in Samsung Bioepis under the equity method of accounting one quarter in arrears when the results of the entity become available, which is reflected as equity in income (loss) of investee, net of tax in our condensed consolidated statements of income. During 2015, as our share of losses exceeded the carrying value of our initial investment, we suspended recognizing additional losses. In the first quarter of 2019 we restarted recognizing our share of Samsung Bioepis' income (losses), and we began recognizing amortization on certain basis differences resulting from our November 2018 investment.
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basis differences are amortized over their economic life. The total basis difference was approximately $675 million, consisting of approximately $115 million attributed to inventory, approximately $615 million attributed to developed technology and approximately $170 million attributed to IPR&D. A deferred tax liability of $225 million was established for the acquired assets that had no tax basis. The basis differences related to inventory and developed technology will be amortized, net of tax, over their estimated useful lives of 1.5 years and 15 years, respectively, one quarter in arrears.
Our joint venture partner, Samsung BioLogics, is currently subject to an ongoing criminal investigation that we continue to monitor. While this investigation could impact the operations of Samsung Bioepis and its business, we have assessed the value of our investment in Samsung Bioepis and continue to believe that the fair value of the investment is in excess of its net book value.
For the three and nine months ended September 30, 2019, we recognized losses on our investment of $21.8 million and $66.8 million, respectively. These losses reflect our share of losses totaling $0.8 million and $9.3 million, respectively, and amortization of basis differences totaling $21.1 million and $57.6 million, respectively.
As of September 30, 2019 and December 31, 2018, the carrying value of our investment in Samsung Bioepis totaled 687.3 billion South Korean won ($572.8 million) and 759.5 billion South Korean won ($680.6 million), respectively, which is classified as a component of investments and other assets in our condensed consolidated balance sheets.
Commercial Agreement
We reflect revenues on sales of BENEPALI, IMRALDI and FLIXABI to third parties in product revenues, net in our condensed consolidated statements of income and record the related cost of revenues and sales and marketing expenses in our condensed consolidated statements of income to their respective line items when these costs are incurred.
We share 50% of the profit or loss related to our commercial agreement with Samsung Bioepis, which is recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income. For the three and nine months ended September 30, 2019, we recognized net profit-sharing expense of $60.1 million and $181.6 million, respectively, to reflect Samsung Bioepis' 50% sharing of the net collaboration profits, compared to $47.7 million and $131.2 million, respectively, in the prior year comparative periods.
Other Services
Simultaneous with the formation of Samsung Bioepis, we also entered into a license agreement, a technical development services agreement and a manufacturing agreement with Samsung Bioepis. For the three and nine months ended September 30, 2019, we recognized $12.9 million and $89.9 million, respectively, in revenues related to these services, which is reflected in collaborative and other relationships revenues as a component of other revenues in our condensed consolidated statements of income, compared to $48.1 million and $80.7 million, respectively, in the prior year comparative periods.
Following the divestiture of our Hillerød, Denmark manufacturing operations on August 1, 2019, FUJIFILM assumed responsibility for the manufacture of clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis. We no longer recognize revenues for the manufacturing completed after the divestiture date under our technical development services and manufacturing agreements with Samsung Bioepis. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to these condensed consolidated financial statements.
For additional information on our collaboration arrangement with Samsung Bioepis and our other significant collaboration arrangements, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K.

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18.    Investments in Variable Interest Entities
Consolidated Variable Interest Entities
Our condensed consolidated financial statements include the financial results of variable interest entities in which we are the primary beneficiary. The following are our significant variable interest entities.
Neurimmune SubOne AG
In 2007 we entered intoWe have a collaboration and license agreement with Neurimmune SubOne AG (Neurimmune), a subsidiary of Neurimmune AG, for the development and commercialization of antibodies for the potential treatment of AD. Neurimmune conducts research to identify potential therapeutic antibodies and weAD, including aducanumab. We are responsible for the development, manufacturing and commercialization of all collaboration products. This agreement is effective for the longer of the duration of certain patents relating to a licensed product or 12 years from the first commercial sale of any product using such a licensed compound.
We consolidate the results of Neurimmune as we determined that we are the primary beneficiary of Neurimmune because we have the power through the collaboration to direct the activities that most significantly impact the entity’s economic performance and we are required to fund 100% of the research and development costs incurred in support of the collaboration.
Under the terms of our collaboration agreement.and license agreement with Neurimmune (the Neurimmune Agreement), the royalty rates payable on products developed under the Neurimmune Agreement, including royalty rates payable on potential commercial sales of aducanumab, range from the high single digits to sub-teens.
Amounts incurred byResearch and development costs for which we reimbursed Neurimmune forare reflected in research and development expensesexpense in supportour condensed consolidated statements of the collaboration and reimbursed by us were immaterial forincome. During the three and nine months ended September 30, 20172019 and 2016.2018, amounts reimbursed were immaterial.
The assets and liabilities of Neurimmune are not significant to our condensed consolidated financial position or results of operations as it is a research and development organization. We have provided no financing to Neurimmune other than previously contractually required amounts.
Unconsolidated Variable Interest Entities
We have relationships with other variable interest entities that we do not consolidate as we lack the power to direct the activities that significantly impact the economic success of these entities. These relationships include investments in certain biotechnology companies and research collaboration agreements.
As of September 30, 20172019 and December 31, 2016,2018, the total carrying value of our investments in certain biotechnology companies representing potential unconsolidated variable interest entities totaled $49.7$23.1 million and $47.4$28.7 million, respectively. Our maximum exposure to loss related to these variable interest entities is limited to the carrying value of our investments.
We have also entered into research collaboration agreements with certain variable interest entities where we are required to fund certain development activities. These development activities are included in research and development expense in our condensed consolidated statements of income as they are incurred. We have provided no financing to these variable interest entities other than previously contractually required amounts.
For additional information related toon our investments in Neurimmune and other variable interest entities, please read Note 18, 20, Investments in Variable Interest Entities, to our consolidated financial statements included in our 20162018 Form 10-K.
18.    Collaborative and Other Relationships
Bristol-Myers Squibb Company
On June 1, 2017, we finalized an agreement with Bristol-Myers Squibb Company (BMS) to exclusively license BMS-986168 (now known as BIIB092), a Phase 2-ready experimental medicine with potential in AD and progressive supranuclear palsy (PSP), and made an upfront payment of $300.0 million to BMS. BIIB092 is an antibody targeting tau, the protein that forms the deposits, or tangles, in the brain associated with AD and other neurodegenerative tauopathies such as PSP. PSP is a rare condition that affects movement, speech, vision and cognitive function.
Under the agreement, we received worldwide rights to BIIB092 and are responsible for the full development and global commercialization of BIIB092 in AD and PSP. We may pay BMS up to $410.0 million in additional milestone payments, and potential royalties. We also assumed all remaining obligations to the former stockholders of iPierian, Inc. (iPierian) related to BMS’s acquisition of iPierian in 2014. In June 2017 we triggered a $60.0 million developmental milestone payable to the former stockholders of iPierian upon dosing of the first patient in the Phase

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2 PSP study for BIIB092 and we may pay the former stockholders of iPierian up to $490.0 million in remaining milestone payments, and potential royalties.
Both the $300.0 million upfront payment and the $60.0 million developmental milestone payment were recognized as research and development expense in our condensed consolidated statements of income for the nine months ended September 30, 2017.
AbbVie Inc.
We have a collaboration agreement with AbbVie Inc. (AbbVie) aimed at advancing the development and commercialization of ZINBRYTA in MS, which was approved for the treatment of relapsing forms of MS in the U.S. in May 2016 and in the E.U. in July 2016. Under the agreement, we and AbbVie conduct ZINBRYTA co-promotion activities in the U.S., E.U. and Canadian territories (Collaboration Territory), where development and commercialization costs and profits are shared equally. Outside of the Collaboration Territory, we are solely responsible for development and commercialization of ZINBRYTA and will pay a tiered royalty to AbbVie as a percentage of net sales in the low to high teens.
In July 2017 the European Medicines Agency (EMA) announced that it had provisionally restricted the use of ZINBRYTA to adult patients with highly active relapsing disease despite a full and adequate course of treatment with at least one disease modifying therapy (DMT) or with rapidly evolving severe relapsing MS who are unsuitable for treatment with other DMTs. These restrictions followed the initiation of an EMA review (referred to as an Article 20 Procedure) of ZINBRYTA following the report of a case of fatal fulminant liver failure, as well as four cases of serious liver injury. The outcome of the EMA review process may affect the market for ZINBRYTA, which may result in the impairment of all or a portion of certain assets related to ZINBRYTA. As of September 30, 2017, our condensed consolidated balance sheet includes ZINBRYTA related assets, primarily related to inventory, prepaid tax and intangible assets, totaling approximately $200 million. Offsetting these amounts, we also have an unrecorded tax benefit related to certain ZINBRYTA assets totaling approximately $100 million as of September 30, 2017.
Co-promotion Profits and Losses
In the U.S., AbbVie recognizes revenues on sales to third parties and we recognize our 50% share of the co-promotion profits or losses as a component of other revenues from collaborative and other relationships in our condensed consolidated statements of income. The collaboration began selling ZINBRYTA in the U.S. in the third quarter of 2016. During the three and nine months ended September 30, 2017, we recognized a net reduction in revenue of $2.8 million and $12.6 million, respectively, to reflect our share of an overall net loss within the collaboration, as compared to $13.5 million in each of the prior year comparative periods.
In the E.U. and Canada, we recognize revenues on sales to third parties in product revenues, net and record the related cost of revenues and sales and marketing expenses to their respective line items in our condensed consolidated statements of income as revenues are recognized and related costs are incurred. We also reimburse AbbVie for their 50% share of the co-promotion profits or losses in the E.U. and Canada, which is recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income. We began to recognize product revenues on sales of ZINBRYTA in the E.U. in the third quarter of 2016. For the three and nine months ended September 30, 2017, we recognized net expense of $0.7 million and $2.0 million, respectively, to reflect AbbVie's 50% sharing of the net collaboration profits in the E.U. and Canada, as compared to net income recognized of $2.7 million to reflect AbbVie's 50% sharing of the net collaboration losses in the E.U. and Canada in the prior year comparative periods.
Ionis Pharmaceuticals, Inc.
SPINRAZA (nusinersen)
In January 2012 we entered into an exclusive worldwide option and collaboration agreement with Ionis Pharmaceuticals, Inc. (Ionis) under which both companies develop and commercialize the antisense investigational drug candidate, SPINRAZA, for the treatment of SMA.
Under the terms of the agreement, during the third quarter of 2016, we exercised our option to develop and commercialize SPINRAZA and paid Ionis a $75.0 million license fee in connection with the option exercise. This amount was recognized as research and development expense in our condensed consolidated statements of income.

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SPINRAZA was approved for use in the U.S., E.U. and Japan in December 2016, June 2017 and July 2017, respectively. These approvals triggered milestone payments to Ionis totaling $150.0 million during 2017, which were capitalized in intangible assets, net in our condensed consolidated balance sheets.
For the three and nine months ended September 30, 2017, we recognized product revenues totaling $197.6 million and $438.8 million, respectively, on our sales of SPINRAZA in the U.S. and $73.3 million and $82.4 million, respectively, on our sales of SPINRAZA outside of the U.S. Pursuant to our agreement with Ionis, we make royalty payments to Ionis on annual worldwide net sales of SPINRAZA using a tiered royalty rate between 11% and 15%, which are recognized in royalty cost of sales within our condensed consolidated statements of income. Royalty cost of sales related to sales of SPINRAZA for the three and nine months ended September 30, 2017 totaled $34.0 million and $64.9 million, respectively.
Samsung Bioepis
Joint Venture Agreement
In February 2012 we entered into a joint venture agreement with Samsung Biologics, establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar pharmaceuticals. As of September 30, 2017, our ownership interest was approximately 5%, which reflects the effect of additional equity financings in which we did not participate. We maintain an option to purchase additional stock in Samsung Bioepis that would allow us to increase our ownership percentage up to 49.9%. The exercise of this option is within our control.
We recognize our share of the results of operations related to our investment in Samsung Bioepis one quarter in arrears when the results of the entity become available, which is reflected as equity in loss of investee, net of tax in our condensed consolidated statements of income. During 2015, as our share of losses exceeded the carrying value of our investment, we suspended recognizing additional losses and will continue to do so unless we commit to providing additional funding.
Commercial Agreement
We began to recognize revenue on sales of BENEPALI and FLIXABI in the E.U. in the first and third quarters of 2016, respectively. We reflect revenues on sales of BENEPALI and FLIXABI to third parties in product revenues, net in our condensed consolidated statements of income and record the related cost of revenues and sales and marketing expenses in our condensed consolidated statements of income to their respective line items when these costs are incurred. In August 2017 the European Commission granted a marketing authorization in the E.U. for IMRALDI, an adalimumab biosimilar referencing HUMIRA, triggering an additional $25.0 million milestone payment due to Samsung Bioepis, which was capitalized in intangible assets, net in our condensed consolidated balance sheets as of September 30, 2017.
We share 50% of the profit or loss in accordance with the cost sharing provision of the commercial agreement with Samsung Bioepis, which is recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income. For the three and nine months ended September 30, 2017, we recognized net expense of $34.5 million and $80.5 million, respectively, to reflect Samsung Bioepis's 50% sharing of the net collaboration profits, as compared to net expense recognized of $7.4 million and $1.8 million to reflect sharing of the net collaboration profits in the prior year comparative periods.
Other Services
Simultaneous with the formation of Samsung Bioepis, we also entered into a license agreement, a technical development services agreement and a manufacturing agreement with Samsung Bioepis. For the three and nine months ended September 30, 2017, we recognized $8.8 million and $23.7 million, respectively, in connection with these services as a component of other revenues from collaborative and other relationships in our condensed consolidated statements of income, as compared to $0.4 million and $17.3 million, respectively, in the prior year comparative periods.
For additional information related to these and our other significant collaboration arrangements, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2016 Form 10-K.

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19.    Litigation
We are currently involved in various claims and legal proceedings, including the matters described below. For information as to our accounting policies relating to claims and legal proceedings, including use of estimates and contingencies, please read Note 1,Summary of Significant Accounting Policies, to our consolidated financial statements included in our 20162018 Form 10-K.
With respect to some loss contingencies, an estimate of the possible loss or range of loss cannot be made until management has further information, including, for example, (i) which claims, if any, will survive dispositive

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motion practice; (ii) information to be obtained through discovery; (iii) information as to the parties' damages claims and supporting evidence; (iv) the parties’ legal theories; and (v) the parties' settlement positions.
The claims and legal proceedings in which we are involved also include challenges to the scope, validity or enforceability of the patents relating to our products, pipeline or processes and challenges to the scope, validity or enforceability of the patents held by others. These include claims by third parties that we infringe their patents. An adverse outcome in any of these proceedings could result in one or more of the following and have a material impact on our business or consolidated results of operations and financial position: (i) loss of patent protection; (ii) inability to continue to engage in certain activities; and (iii) payment of significant damages, royalties, penalties and/or license fees to third parties.
Loss Contingencies
IMRALDI Patent Litigation
In September 2018 Fresenius Kabi Deutschland GmbH (Fresenius Kabi) commenced proceedings for damages and injunctive relief against Biogen France SAS in the Tribunal de Grande Instance de Paris, alleging that IMRALDI, the adalimumab biosimilar product of Samsung Bioepis UK Limited that Biogen commercializes in Europe, infringes the French counterpart of European Patent No. 3 148 510 (the ‘510 Patent), which was issued in June 2018 and expires in May 2035. No hearing on the merits has been scheduled.
In October 2018 Fresenius Kabi commenced preliminary injunction proceedings against Biogen (Denmark) Manufacturing ApS and Biogen Denmark A/S in Denmark's Maritime and Commercial High Court alleging infringement of the Danish Utility Models. In June 2019 the Danish court denied Fresenius Kabi's request for a preliminary injunction and Fresenius Kabi has appealed that decision.
In November 2018 Fresenius Kabi commenced infringement proceedings for damages and injunctive relief against Biogen Italia S.R.L. in the District Court of Milan relating to the Italian counterpart of the ‘510 Patent, and against Biogen GmbH in the Düsseldorf Regional Court relating to the German counterpart of the ‘510 Patent. A hearing in the proceeding in Germany has been set for March 2020. No hearing on the merits has been scheduled.
An estimate of the possible loss or range of loss in the above matters cannot be made at this time.
In August 2018 Biogen Idec Ltd. (Biogen UK) and Samsung Bioepis UK Limited filed an action in the United Kingdom Patents Court to revoke the United Kingdom (U.K.) counterpart of the ‘510 Patent. Fresenius Kabi counterclaimed for infringement, damages and injunctive relief. In July 2019 the United Kingdom Patents Court entered a consent order in which it declared that the U.K. counterpart of the '510 Patent is invalid, ordered the patent revoked and dismissed Fresenius Kabi's counterclaims.
In December 2018 Biogen B.V. and Samsung Bioepis UK Limited filed an action in the District Court of the Hague, Netherlands to revoke the Dutch counterpart of the ‘510 Patent. In September 2019 the parties entered an Agreement to Discontinue Proceedings wherein Fresenius Kabi declared the Dutch counterpart of the '510 Patent invalid and surrendered it in full.
In July 2019 Gedeon Richter PLC commenced proceedings against Biogen GmbH in the Düsseldorf Regional Court alleging infringement of the German counterpart of European Patent No. 3 212 667 (the '667 Patent), which was issued in September 2018 and expires in October 2035, and seeking damages and injunctive relief. A hearing has been set for November 2020. An estimate of the possible loss or range of loss cannot be made at this time.
In July 2019 Biogen Idec Ltd. (Biogen UK) and Samsung Bioepis UK Limited filed an action in the United Kingdom Patents Court to revoke the U.K. counterpart of the '667 Patent, and in August 2019 Biogen B.V. (Netherlands) and Samsung Bioepis UK Limited filed an action in the District Court of the Hague, Netherlands to revoke the Dutch counterpart of the '667 Patent. A hearing has been set for May 2020 in the Dutch matter and October 2020 in the U.K. matter.

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Qui Tam Litigation
OnIn July 6, 2015 a qui tam action filed by Michael Bawduniak on behalf of the United StatesU.S. and certain states was unsealed by the U.S. District Court for the District of Massachusetts. The action alleges sales and promotional activities in violation of the federal False Claims Act and state law counterparts and seeks single and treble damages, civil penalties, interest, attorneys’ fees and costs. Our motion to dismiss is pending.was denied in part. No trial date has been set. The United StatesU.S. has not made an intervention decision. An estimate of the possible loss or range of loss cannot be made at this time.
In July 2018 we and certain other drug manufacturers and pharmacy benefit managers were served with a qui tam action filed by John Borzilleri on behalf of the U.S. and certain states in the U.S. District Court for the District of Rhode Island. The case was filed under seal in January 2014 and unsealed in April 2018 after the U.S. government declined to intervene. The case alleged agreements with pharmacy benefit managers in violation of the federal False Claims Act and state law counterparts and seeks single and treble damages, civil penalties, interest, attorneys' fees and costs. In September 2019 the court dismissed the action on the U.S. government's motion.
Securities Litigation
We and certain current and former officers arewere defendants in an action filed by a shareholder onin October 20, 2016 in the U.S. District Court for the District of Massachusetts alleging violations of federal securities laws under 15 U.S.C §78j(b) and §78t(a) and 17 C.F.R. §240.10b-5 and seeking a declaration of the action as a class action and an award of damages, interest and attorneys' fees. An estimate of the possible loss or range of loss cannot be made at this time.
Other Matters
Abbreviated New Drug Application Litigation relating to TECFIDERA
In June July and September2019 the U.S. Court of Appeals for the First Circuit affirmed the judgment dismissing the complaint with prejudice.
Dismissed Shareholder Derivative Litigation
On January 13, 2017, weMary Ann Mullaney, a Biogen shareholder, filed patent infringement actions pursuant to the Hatch-Waxman Act against parties who filed Abbreviated New Drug Applications (ANDAs) for generic versions of TECFIDERA. We have sued the following partiesa complaint in the United StatesU.S. District Court for the District of Delaware:Delaware asserting derivative claims on behalf of Biogen against certain of the company’s current and former directors and officers alleging that those individuals (i) breached their fiduciary duties by failing to oversee the company’s operations, (ii) breached their fiduciary duties and Section 14(a) of the Securities Exchange Act of 1934, as amended, and (iii) were unjustly enriched. The complaint sought unspecified damages, interest, attorneys’ fees and other costs. The parties filed a Joint Stipulation for Voluntary Dismissal and Proposed Order, which the court granted on August 6, 2019.
Other Matters
Hatch-Waxman Act Litigation relating to TECFIDERA Orange-Book Listed Patents
In 2017, 2018 and 2019 we initiated patent infringement proceedings against multiple parties pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, in the U.S. District Courts.
Patent infringement proceedings pursuant to the Hatch-Waxman Act are pending against Accord Healthcare Inc., Alkem Laboratories Ltd., Amneal Pharmaceuticals LLC, Aurobindo Pharma U.S.A., Inc., Hetero USA, Inc., Impax Laboratories, Inc., Prinston Pharmaceuticals, Inc., Slayback PharmaBanner Life Sciences LLC,  Teva Pharmaceuticals USA, Inc., Alkem Laboratories Ltd., Cipla Limited, Glenmark Pharmaceuticals Ltd., Graviti Pharmaceuticals Pvt. Ltd., Hetero USA Inc., Lupin Atlantis Holdings SA, Macleods Pharmaceuticals, Ltd., MSN Laboratories Pvt. Ltd., Pharmathen S.A., ShiplaPrinston Pharmaceutical Inc., Sandoz Inc., Sawai USA, Inc., Shilpa Medicare Limited, SunSlayback Pharma Global FZE, TorrenLLC, Torrent Pharmaceuticals Ltd., TWITWi Pharmaceuticals, Inc., Windlas Healthcare Pvt., Ltd., Accord Healthcare Inc., Par Pharmaceuticals, Sandoz Inc., Sawai (USA), Inc. and Zydus Pharmaceuticals (USA), Inc. We have also filed actions against Stason Pharmaceuticals, Inc. in the United States District Court for the Central District of California, Zydus Pharmaceuticals (USA), Inc. in the United StatesU.S. District Court for the District of New Jersey, Accord HealthcareDelaware and against Mylan Pharmaceuticals Inc. in the Middle District of North Carolina, Par Pharmaceuticals in the Southern District of New York, Sandoz, Inc. in the District of Colorado and Mylan Pharmaceuticals in the United StatesU.S. District Court for the Northern District of West Virginia. No
A trial date has been scheduledset in anythe Delaware action against Banner Life Sciences LLC for March 2020. A trial date has been set for December 2019 in the other Delaware actions and a trial date has been set for February 2020 in the West Virginia action against Mylan Pharmaceuticals Inc.
Petition for Inter Partes Review
In July 2018 Mylan Pharmaceuticals Inc. filed a petition with the U.S. Patent Trial and Appeal Board (PTAB) seeking inter partes review of these matters.our U.S. Patent No. 8,399,514 (the '514 Patent). The '514 Patent includes claims covering the treatment of MS with 480 mg of dimethyl fumarate per day as provided for in our TECFIDERA label. On February 6, 2019, the PTAB instituted inter partes review of the '514 Patent (the "Mylan IPR"). Thereafter, the PTAB


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Interference Proceeding with Forward Pharmagranted the petition of Sawai USA, Inc. and Sawai Pharmaceutical Co. Ltd. and joined them as petitioners in the Mylan IPR. A hearing has been scheduled for November 2019.
European Patent Office Oppositions
In April 20152016 the U.S.European Patent and Trademark Office (USPTO) declared an interference between Forward Pharma’s pending U.S. Patent Application No. 11/576,871 and(EPO) revoked our U.S. Patent No. 8,399,514European patent number 2 137 537 (the '514 patent). The '514 patent'537 Patent), which includes claims covering the treatment of MS with 480 mg of dimethyl fumarate as provided for in our TECFIDERA label. In March 2017 the USPTO ruled against Forward Pharma. Forward Pharma hasWe have appealed to the U.S. CourtTechnical Boards of Appeals forAppeal of the Federal CircuitEPO and the appeal is pending. For additional information regarding this matter, please read Note 6, Intangibles Assets and Goodwill, to these condensed consolidated financial statements.
European Patent Office OppositionsA hearing has been set for March 2020.
In June 2016March 2018 the European Patent Office (EPO) issued a written decision confirming its earlier revocation of our European patent number 2 137 537 (the '537 patent), which we have appealed. The '537 patent includes claims covering the treatment of MS with 480 mg of dimethyl fumarate as provided for in our TECFIDERA label.
The EPO has scheduled a hearing for January 2018 on Biogen’s and others’ oppositions torevoked Forward Pharma’s European Patent No. 2 801 355, which was issued in May 2015 and expires in October 2025. Forward Pharma has filed an appeal to the Technical Boards of Appeal of the EPO and the appeal is pending. A hearing has been set for June 2020. The settlement and license agreement that we entered with Forward Pharma in January 2017 did not resolve the issues pending in this proceeding and we and Forward Pharma intend to permit the EPO and the Technical BoardBoards of Appeal and the Enlarged Board of Appeal, asif applicable, to make a final determination. For additional information regarding this matter, please read Note 6, Intangibles Assets and Goodwill, to these condensed consolidated financial statements.
TYSABRI Patent Revocation MatterMatters
Swiss Pharma International AG filed actionsIn November 2017 Bioeq GMBH, affiliated with the Polpharma Group, brought an action in the District Court of The Hague (on January 11, 2016) andPolish Patent Office seeking to revoke Polish Patent Number 215263 (the Polish ‘263 Patent), the German Patents Court (on March 3, 2016)Polish patent corresponding to invalidate the Dutch and German counterparts of our European Patent Number 1 485 127 (the EU ‘127 Patent) (“Administration of agents to treat inflammation”), which was issued in June 2011 and. The Polish ‘263 Patent concerns administration of natalizumab (TYSABRI) to treat MS. The patentPolish ‘263 Patent expires in February 2023. In July 2017No hearing on the merits has been set in this matter.
Swiss Pharma International AG, also affiliated with the Polpharma Group, filed actions in the District Court of Thethe Hague, ruled thatNetherlands (January 2016), the German Patents Court (March 2016) and the Commercial Court of Rome (November 2017) seeking to invalidate the Dutch, counterpartGerman and Italian counterparts of the patent is invalidEU '127 Patent, which also concerns administration of natalizumab (TYSABRI) to treat MS and we have appealed. A hearing has been scheduledexpires in February 2023. The Dutch and German counterparts were ruled invalid. The decision in the Dutch action was affirmed in September 2019 and our appeal as to the German action is pending. No date for early 2018.a hearing on the merits has been set in the Italian action.
'755 Patent Litigation
OnIn May 28, 2010 Biogen MA Inc. (formerly Biogen Idec MA Inc.) filed a complaint in the U.S. District Court for the District of New Jersey alleging infringement by Bayer Healthcare Pharmaceuticals Inc. (Bayer) (manufacturer, marketer and seller of BETASERON and manufacturer of EXTAVIA), EMD Serono, Inc. (EMD Serono) (manufacturer, marketer and seller of REBIF), Pfizer Inc. (Pfizer) (co-marketer of REBIF) and Novartis Pharmaceuticals Corp. (Novartis) (marketer and seller of EXTAVIA) of our U.S. Patent No. 7,588,755 ('755(the '755 Patent), which claims the use of interferon beta for immunomodulation or treating a viral condition, viral disease, cancers or tumors. The complaint seeks monetary damages, including lost profits and royalties.
Bayer, Pfizer, Novartis and EMD Serono filed counterclaims seeking declaratory judgments of patent invalidity and non-infringement and seeking monetary relief in the form of costs and attorneys' fees. Bayer had previously filed a complaint against us in the same court, on May 27, 2010, seeking a declaratory judgment that it does not infringe the '755 Patent and that the patent'755 Patent is invalid, and seeking monetary relief in the form of attorneys' fees, costs and expenses. The
In September 2018 the trial court has consolidated the two lawsuits, and we refer to the two actions as the “Consolidated '755 Patent Actions.”
Bayer, Pfizer, Novartis and EMD Serono have all filed counterclaims in the Consolidated '755 Patent Actions seeking declaratory judgments of patent invalidity and non-infringement, and seeking monetary relief in the form of costs and attorneys' fees, andentered judgment against EMD Serono and Bayer have each filed a counterclaim seeking a declaratory judgmentPfizer that the '755 Patent is unenforceable basedinfringed and valid and ordered a new trial on alleged inequitable conduct. Bayer has also amended its complaint to seek such a declaration. Trial has been setdamages. In October 2018 EMD Serono and Pfizer filed an appeal from the judgment in the U.S. Court of Appeals for the first quarter of 2018.Federal Circuit, which is pending. The trial court has not yet scheduled the new damages trial or a trial against Bayer and Novartis.
Government Matters
We have learned that state and federalU.S. governmental authorities are investigating our sales and promotional practices and have received related subpoenas. We are cooperating with the government.investigation.
We have also received subpoenas and other requests from the federalU.S. government for documents and information relating to our relationship with non-profit organizations that provide assistance toassist patients taking drugs sold by Biogen and Biogen's co-pay assistance programs.the government has challenged some of our contributions to these organizations. We are cooperating with the government.
On July 1, 2016, we received civil investigative demands from the federal government for documents and information relating to our treatment of certain service agreements with wholesalers when calculating and reporting


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(unaudited, continued)


Average Manufacturer Pricesinvestigation and have participated in connectionpreliminary discussions with the Medicaid Drug Rebate Program. government regarding potential resolution of aspects of the matter.
We are cooperating with the government.
On December 29, 2016, wehave also received a civil investigative demandsubpoenas and other requests from the federalU.S. government for documents and information relating to our relationshipsBiogen's co-pay assistance programs. We cooperated with entities providing clinical educationthe investigation and reimbursement support services. We regardhave received no communication from the government in this matter as closed.since December 2017.
Tax Matter
In July 2017 we learned that the Prosecution Officesecond quarter of Milan is investigating our interactions with certain healthcare providers in Italy.2018 the State Treasury of Goias, Brazil issued tax assessments for the period 2013 through February 2018 relating to tax on the circulation of goods and totaling approximately $70.0 million including interest and penalties. We are cooperatingdispute the assessments and have filed defenses with the government.Administrative Court of Appeals for the State of Goias, which are pending. We have not formed an opinion that an unfavorable outcome of the dispute is either probable or remote.
Product Liability and Other Legal Proceedings
We are also involved in product liability claims and other legal proceedings generally incidental to our normal business activities. While the outcome of any of these proceedings cannot be accurately predicted, we do not believe the ultimate resolution of any of these existing matters would have a material adverse effect on our business or financial condition.
20.    Subsequent Events
Eisai Co., Ltd.
BAN2401 and E2609 Collaboration
In March 2014, we entered into a collaboration agreement (Eisai Collaboration Agreement) with Eisai Co., Ltd. (Eisai) to jointly develop and commercialize two Eisai product candidates for the treatment of AD, BAN2401, a monoclonal antibody that targets amyloid-beta aggregates, and E2609, a BACE inhibitor. Under the Eisai Collaboration Agreement, Eisai had an option to jointly develop and commercialize aducanumab, our anti-amyloid beta antibody candidate for AD (Aducanumab Option).
On October 23, 2017, Eisai exercised its Aducanumab Option and we entered into a new collaboration agreement (Aducanumab Agreement) for the joint development and commercialization of aducanumab. Under the Aducanumab Agreement, the two companies will co-promote aducanumab with a region-based profit split. We will receive a 55% share of the potential profits (losses) in the U.S., a 68.5% share of the potential profits (losses) in the E.U. and a 20% share of the potential profits (losses) in Japan and Asia, excluding China and South Korea. The companies will continue to share equally in the potential profits (losses) in rest of world markets.
Under the Aducanumab Agreement, we will continue to lead the ongoing Phase 3 development of aducanumab and will remain responsible for 100% of development costs for aducanumab incurred in support of the agreement until April 2018. Eisai will then reimburse us for 15% of development expenses for the period April 2018 through December 2018, and 45% thereafter.
In addition, both companies will continue to jointly develop BAN2401 and E2609; however, we are no longer required to pay Eisai any milestone payments for products containing BAN2401 and we are no longer entitled to any potential development and commercial milestone payments from Eisai in relation to aducanumab.
We and Eisai have also agreed to co-promote AVONEX, TYSABRI and TECFIDERA in Japan in certain settings and Eisai will distribute AVONEX, TYSABRI, TECFIDERA and PLEGRIDY in India and other Asia-Pacific markets (excluding China).
For additional information related to our collaboration arrangement with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2016 Form 10-K.
Neurimmune
On October 23, 2017, we amended the terms of our existing collaboration agreement with Neurimmune. Pursuant to the amended agreement, we agreed to make a one-time $150.0 million payment to Neurimmune in exchange for a 15% reduction in royalty rates payable on potential commercial sales of aducanumab. Our royalty rates payable on potential commercial sales of aducanumab will now range from the high single digits to low-teens. This payment will be recognized in the fourth quarter of 2017.

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(unaudited, continued)

Under the amended agreement, we also have an option that will expire in April 2018 to further reduce our royalty rate payable on potential commercial sales of aducanumab by an additional 5% in exchange for a one-time $50.0 million payment to Neurimmune. 
Under the terms of the Aducanumab Agreement, Eisai may elect to share in the benefit and cost of the royalty reduction.
For additional information relating to our collaboration agreement with Neurimmune, please read Note 17, Investments in Variable Interest Entities, to these condensed consolidated financial statements.

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 5 of this quarterly report on Form 10-Q and our audited consolidated financial statements and relatedthe accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2016 (20162018 (2018 Form 10-K).
Executive Summary
Introduction
Biogen is a global biopharmaceutical company focused on discovering, developing manufacturing and delivering worldwide innovative therapies tofor people living with serious neurological and neurodegenerative diseases.diseases as well as related therapeutic adjacencies. Our core growth areas include multiple sclerosis (MS) and neuroimmunology, neuromuscular disorders, including spinal muscular atrophy (SMA) and amyotrophic lateral sclerosis (ALS), movement disorders, including Parkinson's disease and progressive supranuclear palsy (PSP), Alzheimer's disease (AD) and dementia and ophthalmology. We are also focused on discovering, developing and delivering worldwide innovative therapies in our emerging growth areas of immunology, neurocognitive disorders, acute neurology and pain. In addition, we commercialize biosimilars of advanced biologics. We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities.
Our marketed products include TECFIDERA, AVONEX, PLEGRIDY, TYSABRI ZINBRYTA and FAMPYRA for multiple sclerosis (MS),the treatment of MS, SPINRAZA for the treatment of spinal muscular atrophy (SMA)SMA and FUMADERM for the treatment of severe plaque psoriasis. We also have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, chronic lymphocytic leukemia (CLL) and other conditions, RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL, GAZYVA indicated for the treatment of CLL and follicular lymphoma, OCREVUS indicated for the treatment of primary progressive MS (PPMS) and relapsing MS (RMS), and other potential anti-CD20 therapies under apursuant to our collaboration agreementarrangements with Genentech, Inc. (Genentech), a wholly-owned member of the Roche Group. For additional information on our collaboration arrangements with Genentech, please read Note 19, Collaborative and Other Relationships,
to our consolidated financial statements included in our 2018 Form 10-K.
Our innovative drug development and commercialization activities are complemented by our biosimilar products that expand access to medicines and reduce the cost burden for healthcare systems. Through Samsung Bioepis Co., Ltd. (Samsung Bioepis), our joint venture with Samsung BioLogics Co., Ltd. (Samsung BioLogics), we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in the E.U. For additional information on our collaboration arrangement with Samsung Bioepis, please read Note 17, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.
Our current revenues depend upon continued sales of our principal products, as well as the financial rights we have in our anti-CD20 therapeutic programs, and, unless we develop, acquire rights to andand/or commercialize new products and technologies, we maywill be substantially dependent on sales from our principal products and our financial rights in our anti-CD20 therapeutic programs for many years. Additionally, a significant portion of our revenues are concentrated on sales of our products in increasingly competitive markets.
In the longer term, our revenue growth will be dependentdepend 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 andand/or successful execution of external business development opportunities.
Our innovative drug Drug development and commercialization activities are complemented by our biosimilar therapies that expand access to medicinesinvolve a high degree of risk, and reduce the cost burden for healthcare systems. We are leveraging our manufacturing capabilities and know-how by developing, manufacturing and marketing biosimilars through Samsung Bioepis, our joint venture with Samsung BioLogics Co. Ltd. (Samsung Biologics). Under our commercial agreement, we market and sell BENEPALI, an etanercept biosimilar referencing ENBREL, and FLIXABI, an infliximab biosimilar referencing REMICADE, in the E.U. In August 2017 the European Commission (EC) grantedonly a marketing authorization for IMRALDI, an adalimumab biosimilar referencing HUMIRA, in the E.U.
Corporate Strategy Update
In July 2017 we announced an updated strategic framework to optimize the valuesmall number of our MS business while investing for the future across our core growth areas of MS and neuroimmunology, Alzheimer's disease (AD) and dementia, Parkinson's disease and movement disorders, and neuromuscular diseases including SMA and amyotrophic lateral sclerosis (ALS). Further, we see opportunities to invest in emerging growth areas such as pain, ophthalmology, neuropsychiatry and acute neurology. In addition, we are employing innovative technologies to discover potential treatments for rare and genetic disorders, including new ways of treating diseases through gene therapy.
We expect the continued performance of our commercial assets and the expiration of the contingent payments related to TECFIDERA, discussed further in the “Contractual Obligations and Off-Balance Sheet Arrangements” section of this report, to enable us to invest in and build an industry leading neuroscience pipeline. We view investment in growth as our top priority, but also recognize the value of opportunistically returning excess capital to shareholders through share repurchases.
In order to deliver positive results in the near term while investing in the next stages of our growth, we will focus on the following strategic priorities:
maximizing the resilience of our MS core business;
accelerating efforts in SMA as a significant new growth opportunity;
developing and expanding our neuroscience portfolio;
focusing our capital allocation efforts to drive investment for future growth; and

creating a leaner and simpler operating model to streamline our operations and reallocate resources towards prioritized research and development programs result in commercialization of a product. Results in early stage clinical trials may not be indicative of full results or results from later stage or larger scale clinical trials and commercial value creation opportunities.
In October 2017, in connection with creating a leaner and simpler operating model, we approved a corporate restructuring program intended to streamline our operations and reallocate resources. We expect to make total non-recurring operating and capital expenditures of up to $170.0 million, primarily in 2018, and our goal is to redirect resources of up to $400.0 million annually by 2020 to prioritized research and development and other value creation opportunities.
Hemophilia Spin-Off
On February 1, 2017, we completed the spin-off of our hemophilia business, Bioverativ Inc. (Bioverativ), as an independent publicly traded company trading under the symbol "BIVV" on the Nasdaq Global Select Market. The spin-off was accomplished through the distribution of all the then outstanding shares of common stock of Bioverativ to Biogen shareholders, who received one share of Bioverativ common stock for every two shares of Biogen common stock they owned. The separation and distribution was structured to be tax-free for shareholders for federal income tax purposes. Bioverativ assumed all of our rights and obligations under our collaboration agreement with Swedish Orphan Biovitrum AB (Sobi) and our collaboration and license agreement with Sangamo Biosciences Inc.
Our consolidated results of operations and financial position included in these unaudited condensed consolidated financial statements reflect the financial results of our hemophilia business for all periods through January 31, 2017. For additional information related to the spin-off of our hemophilia business, please read Note 3, Hemophilia Spin-Off, to our condensed consolidated financial statements included in this report.
Financial Highlights
biib-2017930highlights.jpg
Diluted earnings per share attributable to Biogen Inc. was $5.79 for the three months ended September 30, 2017, representing an increase of 22.9% over the same period in 2016.
Our income from operations for the three months ended September 30, 2017, reflects the following:
Total revenues were $3,077.8 million for the third quarter of 2017, representing an increase of 4.1% over the same period in 2016.
Product revenues, net totaled $2,622.5 million for the third quarter of 2017, representing an increase of 3.3% over the same period in 2016. This increase was driven by revenues from SPINRAZA and BENEPALI, partially offset by the elimination of worldwide ALPROLIX and ELOCTATE revenues resulting from the spin-off of our hemophilia business on February 1, 2017.
Revenues from anti-CD20 therapeutic programs totaled $406.5 million for the third quarter of 2017, representing an increase of 28.0% over the same period in 2016. This increase was driven by royalty revenues on sales of OCREVUS.

Other revenues totaled $48.8 million for the third quarter of 2017, representing a decrease of 50.5% from the same period in 2016.
Total cost and expenses totaled $1,424.3 million for the third quarter of 2017, representing a decrease of 6.9% from the same period in 2016. This decrease was primarily driven by a 15.6% decrease in research and development, an 11.2% decrease in cost of sales and a 6.2% decrease in selling, general and administrative expenses. These decreases were partially offset by an increase in collaboration profit sharing and losses on fair value remeasurement of contingent consideration.
We generated $3,032.7 million of net cash flows from operations for the nine months ended September 30, 2017. Cash, cash equivalents and marketable securities totaled approximately $6,570.3 million as of September 30, 2017.do not ensure regulatory approval.
Business Environment
The biopharmaceutical industry and the markets in which we operate are intensely competitive. Many of our competitors are working to develop or have commercialized products similar to those we market or are developing.developing and have considerable experience in undertaking clinical trials and in obtaining regulatory approval to market pharmaceutical products. In addition, the commercialization of certain of our own approved MS products, products of our collaborators and pipeline product candidates may negatively impact

future sales of our existing MS products. Our products may also face increased competitive pressures from the introduction of generic versions, orprodrugs of existing therapies, biosimilars of existing products, other products approved under abbreviated regulatory pathways and other technologies.
Sales of our products are dependent, in large part,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 many of the markets in which our products are prescribed. DrugWe expect drug pricing and other health care costs to continue to be subject to intense political and societal pressures.pressures on a global basis.
Our failure to obtain or maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business, reputation, revenues 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 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 are subject to thecould also be affected by other risks of doing business internationally. For example,internationally, including the full scopeimpact of implementationforeign currency exchange fluctuations, changes in intellectual property legal protections and changes in trade regulations and procedures as well as the impact of the continued uncertainty of the credit and economic conditions in certain countries in Europe.
For additional information on the competition and pricing risks that could negatively impact our product sales, please read Item 3. Quantitative and Qualitative Disclosures About Market Risk and Item 1A. Risk Factors included in this report.
Brexit
In June 2016 the U.K.’s electorate voted in a referendum decision to voluntarily depart from the E.U., known as Brexit. In March 2017 the U.K. government formally notified the European Council of its intention to leave the E.U. and began to negotiate the terms of the future relationship between the U.K. and the E.U. upon exit, which is expected to occur in October 2019.
The potential impact on our results of operations and liquidity resulting from Brexit remains unclear; complianceunclear. The actual effects of Brexit will depend upon many factors and significant uncertainty remains with respect to the ultimate resolution of the Brexit negotiations. The final outcome of these negotiations may impact certain of our research, commercial and general business operations in the U.K. and the E.U., including the approval and supply of our products.
Compliance with any resulting regulatory mandates may prove challenging and the macroeconomic impact on our sales and consolidated results of operations from these developments remains unknown. We do not, however, expect Brexit to have a material impact on our consolidated results of operations as 3.3% and 3.4% of our total product revenues for the three and nine months ended September 30, 2019, respectively, and 3.2% and 3.3% for the prior year comparative periods, respectively, were derived from U.K. sales.
We have implemented measures to meet E.U. legal and regulatory requirements and continue to modify our business operations to prepare for the U.K.'s separation from the E.U. However, we cannot predict the direction Brexit-related developments will take nor the impact of those developments on our European operations and the economies of the markets where we operate. Therefore, we will continue to monitor developments in this area and assess any potential impact on our business and results of operations.

Financial Highlights
financialhighlights.jpg
Diluted earnings per share attributable to Biogen Inc. was $8.39 for the three months ended September 30, 2019, representing an increase of 17.3% over $7.15 in the same period in 2018.
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, 2019, compared to the three months ended September 30, 2018, reflects the following:
Total revenues were $3,600.1 million for the third quarter of 2019, representing an increase of 4.7% over $3,439.0 million in the same period in 2018.
Product revenues, net totaled $2,894.7 million for the third quarter of 2019, representing an increase of 4.1% over $2,780.1 million in the same period in 2018. This increase was primarily due to a 36.2% increase in revenues from our biosimilar products and a 17.0% increase in revenues from SPINRAZA.
Revenues from anti-CD20 therapeutic programs totaled $595.8 million for the third quarter of 2019, representing an increase of 16.4% over $511.7 million in the same period in 2018. This increase was primarily
 
For additional information relateddue to our competitiona 37.3% increase in royalty revenues on sales of OCREVUS.
Other revenues totaled $109.6 million for the third quarter of 2019, representing a decrease of 25.5% from $147.2 million in the same period in 2018. This decrease was primarily due to lower revenues from our contract manufacturing agreements.
Total cost and expenses were $1,793.8 million for the third quarter of 2019, representing an increase of 3.0% over $1,741.4 million in the same period in 2018. This increase was primarily due to a 11.4% increase in selling, general and administrative expense, a 6.4% increase in research and development expense and a 34.2% decrease in net (gain) loss on fair value remeasurement of contingent consideration. The increase to cost and expenses was partially offset by a 6.7% decrease in cost of sales.
Net income attributable to Biogen Inc. was favorably impacted by a decrease in our effective tax rate to 11.9% for the third quarter of 2019, from 20.4% for the same period in 2018, due in part 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.
As described below under Financial Condition, Liquidity and pricing risks that could negatively impact our product sales, please read the “Risk Factors” section of this report.Capital Resources:
Cash, cash equivalents and marketable securities totaled approximately $6.3 billion and $4.9 billion as of September 30, 2019 and December 31, 2018, respectively.
We repurchased and retired approximately 3.1 million shares of our common stock at a cost of approximately $717.9 million during the third quarter of 2019 under a program authorized by our Board of Directors in March 2019 to repurchase up to $5.0 billion of our common stock (2019 Share Repurchase Program).
Key Pipeline
Acquisitions, Divestitures, Collaborative and Product DevelopmentsOther Relationships
SPINRAZA (nusinersen)Skyhawk Therapeutics, Inc.
In June 2017January 2019 we entered into a collaboration and research and development services agreement with Skyhawk Therapeutics Inc. (Skyhawk) pursuant to which the EC approvedcompanies will leverage Skyhawk's SkySTAR technology platform with the usegoal of SPINRAZAdiscovering innovative small molecule treatments for the treatment of SMA in pediatric and adult patients in the E.U. SPINRAZA was reviewed under the European Medicines Agency's (EMA) accelerated assessment program, intended to expedite access to patients with unmet medical needs.neurological diseases, including MS and SMA. In connection with this agreement, we made an upfront payment of $74.0 million to Skyhawk.
In July 2017 the Japanese Ministry of Health, Labor and Welfare approved the use of SPINRAZA for the treatment of infantile SMA and in September 2017 the Japanese Ministry of Health, Labor and Welfare approved the use of SPINRAZA for the treatment of pediatric and adult patients with SMA.
ZINBRYTA (daclizumab)
In July 2017 the EMA announced that it had provisionally restricted the use of ZINBRYTA to adult patients with highly active relapsing disease despite a full and adequate course of treatment with at least one disease modifying therapy (DMT) or with rapidly evolving severe RMS who are unsuitable for treatment with other DMTs. These restrictions followed the initiation of an EMA review (referred to as an Article 20 Procedure) of ZINBRYTA, following the report of a case of fatal fulminant liver failure, as well as four cases of serious liver injury.
For additional information on our relationshipcollaboration arrangement with AbbVie Inc. (AbbVie),Skyhawk, please read Note 18, 17, Collaborative and Other Relationships,to our condensed consolidated financial statements included in this report.
Acquisition of Nightstar Therapeutics plc
On June 7, 2019, we completed our acquisition of all of the outstanding shares of Nightstar Therapeutics plc (NST), a clinical-stage gene therapy company focused on adeno-associated virus (AAV) treatments for inherited retinal disorders. As a result of this acquisition, we added two mid-to late-stage clinical assets, as well as preclinical programs, in ophthalmology. These assets include BIIB111 (formerly known as NSR-REP1), which is in Phase 3 development for the potential treatment of choroideremia, a rare, degenerative, X-linked inherited retinal disorder that leads to blindness and currently has no approved treatments, and BIIB112 (formerly known as NSR-RPGR), which is in Phase 2/3 development for the potential treatment of X-linked retinitis pigmentosa (XLRP), which is a rare inherited retinal disease with no currently approved treatments.
Under the terms of this acquisition, we paid NST shareholders $25.50 in cash for each issued and outstanding NST share, which totaled $847.6 million.
For additional information on our acquisition of NST, please read Note 2, Acquisitions,to our condensed consolidated financial statements included in this report.
Divestiture of Hillerød, Denmark Manufacturing Operations
On August 1, 2019, we completed our sale of all of the outstanding shares of our subsidiary that owned our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM Corporation (FUJIFILM). Upon the closing of this transaction, we received approximately $881.9 million in cash, which is subject to the finalization of certain working capital adjustments and may be further adjusted based on
other contractual terms. In addition, we sold to FUJIFILM $41.8 million of raw materials.
For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to our condensed consolidated financial statements included in this report.
OCREVUS (Ocrelizumab)Other Key Developments
BIIB098 (diroximel fumarate)
In March 2017 the Roche GroupFebruary 2019 we and Alkermes plc announced that the U.S. Food and Drug Administration (FDA) approved OCREVUShas accepted for review the New Drug Application (NDA) for diroximel fumarate (BIIB098), a novel oral fumarate in development for the treatment of RMSRMS. The NDA has been assigned a PDUFA (Prescription Drug User Fee Act) target action date in the fourth quarter of 2019. In October 2019 the FDA issued a tentative approval for diroximel fumarate. If approved, we intend to market diroximel fumarate under the brand name VUMERITY, which has been conditionally accepted by the FDA and PPMS.will be confirmed upon final approval.
Aducanumab (AB mAb)
On October 22, 2019, we and Eisai Co., Ltd. (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 by Biogen in close 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.
Elenbecestat
In July 2017September 2019 we and September 2017Eisai announced the Roche Group announced that OCREVUS was approveddecision to discontinue the global Phase 3 trials, MISSION AD1 and MISSION AD2, designed to assess the efficacy and safety of elenbecestat, the oral BACE (base amyloid cleaving enzyme) inhibitor, in Australiapatients with mild cognitive impairment and Switzerland, respectively, for the treatment of RMS and PPMS.mild AD.
For additional information related to our agreements with Genentech, please read the “Revenues from Anti-CD20 Therapeutic Programs” section of this report.
IMRALDI (adalimumab)
In August 2017 the EC granted a marketing authorization for IMRALDI, an adalimumab biosimilar referencing HUMIRA, in the E.U.

For additional information on our agreementscollaboration arrangements with Samsung Bioepis,Eisai, please read Note 19, 17, Collaborative and Other Relationships,to our condensed consolidated financial statements included in our 2016 Form 10-K.this report.
Aducanumab (BIIB037)2019 Share Repurchase Program
In August 2017 we announced results fromMarch 2019 our Board of Directors authorized our 2019 Share Repurchase Program, which is a recently conducted analysis of the long-term extension (LTE) of our ongoing Phase 1b study of aducanumab, our anti-amyloid beta antibody candidate for AD, which included data from the placebo-controlled period and LTE for patients treated with aducanumabprogram to repurchase up to 24 months in the titration cohort and up to 36 months in the fixed-dose cohorts. The results are consistent with previously reported results from this ongoing Phase 1b study and support the design$5.0 billion of the ongoing Phase 3 studies of aducanumab for early AD.our

common stock. Our 2019 Share Repurchase Program does not have an expiration date. All share repurchases under our 2019 Share Repurchase Program will be retired.
 
IONIS-MAPTRx
In October 2017 Ionis Pharmaceuticals, Inc. (Ionis) announced the initiation of a Phase 1/2a clinical study of IONIS-MAPTRx in patients with mild AD. IONIS-MAPTRx is an antisense drug designed to selectively reduce the production of microtubule-associated protein tau (MAPT), or tau protein, in the brain. We have an option to develop and commercialize IONIS-MAPTRx.
BIIB054
In July 2017 we completed enrollment in the Phase 1 study of BIIB054, an anti-alpha synuclein antibody, in both healthy volunteers and patients with early onset Parkinson’s disease.
Results of Operations
Revenues
Revenues are summarized as follows:
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions, except percentages)2017 2016 2017 20162019 2018 2019 2018
Product revenues:               
Product revenues, net:               
United States$1,774.0
 57.6% $1,828.6
 61.9% $5,265.9
 58.7% $5,269.4
 61.4%$1,702.0
 47.3% $1,740.5
 50.6% $4,959.7
 46.3% $5,020.3
 50.6%
Rest of world848.5
 27.6% 711.0
 24.1% 2,376.4
 26.5% 2,045.6
 23.9%1,192.7
 33.1% 1,039.6
 30.2% 3,495.3
 32.6% 3,040.8
 30.6%
Total product revenues2,622.5
 85.2% 2,539.6
 86.0% 7,642.3
 85.2% 7,315.0
 85.3%
Total product revenues, net2,894.7
 80.4% 2,780.1
 80.8% 8,455.0
 79.0% 8,061.1
 81.2%
Revenues from anti-CD20 therapeutic programs406.5
 13.2% 317.6
 10.7% 1,144.2
 12.8% 996.3
 11.6%595.8
 16.5% 511.7
 14.9% 1,689.6
 15.8% 1,445.3
 14.6%
Other revenues48.8
 1.6% 98.6
 3.3% 180.4
 2.0% 265.5
 3.1%109.6
 3.0% 147.2
 4.3% 562.0
 5.2% 420.2
 4.2%
Total revenues$3,077.8
 100.0% $2,955.8
 100.0% $8,966.9
 100.0% $8,576.8
 100.0%$3,600.1
 100.0% $3,439.0
 100.0% $10,706.6
 100.0% $9,926.6
 100.0%

Product Revenues
Product revenues are summarized as follows:
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions, except percentages)2017 2016 2017 20162019 2018 2019 2018
Multiple Sclerosis:                              
TECFIDERA$1,069.6
 40.8% $1,033.7
 40.7% $3,138.4
 41.1% $2,966.1
 40.5%$1,122.4
 38.8% $1,090.0
 39.2% $3,271.4
 38.7% $3,163.7
 39.2%
Interferon*662.0
 25.2% 708.3
 27.9% 2,000.9
 26.2% 2,107.0
 28.8%530.0
 18.3% 590.1
 21.2% 1,585.3
 18.7% 1,765.9
 21.9%
TYSABRI469.4
 17.9% 515.5
 20.3% 1,510.4
 19.8% 1,489.9
 20.4%483.6
 16.7% 470.2
 16.9% 1,419.3
 16.8% 1,399.5
 17.4%
FAMPYRA24.3
 0.9% 21.1
 0.8% 67.4
 0.9% 62.9
 0.9%24.2
 0.8% 22.5
 0.8% 71.2
 0.8% 69.9
 0.9%
ZINBRYTA14.2
 0.5% 1.9
 0.1% 41.0
 0.5% 1.9
 %
 % 
 % 
 % 1.4
 %
Subtotal: MS product revenues2,160.2
 74.6% 2,172.8
 78.2% 6,347.2
 75.1% 6,400.4
 79.4%
               
Spinal Muscular Atrophy:                              
SPINRAZA270.9
 10.3% 
 % 521.2
 6.8% 
 %547.1
 18.9% 467.7
 16.8% 1,553.8
 18.4% 1,254.3
 15.6%
Hemophilia:  
   
   
   
ELOCTATE
 % 131.8
 5.2% 48.4
 0.6% 364.2
 5.0%
ALPROLIX
 % 85.2
 3.4% 26.0
 0.3% 240.5
 3.2%
Other Product Revenues:               
               
Biosimilars:  
   
   
   
BENEPALI115.9
 4.0% 123.4
 4.4% 360.2
 4.3% 359.9
 4.5%
IMRALDI49.3
 1.7% 
 % 132.3
 1.6% 
 %
FLIXABI18.4
 0.6% 11.4
 0.4% 49.9
 0.6% 29.2
 0.4%
Subtotal: Biosimilar product revenues183.6
 6.3% 134.8
 4.8% 542.4
 6.4% 389.1
 4.8%
               
Other:               
FUMADERM10.7
 0.4% 11.3
 0.4% 30.7
 0.4% 34.5
 0.5%3.8
 0.1% 4.8
 0.2% 11.6
 0.1% 17.3
 0.2%
BENEPALI99.2
 3.8% 30.7
 1.2% 253.2
 3.3% 47.9
 0.7%
FLIXABI2.2
 0.1% 0.1
 % 4.7
 0.1% 0.1
 %
               
Total product revenues$2,622.5
 100.0% $2,539.6
 100.0% $7,642.3
 100.0% $7,315.0
 100.0%$2,894.7
 100.0% $2,780.1
 100.0% $8,455.0
 100.0% $8,061.1
 100.0%
*Interferon includes AVONEX and PLEGRIDY.

Multiple Sclerosis (MS)
TECFIDERA
biib-2017930tecfidera.jpgtecfidera.jpg
For the three months ended September 30, 2017,2019, compared to the same period in 2016, the decrease in2018, U.S.
TECFIDERA revenues was primarily due towere consistent with price increases, offset by a decrease in unit sales volume of 7%, partially offset by price increases.4% and higher rates in discounts and allowances.
For the nine months ended September 30, 2017,2019, compared to the same period in 2016,2018, the increase of 1.4% in U.S. TECFIDERA revenues was primarily due to price increases, partially offset by a decrease in unit sales volume of 4%3% and higher rates in discounts and allowances.
For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016,2018, the increaseincreases of 13.1% and 9.8%, respectively, in rest of world TECFIDERA revenues waswere primarily due to increases in unit sales volumevolumes of 21%10% and 20%13%, respectively, in existingprimarily related to our European and Japanese markets, and new markets where we continue to launch the product and expand our presence around the world. These increases were partially offset by pricing reductions in certain European countries.
We anticipate relatively stablean increase in TECFIDERA demand for TECFIDERA on a global basis with patient growth in our international markets offsetting modest patient declines in the U.S., primarily resulting from2019, compared to 2018, notwithstanding increasing competition from additional treatments for MS, including OCREVUS.MS. We expect volume growth in our international markets to exceed volume

declines in the U.S. We also expect price reductions in certain European countries.
We are currently involved in patent infringement proceedings against multiple parties pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch-Waxman Act, related to TECFIDERA. These parties have, or are seeking, regulatory approval of Abbreviated New Drug Applications for generic versions of TECFIDERA or NDAs filed under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act. If we are unsuccessful in these patent infringement actions, generic versions of TECFIDERA or other bioequivalent products could be introduced into the market prior to our patents’ expiry dates.
Interferon
AVONEX and PLEGRIDY
biib-2017930interferon.jpginterferon.jpg
For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016,2018, the decreasedecreases of 14.5% and 13.8%, respectively, in U.S. Interferon revenues waswere primarily due to an overall decreasedecreases in Interferon unit sales volumes of 11% and 12%, respectively, which waswere primarily attributable to patients transitioning to other MS therapies partially offset byand price increases.decreases.
For the three and nine months ended September 30, 2017,2019, compared to the same periodsperiod in 2016,2018, the decreaseincrease of 0.7% in rest of world Interferon revenues was primarily due to an overall decreaseincrease in AVONEXInterferon unit sales volumes of 18% and 15%13%, respectively,partially offset by pricing reductions in certain European countries.
For the nine months ended September 30, 2019, compared to the same period in 2018, the decrease of 2.0% in rest of world Interferon revenues was primarily due to patients transitioning to other MS therapies.pricing reductions in certain European countries, partially offset by an increase in Interferon unit sales volumes of 15%.
We expect that overall Interferon revenues will continue to decline in both the U.S. and international markets in 2019, compared to prior year periods2018, as a result of increasing competition from our other MS products as well as other treatments for MS.MS, including biosimilars, and pricing reductions in certain European markets.
AVONEXTYSABRI
tysabri.jpg
For the three months ended September 30, 2019, compared to the same period in 2018, the increase of 4.0% in U.S. TYSABRI revenues was primarily due to price increases, partially offset by higher rates in discounts and allowances and a decrease in unit sales volumes of 1%.
For the nine months ended September 30, 2019, compared to the same period in 2018, the increase of 0.5% in U.S. TYSABRI revenues was primarily due to price increases, partially offset by a decrease in unit sales volumes of 4%.
For the three and nine months ended September 30, 2017, U.S. AVONEX revenues totaled $397.7 million and $1,218.2 million, respectively, as2019, compared to $421.8 millionthe same periods in 2018, the increases of 1.6% and $1,264.0 million,2.5%, respectively, in rest of world TYSABRI revenues were primarily due to increases in unit sales volumes of 14% and 7%, respectively.
We anticipate TYSABRI demand to be stable on a global basis in 2019, compared to 2018, with expected volume declines in the prior year comparative periods.U.S. due to increasing competition from additional treatments for MS, including OCREVUS, to be offset by volume growth in our international markets.

Spinal Muscular Atrophy
SPINRAZA
spinraza.jpg
For the three and nine months ended September 30, 2017, rest of world AVONEX revenues totaled $139.9 million and $413.4 million, respectively, as2019, compared to $158.3 millionthe same periods in 2018, the increases of 5.7% and $485.8 million,11.8%, respectively, in the prior year comparative periods.

PLEGRIDYU.S. SPINRAZA revenues were primarily due to increases in unit sales volumes of 6% and 12%, respectively.
For the three and nine months ended September 30, 2017, U.S. PLEGRIDY2019, compared to the same periods in 2018, the increases of 27.3% and 35.6%, respectively, in rest of world SPINRAZA revenues totaled $75.6were primarily due to increases in unit sales volumes of 71% and 68%, respectively, partially offset by the unfavorable impact of foreign currency exchange of $9.2 million and $221.6$36.3 million, respectively,respectively.
For the nine months ended September 30, 2019, rest of world SPINRAZA revenues were favorably impacted by approximately $14.0 million as we reached a price reimbursement agreement in France, which resulted in the recognition of additional revenues in relation to sales for the period from August 2017, the date upon which we began to sell SPINRAZA in France, until December 2018 as we had a change in the estimated amount of revenues for which we determined that a significant reversal was not probable.
We expect that the rate at which SPINRAZA revenues will grow will moderate in 2019, compared to $83.9 million and $228.2 million, respectively,2018, primarily due to a lower rate of new patient starts combined with the impact of loading dose dynamics as patients transition to dosing once every four months.
We face competition from a new gene therapy product, which was approved in the prior year comparative periods.U.S. in May 2019
for the treatment of SMA. Additionally, we are aware of other products in development that, if successfully developed and approved, may compete with SPINRAZA in the SMA market. Future sales of SPINRAZA may be adversely affected by the commercialization of these competing products.
For additional information on our collaboration arrangements with Ionis Pharmaceuticals, Inc. (Ionis), please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K.
Biosimilars
BENEPALI, IMRALDI and FLIXABI
biosimilars.jpg
For the three and nine months ended September 30, 2017, rest of world PLEGRIDY revenues totaled $48.8 million and $147.7 million, respectively, as compared to $44.3 million and $129.0 million, respectively, in the prior year comparative periods.
TYSABRI
biib-2017930tysabri.jpg
For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016,2018, the decrease in U.S. TYSABRI revenues was primarily due to a decrease in unit sales volumeincreases of 6%36.2% and 2%39.4%, respectively, and higher discounts and allowances, partially offset by price increases.
For the three months ended September 30, 2017, compared to the same period in 2016, the decrease in rest of world TYSABRIbiosimilar revenues was primarily due to a prior year favorable adjustment of approximately $20.0 million to previous reserves estimates related to a government price reimbursement program in Italy included in our discounts and allowances, partially offset by a 1% increase in unit sales volume.
For the nine months ended September 30, 2017, compared to the same period in 2016, the increase in rest of world TYSABRI revenues waswere primarily due to the recognitionlaunch of approximately $45.0 millionIMRALDI in the fourth quarter of previously deferred revenue in Italy relating to the pricing agreement with the Italian National Medicines Agency (Agenzia Italiana del Farmaco, or AIFA), as discussed below, and an 8% increase in unit sales volume,2018, partially offset by a
prior year favorable adjustmentthe unfavorable impact of approximately $20.0foreign currency exchange of $6.5 million to previous reserves estimates related to a government price reimbursement program included in our discounts and allowances.$23.7 million, respectively.
In 2019 we expect strong revenue growth for our biosimilar business, primarily driven by the first quartercontinued launch of 2017 we reached an agreement with AIFA's Price and Reimbursement Committee resolving all of AIFA's claims relating to sales of TYSABRI in excess of the reimbursement limit for prior periods.IMRALDI.
For information regarding our agreement with AIFA relating to sales of TYSABRI in Italy, please read Note 20, Litigation, to our consolidated financial statements included in our 2016 Form 10-K.
We anticipate relatively stable demand for TYSABRI on a global basis, with patient growth in our international markets offsetting modest patient declines in the U.S. primarily resulting from increasing competition from additional treatments for MS, primarily OCREVUS.
ZINBRYTA
biib-2017930zinbryta.jpg
Under the terms of our collaboration agreement with AbbVie, we began to recognize revenues on sales of ZINBRYTA to third parties in the E.U. in the third quarter of 2016.
For additional information on our relationshipcollaboration arrangement with AbbVie,Samsung Bioepis, please read Note 18, 17, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.

Spinal Muscular Atrophy (SMA)
SPINRAZA
biib-2017930spinraza.jpg
We began to recognize revenues on sales of SPINRAZA in the U.S. in the fourth quarter of 2016 and the rest of world in the first quarter of 2017.
For additional information on our relationship with Ionis, please read Note 18, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.
Biosimilars
BENEPALI and FLIXABI
biib-2017930biosimilars.jpg
Under the terms of our commercial agreement with Samsung Bioepis, we began to recognize revenues on sales of BENEPALI and FLIXABI to third parties in the E.U. in the first and third quarters of 2016, respectively.
For additional information on our relationship with Samsung Bioepis, please read Note 18, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.
Revenues from Anti-CD20 Therapeutic Programs
Genentech (Roche Group)
Our share of RITUXAN, including RITUXAN HYCELA, and GAZYVA collaboration operating profits in the U.S. and royaltyother revenues on otherfrom anti-CD20 therapeutic programs are summarized in the table below. For purposes of this discussion, we refer to RITUXAN and RITUXAN HYCELA collectively as follows:RITUXAN.
biib-2017930anticd.jpganticd20.jpg
Biogen’s Share of Pre-tax Profits in the U.S. for RITUXAN and GAZYVA
The following tables provide a summary of amounts comprising our share of pre-tax profits on RITUXAN and GAZYVA in the U.S.:
 For the Three Months
Ended September 30,
(In millions)2017 2016
Product revenues, net$1,039.7
 $961.8
Cost and expenses172.8
 191.7
Pre-tax profits in the U.S.866.9
 770.1
Biogen's share of pre-tax profits$325.1
 $301.0

 For the Nine Months
Ended September 30,
(In millions)2017 2016
Product revenues, net$3,164.5
 $2,969.3
Cost and expenses567.7
 544.9
Pre-tax profits in the U.S.2,596.8
 2,424.4
Biogen's share of pre-tax profits$996.1
 $947.6
Our share of RITUXAN annual pre-tax co-promotion profits in the U.S. in excess of $50.0 million decreased to 39% from 40% in February 2016 when GAZYVA was approved by the FDA as a new treatment for follicular lymphoma and was further decreased to 37.5% in the third quarter of 2017 as gross sales of GAZYVA in the U.S. for RITUXAN and GAZYVA:
 For the Three Months
Ended September 30,
(In millions)2019 2018
Product revenues, net$1,189.8
 $1,112.4
Cost and expenses141.6
 157.0
Pre-tax profits in the U.S.1,048.2
 955.4
Biogen's share of pre-tax profits$393.2
 $358.0
 For the Nine Months
Ended September 30,
(In millions)2019 2018
Product revenues, net$3,581.5
 $3,350.5
Cost and expenses473.0
 499.9
Pre-tax profits in the U.S.3,108.5
 2,850.6
Biogen's share of pre-tax profits$1,161.2
 $1,066.6

For the preceding 12 month period exceeded $150.0 million.
In June 2017 the FDA approved RITUXAN HYCELA for subcutaneous injection for the treatment of adults with the following blood cancers: previously untreated and relapsed or refractory follicular lymphoma, previously untreated diffuse large B-cell lymphoma, and previously untreated and previously treated chronic lymphocytic leukemia. This new treatment includesthree months ended September 30, 2019, compared to the same monoclonal antibody as intravenousperiod in 2018, the increase in U.S. product revenues, net was primarily due to increased net sales of RITUXAN in combination with hyaluronidase human,the U.S. of 6.1%. This increase in net sales of RITUXAN in the U.S. reflects an enzyme that helpsincrease in unit sales volume of 2% and lower discounts and allowances.
For the nine months ended September 30, 2019, compared to deliver rituximab under the skin.same period in 2018, the increase in U.S. product revenues, net was primarily due to increased net sales of RITUXAN in the U.S. of 6.4%. This increase in net sales of RITUXAN in the U.S. reflects an increase in unit sales volume of 3% and selling price increases, partially offset by higher discounts and allowances.
For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016,2018, the increaseincreases in U.S. product revenues, was primarily due to selling pricenet also reflects increases an increase in RITUXAN unit sales volume of 4% and 2%, respectively, and an increase in GAZYVA unit sales volume of 39%20% and 33%13%, respectively, partially offset by higher discounts and allowances.respectively.
For the three months ended September 30, 2017,2019, compared to the same period in 2016,2018, the decrease in collaboration costs and expenses decreasedwas primarily due to decreases in selling and marketing and research and development costs.lower cost of sales on RITUXAN.
Collaboration costs and expenses forFor the nine months ended September 30, 2017, as depicted in the table above, excludes certain expenses charged to the collaboration by Genentech that we believe remain the responsibility of Genentech and we are not obligated to pay under the terms of the collaboration agreement. Accordingly, we did not recognize the effect of those expenses in the determination of our share of pre-tax collaboration profits and Genentech has withheld approximately $120 million from amounts due to us in relation to collaboration activity for the first quarter of 2017, representing Genentech’s estimate of our share of these
expenses. We remain in discussions with Genentech about a resolution relating to these amounts.
Excluding amounts under dispute, for the nine months ended September 30, 2017,2019, compared to the same period in 2016,2018, the decrease in collaboration costs and expenses increasedwas primarily due to an increaselower selling and marketing costs on RITUXAN and lower Branded Pharmaceutical Drug Fee expenses for RITUXAN and GAZYVA.
We are aware of anti-CD20 molecules, including biosimilar products, in development that if successfully developed and approved, may compete with RITUXAN. In 2018 the FDA approved a rituximab biosimilar in the U.S. A biosimilar of RITUXAN product costcould come to market in the U.S. in the fourth quarter of sales.2019, which may adversely affect the pre-tax profits of our collaboration arrangements with Genentech, which would, in turn, adversely affect our co-promotion profits in the U.S. in future years.
Other Revenues from Anti-CD20 Therapeutic Programs
Other revenues from anti-CD20 therapeutic programs primarily consist of royalty revenues on sales of OCREVUS and our share of pre-tax co-promotion profits onfrom RITUXAN in Canada and royalty revenues on sales of OCREVUS.Canada.
For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016,2018, the increases in other revenues from anti-CD20 therapeutic programs increasedwere primarily due to the launchsales growth of OCREVUS in the second quarter of 2017.
OCREVUS
In March 2017 the FDA approved OCREVUS, a humanized anti-CD20 monoclonal antibody, for the treatment of RMS and PPMS. Under the terms of our agreement with Genentech, we will receive a tiered royaltyOCREVUS. Royalty revenues recognized on U.S. net sales from 13.5% and increasing up to 24% if annual net sales exceed $900.0 million.
In addition, we will receive a 3% royalty on net sales of OCREVUS outsidefor the U.S., withthree and nine months ended September 30, 2019, totaled

$187.8 million and $482.1 million, respectively, compared to $136.8 million and $326.5 million, respectively, in the royalty period lasting 11 years from the first commercial sale of OCREVUS on a country-by-country basis. OCREVUS was approved for treatment of RMS and PPMS in Australia and Switzerland in July 2017 and September 2017, respectively. Marketing applications for OCREVUS are currently under review in numerous markets worldwide, including in Europe, Latin America and the Middle East.prior year comparative periods.
The commercialization of OCREVUS does not impact the percentage of the co-promotion profits we receive for RITUXAN or GAZYVA. Genentech is solely responsible for development and commercialization of OCREVUS and funding future costs. OCREVUS royalty revenues wereare 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 revenues will be adjusted for in the period in which they become known, which is expected to be the following quarter.
For additional information related toon our collaboration arrangements with Genentech, including information regarding the pre-tax profit sharingprofit-sharing formula and its impact on future revenues from anti-CD20 therapeutic programs, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 20162018 Form 10-K.

Other Revenues
Other revenues are summarized as follows:
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions, except percentages)2017 2016 2017 20162019 2018 2019 2018
Other revenues from collaborative and other relationships$6.2
 12.7% $(0.9) (0.9)% $21.5
 11.9% $30.2
 11.4%
Revenues from collaborative and other relationships$13.2
 12.0% $47.4
 32.2% $89.7
 16.0% $72.8
 17.3%
Other royalty and corporate revenues42.6
 87.3% 99.5
 100.9 % 158.9
 88.1% 235.3
 88.6%96.4
 88.0% 99.8
 67.8% 472.3
 84.0% 347.4
 82.7%
Total other revenues$48.8
 100.0% $98.6
 100.0 % $180.4
 100.0% $265.5
 100.0%$109.6
 100.0% $147.2
 100.0% $562.0
 100.0% $420.2
 100.0%
Other Revenues from Collaborative and Other Relationships
Other revenuesRevenues from collaborative and other relationships primarily include revenues earned under our 50% share of the co-promotion profits or losses of ZINBRYTA in the U.S. with AbbVie and revenues from our technical development services and manufacturing services agreements with Samsung Bioepis and royalty revenues on biosimilar products from Samsung Bioepis. Prior to
Following the spin-offdivestiture of our hemophilia business, otherHillerød, Denmark manufacturing operations on August 1, 2019, FUJIFILM assumed responsibility for the manufacture of clinical and commercial quantities of bulk drug substance of biosimilar products for Samsung Bioepis. We no longer recognize revenues from collaborative and other relationships also included revenues earnedfor the manufacturing completed after the divestiture date under our technical development services and manufacturing services agreementagreements with Sobi on shipments of ELOCTA and ALPROLIX to Sobi and royalties from Sobi on sales of ELOCTA and ALPROLIX in their territory, which included substantially all of Europe, Russia and certain markets in Northern Africa and the Middle East. Bioverativ assumed all of our rights and obligations under our agreement with Sobi on February 1, 2017.Samsung Bioepis.
For the three and nine months ended September 30, 2017,2019, we recognized $12.9 million and $89.9 million, respectively, in revenues related to the services described above provided to Samsung Bioepis, compared to the same period in 2016, the increase in other revenues from collaborative$48.1 million and other relationships was primarily due to a decrease in net losses recognized in the U.S. territory under our collaboration with AbbVie, totaling $2.8$80.7 million, as compared to $13.5 million recognizedrespectively, in the prior year comparative period.periods. Revenue recognized related to these services totaled $96.4 million for the year ended December 31, 2018.
For the nine months ended September 30, 2017, compared to the same period in 2016, the decrease in other revenues from collaborative and other relationships was primarily due to the impact of the spin-off of our hemophilia business on February 1, 2017.
For additional information on our collaborationcollaborative and other relationships, including revenues recognized under our technical development services and manufacturing agreements with AbbVie and Samsung Bioepis, please read Note 18, 17, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.
Other Royalty and Corporate Revenues
biib-2017930otherrevenues.jpgotherrevenues.jpg
We receive royalties from net sales on products related to patents that we have out-licensed and we record other corporate revenues primarily from

amounts earned under contract manufacturing agreements.
For the three and nine months ended September 30, 2017,2019, compared to the same periodsperiod in 2016,2018, the decrease in other royalty and other corporate revenues was primarily due to lowerthe reduction in royalty revenues due to the expiration of certain of our patents, partially offset by higher contract manufacturing revenues relatedrevenues.
For the nine months ended September 30, 2019, compared to the volumesame period in 2018, the increase in other royalty and corporate revenues was primarily due to $306.9 million in revenues recognized under the manufacturing and supply agreement with Bioverativ Inc. (Bioverativ) entered into in connection with the spin-off of shipmentsour hemophilia business, compared to $131.1 million recognized in the prior year comparative period. The increase in Bioverativ revenues over the prior year comparative period was due to sales of drug substance production providedhemophilia inventory on hand. The increase in corporate revenues was partially offset by the reduction in royalty revenues due to a strategic partner.
the expiration of certain of our patents.

Reserves for Discounts and Allowances
Revenues from product sales are 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.
These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). OurThese estimates take into considerationreflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which willcould have an effect on earnings in the period of adjustment.
Reserves for discounts, contractual adjustments and returns that reduced gross product revenues are summarized as follows:
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For the three and nine months ended September 30, 2017,2019, reserves for discounts and allowances as a percentage of gross product revenues were 21.4%24.4% and 21.8%23.5%, respectively, as compared to 20.8%22.7% and 23.4%, respectively, in both of the prior year comparative periods.
Discounts
Discounts include trade term discounts and wholesaler incentives.
For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016, the increase in2018, discounts was primarily driven by an increase in rest of world product revenues, due in part to an increase in biosimilar revenues, as well as an increase in gross selling prices, partially offset by the impact from the spin-off of our hemophilia business on February 1, 2017.were relatively consistent.
Contractual Adjustments
Contractual adjustments primarily relate to Medicaid and managed care rebates, co-payment assistance, Veterans Administration, Public Health Service discounts, specialty pharmacy program fees and other government rebates or applicable allowances.
For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016,2018, the increaseincreases in contractual adjustments waswere primarily due to higher Medicaidmanaged care rebates and othergovernmental rebates in the U.S. as well as higher governmental rebates and allowances in the U.S. and managed care rebates,rest of world, due in part to an increaseincreases in gross selling prices and the launch of SPINRAZA in the U.S. in the fourth quarter of 2016, partially offset by the impact from the spin-off of our hemophilia business on February 1, 2017.sales volumes worldwide.

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 product returns are recordedrecognized in the period the related revenue isrevenues are recognized, resulting in a reduction to product sales.
For the three and nine months ended September 30, 2017,2019, compared to the same periodsperiod in 2016,2018, return provisionsreserves were relatively consistent.
For additional information related toon our revenue reserves, please read Note 4, Reserves for Discounts and Allowances,Revenues, to our condensed consolidated financial statements included in this report.

Cost and Expenses
A summary of total cost and expenses is as follows:
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
For the Three Months
Ended September 30,
 For the Nine Months
Ended September 30,
(In millions, except percentages)2017 2016 Change % 2017 2016 Change %2019 2018 Change % 2019 2018 Change %
Cost of sales, excluding amortization of acquired intangible assets$370.0
 $416.9
 (11.2)% $1,120.8
 $1,100.2
 1.9 %
Cost of sales, excluding amortization and impairment of acquired intangible assets$430.0
 $460.8
 (6.7)% $1,508.3
 $1,327.8
 13.6 %
Research and development446.4
 529.0
 (15.6)% 1,666.0
 1,439.4
 15.7 %540.4
 507.9
 6.4 % 1,588.9
 1,985.6
 (20.0)%
Selling, general and administrative433.8
 462.7
 (6.2)% 1,363.1
 1,452.4
 (6.1)%554.5
 497.7
 11.4 % 1,709.8
 1,515.2
 12.8 %
Amortization of acquired intangible assets108.9
 99.7
 9.2 % 674.9
 281.4
 139.8 %
Acquired in-process research and development
 
 **
 120.0
 
 **
Amortization and impairment of acquired intangible assets283.9
 281.9
 0.7 % 422.2
 493.2
 (14.4)%
Collaboration profit (loss) sharing35.2
 4.7
 648.9 % 82.5
 (0.9) **
60.2
 47.5
 26.7 % 181.8
 129.2
 40.7 %
Loss on divestiture of Hillerød, Denmark manufacturing operations(17.7) 
 **
 95.5
 
 **
(Gain) loss on fair value remeasurement of contingent consideration30.0
 5.9
 408.5 % 61.2
 18.8
 225.5 %(57.8) (87.9) (34.2)% (66.3) (91.6) (27.6)%
Restructuring charges
 11.6
 (100.0)% 
 21.3
 (100.0)%0.3
 6.0
 (95.0)% 1.5
 9.2
 (83.7)%
Acquired in-process research and development
 27.5
 **
 
 112.5
 **
Total cost and expenses$1,424.3
 $1,530.5
 (6.9)% $5,088.5
 $4,312.6
 18.0 %$1,793.8
 $1,741.4
 3.0 % $5,441.7
 $5,481.1
 (0.7)%
** Percentage not meaningful.
Cost of Sales, Excluding Amortization and Impairment of Acquired Intangible Assets
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Product Cost of Sales
For the three months ended September 30, 2017,2019, compared to the same period in 2016,2018, the decrease in product cost of sales was primarily driven bydue to lower cost of sales from contract manufacturing agreements and a decrease in inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons, partially offset by an increase in sales of our biosimilar products.

For the impact fromnine months ended September 30, 2019, compared to the same period in 2018, the increase in product cost of sales was primarily due to our sale to Bioverativ of hemophilia-related inventory on hand with a cost basis totaling $173.5 million in the first quarter of 2019, pursuant to the terms of the manufacturing and supply agreement with Bioverativ entered into in connection with the spin-off of our hemophilia business, on February 1, 2017 and the accelerated depreciation recordedan increase in the third quarter of 2016 as a resultsales of our decision to cease manufacturing in Cambridge, MA. These decreases were partially offset by higher unit sales volume related to our biosimilar product shipmentsproducts and an increase in inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons.
For the nine months ended September 30, 2017, compared to the same period in 2016, the increase in productreasons, partially offset by lower cost of sales was primarily driven by higher unit sales volume related tofrom our biosimilar product shipments and an increase in inventory amounts written down as a result of excess, obsolescence, unmarketability or other reasons. These increases were partially offset by the impact from the spin-off of our hemophilia business on February 1, 2017, lower contract manufacturing shipments and the accelerated depreciation recorded in the second and third quarters of 2016agreements, except Bioverativ, as a result of our decision to cease manufacturing in Cambridge, MA.
For additional information related to our Cambridge, MA manufacturing facility, please read Note 3, Restructuring, Business Transformation and Other Cost Saving Initiatives, to our consolidated financial statements included in our 2016 Form 10-K.noted above.
Royalty Cost of Sales
For the three and nine months ended September 30, 2017,2019, compared to the same periodperiods in 2016,2018, the decreasedecreases in royalty cost of sales waswere primarily driven by lowerdue to a decrease in royalties payable on sales of TYSABRI resulting from the expiration of certain third-partythird party royalties, and the elimination ofpartially offset by increased royalties payable on sales of hemophilia product resulting from the spin-off of our hemophilia business on February 1, 2017. These decreases were partially offset by the recognition of royalties payable to Ionis on sales of SPINRAZA.

For the nine months ended September 30, 2017, compared to the same period in 2016, the increase in royalty cost of sales was primarily driven by the recognition of royalties payable to Ionis onhigher sales of SPINRAZA and higher royalties on sales of AVONEX and PLEGRIDY in the U.S., as described below. These increases were partially offset by lower royalties on sales of TYSABRI resulting from the expiration of certain third-party royalties and the elimination of royalties payable on sales of hemophilia product resulting from the spin-off of our hemophilia business on February 1, 2017.IMRALDI.
On June 28, 2016, the U.S. Patent and Trademark Office issued to the Japanese Foundation for Cancer Research (JFCR) a patent related to recombinant interferon-beta protein. This patent, U.S. Patent No. 9,376,478, expires in June 2033, and was issued following an interference proceeding between JFCR and us. This patent is relevant to AVONEX and PLEGRIDY, and we will pay royalties in the mid-single digits in relation to this patent during its life.
Research and Development
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We support our drug discovery and development efforts through the commitment of significant resources to discovery, research and development programs and business development opportunities, particularly within areas of our scientific, manufacturing and technical capabilities.opportunities.
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.
Research and development expense incurred in support of our marketed products includes costs associated with product lifecycle management activities including, if applicable, costs associated with the development of new indications for existing products. Late stage programs are programs in Phase 3 development or in registration stage. Early stage
programs are programs in Phase 1 or Phase 2 development. Research and discovery representsrepresent costs incurred to support our discovery research and translational science efforts. Costs are reflected in the development stage 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.
For the three months ended September 30, 2017,2019, compared to the same period in 2016,2018, the increase in research and development expense was primarily due to increases in costs incurred in connection with our early and late stage programs, partially offset by a decrease in costs incurred in connection with milestones and upfront expenses and research and discovery.
For the nine months ended September 30, 2019, compared to the same period in 2018, the decrease in research and development expense was primarily relateddue to a decrease in milestone and upfront expenses and decreaseda decrease in research and discovery. These decreases were partially offset by increases in costs incurred in connection with our marketed productsearly and our late stage and research and discovery programs.
For the nine months ended September 30, 2017, compared to the same period in 2016, the increase in research and development expense was primarily related to milestone and upfront expenses, partially offset by decreased costs incurred in connection with our marketed products and our late stage and research and discovery programs.
We intend to continue committing significant resources to targeted research and development opportunities where there is a significant unmet need and where a drug candidate has the potential to be highly differentiated.
Milestone and Upfront Expenses
The decrease in milestone and upfront expenses for the three months ended September 30, 2017, compared to the same period in 2016, was primarily due to the $75.0 million license fee paid to Ionis in the third quarter of 2016 upon the exercise of our option to develop and commercialize SPINRAZA.
The increase in milestoneMilestone and upfront expenses for the nine months ended September 30, 2017,2019, reflected the recognition of a $38.5 million charge to research and development expense upon entering into our collaboration and research development services agreement with Skyhawk. The decrease compared to the same period in 2016,2018 was primarily due to the prior year recognition of a $300.0$486.2 million upfront paymentnet charge to Bristol-Myers Squibb Company (BMS) uponresearch and development expense related to the closing of oura 10-year exclusive agreement with Ionis to exclusively license BMS-986168 (now known as BIIB092) and
develop novel antisense oligonucleotide drug candidates for a $60.0 million developmental milestone that became payable to the former stockholdersbroad range of iPierian, Inc. upon dosing of the first patient in the Phase 2 progressive supranuclear palsy (PSP) study for BIIB092. These amounts were partially offset by the prior year license fee paid toneurological diseases (the 2018 Ionis upon the exercise of our option to develop and commercialize SPINRAZA discussed above and the $20.0 million upfront milestone paid to the University of Pennsylvania upon entering into a collaboration and alliance agreement in May 2016.

For additional information related to our agreements with BMS and Ionis, please read Note 18, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.
Marketed Products
The decrease in spending associated with our marketed products for the three and nine months ended September 30, 2017, compared to the same periods in 2016, was primarily due to a reduction in spending resulting from the spin-off of our hemophilia business on February 1, 2017, and a reduction in spending related to TECFIDERA, partially offset by increased spending related to SPINRAZA following its approval in the U.S. in the fourth quarter of 2016.
Late Stage Programs
The decrease in spending associated with our late stage programs for the three and nine months ended September 30, 2017, compared to the same periods in 2016, was primarily related to the approval of SPINRAZA in the fourth quarter of 2016. These decreases were partially offset by increased costs associated with the development of aducanumab and costs incurred associated with the development of E2609, a BACE inhibitor that was advanced to a late stage program in the fourth quarter of 2016.Agreement).
Early Stage Programs
The increase in spending associated with early stage programs for the three and nine months ended September 30, 2017, compared to the same periods in 2016, was primarily related to spending associated with the development of BIIB092 in AD and PSP pursuant to our June 2017 agreement with BMS, BIIB074 in trigeminal neuralgia (TGN) and BIIB076 in AD. These increases were partially offset by a reduction in costs resulting from our discontinuance of development of amiselimod in the third quarter of 2016.

Selling, General and Administrative
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For the three and nine months ended September 30, 2017,2019, compared to the same periods in 2016,2018, the decreasesincreases in spending related to our early stage programs were primarily due to an increase in costs associated with:
our decision in September 2019 to discontinue the Phase 2b study of BG00011 (STX-100) for the potential treatment of idiopathic pulmonary fibrosis (IPF);
BIIB092 (gosuranemab) in PSP and AD pursuant to our license agreement with Bristol-Myers Squibb Company;
BIIB054 (α-synuclein mAb) in Parkinson's disease;
BIIB104 in cognitive impairment associated with schizophrenia (CIAS); and
BIIB110 (ActRIIA/B ligand trap) in SMA.
These increases were partially offset by a decrease in costs associated with:
the development of vixotrigine (BIIB074) in trigeminal neuralgia (TGN);
BIIB067 (tofersen) in ALS, which was advanced to a late stage program in the first quarter of 2019;
our decision in December 2018 to discontinue development of BIIB087, an investigational AAV-based gene therapy for the treatment of X-linked retinoschisis, and BIIB088, an investigational AAV-based gene therapy for the treatment of XLRP, upon the termination of our collaboration agreement with Applied Genetic Technologies Corporation; and
BAN2401 (Aβ mAb) in early AD pursuant to our collaboration arrangement with Eisai, which was advanced to a late stage program in the first quarter of 2019.
Late Stage Programs
For the three and nine months ended September 30, 2019, compared to the same periods in 2018, the increases in spending associated with our late stage programs were primarily due to:
our share of the termination costs related to the discontinuation of the global Phase 3 trials of elenbecestat in AD;

BAN2401 in early AD pursuant to our collaboration arrangement with Eisai, which was advanced to a late stage program in the first quarter of 2019;
tofersen in ALS, which was advanced to a late stage program in the first quarter of 2019; and
BIIB093 (glibenclamide IV) in large hemispheric infarction (LHI), which was advanced to a late stage program in the third quarter of 2018.
These increases were partially offset by a decrease in spending related to the discontinuation of the global Phase 3 trials of aducanumab, net of Eisai reimbursement.
In the first quarter of 2019, as a result of the decision to discontinue the Phase 3 EMERGE and ENGAGE trials following the futility analysis, we accrued approximately $45.0 million related to the termination of various clinical trials and research and development contracts net of the expected 45% Eisai reimbursement of development costs incurred by the collaboration for the advancement of aducanumab. On October 22, 2019, we and Eisai announced that, based on a new analysis, conducted by Biogen in close consultation with the FDA, of a larger dataset from the Phase 3 EMERGE and ENGAGE trials that were discontinued in March 2019 following the futility analysis, we plan to pursue regulatory approval for aducanumab in the U.S.
In March 2019 Eisai initiated a global Phase 3 trial for the development of BAN2401 in early AD. Under our collaboration arrangement, Eisai serves as the global operational and regulatory lead for BAN2401 and all costs, including research, development, sales and marketing expenses, are shared equally between us and Eisai.
In September 2019 we and Eisai announced the decision to discontinue the global Phase 3 trials, MISSION AD1 and MISSION AD2, designed to assess the efficacy and safety of elenbecestat in patients with mild cognitive impairment and mild AD. As a result of this decision, in the third quarter of 2019, we accrued approximately $48.0 million related to our share of the termination of various clinical trials and research and development contracts incurred under the collaboration arrangement with Eisai.
For additional information on our collaboration arrangements with Eisai, please read Note 17, Collaborative and Other Relationships,to our condensed consolidated financial statements included in this report.
Selling, General and Administrative
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For the three and nine months ended September 30, 2019, compared to the same periods in 2018, the increases in selling, general and administrative expensesexpense were primarily due to a reductionan increase in operational spending resulting from the spin-off of our hemophilia business on February 1, 2017, and the execution of targeted cost reduction initiatives, partially offset bycorporate giving, an increase in commercialization costs, primarily related to SPINRAZA, as we continued to expand into new international markets, an increase in incentive compensation and an increase in legal and patent fees. These increases were partially offset by a decrease in operational spending associated with SPINRAZA.our pre-commercialization costs related to our AD programs following the discontinuation of the global Phase 3 trials of aducanumab in March 2019.
The comparative decrease in selling,Selling, general and administrative expensesexpense for the nine month comparative periodsmonths ended September 30, 2019, also reflects an increase due to acquisition related charges incurred in connection with our acquisition of NST totaling $33.4 million, including $18.4 million of stock-based compensation expense associated with the discontinuanceaccelerated vesting of our TECFIDERA television advertising campaign in the second quarter of 2016,stock options previously granted to NST employees for post-combination services performed, partially offset by an increasea decrease in corporate giving throughout 2017.operational spend on ZINBRYTA subsequent to the voluntary worldwide withdrawal of ZINBRYTA for RMS, which we and AbbVie Inc. announced in March 2018.

Amortization and Impairment of Acquired Intangible Assets
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Our amortization expense is based on the economic consumption and impairment of intangible assets. Our most significant intangible assets are related to our TYSABRI, AVONEX, SPINRAZA and TECFIDERA AVONEXproducts and TYSABRI products. other programs acquired through business combinations.
Annually, during our long-range planning cycle, we perform an analysis of anticipated lifetime revenues of our TYSABRI, AVONEX, SPINRAZA and TECFIDERA AVONEX and TYSABRI.products. This analysis is also updated whenever we determine events or changes in circumstances would significantly affect the anticipated lifetime revenues of either product.any of these products. Impairments are recorded in the period in which they are incurred.
Our most recent long rangelong-range planning cycle was updatedcompleted in the thirdsecond quarter of 2017.2019. The results of our TECFIDERA,TYSABRI, AVONEX, SPINRAZA and TYSABRITECFIDERA analyses were impacted by changes in the estimated timing ofand impact of other existing and potential oral and alternative MS formulations, including OCREVUS, which may compete with TYSABRI, TECFIDERA and AVONEX. Based onOCREVUS. The outcome of this most recent analysis there was notresulted in a significant net changeoverall decrease in our near-term expected rate of amortization for acquired intangible assets, which was primarily related to higher expected lifetime revenues of TYSABRI.
Amortization and impairment of acquired intangible assets for the three and nine months ended September 30, 2019, reflects the impact of a $215.9 million impairment charge related to certain in-process research and development (IPR&D) assets associated with the Phase 2b study of BG00011 for the potential treatment of IPF, which was discontinued in the third quarter of 2019, as discussed below.
Amortization of acquired intangible assets for the three and nine months ended September 30, 2018, reflects the impact of impairment charges related to certain IPR&D assets associated with our vixotrigine program totaling $189.3 million, as discussed below.
Amortization of acquired intangible assets, excluding impairment charges, totaled approximately $68.0 million and $206.3 million for the three and nine months ended September 30, 2019, respectively, compared to $92.6 million and $303.9 million, respectively, in the prior year comparative periods.
The decrease in amortization of acquired intangible assets, excluding impairment charges, was primarily due to a net overall decrease in our expected rate of amortization for acquired intangible assets. This decrease was primarily due to lower amortization subsequent to the impairment in the fourth quarter of 2018 of the U.S. license to Forward Pharma A/S' (Forward Pharma) intellectual property, including Forward Pharma's intellectual property related to TECFIDERA, and higher expected lifetime revenues of TYSABRI.
We monitor events and expectations regarding product performance. If new information indicates that the assumptions underlying our most recent analysis are substantially different than those utilized in our current estimates, our analysis would be updated and may result in a significant change in the anticipated lifetime revenues of the relevant process.products. The occurrence of an adverse event could substantially increase the amount of amortization expense associated withrelated to our acquired intangible assets as compared to previous periods or our current expectations, which may result in a significant negative impact on our future results of operations.
Amortization of acquired intangible assets for the three and nine months ended September 30, 2017, includes $30.4 million and $413.4 million, respectively, of amortization and impairment charges associated with our U.S. and rest of world licenses to Forward Pharma A/S' (Forward Pharma) intellectual property related to TECFIDERA acquired in the first quarter of 2017, as discussed below.
TECFIDERA License Rights
In January 2017 we entered into a settlement and license agreement. Pursuant to this agreement, we obtained U.S. and rest of world licenses to Forward Pharma's intellectual property, including Forward Pharma's intellectual property related to TECFIDERA. In exchange, we paid Forward Pharma $1.25 billion in cash. During the fourth quarter of 2016, we recognized a pre-tax charge of $454.8 million and in the first quarter of 2017 we recognized an intangible asset of $795.2 million related to this agreement. The pre-tax charge recognized in the fourth quarter of 2016 represented the fair value of our licenses to Forward Pharma’s intellectual property for the period April 2014, when we started selling TECFIDERA, through December 31, 2016. The intangible asset represented the fair value of the U.S. and rest of world licenses to Forward Pharma’s intellectual property related to TECFIDERA revenues for the period January 2017, the month in which we entered into the agreement, through December 2020, the last month before royalty payments could first commence pursuant to the agreement.
We have two intellectual property disputes with Forward Pharma, one in the U.S. and one in the E.U., concerning intellectual property related to TECFIDERA. In March 2017 the U.S. intellectual property dispute was decided in our favor. Forward Pharma appealed to the U.S. Court of Appeals for the Federal Circuit and the appeal is pending. For additional information related to these disputes, please read Note 19, Litigation, to our condensed consolidated financial statements included in this report.
As we prevailed in the U.S. proceeding in March 2017, we evaluated the recoverability of the U.S. asset acquired from Forward Pharma and recorded an impairment charge to adjust the carrying value of the acquired U.S. asset to fair value reflecting the impact of the developments in the U.S. legal dispute. We also continue to amortize the remaining net book value of the U.S. and rest of world intangible assets in our condensed consolidated statements of income utilizing an economic consumption model.

In Process Research & Development (IPR&D)IPR&D related to Business Combinations
Overall,IPR&D represents the fair value of our acquired IPR&D assets is dependent upon a number of variables, including estimates of future revenues and the effects of competition, the level of anticipated development costs and the probability and timing of successfully advancing a particular research program from a clinical trial phaseassigned to the next. We are continually reevaluating our estimates concerning these variables and evaluating industry data regarding the productivity of clinical research and development assets that we acquired as part of a business combination and had not yet reached technological feasibility at the development process. Changes in our estimatesdate of items may result in a significant change to our valuation of these assets.
acquisition. We review amounts capitalized as acquired IPR&D for impairment at least annually, as of October 31, and whenever events or changes in circumstances indicate to us that the carrying value of the assets might not be recoverable. Our most recent
BG00011
During the third quarter of 2019 we discontinued the Phase 2b study of BG00011 for the potential treatment of IPF due to safety concerns. As a result, we recognized an impairment assessment ascharge of October 31, 2016 resultedapproximately $215.9 million during the third quarter of 2019 to reduce the fair value of the IPR&D

intangible asset to zero. We also adjusted the value of our contingent consideration obligations related to this asset resulting in no impairments. Changes to clinical development plans, regulatory feedback received, life cycle management strategiesa gain of $61.2 million in the third quarter of 2019.
Vixotrigine
During the third quarter of 2018 we completed the Phase 2b study of vixotrigine for the potential treatment of PLSR. The study did not meet its primary or secondary efficacy endpoints and changes in program economics, including foreign currency exchange rates, are evaluated regularly. The field of developing treatments for forms of neuropathic pain, such as TGN and idiopathic pulmonary fibrosis (IPF) are highly competitive and can be affected by changes to expected market candidates and changes in timing and the clinicalwe discontinued development of our product candidates. There can be no assurance thatvixotrigine for the potential treatment of PLSR. As a result, we will be ablerecognized an impairment charge of approximately $60.0 million during the third quarter of 2018 to successfully develop BIIB074reduce the fair value of the IPR&D intangible asset to zero.
In addition, we delayed the initiation of the Phase 3 studies of vixotrigine for the potential treatment of TGN or STX-100as we awaited the outcome of ongoing interactions with the FDA regarding the design of the Phase 3 studies, a more detailed review of the data from the Phase 2b study of vixotrigine for the potential treatment of IPF or other indications,PLSR and insights from the Phase 2 study of vixotrigine for the potential treatment of small fiber neuropathy. We reassessed the fair value of the TGN program using reduced expected lifetime revenues, higher expected clinical development costs and a lower cumulative probability of success. As a result of that assessment, we recognized an impairment charge of $129.3 million during the third quarter of 2018 to reduce the fair value of the TGN IPR&D intangible asset to $41.8 million at that date. We also adjusted the value of our contingent consideration obligations related to the TGN program to reflect the lower cumulative probabilities of success resulting in a gain of $89.6 million in the third quarter of 2018.
Overall, the value of our acquired IPR&D assets is dependent upon many variables, including estimates of future revenues and the effects of competition, our ability to secure sufficient pricing in a competitive market, our ability to confirm safety and efficacy based on data from clinical trials or thatand regulatory feedback, the level of anticipated development costs and the probability and timing of successfully advancing a successfully developed therapy will be ableparticular research program from one clinical trial phase to secure sufficient pricingthe next. We are continually reevaluating our estimates concerning these and other variables, including our life cycle management strategies, research and development priorities and development risk, changes in program and portfolio economics and related impact of foreign currency exchange rates and economic trends and evaluating industry and company data regarding the productivity of clinical research and the development process. Changes in our estimates and prioritization of these items may result in a competitive market. Changessignificant change to our valuation of our IPR&D assets.
For example, the TGN program has experienced numerous delays in eventsdevelopment in the periods since we acquired the TGN program and circumstances for these programs may have a material impact on the fair value of our relatedthis asset is not significantly in excess of carrying value. In addition, we are currently testing vixotrigine in another mid-stage clinical trial, in a different neuropathic pain indication, for which we also have an IPR&D. &D asset. Data from that trial may affect the economic value of vixotrigine and the IPR&D assets for one or both programs could be impaired if assumptions used in determining their fair value change.
For additional information related toon the amortization and impairment of our acquired intangible assets, and our TECFIDERA settlement and license agreement please read Note 6, Intangible Assets and Goodwill, to our condensed consolidated financial statements included in this report.
Acquired In-Process Research and Development
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On May 15, 2017, we completed an asset purchase of the Phase 3 candidate, CIRARA (now known as BIIB093), from Remedy Pharmaceuticals Inc. (Remedy). Upon closing of the transaction, we made a $120.0 million upfront payment to Remedy, which was recorded as acquired in-process research and development in our condensed consolidated statements of income during the second quarter of 2017 as BIIB093 had not yet reached technological feasibility. For additional information related to this transaction, please read Note 2, Acquisitions, to our condensed consolidated financial statements included in this report.
Collaboration Profit (Loss) Sharing
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Collaboration profit (loss) reflects the sharing ofprimarily includes our partner's 50% share of the profit or loss related to our biosimilars commercial agreement with Samsung Bioepis and our 50% sharing of the co-promotion profits or losses in the E.U. and Canada related to our collaboration agreement with AbbVie in the commercialization of ZINBRYTA.Bioepis.
We began to recognize revenues on sales of biosimilars in the first quarter of 2016. For the three and nine months ended September 30, 2017,2019, we sharedrecognized net profit-sharing expense of $60.1 million and $181.6 million, respectively, to reflect Samsung Bioepis' 50% sharing of the net collaboration profits, and therefore recognized net expense of $34.5compared to $47.7 million and $80.5 million, respectively, as compared to net expense of $7.4 million and $1.8$131.2 million, respectively, in the prior year comparative periods. The increaseincreases in profit sharingprofit-sharing expense for the comparative periods waswere primarily due to increased collaboration profits resulting from increased biosimilar product sales.
We began to recognize revenues on sales of ZINBRYTA in the E.U. in the third quarter of 2016. For the three and nine months ended September 30, 2017, we recognized net expense of $0.7 million and $2.0 million, respectively, to reflect AbbVie's 50% sharing of the net collaboration profits in the E.U. and Canada as compared to net income recognized of $2.7 million in both of the prior year comparative periods, to reflect AbbVie's 50% sharing of the net collaboration losses in the E.U. and Canada.
For additional information related toon our agreementscollaboration arrangement with Samsung Bioepis, and AbbVie please read Note 18, 17, Collaborative and Other Relationships, to our condensed consolidated financial statements included in this report.

Loss on Divestiture of Hillerød, Denmark Manufacturing Operations
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Divestiture of Hillerød, Denmark Manufacturing Operations
On August 1, 2019, we completed the sale of all of the outstanding shares of our subsidiary that owns our biologics manufacturing operations in Hillerød, Denmark to FUJIFILM. Upon the closing of this transaction, we received approximately $881.9 million in cash, which is subject to the finalization of certain working capital adjustments and may be further adjusted based on other contractual terms, which are discussed below. We determined that the operations disposed of in this transaction did not meet the criteria to be classified as discontinued operations under the applicable guidance.
As part of this transaction, we have provided FUJIFILM with certain minimum batch production commitment guarantees. There is a risk that the minimum contractual batch production commitments will not be met. Based upon current estimates we expect to incur an adverse commitment obligation of approximately $114.0 million associated with such guarantees. We may adjust this estimate based upon changes in business conditions, which may result in the recognition of additional losses. We also may be obligated to indemnify FUJIFILM for liabilities that existed relating to certain business activities incurred prior to the closing of this transaction.
In addition, we may earn certain contingent payments based on future manufacturing activities at the Hillerød facility. For the disposition of a business, our policy is to recognize contingent consideration when the consideration is realizable. We currently believe the probability of earning these payments is remote and therefore we did not include these contingent payments in our calculation of the fair value of the operations.
 
As part of this transaction, we entered into certain manufacturing services agreements with FUJIFILM pursuant to which FUJIFILM will use the Hillerød facility to produce commercial products for us, such as TYSABRI, as well as other third-party products.
In connection with this transaction we recognized a total net loss of approximately $160.2 million in our condensed consolidated statements of income. This loss included a pre-tax loss of $95.5 million, which reflects a decrease of $17.7 million to our previously recorded pre-tax loss. The loss recognized was based on exchange rates and business conditions on the closing date of this transaction, and included costs to sell our Hillerød, Denmark manufacturing operations of approximately $11.2 million and our estimate of the fair value of an adverse commitment of approximately $114.0 million associated with the guarantee of future minimum batch production at the Hillerød facility. The value of this adverse commitment was determined using a probability-weighted estimate of future manufacturing activity. We also recorded a tax expense of $64.7 million related to this transaction.
Our estimate of the fair value of the adverse commitment is a Level 3 measurement and is based on forecasted batch production at the Hillerød facility.
For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to our condensed consolidated financial statements included in this report.
(Gain) Loss on Fair Value Remeasurement of Contingent Consideration
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Consideration payable for certain of our business combinations includes future payments that are contingent upon the occurrence of a particular factor

event or factors.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.
The change in fair value remeasurement of contingent consideration forFor the three and nine months ended September 30, 2017, compared to2019, changes in the same periods in 2016, wasfair value of our contingent consideration obligations were primarily due to the increasediscontinuation of our BG00011 program for the potential treatment of IPF, partially offset by a decrease in interest rates used to revalue our contingent consideration liabilities and the probabilitypassage of achieving certain developmental milestones based upon the progression of the underlying clinical programs.

Other Income (Expense), Net
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For the three and nine months ended September 30, 2017,2018, changes in the fair value of our contingent consideration obligations were primarily due to lower cumulative probabilities of success related to our vixotrigine program for the potential treatment of TGN, an increase in interest rates used to revalue our contingent consideration liabilities and the passage of time.
For additional information on our IPR&D intangible assets related to our discontinued BG00011 program for the potential treatment of IPF and our vixotrigine program for the potential treatment of TGN, please read Note 6, Intangible Assets and Goodwill, to our condensed consolidated financial statements included in this report.
Acquired In-Process Research and Development
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BIIB110 Acquisition
In July 2018 we acquired BIIB110 and ALG-802 from AliveGen Inc. (AliveGen). BIIB110 and ALG-802 represent novel ways of targeting the myostatin pathway. In connection with the closing of this transaction, we made an upfront payment of $27.5 million to AliveGen, which was recorded as acquired IPR&D in our condensed consolidated statements of income as BIIB110 has not yet reached technological feasibility.
BIIB104 Acquisition
In April 2018 we acquired BIIB104 from Pfizer Inc. (Pfizer). BIIB104 is a first-in-class, Phase 2b AMPA receptor potentiator for CIAS. In connection with the closing of this transaction, we made an upfront payment of $75.0 million to Pfizer, which was recorded as acquired IPR&D in our condensed consolidated statements of income as BIIB104 has not yet reached technological feasibility.
BIIB100 Acquisition
In January 2018 we acquired BIIB100 from Karyopharm Therapeutics Inc. (Karyopharm). BIIB100 is a Phase 1 investigational oral compound for the treatment of certain neurological and neurodegenerative diseases, primarily in ALS. In connection with the closing of this transaction, we made an upfront payment of $10.0 million to Karyopharm, which was recorded as acquired IPR&D in our condensed consolidated statements of income as BIIB100 has not yet reached technological feasibility.
For additional information on our acquisitions of BIIB110, BIIB104 and BIIB100, please read Note 2, Acquisitions, to our consolidated financial statements included in our 2018 Form 10-K.
Other Income (Expense), Net
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For the three months ended September 30, 2019, compared to the same periodsperiod in 2016,2018, the change in other income (expense), net was primarily duereflects net losses totaling $4.1 million recognized on our investments related to our holdings in equity and debt securities, compared to net gains totaling $141.1 million in the prior year comparative period. The net losses recognized during the three months ended September 30, 2019, primarily reflects a decrease in the fair value in our investment in Ionis common stock from June 30, 2019, partially offset by a gain recognized on our sale of a portion of our investment in Ionis common stock during the third quarter of 2019 reflecting an increase in foreign currency exchangefair value of the shares sold from June 30, 2019.
Proceeds from our sale of a portion of our investment in Ionis common stock during the three and nine months ended September 30, 2019, totaled approximately $168.7 million and $382.0 million, respectively. The original cost basis upon acquisition in June 2018 for the shares sold during the three and nine months ended September 30, 2019, totaled approximately $138.9 million and $312.5 million, respectively.
For the nine months ended September 30, 2019, compared to the same period in 2018, the change in other income (expense), net primarily reflects net gains totaling $198.9 million recognized on our investments related to our holdings in equity and debt securities, compared to net gains totaling $132.0 million in the prior year comparative period. The net gains recognized during the nine months ended September 30, 2019, primarily reflect an increase in interest incomethe fair value in our investment in Ionis common stock from December 31, 2018, partially offset by the net loss recognized on our sale of a portion of our investment in Ionis common stock during the second quarter of 2019 and third quarter of 2019 reflecting a decrease in interest expense, partially offset by other than temporary impairments recorded on strategic investments duringfair value of the year.shares sold from March 31, 2019.

Other income (expense), net for the nine months ended September 30, 2019, also reflects an increase in the fair value of an investment in a non-marketable equity security from December 31, 2018, that was realized for a net gain of approximately $87.7 million upon sale in the second quarter of 2019.
 
Income Tax Provision
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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, changes in tax laws, the amount and characterization of our research and development expenses, the levels of certain deductions and credits, acquisitions and licensing transactions.
For the three and nine months ended September 30, 2017,2019, compared to the same periodsperiod in 2016,2018, the decrease in our effective tax rate was primarily due to Swiss Tax Reform. As a lower relative percentageresult of the impact of Swiss Tax Reform, in the three months ended September 30, 2019, we recorded an income tax benefit of approximately $54.3 million, resulting from a remeasurement of our earnings being recognized in the U.S., a highdeferred tax jurisdiction, along with a higher deduction for U.S. manufacturing activities. The geographic split of our earnings was affected by milestoneassets and upfront payments in the current year and the spin-off of our hemophilia business, partially offset by growth from the U.S. launch of SPINRAZA and increases in our revenues from anti-CD20 therapeutic programs in the U.S.liabilities. In addition, in 2017the three months ended September 30, 2019, we are earningrecognized a lowernet benefit for the impact of the internal reorganization of certain intellectual property rights and a net benefit of $15.8 million resulting from the orphan drug creditfinalization of tax returns in various jurisdictions related to the 2018 fiscal year. We also had a higher effective tax rate in 2018 resulting from our sale of inventory, the tax effect of which had been included within prepaid taxes at January 1, 2018, at a higher effective tax rate than the 2018 statutory tax rate.
For the nine months ended September 30, 2019, compared to the same period in 2018, the decrease in our effective tax rate was primarily due to the FDA's approvalcombination of SPINRAZA.the internal reorganization of certain intellectual property rights and the impact of Swiss Tax Reform. This decrease was partially offset

by a $64.7 million tax expense related to the divestiture of our subsidiary that owned our Hillerød, Denmark manufacturing operations. We also had a higher effective tax rate in 2018 resulting from our sale of inventory, the tax effect of which had been included within prepaid taxes at January 1, 2018, at a higher effective tax rate than the 2018 statutory tax rate.
Although we are recognizing a loss on the divestiture of our Hillerød, Denmark manufacturing operations, the divestiture requires us to write off certain deferred tax assets and resulted in a taxable gain in certain jurisdictions.
As a result of the internal reorganization of certain intellectual property rights, as of September 30, 2019, we recorded a deferred tax asset of $754.2 million and a deferred tax liability of $603.4 million. 
For moreadditional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to our condensed consolidated financial statements included in this report.
For additional information on our uncertain tax positions and income tax rate reconciliation for the three and nine months ended September 30, 20172019 and 2016,2018, please read Note 15, Income Taxes, to our condensed consolidated financial statements included in this report.
Equity in Loss of Investee, Net of Tax

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In February 2012 we entered into a joint venture agreement with Samsung BioLogics, establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar products.
In June 2018 we exercised our option under our joint venture agreement to increase our ownership percentage in Samsung Bioepis from approximately 5% to approximately 49.9%. The share purchase transaction was completed in November 2018 and, upon closing, we paid 759.5 billion South Korean won ($676.6 million) to Samsung BioLogics. As of September 30, 2019, our ownership percentage remained at approximately 49.9%.
We recognize our share of the results of operations related to our investment in Samsung Bioepis under the equity method of accounting one quarter in arrears when the results of the entity become available, which is reflected as equity in income (loss) of investee, net of tax in our condensed consolidated statements of income. During 2015, as our share of losses exceeded the carrying value of our initial investment, we suspended recognizing additional losses. In the first quarter of 2019 we restarted recognizing our share of Samsung Bioepis' income (losses), and we began recognizing amortization on certain basis differences resulting from our November 2018 investment.
Our joint venture partner, Samsung BioLogics, is currently subject to an ongoing criminal investigation that we continue to monitor. While this investigation could impact the operations of Samsung Bioepis and its business, we have assessed the value of our investment in Samsung Bioepis and continue to believe that the fair value of the investment is in excess of its net book value.
For the three and nine months ended September 30, 2019, losses reflect our share of losses totaling $0.8 million and $9.3 million, respectively, and amortization of basis differences totaling $21.1 million and $57.6 million, respectively.
For additional information on our collaboration arrangement with Samsung Bioepis, please read Note 17, Collaborative and Other Relationships 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,
2017
 As of
December 31,
2016
 Change %
Financial assets:     
Cash and cash equivalents$1,548.1
 $2,326.5
 (33.5)%
Marketable securities — current1,960.2
 2,568.6
 (23.7)%
Marketable securities — non-current3,062.0
 2,829.4
 8.2 %
Total cash, cash equivalents and marketable securities$6,570.3
 $7,724.5
 (14.9)%
Borrowings:     
Current portion of notes payable and other financing arrangements$573.2
 $4.7
 **
Notes payable and other financing arrangements5,938.3
 6,512.7
 (8.8)%
Total borrowings$6,511.5
 $6,517.4
 (0.1)%
Working capital:     
Current assets$7,568.0
 $8,732.2
 (13.3)%
Current liabilities(3,448.4) (3,419.9) 0.8 %
Total working capital$4,119.6
 $5,312.3
 (22.5)%
** Percentage not meaningful.
(In millions, except percentages)As of
September 30,
2019
 As of
December 31,
2018
 Change %
Financial assets:     
Cash and cash equivalents$2,343.9
 $1,224.6
 91.4 %
Marketable securities — current2,093.5
 2,313.4
 (9.5)%
Marketable securities — non-current1,813.9
 1,375.9
 31.8 %
Total cash, cash equivalents and marketable securities$6,251.3
 $4,913.9
 27.2 %
Borrowings:     
Current portion of notes payable$1,495.3
 $
 100.0 %
Notes payable4,458.2
 5,936.5
 (24.9)%
Total borrowings$5,953.5
 $5,936.5
 0.3 %
Working capital:     
Current assets$8,448.2
 $7,640.9
 10.6 %
Current liabilities(4,432.2) (3,295.2) 34.5 %
Total working capital$4,016.0
 $4,345.7
 (7.6)%
For the nine months ended September 30, 2017,2019, certain significant cash flows were as follows:
$3.0 billion in net cash flows provided by operating activities, net of:
$5.1 billion in net cash flows provided by operating activities, net of:
$765.4788.5 million in total payments for income taxes;
$454.874.0 million upfront payment made to Forward Pharma for the litigationSkyhawk upon entering into a collaboration and settlement charges that were accrued as of December 31, 2016;research and development services agreement; and
$300.045.0 million upfront payment made to BMS;C4 Therapeutics (C4T) upon entering into a collaborative research and license agreement;
$1.4 billion used for share repurchases;
$900.0 million in contingent payments made to former shareholders of Fumapharm AG and holders of their rights;
$795.2 million payment made to Forward Pharma to license intellectual property related to TECFIDERA;
$636.8 million used for purchases of property, plant and equipment;
$302.7 million net cash contribution made to Bioverativ; and
$230.0 million in upfront and milestone payments made to Remedy and Ionis.
$3.8 billion used for share repurchases;
$923.7 million in proceeds received on the divestiture of our Hillerød, Denmark manufacturing operations;
$744.4 million payment made for our acquisition of NST, net of cash acquired;
$476.0 million in proceeds received on sales of strategic investments;
$404.1 million used for purchases of property, plant and equipment; and
$300.0 million for the final contingent payment made to former shareholders of Fumapharm AG and holders of their rights.
 
For the nine months ended September 30, 2016,2018, certain significant cash flows were as follows:
$3.0 billion in net cash flows provided by operating activities, net of:
$4.3 billion in net cash flows provided by operating activities, net of:
$1.3 billion698.8 million in total payments for income taxes; and
$375.0 million upfront payment made to Ionis upon the closing of the 2018 Ionis Agreement and a $162.1 million charge reflecting the premium paid for the purchase of Ionis common stock;
$3.0 billion used for share repurchases;
$1.2 billion in contingent payments made to former shareholders of Fumapharm AG and holders of their rights;
$544.7 million used for purchases of property, plant and equipment;
$462.9 million payment made to Ionis reflecting the fair value of the Ionis common stock purchased upon the closing of the 2018 Ionis Agreement; and
$900.0112.5 million in contingentupfront payments made to former shareholdersfor our acquisitions of Fumapharm AGBIIB100, BIIB104 and holders of their rights;
$434.0 million used for purchases of property, plant and equipment; and
$348.9 million used for share repurchases.
BIIB110.
Overview
We have historically financed our operating and capital expenditures primarily through cash flows earned from our operations. We expect to continue funding our current and planned operating requirements principally through our cash flows from

operations, as well as our existing cash resources. 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, from time to time, 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.
The undistributed cumulative foreign earnings of certain of our foreign subsidiaries, exclusive of earnings that would result in little or no net income tax expense under current U.S. tax law or which has already been subject to tax under U.S. tax law, are invested indefinitely outside the U.S.
Of the total cash, cash equivalents and marketable securities at September 30, 2017, approximately $4.4 billion was generated in foreign jurisdictions and is primarily intended for use in our foreign operations or in connection with business development transactions outside the U.S. In managing our day-to-day liquidity in the U.S., we do not rely on the unrepatriated earnings as a source of funds and we have not provided for U.S. federal or state income taxes on these undistributed foreign earnings.
For additional information related toon certain risks that could negatively impact our financial position or future results of operations, please read the “Risk Factors” and “Item 3. Quantitative and Qualitative Disclosures About Market Risk” sections of andItem 1A. Risk Factors included in this report.
Share Repurchase Programs
In March 2019 our Board of Directors authorized our 2019 Share Repurchase Program, which is a program to repurchase up to $5.0 billion of our common stock. Our 2019 Share Repurchase Program does not have an expiration date. All share repurchases under our 2019 Share Repurchase Program will be retired. Under our 2019 Share Repurchase Program, we repurchased and retired approximately 3.1 million and 7.0 million shares of our common stock at a cost of approximately $717.9 million and $1.6 billion during the three and nine months ended September 30, 2019, respectively.
From October 1, 2019 through October 21, 2019, we repurchased and retired approximately 2.3 million shares of our common stock at a cost of approximately $508.6 million under our 2019 Share Repurchase Program. Approximately $2.9 billion remained available under our 2019 Share Repurchase Program as of October 21, 2019.
In August 2018 our Board of Directors authorized a program to repurchase up to $3.5 billion of our common stock (2018 Share Repurchase Program), which was completed as of June 30, 2019. All share repurchases under our 2018 Share Repurchase Program were retired. Under our 2018 Share Repurchase Program, we repurchased and retired approximately 8.9 million shares of our common stock at a cost of approximately $2.1 billion during the nine months ended September 30, 2019.
In July 2016 our Board of Directors authorized a program to repurchase up to $5.0 billion of our common stock. This authorization does not have an expiration date.stock (2016 Share Repurchase Program), which was completed as of June 30, 2018. All share
repurchases under this authorization will beour 2016 Share Repurchase Program were retired. Under this program,our 2016 Share Repurchase Program, we repurchased and retired 3.7approximately 10.5 million shares of our common stock at a cost of $1.0approximately $3.0 billion during the nine months ended September 30, 2017. We did not repurchase any shares of common stock under this program during the three months ended September 30, 2017. During the three and nine months ended September 30, 2016, we repurchased and retired 1.1 million shares of common stock at a cost of $348.9 million. As of September 30, 2017, approximately $3.0 billion remains available to repurchase shares under this authorization.2018.
In February 2011 our Board of Directors authorized a program to repurchase up to 20.0 million shares of common stock, which was completed as of March 31, 2017. During the nine months ended September 30, 2017, we repurchased 1.3 million shares of common stock at a cost of $365.4 million under this program. We did not repurchase any shares of common stock under this program during the three and nine months ended September 30, 2016.
Cash, Cash Equivalents and Marketable Securities
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 bearinginterest-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.
As of September 30, 2019, we had cash, cash equivalents and marketable securities totaling approximately $6.3 billion compared to approximately $4.9 billion as of December 31, 2018. The net decreaseincrease in cash, cash equivalents and marketable securities at September 30, 20172019 from December 31, 2016,2018, was primarily due to cash flows from operations, cash received upon the divestiture of our Hillerød, Denmark manufacturing operations and proceeds from sales of strategic investments, partially offset by cash used for share repurchases, the payment made to Forward Pharma in connection withcash used for our January 2017 settlementacquisition of NST, net purchases of property, plant and license agreement,equipment, contingent payments made to former shareholders of Fumapharm AG and holders of their rights, net purchases of property, plantmarketable securities and equipment, upfront and milestone payments made to BMS, RemedySkyhawk and C4T.
Investments and other assets in our condensed consolidated balance sheet as of September 30, 2019 and December 31, 2018, includes the carrying value of our investment in Samsung Bioepis of $572.8 million and $680.6 million, respectively. As Samsung Bioepis is a privately-held entity, our ability to liquidate our investment in Samsung Bioepis may be limited and we may realize significantly less than the value of such investment. Investments and other assets, as of September 30, 2019 and December 31, 2018, also includes the fair value of our investment in Ionis common stock of $318.2 million and $563.8 million, respectively, which is subject to certain holding period restrictions.
For additional information on our acquisition of NST, please read Note 2, Acquisitions, to our condensed consolidated financial statements included in this report. For additional information on the divestiture of our Hillerød, Denmark manufacturing operations, please read Note 3, Divestitures, to our condensed consolidated financial statements

included in this report. For additional information on our collaboration arrangements with Skyhawk and Samsung Bioepis, please read Note 17, Collaborative and Other Relationships,to our condensed consolidated financial statements included in this report. For additional information on our collaboration arrangements with Ionis and the net cash contribution made C4T, please read Note 19, Collaborative and Other Relationships,to Bioverativ. These cash outflows were partially offset by cash flows related to operations.our consolidated financial statements included in our 2018 Form 10-K.
Borrowings
The following is a summary of our principal indebtedness:
$550.0 million aggregate principal amount of 6.875% Senior Notes due March 1, 2018;
$1.5 billion aggregate principal amount of 2.90% Senior Notes due September 15, 2020;
$1.0 billion aggregate principal amount of 3.625% Senior Notes due September 15, 2022;
$1.75 billion aggregate principal amount of 4.05% Senior Notes due September 15, 2025; and
$1.75 billion aggregate principal amount of 5.20% Senior Notes due September 15, 2045.
These senior unsecured notesSenior Notes were issued at a discount and are amortized as additional interest expense over the period from issuance through maturity.
We expect to redeem our $550.0 million aggregate principal amount of 6.875% Senior Notes due March 1, 2018 during the fourth quarter of 2017. As a result, we expect to recognize an insignificant loss on the extinguishment of debt in other income (expense), net in our condensed consolidated statements of income. For additional information on our 6.875% Senior Notes due March 1, 2018 and related interest rate swap contracts, please read Note

11, Indebtedness, to our consolidated financial statements included in our 2016 Form 10-K.
During the third quarter of 2015 we entered into a $1.0 billion, 5-yearfive-year senior unsecured revolving credit facility under which we are permitted to draw funds for working capital and general corporate purposes. The terms of the revolving credit facility include a financial covenant that requires us not to exceed a maximum consolidated leverage ratio. As of
September 30, 2017,2019, 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, 20172019 and December 31, 2016,2018, please read Note 7, Fair Value Measurements, to our condensed consolidated financial statements included in this report.
Working Capital
We define workingWorking capital is defined as current assets less current liabilities. The change in working capital at September 30, 20172019, from December 31, 2016,2018, reflects a decreasean increase in total current assets of approximately $1.2 billion$807.3 million and an increase in total current liabilities of $28.5 million.approximately $1.1 billion.
The decreasenet increase in total current assets was primarily driven by a decreasean increase in net cash, cash equivalents and marketable securities, as described above.above, offset by a decrease in inventory resulting from our sale of hemophilia-related inventory to Bioverativ.
The net increase in current liabilities was driven byprimarily due to the reclassification of $1.5 billion of our Senior Notes to current liabilities of $550.0 million of our 6.875%from notes payable, as the Senior Notes due March 1, 2018, as these notes are due within one year,year. This increase was partially offset by a reduction in accrued expenses and other. The net decrease in accrued expenses and other was primarily duerelated to a decrease in the accrual of contingent payments related to FUMADERM and TECFIDERA, a decrease in the accrual for construction in progress and the $45.0 million upfront payment of the $454.8 million charge thatmade to C4T, which was accrued as of December 31, 2016 in relation to our settlement and license agreement with Forward Pharma.2018.

Cash Flows
The following table summarizes our cash flow activity:
 For the Nine Months
Ended September 30,
(In millions, except percentages)2017 2016 % Change
Net cash flows provided by operating activities$3,032.7
 $3,005.3
 0.9%
Net cash flows used in investing activities$(2,193.6) $(1,903.1) 15.3%
Net cash flows used in financing activities$(1,671.9) $(326.1) **
** Percentage not meaningful.
 For the Nine Months
Ended September 30,
(In millions, except percentages)2019 2018 % Change
Net cash flows provided by operating activities$5,118.4
 $4,292.3
 19.2 %
Net cash flows used in investing activities$(237.9) $(421.0) (43.5)%
Net cash flows used in financing activities$(3,744.0) $(3,035.0) 23.4 %
Operating Activities
Cash flows from operating activities represent the cash receipts and disbursements related to all of our activities other than investing and financing activities. We expect cash provided from operating activities will continue to be our primary source of funds to finance operating needs and capital expenditures for the foreseeable future.
Operating cash flow is derived by adjusting our net income for:
Non-cashnon-cash operating items such as depreciation and amortization, impairment charges, unrealized gain (loss) on strategic investments, acquired in-process research and developmentIPR&D and share-based compensation;
Changeschanges 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
Changes associated withchanges in the fair value of contingent payments associated with our acquisitions of businesses and payments related to collaborations.
For the nine months ended September 30, 2017,2019, compared to the same period in 2016, the increase in2018, net cash flows provided by operating activities wasincreased primarily due to higher net income, the changes in working capital, as discussed above, the $375.0 million upfront payment made to Ionis upon the closing of the 2018 Ionis Agreement and a decrease in income tax payments$162.1 million charge reflecting the premium paid for the purchase of Ionis common stock in the U.S., partially offset by the $454.8 million payment that was accrued as of December 31, 2016 and paid in the first quarter of 2017, in relation to our settlement and license agreement with Forward Pharma.prior year comparative period.
Investing Activities
For the nine months ended September 30, 2017,2019, compared to the same period in 2016,2018, the increasedecrease in net cash flows used in investing activities was primarily due to a decrease in net proceeds related to marketable securities and the $795.2cash used for our acquisition of NST. These amounts were partially offset by a decrease in contingent payments made to former shareholders of Fumapharm AG and holders of their rights, the proceeds received upon the divestiture of our Hillerød, Denmark manufacturing operations, the proceeds received on our sales of strategic investments and the $462.9 million payment made to license Forward Pharma's intellectual property related to TECFIDERAIonis reflecting the fair value of the Ionis common stock purchased upon the closing of the 2018 Ionis Agreement in the first quarter of 2017, the $120.0 million payment made to Remedy for the purchase of BIIB093 in the second quarter of 2017, the $60.0 million and $50.0 million milestone payments made to Ionis in the first and third quarters of 2017, respectively, related to the approvals of SPINRAZA and an increase in purchases of property, plant and equipment primarily related to the construction of our Solothurn, Switzerland facility, partially offset by an increase in net proceeds of marketable securities.prior year comparative period.
Financing Activities
For the nine months ended September 30, 2017,2019, compared to the same period in 2016,2018, the increase in net cash flows used in financing activities was primarily due to approximately $1.4 billion ofthe increase in cash used for share repurchases in the first half of 2017 and the $302.7 million net cash contribution made to Bioverativ in connection with the spin-off of our hemophilia business in February 2017.
repurchases.

Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations
Our contractual obligations primarily consist of our obligations under non-cancellable operating leases, capital leases, long-term debt obligations and defined benefit and other purchase obligations, excluding amounts related to uncertain tax positions, funding commitments, contingent development, regulatory and commercial milestone payments, TYSABRI contingent payments and contingent consideration related to our business combinations, as described below.
There have been no material changes in our contractual obligations since December 31, 2016.2018.
Contingent Payments
TYSABRI Contingent Payments
In 2013 we acquired from Elan Pharma International Ltd. (Elan), an affiliate of Elan Corporation plc, (Elan) full ownership of all remaining rights to TYSABRI that we did not already own or control. Under the terms of the acquisition agreement, we are obligated to make contingent payments to Elan of 18% on annual worldwide net sales up to $2.0 billion and 25% on annual worldwide net sales that exceed $2.0 billion. Royalty payments to Elan and other third parties are recognized as cost of sales in our condensed consolidated statements of income. Elan was acquired by Perrigo Company plc (Perrigo) in December 2013 and Perrigo subsequently sold its rights to these payments to another third partya third-party effective January 2017.
SPINRAZA
In 2016 we exercised our option to develop and commercialize SPINRAZA from Ionis. Under our agreement with Ionis, we make royalty payments to Ionis on annual worldwide net sales of SPINRAZA using a tiered royalty rate between 11% and 15%, which are recognized as cost of sales in our condensed consolidated statements of income. For additional information on our collaboration arrangements with Ionis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in our 2018 Form 10-K.
Contingent Consideration related to Business Combinations
In connection with our acquisitions of Convergence Pharmaceuticals Ltd. (Convergence), Stromedix, Inc. (Stromedix) and Biogen International Neuroscience GmbH (BIN), formerly Panima Pharmaceuticals AG, in 2015, 2012 and 2010, respectively, we agreed to make additional payments based upon the achievement of certain milestone events.
As the acquisitions of Convergence, Stromedix and BIN occurred after January 1, 2009, we recordrecognized the contingent consideration liabilities associated with these transactions at their fair value on the acquisition date and revalue these obligations each reporting period.
We may pay up to approximately $1.2$0.7 billion in remaining milestones related to these acquisitions.
Fumapharm AG
In 2006 we acquired Fumapharm AG. As part of this acquisition we acquired FUMADERM and TECFIDERA (together, Fumapharm Products). We are required to make contingent payments to former shareholders of Fumapharm AG or holders of their rights based on the attainment of certain cumulative sales levels of Fumapharm Products and the level of total net sales of Fumapharm Products in the prior 12- month period.
During the nine months ended September 30, 2017, we paid $900.0 million in contingent payments as we reached the $11.0 billion, $12.0 billion and $13.0 billion cumulative sales levels related to the Fumapharm Products in the fourth quarter of 2016, the first quarter of 2017 and the second quarter of 2017, respectively, and accrued $300.0 million upon reaching $14.0 billion in total cumulative sales of Fumapharm Products in the third quarter of 2017.
We will owe an additional $300.0 million contingent payment for every additional $1.0 billion in cumulative sales level of Fumapharm Products reached if the prior 12 months sales of the Fumapharm Products exceed $3.0 billion, until such time as the cumulative sales level reaches $20.0 billion, at which time no further contingent payments will be due. If the prior 12 months sales of Fumapharm Products are less than $3.0 billion, contingent payments remain payable on a decreasing tiered basis. These payments are accounted for as an increase to goodwill as incurred, in accordance with the accounting standard applicable to business combinations when we acquired Fumapharm AG. Any portion of the payment that is tax deductible will be recorded as a reduction to goodwill. Payments are due within 60 days following the end of the quarter in which the applicable cumulative sales level has been reached.
Contingent Development, Regulatory and Commercial Milestone Payments
Based on our development plans as of September 30, 2017,2019, we could make potential future

milestone payments to third parties of up to approximately $3.1$6.3 billion, including approximately $0.6$0.9 billion in development milestones, approximately $0.9$1.7 billion in regulatory milestones and approximately $1.6$3.7 billion in commercial milestones, as part of our various collaborations, including licensing and development programs. Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones. Because the achievement of these milestones hadwas not occurredconsidered probable as of September 30, 2017,2019, 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 approval or commercial milestones.
Provided various development, regulatory or commercial milestones are achieved, we anticipate that we may pay approximately $25.0$172.0 million of milestone payments during the remainder of 2017 in addition to the $40.0 million due to Ionis for the regulatory approval of SPINRAZA in Japan and the $25.0 million due to Samsung Bioepis for the marketing authorization of IMRALDI in the E.U.2019.
Other Funding Commitments
As of September 30, 2017,2019, we have several ongoing clinical studies in various clinical trial stages. Our most significant clinical trial expenditures are to contract research organizations (CROs). OurThe contracts with CROs are generally cancellable, with notice, at our option. We recorded accrued expenses of approximately $35.0$37.0 million in our condensed consolidated balance sheet for expenditures incurred by CROs as of September 30, 2017.2019. We have approximately $455.0$466.0 million in cancellable future commitments based on existing CRO contracts as of September 30, 2017.2019.
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, 2017,2019, we have approximately $80.0$128.0 million of liabilities associated with uncertain tax positions.
As of both September 30, 2019 and December 31, 2018, included in other long-term liabilities we have accrued income tax liabilities of $697.0 million under a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax). Of the amounts accrued as of September 30, 2019, no amounts are expected to be paid within one year due to a $87.0 million carryforward of taxes paid in relation to the company's 2017 tax return. The Transition Toll Tax will be paid in installments over an eight-year period, which started in 2018, and will not
accrue interest.
Other Off-Balance Sheet Arrangements
We do not have any relationships with entities often referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We consolidate variable interest entities if we are the primary beneficiary.

New Accounting Standards
For a discussion of new accounting standards please read Note 1, Summary of Significant Accounting Policies - New Accounting Pronouncements, 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 accounting principles generally accepted in the U.S. (U.S. GAAP), requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and methodologies. We base our estimates on historical experience and on various other assumptions that we believe to beare reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. Actual results may differ from these estimates under different assumptionsestimates.

Assets and Liabilities Held For Sale
Upon determining that a long-lived asset or conditions.disposal group meets the criteria to be classified as held for sale, we cease depreciation and separately present such assets and liabilities of the disposal group in our condensed consolidated balance sheet. We initially measure a long-lived asset or disposal group that is classified as held for sale at the lower of its carrying value or fair value less any costs to sell. Any loss resulting from this measurement is recognized in the period in which the held for sale criteria are met. Conversely, gains are not recognized on the sale of a long-lived asset or disposal group until the date of sale. We assess the fair value of a long-lived asset or disposal group less any costs to sell each reporting period it remains classified as held for sale and recognize any subsequent changes as an adjustment to the carrying value of the asset or disposal group, as long as the remeasured carrying value does not exceed the carrying value less costs to sell of the asset or disposal group at the time it was initially classified as held for sale.
For a discussion of our critical accounting estimates, please read Part II, Item 7 “7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of in our 20162018 Form 10-K. ThereExcept as discussed above, there have been no material changes to these critical accounting estimates since our 20162018 Form 10-K.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk
Market Risk
We are subject to certain risks that may affect our results of operations, cash flows and fair values of assets and liabilities, including volatility in foreign currency exchange rates, interest rate movements, pricing pressures worldwide and weak economic conditions in the foreign markets in which we operate. We manage the impact of foreign currency exchange rates and interest rates through various financial instruments, including derivative instruments such as foreign currency forward contracts, interest rate lock contracts and interest rate swap contracts. We do not enter into financial instruments for trading or speculative purposes. The counterparties to these contracts are major financial institutions and there is no significant concentration of exposure with any one counterparty.
Foreign Currency Exchange Risk
Our results of operations are subject to foreign currency exchange rate fluctuations due to the global nature of our operations. We have operations or maintain distribution relationships in the U.S., Europe, Canada, Asia and Central and South America. In addition, we recognize our share of pre-tax co-promotionco-
promotion profits on RITUXAN in Canada. As a result, our condensed consolidated financial position, results of operations and cash flows can be affected by market fluctuations in foreign currency exchange rates, primarily with respect to the Euro, British pound sterling, Canadian dollar, Swiss franc, Danish kroneJapanese yen and Japanese yen.South Korean won.
While the financial results of our global activities are reported in U.S. dollars, the functional currency for most of our foreign subsidiaries is their respective local currency. Fluctuations in the foreign currency exchange rates of the countries in which we do business will affect our operating results, often in ways that are difficult to predict. In particular, as the U.S. dollar strengthens versus other currencies, the value of the non-U.S. revenuerevenues will decline when reported in U.S. dollars. The impact to net income as a result of a strengthening U.S. dollar will be partially mitigated by the value of non-U.S. expense,expenses, which will also decline when reported in U.S. dollars. As the U.S. dollar weakens versus other currencies, the value of the non-U.S. revenuerevenues and expenses will increase when reported in U.S. dollars.
We have established revenue and operating expense hedging and balance sheet risk management programs to protect against volatility of future foreign currency cash flows and changes in fair value caused by volatility in foreign currency exchange rates.
In June 2016During the U.K. voted insecond quarter of 2018 the International Practices Task Force of the Center for Audit Quality categorized Argentina as a referendum to voluntarily depart from the E.U.country with a projected three-year cumulative inflation rate greater than 100%, known as Brexit, and in March 2017, the U.K. formally started the process for the U.K. to leave the E.U. The macroeconomicwhich indicated that Argentina's economy is highly inflationary. This categorization did not have a material impact on our results of operations from these developments remains unknown. To date,or financial position as of September 30, 2019, and is not expected to have a material impact on our results of operations or financial position in the foreign currency exchange impact has been negligible since we hedged the balance sheet foreign currency exchange risk.future.
Revenue and Operating Expense Hedging Program
Our foreign currency hedging program is designed to mitigate, over time, a portion of the impact resulting from volatility in exchange rate changes on revenues and operating expenses. We use foreign currency forward contracts to manage foreign currency risk, with the majority of our forward contracts used to hedge certain forecasted revenue and operating expense transactions denominated in foreign currencies in the next 2115 months. We do not engage in currency speculation. For a more detailed disclosure of our revenue and operating expense hedging program, please read Note 9, Derivative Instruments, to our condensed consolidated financial statements included in this report.
Our ability to mitigate the impact of foreign currency exchange rate changes on revenues and net

income diminishes as significant foreign currency exchange rate fluctuations are sustained over extended periods of time. In particular, devaluation or significant deterioration of foreign currency exchange rates are difficult to mitigate and likely to negatively impact earnings. The cash flows from these contracts are reported as operating activities in our condensed consolidated statements of cash flows.
Balance Sheet Risk Management Hedging Program
We also use forward contracts to mitigate the foreign currency exposure related to certain balance sheet items. The primary objective of our balance sheet risk management program is to mitigate the exposure of foreign currency denominated net monetary assets and liabilities of foreign affiliates. In these instances, we principally utilize currency forward contracts. We have not elected hedge accounting for the balance sheet related items. The cash flows from these contracts are reported as operating activities in our condensed consolidated statementstatements of cash flows.

The following quantitative information includes the impact of currency movements on forward contracts used in our revenue, operating expense and balance sheet hedging programs. As of September 30, 20172019 and December 31, 2016,2018, a hypothetical adverse 10% movement in foreign currency exchange rates compared to the U.S. dollar across all maturities would result in a hypothetical decrease in the fair value of forward contracts of approximately $210.0$284.0 million and $172.0$290.0 million, respectively. The estimated fair value change was determined by measuring the impact of the hypothetical exchange rate movement on outstanding forward contracts. Our use of this methodology to quantify the market risk of such instruments is subject to assumptions and actual impact could be significantly different. The quantitative information about market risk is limited because it does not take into account all foreign currency operating transactions.
Net Investment Hedge Program
Our net investment hedging program is designed to mitigate currency fluctuations between the U.S. dollar and the South Korean won as a result of exercising our option to increase our ownership percentage in Samsung Bioepis to approximately 49.9%. We entered into foreign currency forward contracts to manage the foreign currency risk with our forward contracts used to hedge changes in the spot rate over the next one month. As of September 30, 2019 and December 31, 2018, a hypothetical adverse 10% movement would result in a hypothetical decrease in fair value of approximately $50.0 million and $64.0 million, respectively. The estimated fair value was determined by measuring the impact of the
hypothetical spot rate movement on outstanding forward contracts.
Interest Rate Risk
Our investment portfolio includes cash equivalents and short-term investments. The fair value of our marketable securities is subject to change as a result of potential changes in market interest rates. The potential change in fair value for interest rate sensitive instruments has been assessed on a hypothetical 100 basis point adverse movement across all maturities. As of September 30, 20172019 and December 31, 2016,2018, we estimate that such hypothetical 100 basis point adverse movement would result in a hypothetical loss in fair value of approximately $53.0$27.0 million and $50.0$19.0 million, respectively, to our interest rate sensitive instruments. The fair values of our investments were determined using third-party pricing services or other market observable data.
To achieve a desired mix of fixed and floating interest rate debt, we entered into interest rate swap contracts during 2015 for certain of our fixed-rate debt. These derivative contracts effectively converted a fixed-rate interest coupon to a floating-rate LIBOR-based coupon over the life of the respective note. As of September 30, 20172019 and December 31, 2016,2018, a 100 basis-point adverse movement (increase in LIBOR) would increase annual interest expense by approximately $6.8 million.
Pricing Pressure
Governments in somecertain international markets in which we operate have implemented measures, aimed at reducing healthcareand may in the future implement new or additional measures, to reduce health care costs to limit the overall level of government expenditures. These implemented measures vary by country and may include, among other things, mandatory rebates and discounts,patient access restrictions, suspensions on price increases, prospective and possible retroactive price reductions and suspensions onother recoupments and increased mandatory discounts or rebates, recoveries of past price increases and greater importation of pharmaceuticals.
drugs from lower-cost countries. In addition, certain countries set prices by reference to the prices in other countries where our products are marketed. Thus, our inability to secure favorableobtain and maintain adequate prices in a particular country may impairadversely affect our ability to obtainsecure acceptable prices in existing and potential new markets, which may limit market growth. The continued implementation of pricing actions throughout Europe may also lead to higher levels of parallel trade.
In the U.S., federal and state legislatures, health agencies and third-party payors continue to focus on containing the cost of health care. Legislative and regulatory proposals, enactments to reform health

care insurance programs and increasing pressure from social sources could significantly influence the manner in whichway our products are prescribed and purchased. It is possible that additional federal health care reform measures will be adopted in the future, which could result in increased pricing pressure and reduced reimbursement for our products and otherwise have an adverse impact on our financial position or results of operations.
Our products are also susceptible to increasing competition from generics and biosimilars in many markets. Generic versions of drugs and biosimilars are likely to be sold at substantially lower prices than branded products. Accordingly, the introduction of generic or biosimilar versions of our marketed products, as well as lower-priced competing products, likely would significantly reduce both the price that we receive for such marketed products and the volume of products that we sell, which may have an adverse impact on our results of operations.
There is also significant economic pressure on state budgets that may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for our drugs. Managed care organizations are also continuing to seek price discounts and, in some cases, to impose restrictions on the coverage of particularcertain drugs.
Our products are also susceptible to increasing competition in many markets from generics, biosimilars, prodrugs and other products approved under abbreviated regulatory pathways. Generic versions of drugs, biosimilars and other products approved under abbreviated regulatory pathways are likely to be sold at substantially lower prices than branded products. Accordingly, the introduction of such products, as well as other lower-priced competing products, may significantly reduce both the price that we receive for branded products and the volume of branded products that we sell, which will negatively impact our revenues.

Credit Risk
We are subject to credit risk from our accounts receivable related to our product sales. The majority of our accounts receivable arise from product sales in the U.S. and Europe with concentrations of credit risk limited due to the wide variety of customers and markets using our products, as well as their dispersion across many different geographic areas. Our accounts receivable are primarily due from wholesale and other third-party distributors, public hospitals, pharmacies and other government entities. We monitor the financial performance and creditworthiness of our customers so that we can properly assess and respond to changes in their credit profile. We operate in certain countries where weakness in economic conditions can result in extended collection periods. We continue to monitor these conditions, including the volatility associated with international economies and the relevant financial markets, and assess their possible impact on our business. To date, we have not experienced any significant losses with respect to the collection of our accounts receivable.
Credit and economic conditions in the E.U. continue to remain uncertain, which has, from time to time, led to long collection periods for our accounts
receivable and greater collection risk in certain countries.
We believe that our allowance for doubtful accounts was adequate as of September 30, 20172019 and December 31, 2016.2018. However, if significant changes occur in the availability of government funding or the reimbursement practices of these or other governments, we may not be able to collect on amounts due to us from customers in such countries and our results of operations could be adversely affected.
Item 4.    Controls and Procedures
Disclosure Controls and Procedures and Internal Control over Financial Reporting
Controls and Procedures
We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of September 30, 2017.2019. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that (a) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the quarter ended September 30, 2017,2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II — OTHER INFORMATION
Item 1.    Legal Proceedings
Please refer toFor a discussion of legal proceedings as of September 30, 2019, please read Note 19, Litigation, to our unaudited condensed consolidated financial statements included in this report, which is incorporated into this item by reference.
Item 1A.    Risk Factors
We are substantially dependent on revenues from our principal products.
Our current revenues depend upon continued sales of our principal products, as well as the financial rights we have in our anti-CD20 therapeutic programs, and, unless we develop, or acquire rights to and/or commercialize new products and technologies, we will be substantially dependent on sales from our principal products and our financial rights in our anti-CD20 therapeutic programs for many years. Further, following the completion of the spin-offAdditionally, a significant portion of our hemophilia business, our revenues are further reliant and concentrated on sales of our MS products in an increasingly competitive market, and revenues from sales of our product for SMA.markets. Any of the following negative developments relating to any of our principal products or any of our anti-CD20 therapeutic programs may adversely affect our revenues and results of operations or could cause a decline in our stock price:
safety or efficacy issues;
the introduction or greater acceptance of competing products, including lower-priced competing products;generics, biosimilars, prodrugs and other products approved under abbreviated regulatory pathways;
constraintslimitations 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.
SPINRAZA was recentlyhas been approved by, among others, the FDA, the ECEuropean Commission and the Japanese Ministry of Health, Labor and Welfare, and is in the early stages of commercial launch in these and othercertain markets. In addition to risks associated with new product launches and the other factors described in these Risk Factors, our ability to successfully commercialize SPINRAZA may be adversely affected due to:
our limited marketing experience within the SMA market, which may impact our ability to develop relationships with the associated medical and scientific community;
the lack of readiness of healthcare providers to treat patients with SMA;
the effectiveness of our commercial strategy for marketing SPINRAZA; and
our ability to maintain a positive reputation among patients, healthcare providers and others in the SMA community, which may be impacted by pricing and reimbursement decisions relating to SPINRAZA.
If we fail to compete effectively, our business and market position would suffer.
The biopharmaceutical industry and the markets in which we operate are intensely competitive. We compete in the marketing and sale of our products, the development of new products and processes, the acquisition of rights to new products with commercial potential and the hiring and retention of personnel. We compete with biotechnology and pharmaceutical companies that have a greater number of products on the market and in the product pipeline, greater financial and other resources and other technological or competitive advantages. One or more of our competitors may benefit from significantly greater sales and marketing capabilities, may develop products that are accepted more widely than ours or may receive patent protection that dominates, blocks or adversely affects our product development or business.
Our products are also susceptible to increasing competition from generics and biosimilars in many markets. Generic versions of drugs and biosimilars are likely to be sold at substantially lower prices than branded products. Accordingly, the introduction of generic or biosimilar versions of our marketed products, as well as lower-priced competing products, likely would significantly reduce both the price that we receive for such marketed products and the volume of products that we sell, which may have an adverse impact on our results of operations.

In the MS market, we face intense competition as the number of products and competitors continues to expand. Due to our significant reliance on sales of our MS products, our business may be harmed if we are unable to successfully compete in the MS market. More specifically, our ability to compete, maintain and grow our share in the MS market may be adversely affected due to a number of factors, including:SPINRAZA;
the introduction of more efficacious, safer, less expensive or more convenient alternatives to 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 MS products, including our own products and products of our collaborators;
the introduction of lower-cost biosimilars, follow-on products or generic versions of branded MS products sold by our competitors, and the possibility of future competition from generic versions or prodrugs of existing therapeutics or from off-label use by physicians of therapies indicated for other conditions to treat MS patients;
patient dynamics, including the size of the patient population andlimited marketing experience within certain SMA markets, which may impact our ability to attract newdevelop additional relationships with the associated medical and scientific community; and
the lack of readiness of healthcare providers to treat patients to our therapies;
damage to physician and patient confidence in any of our MS 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;
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.SMA.
Sales of our products depend, to a significant extent, on adequate coverage, pricing and reimbursement from third partythird-party payors, which are subject to increasing and intense pressure from political, social, competitive and other sources. Our inability to obtain and maintain adequate coverage, or a reduction in pricing or reimbursement, could have an adverse effect on our business, reputation, revenues and results of operations andor could cause a decline or volatility in our stock price.
Sales of our products are dependent, in large part,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.

Pricing and reimbursement for our products may be adversely affected by a number of factors, including:
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; and
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 products on their formularies and, in some cases, the imposition of restrictions on access or coverage of particular drugs or pricing determined based on perceived value; and
our value-based contracting pilot 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.
Our ability to set the price for our products varies significantly from country to country and as a result so can the price of our products. Certain countries set prices by reference to the prices in other countries where our products are marketed. Thus, our inability to secureobtain and maintain adequate prices in a particular country may not only limit the revenuerevenues from our products within that country but may also adversely affect our ability to obtainsecure acceptable prices in otherexisting and potential new markets. This may create the opportunity for third-party cross-border trade or influence our decision to sell or not to sell a product, thus adversely affecting our geographic expansion plans and revenues.
Our failure to maintain adequate coverage, pricing or reimbursement for our products would have an adverse effect on our business, revenues 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 could cause a decline in our stock price.

Drug prices are under significant scrutiny in the markets in which our products are prescribed. We expect drug pricing and other health care costs to continue to be subject to intense political and societal pressures on a global basis. In addition, competition from current and future competitors may negatively impact our ability to maintain pricing and our market share. New products or treatments brought to market by our competitors could cause revenues for our products to decrease due to potential price reductions and lower sales volumes. As
Payors, including managed care organizations, health insurers, pharmacy benefit managers, government health administration authorities, private health insurers and other organizations, increasingly seek ways to reduce their costs. Many payors continue to adopt benefit plan changes that shift a greater portion of prescription costs to patients. Such measures include more limited benefit plan designs, higher patient co-pay or co-insurance obligations and limitations on patients’ use of commercial manufacturer co-pay payment assistance programs (including through co-pay accumulator adjustment or maximization programs). Payors also increasingly seek price discounts or rebates in connection with the placement of our products on their formularies or those they manage and control costs by imposing restrictions on access to or usage of our products, such as by requiring prior authorization or step therapy. Significant consolidation in the health insurance industry has resulted in a few large insurers and pharmacy benefit managers exerting greater pressure in pricing and usage negotiations with drug manufacturers, significantly increasing discounts and rebates required of manufacturers and limiting patient access and usage. Further consolidation among insurers, pharmacy benefit managers and other payors would increase the negotiating leverage such entities have over us and other drug manufacturers. Ultimately, additional discounts, rebates, coverage or plan changes, restrictions or exclusions as described above could have a material adverse effect on sales of our affected products.
Our failure to obtain or maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business, reputation, revenues 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 or could cause a decline or volatility in our stock price.
If we are unable to obtain and maintain adequate protection for our data, intellectual property and other proprietary rights, our business may be harmed.
Our success depends in part on our ability to obtain and defend patent and other intellectual property rights that are important to the commercialization of our products and product candidates. The degree of patent protection that will be afforded to our products and processes in the U.S. and in other important markets remains uncertain and is dependent upon the scope of protection decided upon by the patent offices, courts, administrative bodies and lawmakers in these countries. We may fail to successfully obtain or preserve patent protection for the technologies incorporated into our products and processes, or the protection we obtain may not be of sufficient breadth and degree to protect our commercial interests in all countries where we conduct business. Under the Hatch-Waxman

Act, a manufacturer may file an Abbreviated New Drug Application, seeking approval of a generic copy of an approved innovator product, or a NDA under Section 505(b)(2) of the Federal Food, Drug and Cosmetic Act, which may be for a new or improved version of the original innovator product. The manufacturers are allowed to rely on the safety and efficacy data of the innovator’s product, may not need to conduct clinical trials, can market a competing version of a product after the expiration or loss of patent exclusivity or the expiration or loss of regulatory exclusivity and often charge significantly lower prices. Upon the expiration or loss of patent protection or the expiration or loss of regulatory exclusivity for a product, especially a small molecule product, the major portion of revenues for that product may be dramatically reduced in a very short period of time. If we cannot prevent others from exploiting our inventions, we will not derive the expected benefit from them. Furthermore, our products may be determined to infringe patents or other intellectual property rights held by third parties, which could result in financial, legal, business or reputational harm to us.
We also rely on regulatory exclusivity for protection of our products. Implementation and enforcement of regulatory exclusivity, which may consist of regulatory data protection and market protection, varies widely from country to country. Failure to qualify for regulatory exclusivity, or failure to obtain or maintain the extent or duration of such protections that we expect in each of the markets for our products due to challenges, changes or interpretations in the law or otherwise, could affect our revenues for our products or our decision on whether to market our products in a particular country or countries or could otherwise have an adverse impact on our results of operations.
Litigation, interferences, oppositions, inter partes reviews, administrative challenges or other similar types of proceedings are, have been and may in the future be necessary in some instances to determine the validity and scope of certain of our proprietary rights, and in other instances to determine the validity, scope or non-infringement of certain patent rights claimed by third parties to be pertinent to the manufacture, use or sale of our products. We may also face challenges to our patent and regulatory protections covering our products by third parties, including manufacturers of generics and biosimilars that may choose to launch or attempt to launch their products before the expiration of our patent or regulatory exclusivity. Litigation, interference, oppositions, inter partes reviews, administrative challenges or other similar types of proceedings are unpredictable and may be protracted, expensive and distracting to management. The outcome of such proceedings could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and market our products, require us to seek a license for the infringed product or technology or result in the assessment of significant monetary damages against us that may exceed amounts, if any, accrued in our financial statements. An adverse determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing or selling our products. Furthermore, payments under any licenses that we are able to obtain would reduce our profits derived from the covered products and services. Any of these circumstances could result in financial, business or reputational harm to us or could cause a decline or volatility in our stock price.
Our long-term success depends upon the successful development of new products and additional indications for existing products.
Our long-term viability and growth will depend upon the successful development of additional indications for our existing products as well as the successful development of new products and technologies from our research and development activities, our biosimilars joint venture with Samsung BioLogics or licenses or acquisitions from third parties.
Product development is very expensive and involves a high degree of uncertainty and risk. Only a small number of research and development programs result in the commercialization of a product. Furthermore, the development of novel approaches for the treatment of diseases, including development efforts in new modalities such as those based on the antisense oligonucleotide platform and gene therapy, may present additional challenges and risks, including obtaining regulatory approval from the FDA and other regulatory agencies that have limited experience with the development of such therapies. In addition, clinical trial data are subject to differing interpretations and, even if we view data as sufficient to support the safety, effectiveness and/or approval of an investigational therapy, regulatory authorities may disagree and may require additional data, may limit the scope of the approval or may deny approval altogether. Consequently, it may be difficult to predict the time and cost of product development of novel approaches for the treatment of diseases.
In addition, success in preclinical work or early stage clinical trials does not ensure that later stage or larger scale clinical trials will be successful. Clinical trials may indicate that our product candidates lack efficacy, have harmful side effects, result in unexpected adverse events or raise other concerns that may significantly reduce the likelihood of regulatory approval. This may result in terminated programs, significant restrictions on use and safety

warnings in an approved label, adverse placement within the treatment paradigm or significant reduction in the commercial potential of the product candidate.
Even if we are able to successfully develop new products or indications, we may make a strategic decision to discontinue development of a product candidate or indication if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline.
If we fail to compete effectively, our business and reputationmarket position would suffer.
The biopharmaceutical industry and the markets in which we operate are intensely competitive. We compete in the marketing and sale of our products, the development of new products and processes, the acquisition of rights to new products with commercial potential and the hiring and retention of personnel. We compete with biotechnology and pharmaceutical companies that have a greater number of products on the market and in the product pipeline, substantially greater financial, marketing and research and development and other resources and other technological or competitive advantages. One or more of our competitors may benefit from significantly greater sales and marketing capabilities, may develop products that are accepted more widely than ours or may receive patent protection that dominates, blocks or adversely affects our product development or business.
Our products are also susceptible to increasing competition in many markets from generics, biosimilars, prodrugs and other products approved under abbreviated regulatory pathways. Generic versions of drugs, biosimilars, prodrugs and other products approved under abbreviated regulatory pathways are likely to be sold at substantially lower prices than branded products. Accordingly, the introduction of such products, as well as other lower-priced competing products, may significantly reduce both the price that we receive for branded products and the volume of branded products that we sell, which will negatively impact our revenues.
In the MS market, we face intense competition as the number of products and competitors continues to expand. Due to our significant reliance on sales of our MS products, including TECFIDERA, our business may be harmed if we are unable to successfully compete in the MS market. More specifically, our ability to compete, maintain and grow our share in the MS market may be adversely affected due to a number of factors, including:
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;
the introduction of biosimilars, follow-on products, generic versions of branded MS products, prodrugs or products approved under other 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 other 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 or generic or biosimilars of our MS 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.
In the SMA market, we face competition from a gene therapy product that was approved in the U.S. in May 2019 for the treatment of SMA. Future sales of SPINRAZA may be adversely affected by the commercialization of this competing product.
Our business may be adversely affected if we do not successfully execute or realize the anticipated benefits of our strategic and growth initiatives.
The successful execution of our strategic and growth initiatives may depend upon internal development projects, commercial initiatives, external opportunities, which may include the acquisition, partnering and in-licensing

of products, technologies and companies or the entry into strategic alliances and collaborations, or the disposition of certain of our assets or operations.
While we believe we have a number of promising programs in our pipeline, failure or delay of internal development projects to advance or difficulties in executing on our commercial initiatives could impact our current and future growth, resulting in additional reliance on external development opportunities for growth. Supporting the further development of our existing products and potential new products in our pipeline will require significant capital expenditures and management resources, including investments in research and development, sales and marketing, manufacturing capabilities and other areas of our business.
The availability of high quality, fairly valued external product development is limited and the opportunity for their acquisition is highly competitive. As such, we are not certain that we will be able to identify suitable candidates for acquisition or if we will be able to reach agreement. Furthermore, if we decide to dispose of certain of our assets or operations, we are not certain that we will be able to identify a suitable counterparty or if we will be able to reach agreement.
We may fail to initiate or complete transactions for many reasons and we may not be able to achieve the full strategic and financial benefits expected to result from transactions, or the benefits may be delayed or not occur at all. We may also face additional costs or liabilities in completed transactions that were not contemplated prior to completion.
Any failure in the execution of a transaction, in the integration of an acquired asset or business or in achieving expected synergies could result in slower growth, higher than expected costs, the recording of asset impairment charges and other actions which could adversely affect our business, financial condition and results of operations.
A breakdown or breach of our technology systems could subject us to liability or interrupt the operation of our business.
We are increasingly dependent upon technology systems and data to operate our business. Our ability to effectively manage our business depends on the security, reliability and adequacy of our technology systems and data. A breakdown, invasion, corruption, destruction or breach of our technology systems and/or unauthorized access to our data and information could subject us to liability or negatively impact the operation of our business. Our technology systems continue to increase in multitude and complexity, making them potentially vulnerable to breakdown, malicious intrusion and random attack. Likewise, data privacy or security breaches by individuals authorized to access our technology systems or others may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, our patients, customers or other business partners, may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect. They are often carried out by motivated, well-resourced, skilled and persistent actors, including nation states, organized crime groups, “hacktivists” and employees or contractors acting with malicious intent. Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, the use of social engineering and other means to affect the confidentiality, integrity and availability of our technology systems and data. Cyber-attacks could also include supply chain attacks, which could cause a delay in the manufacturing of our products or products produced for contract manufacturing. Our key business partners face similar risks and any security breach of their systems could adversely affect our security posture. While we continue to build and improve our systems and infrastructure, including our business continuity plans, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business, operational or reputational harm to us, loss of competitive advantage or loss of consumer confidence. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches.
Successful preclinical work or early stage clinical trials does not ensure success in later stage trials, regulatory approval or commercial viability of a product.
Positive results in a clinical trial may not be replicated in subsequent or confirmatory trials. Additionally, success in preclinical work or early stage clinical trials does not ensure that later stage or larger scale clinical trials will be successful or that regulatory approval will be obtained. In addition, even if later stage clinical trials are successful, regulatory authorities may delay or decline approval of our product candidates. Regulatory authorities may disagree with our view of the data, require additional studies or disagree with our trial design or endpoints. Regulatory authorities may also fail to approve the facilities or processes used to manufacture a product candidate,

our dosing or delivery methods or companion devices. Regulatory authorities may grant marketing approval that is more restricted than anticipated. These restrictions may include limiting indications to narrow patient populations and the imposition of safety monitoring, educational requirements and risk evaluation and mitigation strategies. The occurrence of any of these events could result in significant costs and expenses, have an adverse effect on our business, financial condition and results of operations and cause our stock price may be adversely impacted andto decline or experience periods of volatilityvolatility.
Even if we are able to successfully develop new products or indications, sales of new products or products with additional indications may not meet investor expectations. We may also make a strategic decision to discontinue development of a product or indication if, for example, we believe commercialization will be difficult relative to the standard of care or other opportunities in our pipeline.
Clinical trials and the development of biopharmaceutical products is a lengthy and complex process. If we fail to adequately manage our clinical activities, our clinical trials or potential regulatory approvals may be delayed or denied.
Conducting clinical trials is a complex, time-consuming and expensive process. Our ability to complete clinical trials in a timely fashion depends on a number of key factors. These factors include protocol design, regulatory and institutional review board approval, patient enrollment rates and compliance with current Good Clinical Practices. If we or our third-party clinical trial providers or third-party CROs do not successfully carry out these clinical activities, our clinical trials or the potential regulatory approval of a product candidate may be delayed or be unsuccessful.
We have opened clinical trial sites and are enrolling patients in a number of countries where our experience is limited. In most cases, we use the services of third parties to carry out our clinical trial related activities and rely on such parties to accurately report their results. Our reliance on third parties for these activities may impact our ability to control the timing, conduct, expense and quality of our clinical trials. One CRO has responsibility for a substantial portion of our activities and reporting related to our clinical trials. If this CRO does not adequately perform, many of our trials may be affected. We may need to replace our CROs. Although we believe there are a number of other CROs we could engage to continue these activities, the replacement of an existing CRO may result in the delay of the affected trials or otherwise adversely affect our efforts to obtain regulatory approvals and commercialize our product candidates.
Adverse safety events or restrictions on use and safety warnings for our products can negatively affect our business, product sales and stock price.
Adverse safety events involving our marketed products, or generic or biosimilar versions of our marketed products, may have a negative impact on our business. Discovery of safety issues with our products could create product liability and could cause additional regulatory scrutiny and requirements for additional labeling or safety monitoring, withdrawal of products from the market and the imposition of fines or criminal penalties. Adverse safety events may also damage physician, patient and/or investor confidence in our products and our reputation. Any of these could result in liabilities, loss of revenues, material write-offs of inventory, material impairments of intangible assets, goodwill and fixed assets, material restructuring charges or other adverse impacts on our results of operationsoperations.
Regulatory authorities are making greater amounts of stand-alone safety information directly available to the public through periodic safety update reports, patient registries and other reporting requirements. The reporting of adverse safety events involving our products or products similar to ours and public rumors about such events may increase claims against us and may also cause our product sales or stock price to decline or experience periods of volatility.
Restrictions on use or significant safety warnings that may be required to be included in the label of our products, such as the risk of developing progressive multifocal leukoencephalopathy or liver injury in the label for certain of our products, may significantly reduce expected revenues for those products and require significant expense and management time.
We depend on relationships with collaborators, joint venture partners and other third parties for revenues, and for the development, regulatory approval, commercialization and marketing of certain of our products and product candidates, which are outside of our full control.
We rely on a number of significant collaborative and other third-party relationships, including joint venture partners, for revenues, and for the development, regulatory approval, commercialization and marketing of certain of our products and product candidates. We also outsource to third parties certain aspects of our regulatory affairs and

clinical development relating to our products and product candidates. Reliance on collaborative and other third-party relationships, including joint venture partners, subjects us to a number of risks, including:
we may be unable to control the resources our collaborators, joint venture partners or third parties devote to our programs, products or product candidates;
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 impacted. affect our revenues;
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;
any failure on the part of our collaborators, joint venture partners or other third parties to comply with applicable laws and regulatory requirements 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, and could adversely impact our ability to conduct business, our operating results and our reputation.
Given these risks, there is considerable uncertainty regarding the success of our current and future collaborative efforts. If these efforts fail, our product development or commercialization of new products could be delayed, or revenues from products could decline and/or we may not realize the anticipated benefits of the collaboration arrangements and/or joint ventures.
Our results of operations may be adversely affected by current and potential future healthcare reforms.
In the U.S., federal and state legislatures, health agencies and third-party payors continue to focus on containing the cost of health care. Legislative and regulatory proposals, and enactments to reform health care insurance programs and increasing pressure from social sources could significantly influence the manner in which our products are prescribed and purchased. For example, provisions of the Patient Protection and Affordable Care Act (PPACA) have resulted in changes in the way health care is paid for by both governmental and private insurers, including increased rebates owed by manufacturers under the Medicaid Drug Rebate Program, annual fees and taxes on manufacturers of certain branded prescription drugs, the requirement that manufacturers participate in a discount program for certain outpatient drugs under Medicare Part D and the expansion of the number of hospitals eligible for discounts under Section 340B of the Public Health Service Act. These changes have had and are expected to continue to have a significant impact on our business.
We may face uncertainties as a result of federal and administrative efforts to repeal, substantially modify or invalidate some or all of the provisions of the PPACA. There is no assurance that the PPACA, as currently enacted or as amended in the future, will not adversely affect our business and financial results, and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.
The administration has also indicated an intent to address prescription drug pricing and recent Congressional hearings have brought increased public attention to the costs of prescription drugs. These actions and the uncertainty about the future of the PPACA and healthcare laws may put downward pressure on pharmaceutical pricing and increase our regulatory burdens and operating costs.
There is also significant economic pressure on state budgets that resultsmay result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for our drugs. In recent years, some states have considered legislation and ballot initiatives that would control the prices of drugs, including laws to allow

importation of pharmaceutical products from lower cost jurisdictions outside the U.S. and laws intended to impose price controls on state drug purchases. State Medicaid programs are increasingly requesting manufacturers to pay supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplemental rebates are not being paid. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs. This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraintlimitation on prices and reimbursement for our products.
In the E.U. and some other international markets, the government provides health care at low cost to consumers and regulates pharmaceutical prices, patient eligibility or reimbursement levels to control costs for the government-sponsored health care system. Many countries have announced or implemented measures, and may in the future implement new or additional measures, to reduce health care costs to constrain theirlimit the overall level of government expenditures. These measures vary by country and may include, among other things, patient access restrictions, suspensions on price increases, prospective and possiblypossible retroactive price reductions and other recoupments and increased mandatory discounts or rebates, recoveries of past price increases and greater importation of drugs from lower-cost countries to higher-cost countries. These measures have negatively impacted our revenues and may continue to adversely affect our revenues and results of operations in the future.
Adverse safety events or restrictions on use and safety warnings for our products can negatively affect our business, product sales and stock price.
Adverse safety events involving our marketed products may have a negative impact on our business. Discovery of safety issues with our products could create product liability and could cause additional regulatory scrutiny and requirements for additional labeling or safety monitoring, withdrawal of products from the market and the imposition of fines or criminal penalties. Adverse safety events may also damage physician, patient and/or investor confidence in our products and our reputation. Any of these could result in liabilities, loss of revenue, material write-offs of inventory, material impairments of intangible assets, goodwill and fixed assets, material restructuring charges and other adverse impacts on our results of operations.

Regulatory authorities are making greater amounts of stand-alone safety information directly available to the public through periodic safety update reports, patient registries and other reporting requirements. The reporting of adverse safety events involving our products or products similar to ours and public rumors about such events may increase claims against us and may also cause our product sales or stock price to decline or experience periods of volatility.
Restrictions on use or significant safety warnings that may be required to be included in the label of our products, such as the risk of developing progressive multifocal leukoencephalopathy, a serious brain infection, or liver injury, in the label for certain of our products, may significantly reduce expected revenues for those products and require significant expense and management time.
If we are unable to obtain and maintain adequate protection for our data, intellectual property and other proprietary rights, our business may be harmed.
Our success depends in part on our ability to obtain and defend patent and other intellectual property rights that are important to the commercialization of our products and product candidates. The degree of patent protection that will be afforded to our products and processes in the U.S. and in other important markets remains uncertain and is dependent upon the scope of protection decided upon by the patent offices, courts, administrative bodies and lawmakers in these countries. We can provide no assurance that we will successfully obtain or preserve patent protection for the technologies incorporated into our products and processes, or that the protection obtained will be of sufficient breadth and degree to protect our commercial interests in all countries where we conduct business. If we cannot prevent others from exploiting our inventions, we will not derive the benefit from them that we currently expect. Furthermore, we can provide no assurance that our products will not infringe patents or other intellectual property rights held by third parties.
We also rely on regulatory exclusivity for protection of our products. Implementation and enforcement of regulatory exclusivity, which may consist of regulatory data protection and market protection, varies widely from country to country. Failure to qualify for regulatory exclusivity, or failure to obtain or maintain the extent or duration of such protections that we expect in each of the markets for our products due to challenges, changes or interpretations in the law or otherwise, could affect our revenue for our products or our decision on whether to market our products in a particular country or countries or could otherwise have an adverse impact on our results of operations.
Litigation, interferences, oppositions, inter partes reviews or other proceedings are, have been and may in the future be necessary in some instances to determine the validity and scope of certain of our proprietary rights, and in other instances to determine the validity, scope or non-infringement of certain patent rights claimed by third parties to be pertinent to the manufacture, use or sale of our products. We may also face challenges to our patent and regulatory protections covering our products by third parties, including manufacturers of generics and biosimilars that may choose to launch or attempt to launch their products before the expiration of our patent or regulatory exclusivity. Litigation, interference, oppositions, inter partes reviews, administrative challenges or other similar types of proceedings are unpredictable and may be protracted, expensive and distracting to management. The outcome of such proceedings could adversely affect the validity and scope of our patent or other proprietary rights, hinder our ability to manufacture and market our products, require us to seek a license for the infringed product or technology or result in the assessment of significant monetary damages against us that may exceed amounts, if any, accrued in our financial statements. An adverse determination in a judicial or administrative proceeding or a failure to obtain necessary licenses could prevent us from manufacturing or selling our products. Furthermore, payments under any licenses that we are able to obtain would reduce our profits derived from the covered products and services.
Our long-term success depends upon the successful development of new products and additional indications for existing products.
Our long-term viability and growth will depend upon successful development of additional indications for our existing products as well as successful development of new products and technologies from our research and development activities, our biosimilars joint venture with Samsung Biologics or licenses or acquisitions from third parties.

Product development is very expensive and involves a high degree of risk. Only a small number of research and development programs result in the commercialization of a product. Clinical trials may indicate that our product candidates lack efficacy, have harmful side effects, result in unexpected adverse events or raise other concerns that may significantly reduce the likelihood of regulatory approval. This may result in terminated programs, significant restrictions on use and safety warnings in an approved label, adverse placement within the treatment paradigm or significant reduction in the commercial potential of the product candidate.
Successful preclinical work or early stage clinical trials does not ensure success in later stage trials, regulatory approval or commercial viability of a product.
Positive results in a trial may not be replicated in subsequent or confirmatory trials. Additionally, success in preclinical work or early stage clinical trials does not ensure that later stage or larger scale clinical trials will be successful or that regulatory approval will be obtained. In addition, even if later stage clinical trials are successful, regulatory authorities may delay or decline approval of our product candidates. Regulatory authorities may disagree with our view of the data, require additional studies or disagree with our trial design or endpoints. Regulatory authorities may also fail to approve the facilities or the processes used to manufacture a product candidate, our dosing or delivery methods or companion devices. Regulatory authorities may grant marketing approval that is more restricted than anticipated. These restrictions may include limiting indications to narrow patient populations and the imposition of safety monitoring, educational requirements and risk evaluation and mitigation strategies. The occurrence of any of these events could result in significant costs and expenses, have an adverse effect on our business, financial condition and results of operations, and cause our stock price to decline or experience periods of volatility.
Even if we are able to successfully develop new products or indications, sales of new products or products with additional indications may not meet investor expectations. We may also make a strategic decision to discontinue development of a product or indication if, for example, we believe commercialization will be difficult relative to the standard of care or other opportunities in our pipeline.
Clinical trials and the development of biopharmaceutical products is a lengthy and complex process. If we fail to adequately manage our clinical activities, our clinical trials or potential regulatory approvals may be delayed or denied.
Conducting clinical trials is a complex, time-consuming and expensive process. Our ability to complete clinical trials in a timely fashion depends in large part on a number of key factors. These factors include protocol design, regulatory and institutional review board approval, patient enrollment rates and compliance with current Good Clinical Practices. If we or our third-party clinical trial providers or third-party CROs do not successfully carry out these clinical activities, our clinical trials or the potential regulatory approval of a product candidate may be delayed or be unsuccessful.
We have opened clinical sites and are enrolling patients in a number of countries where our experience is limited. In most cases, we use the services of third parties to carry out our clinical trial related activities and rely on such parties to accurately report their results. Our reliance on third parties for these activities may impact our ability to control the timing, conduct, expense and quality of our clinical trials. One CRO has responsibility for a substantial portion of our clinical trial related activities and reporting. If this CRO does not adequately perform, many of our trials may be affected. We may need to replace our CROs. Although we believe there are a number of other CROs we could engage to continue these activities, the replacement of an existing CRO may result in the delay of the affected trials or otherwise adversely affect our efforts to obtain regulatory approvals and commercialize our product candidates.
Management and key personnel changes may disrupt our operations, and we may have difficulty retaining key personnel or attracting and retaining qualified replacements on a timely basis for management and other key personnel who may leave the Company.
We have experienced changes in management and other key personnel in critical functions across our organization, including most recently our chief executive officer and our chief financial officer. Changes in management and other key personnel have the potential to disrupt our business, and any such disruption could adversely affect our operations, programs, growth, financial condition and results of operations. Further, new members of management may have different perspectives on programs and opportunities for our business, which may cause us to focus on new business opportunities or reduce or change emphasis on our existing business programs.
Our success is dependent upon our ability to attract and retain qualified management and key personnel in a highly competitive environment. Qualified individuals are in high demand, and we may incur significant costs to attract them, particularly at the executive level. We may face difficulty in attracting and retaining key talent for a

number of reasons, such as management changes, the underperformance or discontinuation of one or more late stage programs or recruitment by competitors. We cannot assure you that we will be able to hire or retain the personnel necessary for our operations or that the loss of any such personnel will not have a material impact on our financial condition and results of operations.
Manufacturing issues could substantially increase our costs, limit supply of our products and reduce our revenues.
The process of manufacturing our products is complex, highly regulated and subject to numerous risks, including:
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.
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.
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 and numerous other factors.
Risks Relating to Compliance with current Good Manufacturing Practices (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.
Any adverse developments affecting our manufacturing operations or the operations of our third-party suppliers and manufacturers may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of our products. We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Such developments could increase our manufacturing costs, cause us to lose revenue or market share as patients and physicians turn to competing therapeutics, diminish our profitability or damage our reputation.
We depend on relationships with collaborators and other third parties for revenues, and for the development, regulatory approval, commercialization and marketing of certain of our products and product candidates, which are outside of our full control.
We rely on a number of significant collaborative and other third-party relationships for revenues, and for the development, regulatory approval, commercialization and marketing of certain of our products and product candidates. We also outsource to third parties certain aspects of our regulatory affairs and clinical development relating to our products and product candidates. Reliance on collaborative and other third-party relationships subjects us to a number of risks, including:

we may be unable to control the resources our collaborators or third parties devote to our programs or products;
disputes may arise under the agreement, including with respect to the achievement and payment of milestones or ownership of rights to technology developed with our collaborators or other third parties, and the underlying contract with our collaborators or other third parties may fail to provide significant protection or may fail to be effectively enforced if the collaborators or third parties fail to perform;
the interests of our collaborators 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;
third-party relationships 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 or could result in termination of the research, development or commercialization of product candidates or result in litigation or arbitration; and
any failure on the part of our collaborators or other third parties to comply with applicable laws and regulatory requirements in the marketing, sale and maintenance of the marketing authorization of our products or to fulfill any responsibilities our collaborators 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.
Given these risks, there is considerable uncertainty regarding the success of our current and future collaborative efforts. If these efforts fail, our product development or commercialization of new products could be delayed or revenues from products could decline.
Our business may be adversely affected if we do not successfully execute our growth initiatives.
We anticipate growth through internal development projects, commercial initiatives and external opportunities, which may include the acquisition, partnering and in-licensing of products, technologies and companies or the entry into strategic alliances and collaborations. While we believe we have a number of promising programs in our pipeline, failure of internal development projects to advance or difficulties in executing on our commercial initiatives could impact our current and future growth, resulting in additional reliance on external development opportunities for growth. The availability of high quality, cost-effective development opportunities is limited and competitive, and we are not certain that we will be able to identify candidates that we and our shareholders consider suitable or complete transactions on terms that are acceptable to us and our shareholders. We may fail to complete transactions for other reasons, including if we are unable to obtain desired financing on favorable terms, if at all. Even if we are able to successfully identify and complete acquisitions and other strategic alliances and collaborations, we may face unanticipated costs or liabilities in connection with the transaction or we may not be able to integrate them or take full advantage of them or otherwise realize the benefits that we expect.
Supporting our growth initiatives and the further development of our existing products and potential new products in our pipeline will require significant capital expenditures and management resources, including investments in research and development, sales and marketing, manufacturing capabilities and other areas of our business. If we do not successfully execute our growth initiatives, then our business and financial results may be adversely affected and we may incur asset impairment or restructuring charges.
We are pursuing opportunities to expand our manufacturing capacity for future clinical and commercial requirements for product candidates, which will result in the incurrence of significant investment with no assurance that such investment will be recouped.
While we believe we currently have sufficient large scale manufacturing capacity to meet our near-term manufacturing requirements, it is probable that we would need additional large scale manufacturing capacity to support future clinical and commercial manufacturing requirements for product candidates in our pipeline, if such candidates are successful and approved. We are building a large scale biologics manufacturing facility in Solothurn, Switzerland. Due to the long lead times necessary for the expansion of manufacturing capacity, we expect to make significant investments to build or obtain third-party contract manufacturers with no assurance that such investment will be recouped. If we are unable to adequately and timely manufacture and supply our products and product candidates or if we do not fully utilize our manufacturing facilities, our business may be harmed.

A breakdown or breach of our technology systems could subject us to liability or interrupt the operation of our business.
We are increasingly dependent upon technology systems and data. Our computer systems continue to increase in multitude and complexity due to the growth in our business, making them potentially vulnerable to breakdown, malicious intrusion and random attack. Likewise, data privacy or security breaches by individuals authorized to access our technology systems or others may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, our patients, customers or other business partners, may be exposed to unauthorized persons or to the public. Cyber-attacks are increasing in their frequency, sophistication and intensity, and are becoming increasingly difficult to detect. They are often carried out by motivated, well-resourced, skilled and persistent actors including nation states, organized crime groups, “hacktivists" and employees or contractors acting with malicious intent. Cyber-attacks could include the deployment of harmful malware and key loggers, ransomware, a denial-of-service attack, a malicious website, the use of social engineering and other means to affect the confidentiality, integrity and availability of our technology systems and data. Our key business partners face similar risks and any security breach of their systems could adversely affect our security posture. While we continue to build and improve our systems and infrastructure and believe we have taken appropriate security measures to reduce these risks to our data and information technology systems, there can be no assurance that our efforts will prevent breakdowns or breaches in our systems that could adversely affect our business and operations and/or result in the loss of critical or sensitive information, which could result in financial, legal, business or reputational harm to us. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyber-attacks and other related breaches.
If we fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased costs, penalties and a loss of business.
Our activities, and the activities of our collaborators, distributors and other third-party providers, are subject to extensive government regulation and oversight both in the U.S. and in foreign jurisdictions. The FDA and comparable agencies in other jurisdictions directly regulate many of our most critical business activities, including the conduct of preclinical and clinical studies, product manufacturing, advertising and promotion, product distribution, adverse event reporting and product risk management. Our interactions in the U.S. or abroad with physicians and other health care providers that prescribe or purchase our products are also subject to government regulation designed to prevent fraud and abuse in the sale and use of the products and place significant restrictions on the marketing practices of health care companies. Health care companies such as ours are facing heightened scrutiny of their relationships with health care providers from anti-corruption enforcement officials. In addition, health care companies such as ours have been the target of lawsuits and investigations alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off-label promotion of pharmaceutical products, payments intended to influence the referral of health care business, submission of false claims for government reimbursement, antitrust violations or violations related to environmental matters. There is also enhanced scrutiny of company-sponsored patient assistance programs, including insurance premium and co-pay assistance programs and donations to third-party charities that provide such assistance. The U.S. government has challenged some of our donations to third-party charities that provide patient assistance. If we, or our vendors or donation recipients, are deemedfound to fail to comply with relevant laws, regulations or government guidance in the operation of these programs, we could be subject to significant fines or penalties. Risks relating to compliance with laws and regulations may be heightened as we continue to expand our global operations and enter new therapeutic areas with different patient populations, which may have different product distribution methods, marketing programs or patient assistance programs from those we currently utilize or support.
RegulationsConditions and regulations governing the health care industry are subject to change, with possiblypossible retroactive effect, including:
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;
the hiring freeze implemented by the federal government shutdowns or relocations may result in 2017, including at the FDA, could impactdelays to the review and potential approval ofprocess, slowing the time necessary for new products,drug candidates to be reviewed and/or approved, which may adversely affect our business and financial condition;business;

requirements that provide for increased transparency of clinical trial results and quality data, such as the European Medicines Agency'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.
Violations of governmental regulation may be punishable by criminal and civil sanctions against us, including fines and civil monetary penalties and exclusion from participation in government programs, including Medicare and Medicaid, as well as against executives overseeing our business. In addition to penalties for violation of laws and regulations, we could be required to repay amounts we received from government payors or pay additional rebates and interest if we are found to have miscalculated the pricing information we have submitted to the government. We cannot ensure that our compliance controls, policies and procedures will in every instance protect us from acts committed by our employees, collaborators, partners or third-party providers that would violate the laws or regulations of the jurisdictions in which we operate. Whether or not we have complied with the law, an investigation into alleged unlawful conduct could increase our expenses, damage our reputation, divert management time and attention and adversely affect our business.
Our sales and operations are subject to the risks of doing business internationally.
We are increasing our presence in international markets, particularly emerging markets, subjecting us to many risks that could adversely affect our business and revenues. There is no guarantee that our efforts and strategies to expand sales in international markets will succeed. Emerging market countries may be especially vulnerable to periods of global and local political, legal, regulatory and financial instability and may have a higher incidence of corruption and fraudulent business practices. Further, certain countries may require local clinical trial data as part of the drug registration process in addition to global clinical trials, which can add to overall drug development and registration timelines. We may also be required to increase our reliance on third-party agents and unfamiliar operations and arrangements previously utilized by companies we partner or collaborate with or acquire in emerging markets. 
Our sales and operations are subject to the risks of doing business internationally, including:
less favorable intellectual property or other applicable laws;
the introduction or greater acceptance of competing products, including generics, biosimilars, prodrugs and other 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 U.K. Bribery Act 2010, and elsewhere and escalation of investigations and prosecutions pursuant to such laws;
the effects of the implementation of the U.K.'s decision to voluntarily depart 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; and
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.
In addition, our international operations are subject to regulation under U.S. law. For example, the Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies and their representatives from paying, offering to pay, promising to pay or authorizing the payment of anything of value to any foreign government official, government staff member, political party or political candidate for the purpose of obtaining or retaining business or to otherwise obtain favorable treatment or influence a person working in an official capacity. In many countries, the health care professionals we regularly interact with may meet the FCPA's definition of a foreign government official. Failure to comply with domestic or foreign laws could result in various adverse consequences, including: possible delay in approval or refusal to approve a product, recalls, seizures or withdrawal of an approved product from the market, disruption in the supply or availability of our products or suspension of export or import privileges, the imposition of civil or criminal sanctions, the prosecution of executives overseeing our international operations and damage to our reputation. Any significant impairment of our ability to sell products outside of the U.S. could adversely impact our business and financial results.
Management and key personnel changes may disrupt our operations, and we may have difficulty retaining key personnel or attracting and retaining qualified replacements on a timely basis for management and other key personnel who may leave the Company.
We have experienced changes in management and other key personnel in critical functions across our organization in recent years. Changes in management and other key personnel have the potential to disrupt our business, and any such disruption could adversely affect our operations, programs, growth, financial condition or results of operations. Further, new members of management may have different perspectives on programs and opportunities for our business, which may cause us to focus on new business opportunities or reduce or change emphasis on our existing business programs.
Our success is dependent upon our ability to attract and retain qualified management and key personnel in a highly competitive environment. Qualified individuals are in high demand, and we may incur significant costs to attract them, particularly at the executive level. We may face difficulty in attracting and retaining key talent for a number of reasons, including management changes, the underperformance or discontinuation of one or more late stage programs or recruitment by competitors. We cannot ensure that we will be able to hire or retain the personnel necessary for our operations or that the loss of any such personnel will not have a material impact on our financial condition and results of operations.
We are building a large-scale biologics manufacturing facility, which will result in the incurrence of significant investment with no assurance that such investment will be recouped.
We believe we currently have sufficient large-scale manufacturing capacity to meet our near-term manufacturing requirements. However, due to the long lead times necessary for the expansion of manufacturing capacity, in 2015 we made the decision to expand our large molecule production capacity by building a large-scale biologics manufacturing facility in Solothurn, Switzerland with no assurance that the additional capacity will be required. In addition, we have made and expect to make significant investments in connection with the building of this manufacturing facility with no assurance that such investment will be recouped. If we are unable to adequately and timely manufacture and supply our products and product candidates or if we do not fully utilize our manufacturing facilities, our business may be harmed. Charges resulting from excess capacity would have a negative effect on our financial condition and results of operations.

Manufacturing issues could substantially increase our costs, limit supply of our products and/or reduce our revenues.
The process of manufacturing our products is complex, highly regulated and subject to numerous risks, including:
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.
Risks Relating to Compliance with current Good Manufacturing Practices (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.
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.
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.
Any adverse developments affecting our manufacturing operations or the operations of our third-party suppliers and manufacturers may result in shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of our products. We may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Such developments could increase our manufacturing costs, cause us to lose revenues or market share as patients and physicians turn to competing therapeutics, diminish our profitability or damage our reputation.
In addition, although we have business continuity plans to reduce the potential for manufacturing disruptions or delays and reduce the severity of a disruptive event, there is no guarantee that these plans will be adequate, which could adversely affect our business and operations.
Our success in commercializing biosimilars developed by Samsung Bioepis is subject to risks and uncertainties inherent in the development, manufacture and commercialization of biosimilars. If Samsung Bioepis is unsuccessful in the development, manufacture and commercialization of biosimilars, we may not realize the anticipated benefits of our investment in Samsung Bioepis.
Our success in commercializing biosimilars developed by Samsung Bioepis is subject to a number of risks, including:

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;
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;
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
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.
If Samsung Bioepis is unsuccessful in the development, manufacture and commercialization of biosimilar products, we may not realize the anticipated benefits of our investment in Samsung Bioepis.
In addition, as Samsung Bioepis is a privately-held entity, our ability to liquidate our investment in Samsung Bioepis may be limited and we may realize significantly less than the value of such investment.
Our operating results are subject to significant fluctuations.
Our quarterly revenues, expenses and net income (loss) have fluctuated in the past and are likely to fluctuate significantly in the future due to the risks described in these Risk Factors as well as the timing of charges and expenses that we may take. We have recorded, or may be required to record, charges that include:
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 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 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.
Our revenues and certain assets and liabilities are also subject to foreign currency exchange rate fluctuations due to the global nature of our operations. Although we have foreign currency forward contracts to hedge specific forecasted transactions denominated in foreign currencies, our efforts to mitigate the impact of fluctuating currency exchange rates may not be successful. As a result, currency fluctuations among our reporting currency, the U.S. dollar, and other currencies in which we do business will affect our operating results, often in unpredictable ways. Our net income may also fluctuate due to the impact of charges we may be required to take with respect to foreign currency hedge transactions. In particular, we may incur higher than expected charges from early termination of a hedge relationship.
Our operating results during any one period do not necessarily suggest the anticipated results of future periods.
Our effective tax rate fluctuates, and we may incur obligations in tax jurisdictions in excess of accrued amounts.
As a global biopharmaceutical company, we are subject to taxation in numerous countries, states and other jurisdictions. As a result, our effective tax rate is derived from a combination of applicable tax rates (including withholding taxes) in the various places that we operate. In preparing our financial statements, we estimate the amount of tax that will become payable in each of such places. Our effective tax rate, however, may be different than experienced in the past due to numerous factors, including changes in the mix of our profitability from country to country, the results of examinations and audits of our tax filings, adjustments to the value of our uncertain tax positions, interpretations by tax authorities or other bodies with jurisdiction, the result of tax cases, changes in accounting for income taxes and changes in tax laws.laws either prospectively or retrospectively (including by regulation). Any of these factors could cause us to experience an effective tax rate significantly different from previous periods or our current expectations.
In addition, our inability to secure or sustain acceptable arrangements with tax authorities and future changes in the tax laws, among other things, may result in tax obligations in excess of amounts accrued in our financial statements.
InThe Tax Cuts and Jobs Act of 2017 (2017 Tax Act) resulted in significant changes to the U.S., there are several proposals under consideration to reform tax law, including proposals that may reduce or eliminate the deferral of U.S. corporate income tax system. These changes include a federal statutory rate reduction from 35% to 21%, the elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest expense and executive compensation. The 2017 Tax Act also transitions international taxation from a worldwide system to a modified territorial system, which has the effect of subjecting certain earnings of our foreign subsidiaries to immediate U.S. taxation as global intangible low-taxed income, includes base erosion prevention measures on non-U.S. earnings and the reduced effective tax rate on income that comes from U.S. exports, called Foreign Derived Intangible Income. These changes became effective in 2018.
The 2017 Tax Act also includes the Transition Toll Tax, which is a one-time mandatory deemed repatriation tax on accumulated foreign subsidiaries' previously untaxed foreign earnings. The Transition Toll Tax will be paid in installments over an eight-year period, which started in 2018, and will not accrue interest.
Our estimates concerning the impact of the 2017 Tax Act on our unrepatriated earnings, penalize certain transfer pricing structuresaccounting and reduceon our business remain subject to developing interpretations of the provisions of the 2017 Tax Act. U.S. Treasury regulations, administrative interpretations or eliminate certain foreigncourt decisions interpreting the 2017 Tax Act may require further adjustments and changes in our estimates, which could have a material adverse effect on our business, results of operations or domesticfinancial condition.
The Swiss Federal Act on Tax Reform and AHV Financing (TRAF) will result in significant changes to the Swiss cantonal income tax credits or deductions. Our future reported financial results may be adversely affectedsystem. These changes include the elimination of historic favorable cantonal tax regimes, the introduction of a patent box regime and the introduction of a research and development super deduction. The TRAF also provides for transitional rules to lessen the immediate impact of the elimination of the favorable cantonal tax regimes. These changes will become effective on January 1, 2020. In response to the TRAF, each canton must enact cantonal tax reform to comply with the framework provided by the TRAF and are also expected to lower the statutory tax lawrate to compensate for the elimination of the historic favorable cantonal tax regimes. We will account for the impact of the TRAF and the specific cantonal tax reform changes in the period in which restrict or eliminate certain foreigneach canton in which we

operate enacts the cantonal tax credits orreform. Zug, a canton in which we operate, enacted cantonal tax reform in the third quarter of 2019 and we expect Solothurn, another canton in which we operate, to enact cantonal tax reform within the next six months. Upon the enactment of Zug cantonal tax reform, we were required to remeasure our abilitySwiss deferred tax assets and liabilities, to deduct expenses attributable to foreign earnings, or otherwise affectaccount for the treatmentelimination of the historic favorable cantonal tax regimes, the impact of the transitional rules and the change in the statutory cantonal tax rate. Further remeasurement of our unrepatriated earnings.Swiss deferred tax assets and liabilities could have a significant impact on our income tax provision in the period of enactment.
In addition, to U.S. tax reform proposals, the adoptionenactment of some or all of the recommendations set forth or that may be forthcoming in the Organization for Economic Cooperation and Development’s project on “Base Erosion and Profit Shifting” (BEPS) by tax authorities and economic blocs in the countries in which we operate, could negatively impact our effective tax rate. These recommendationsinitiatives focus on payments from affiliates in high tax jurisdictions to affiliates in lower tax jurisdictions and the activities that give rise to a taxable presence in a particular country.
Our indebtedness could adversely affect our business and limit our ability to plan for or respond to changes in our business.
Our indebtedness, together with our significant contingent liabilities, including milestone and royalty payment obligations, could have important consequences to our business; for example, such obligations could:
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.
Our sales and operations are subject to the risks of doing business internationally.
We are increasing our presence incommon international markets, particularly emerging markets, subjecting us to many risks that could adversely affect our business and revenues, such as:
the inability to obtain necessary foreign regulatory or pricing approvals of products in a timely manner;
uncertainties regarding the collectability of accounts receivable;
fluctuations in foreign currency exchange rates, in particular the recent strength of the U.S. dollar versus foreign currencies, which has adversely impacted our revenues and net income;
difficulties in staffing and managing international operations;
the imposition of governmental controls;
less favorable intellectual property or other applicable laws;
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 U.K. Bribery Act 2010, and elsewhere and escalation of investigations and prosecutions pursuant to such laws;
the effects of the implementation of the U.K.'s decision to voluntarily depart 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; and
changes in tax laws and tariffs.
In addition, our international operations are subject to regulation under U.S. law. For example, the Foreign Corrupt Practices Act prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officialsprinciples for the purposeentitlement to taxation of obtaining or retaining business abroad. In many countries, the health care professionals we regularly interact with may meet the definition of a foreign government official for purposes of the Foreign Corrupt Practices Act. Failure to comply with domestic or foreign laws could result in various adverse consequences, including: possible delay in approval or refusal to approve a product; recalls, seizures or withdrawal of an approved product from the market; disruption in the supply or availability of our products or suspension of export or import privileges; the imposition of civil or criminal sanctions; the prosecution of executives overseeing our international operations;global corporate profits and damage to our reputation. Any significant impairment of our ability to sell products outside of the U.S. could adversely impact our business and financial results.
Our operating results are subject to significant fluctuations.
Our quarterly revenues, expenses and net income (loss) have fluctuated in the past and are likely to fluctuate significantly in the future due to the risks described in these “Risk Factors” as well as the timing of charges and expenses that we may take. We have recorded, or may be required to record, charges that include:
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 R&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 andminimum global tax matters;
milestone payments under license and collaboration agreements; and
payments in connection with acquisitions and other business development activities.
Our revenues are also subject to foreign currency exchange rate fluctuations due to the global nature of our operations. Although we have foreign currency forward contracts to hedge specific forecasted transactions denominated in foreign currencies, our efforts to mitigate the impact of fluctuating currency exchange rates may not be successful. As a result, currency fluctuations among our reporting currency, the U.S. dollar and the currencies in which we do business will affect our operating results, often in unpredictable ways. Our net income may also fluctuate due to the impact of charges we may be required to take with respect to foreign currency hedge transactions. In particular, we may incur higher than expected charges from hedge ineffectiveness or from the termination of a hedge relationship.
Our operating results during any one period do not necessarily suggest the anticipated results of future periods.
Our investment in Samsung Bioepis, and our success in commercializing biosimilars developed by Samsung Bioepis, is subject to risks and uncertainties inherent in the development, manufacture and commercialization of biosimilars.
Our investment in Samsung Bioepis, and our success in commercializing biosimilars developed by Samsung Bioepis, is subject to a number of risks, including:
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. If Samsung Bioepis or such 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;
Failure to Gain Market and Patient Acceptance. Market success of biosimilar products will be adversely affected if patients, physicians and/or payers do not accept biosimilar products as safe and efficacious products offering a more competitive price or other benefit over existing therapies;
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; and
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 matter are additional factors that may impact our success and/or the success of Samsung Bioepis in this business area.
rates.
Our investments in properties may not be fully realized.
We own or lease real estate primarily consisting of buildings that contain research laboratories, office space and manufacturing operations. For strategic or other operational reasons, we may decide to consolidate or co-locate certain aspects of our business operations or dispose of one or more of our properties, some of which may be located in markets that are experiencing high vacancy rates and decreasing property values. If we determine that the fair value of any of our owned properties is lower than their book value, we may not realize the full investment in these properties and incur significant impairment charges or additional depreciation when the expected useful lives of certain assets have been shortened due to the anticipated closing of facilities. If we decide to fully or partially vacate aan owned or leased property, we may incur significant cost, including facility closing costs, employee separation and retention expenses, lease termination fees, rent expense in excess of sublease income and impairment of leasehold improvements and accelerated depreciation of assets. Any of these events may have an adverse impact on our results of operations.

Our portfolio of marketable securities is subject to market, interest and credit risk that may reduce its value.
We maintain a portfolio of marketable securities for investment of our cash. Changes in the value of our portfolio of marketable securities could adversely affect our earnings. In particular, the value of our investments may decline due to increases in interest rates, downgrades of the bonds and other securities included in our portfolio, instability in the global financial markets that reduces the liquidity of securities included in our portfolio, declines in the value of collateral underlying the securities included in our portfolio and other factors. Each of these events may cause us to record charges to reduce the carrying value of our investment portfolio or sell investments for less than our acquisition cost. Although we attempt to mitigate these risks through diversification of our investments and continuous monitoring of our portfolio's overall risk profile, the value of our investments may nevertheless decline.
There can be no assurance that we will continue to repurchase stockshares or that we will repurchase stockshares at favorable prices.
From time to time our Board of Directors authorizes stockshare repurchase programs, including, most recently, our 20162019 Share Repurchase Program. The amount and timing of stockshare repurchases are subject to capital availability and our determination that stockshare repurchases are in the best interest of our shareholders and are in compliance with all respective laws and our agreements applicable to the repurchase of stock.shares. Our ability to repurchase stockshares will depend upon, among other factors, our cash balances and potential future capital requirements for strategic transactions, our results of operations, our financial condition and other factors beyond our control that we may deem relevant. A reduction in repurchases under, or the completion or expiration of, our stock repurchase programs2019 Share Repurchase Program could have a negative effect on our stock price. We can provide no assurance that we will repurchase stockshares at favorable prices, if at all.
We may not be able to access the capital and credit markets on terms that are favorable to us.
We may seek access to the capital and credit markets to supplement our existing funds and cash generated from operations for working capital, capital expenditure and debt service requirements and other business initiatives. The capital and credit markets have experienced extreme volatility and disruption in the past, which leads to uncertainty and liquidity issues for both borrowers and investors. In the event of adverse capital and credit market conditions, we may be unable to obtain capital or credit market financing on favorable terms. Changes in credit ratings issued by nationally recognized credit rating agencies could also adversely affect our cost of financing and the market price of our securities.
We may incur operational difficulties or be exposed to claims and liabilities as a result of the separation and distribution of Bioverativ.
On February 1, 2017, we distributed all of the then outstanding shares of Bioverativ common stock to Biogen shareholders in connection with the separation of our hemophilia business. In connection with the distribution, we entered into a separation and distribution agreement and various other agreements (including a transition services agreement, a tax matters agreement, a manufacturing and supply agreement, an employee matters agreement, an intellectual property matters agreement and certain other commercial agreements). These agreements govern the separation and distribution and the relationship between us and Bioverativ going forward, including with respect to potential tax-related losses associated with the separation and distribution. They also provide for the performance of services by each company for the benefit of the other for a period of time (including under the manufacturing and supply agreement pursuant to which we will manufacture and supply certain products and materials to Bioverativ).
The spin-off of our hemophilia business as an independent public company is intended to qualify for tax-free treatment to Biogen and its shareholders under the Internal Revenue Code. Completion of the spin-off was conditioned upon, among other things, our receipt of a favorable opinion from our tax advisors with respect to the tax-free nature of the transaction. The opinion is not binding on the U.S. Internal Revenue Service (IRS), or the courts, and there can be no assurance that the IRS or the courts will not challenge the qualification of the spin-off as a tax-free transaction or that any such challenge would not prevail. If the spin-off is determined to be taxable, Biogen and its shareholders could incur significant tax liabilities, whichOur indebtedness could adversely affect our business financial condition,and limit our ability to plan for or results of operations.respond to changes in our business.
Bioverativ has agreedOur indebtedness, together with our significant contingent liabilities, including milestone and royalty payment obligations, could have important consequences to indemnify usour business; for certain potential liabilities that may arise, but we cannot guarantee that Bioverativ will be ableexample, such obligations could:
increase our vulnerability to satisfy its indemnification obligations. The separationgeneral adverse economic and distribution agreement provides for indemnification obligations designedindustry conditions;
limit our ability to make Bioverativ financially responsible for many liabilities that may exist relating to its business activities, whether incurred prior to or afteraccess capital markets and incur additional debt in the distribution, including any pending or future litigation. It is possible that a court would disregard the allocation agreed to between us and Bioverativ and future;
require us to assume responsibilitydedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow for obligations allocatedother purposes, including business development efforts, research and development and mergers and acquisitions; and
limit our flexibility in planning for, or reacting to, Bioverativ. Third parties could also seek to hold us

responsible for any of these liabilities or obligations,changes in our business and the indemnity rightsindustry in which we operate, thereby placing us at a competitive disadvantage compared to our competitors that have under the separation and distribution agreement may not be sufficient to fully cover all of these liabilities and obligations. Even if we are successful in obtaining indemnification, we may have to bear costs temporarily. In addition, our indemnity obligations to Bioverativ may be significant. These risks could negatively affect our business, financial condition or results of operations.
The separation of Bioverativ continues to involve a number of risks, including, among other things, the indemnification risks described above and the potential that management’s and our employees’ attention will be significantly diverted by the provision of transitional services. Certain of the agreements described above provide for the performance of services by each company for the benefit of the other for a period of time. If Bioverativ is unable to satisfy its obligations under these agreements, including its indemnification obligations, we could incur losses. These arrangements could also lead to disputes over rights to certain shared property and over the allocation of costs and revenues for products and operations. Our inability to effectively manage the separation activities and related events could adversely affect our business, financial condition or results of operations.
We may not achieve some or all of the anticipated benefits of the separation of Bioverativ, which may adversely affect our business.
We may not be able to achieve the full strategic and financial benefits expected to result from the separation of Bioverativ, or such benefits may be delayed or not occur at all. If we fail to achieve some or all of the expected benefits of the separation, or if such benefits are delayed, our business, financial condition, results of operations and the value of our stock could be adversely impacted.less debt.
Our business involves environmental risks, which include the cost of compliance and the risk of contamination or injury.
Our business and the business of several of our strategic partners involve the controlled use of hazardous materials, chemicals, biologics and radioactive compounds. Although we believe that our safety procedures for handling and disposing of such materials comply with state, federal and foreign standards, there will always be the risk of accidental contamination or injury. If we were to become liable for an accident, or if we were to suffer an extended facility shutdown, we could incur significant costs, damages and penalties that could harm our business. Manufacturing of our products and product candidates also requires permits from government agencies for water supply and wastewater discharge. If we do not obtain appropriate permits, including permits for sufficient quantities of water and wastewater, we could incur significant costs and limits on our manufacturing volumes that could harm our business.
The illegal distribution and sale by third parties of counterfeit or unfit versions of our products or stolen products could have a negative impact on our reputation and business.
Third parties might illegally distribute and sell counterfeit or unfit versions of our products, which do not meet our rigorous manufacturing, distribution and testing standards. A patient who receives a counterfeit or unfit drug may be at risk for a number of dangerous health consequences. Our reputation and business could suffer harm as a result of counterfeit or unfit drugs sold under our brand name. Stolen inventory that is not properly stored or sold through unauthorized channels could adversely impact patient safety, our reputation and our business. In addition, inventory that is stolen from warehouses, plants or while in-transit, and that is subsequently improperly stored and sold through unauthorized channels, could adversely impact patient safety, our reputation and our business.
The increasing use of social media platforms presents new risks and challenges.
Social media is increasingly being used to communicate about our products and the diseases our therapies are designed to treat. Social media practices in the biopharmaceutical industry continue to evolve and regulations relating to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use social media channels to comment on the effectiveness of a product or to report an alleged adverse event. When such disclosures occur, there is a risk that we fail to monitor and comply with applicable adverse event reporting obligations or we may not be able to defend the company or the public's legitimate interests in the face of the political and market pressures generated by social media due to restrictions on what we may say about our products. There is also a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we could incur liability, face overly restrictive regulatory actions or incur other harm to our business.

Some of our collaboration agreements contain change in control provisions that may discourage a third party from attempting to acquire us.
Some of our collaboration agreements include change in control provisions that could reduce the potential acquisition price an acquirer is willing to pay or discourage a takeover attempt that could be viewed as beneficial to shareholders. Upon a change in control, some of these provisions could trigger reduced milestone, profit or royalty payments to us or give our collaboration partner rights to terminate our collaboration agreement, acquire operational control or force the purchase or sale of the programs that are the subject of the collaboration. 

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds
Issuer Purchases of Equity Securities
The following table summarizes our common stock repurchase activity under our 20162019 Share Repurchase Program during the third quarter of 2017:2019:
Period
Total Number of
Shares Purchased
(#)
Average Price
Paid per Share
($)
Total Number of
Shares Purchased
as Part of Publicly
Announced  Programs
(#)
Maximum
Approximate Dollar Value
of Shares That May Yet Be
Purchased Under
Our Programs ($ in millions)
July 2017
$

$3,000.0
August 2017
$

$3,000.0
September 2017


$3,000.0
Total
$
Period
Total Number of
Shares Purchased
(#)
 
Average Price
Paid per Share
($)
 
Total Number of
Shares Purchased
as Part of Publicly
Announced Programs
(#)
 
Maximum
Approximate Dollar Value
of Shares That May Yet Be
Purchased Under
Our Programs
($ in millions)
July 2019378,467
 $237.94
 378,467
 $4,000.0
August 2019
 $
 
 $4,000.0
September 20192,700,000
 $232.52
 2,700,000
 $3,372.2
Total3,078,467
 $233.19
    

In July 2016March 2019 our Board of Directors authorized our 2019 Share Repurchase Program, which is a program to repurchase up to $5.0 billion of our common stock. This authorizationOur 2019 Share Repurchase Program does not have an expiration date. All share repurchases under this authorizationour 2019 Share Repurchase Program will be retired. Under this program,our 2019 Share Repurchase Program, we repurchased and retired 3.7approximately 3.1 million and 7.0 million shares of our common stock at a cost of $1.0approximately $717.9 million and $1.6 billion during the nine months ended September 30, 2017. We did not repurchase any shares of common stock under this program during the three months ended September 30, 2017. During the three and nine months ended September 30, 2016, we repurchased and retired 1.1 million shares of common stock at a cost of $348.9 million. As of September 30, 2017, approximately $3.0 billion remains available to repurchase shares under this authorization.
In February 2011 our Board of Directors authorized a program to repurchase up to 20.0 million shares of common stock, which was completed as of March 31, 2017. During the nine months ended September 30, 2017, we repurchased 1.3 million shares of common stock at a cost of $365.4 million under this program. We did not repurchase any shares of common stock under this program during the three and nine months ended September 30, 2016.2019, respectively.
In August 2018 our Board of Directors authorized our 2018 Share Repurchase Program, which was a program to repurchase up to $3.5 billion of our common stock that was completed as of June 30, 2019. All share repurchases under our 2018 Share Repurchase Program were retired. Under our 2018 Share Repurchase Program, we repurchased and retired approximately 8.9 million shares of our common stock at a cost of approximately $2.1 billion during the nine months ended September 30, 2019.
From October 1, 2019 through October 21, 2019, we repurchased and retired approximately 2.3 million shares of our common stock at a cost of approximately $508.6 million under our 2019 Share Repurchase Program. As of October 21, 2019, we have repurchased and retired approximately 9.3 million shares of our common stock at a cost of approximately $2.1 billion under our 2019 Share Repurchase Program. Approximately $2.9 billion remained available under our 2019 Share Repurchase program as of October 21, 2019.
Item 6.    Exhibits
The exhibits listed below are filed or furnished as part of this Quarterly Report on Form 10-Q.

EXHIBIT INDEX 
Exhibit
Number
  Description of Exhibit
10.1*+
   
31.1+  
   
31.2+  
   
32.1++  
   
101++  
The following materials from Biogen Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017,2019, formatted in XBRL (ExtensibleiXBRL (Inline Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Balance Sheets, (iv) the Condensed Consolidated Statements of Cash Flows, (v) the Condensed Consolidated Statements of Equity and (v)(vi) Notes to Condensed Consolidated Financial Statements.
104The cover page from this Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, formatted in Inline XBRL.


*    Management contract or compensatory plan or arrangement

+    Filed herewith

++    Furnished herewith

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
BIOGEN INC.
 
/s/    Gregory F. CovinoJeffrey D. Capello
Gregory F. CovinoJeffrey D. Capello
Executive Vice President Financeand
Chief AccountingFinancial Officer and
Interim Principal Financial Officer (principal(principal financial officer)
October 24, 201722, 2019


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