Biogen : Reports Q3 2020 Earnings

BIOGEN REPORTS Q3 2020 RESULTS

Third quarter revenue $3,376 million; GAAP diluted EPS $4.46;

Non-GAAP diluted EPS $8.84

FDA accepted Biologics License Application for aducanumab with Priority Review

Marketing Authorization Application for aducanumab submitted in Europe

New collaboration with Denali Therapeutics bolsters pipeline for Parkinson's disease

Company announces new $5.0 billion share repurchase authorization

Cambridge, Mass., October 21, 2020 -- Biogen Inc. (Nasdaq: BIIB) today reported third quarter 2020 financial results.

"In the third quarter, Biogen continued to execute on its strategy and delivered solid performance, although we began to face the launch of multiple generics of TECFIDERA® in the U.S.," said Michel Vounatsos, Biogen's Chief Executive Officer. "We look forward to participating in the aducanumab Advisory Committee meeting on November 6th, and we are excited about the prospect of aducanumab as a short- and long-term value creation opportunity. We have continued to allocate capital to create the opportunity for long-term shareholder value, including business development with our new collaboration in Parkinson's disease."

Financial Results

• Third quarter total revenues were $3,376 million, a 6% decrease versus the third quarter of 2019, inclusive of a 1% unfavorable currency impact.
  o Multiple sclerosis (MS) revenues, including $272 million in royalties on sales of OCREVUS®, decreased 4% versus the prior year to $2,257 million.
  o SPINRAZA® revenues decreased 10% versus the prior year to $495 million. o Biosimilars revenues increased 13% versus the prior year to $208 million.
• Third quarter GAAP net income and diluted earnings per share (EPS) attributable to Biogen Inc. were $702 million and $4.46, respectively.
• Third quarter Non-GAAP net income and diluted EPS attributable to Biogen Inc. were $1,390 million and $8.84, respectively.

(In millions, except per share amounts)		Q3 '20			Q3 '19		Q3 '20 v. Q3 '19
Total revenues	$	3,376	$	3,600	(6%)
GAAP net income#	$	702	$	1,546	(55%)
GAAP diluted EPS	$	4.46	$	8.39	(47%)
Non-GAAP net income#	$	1,390	$	1,689	(18%)
Non-GAAP diluted EPS	$	8.84	$	9.17	(4%)

• Net income attributable to Biogen Inc.

Note: Percent changes represented as favorable/(unfavorable)

A reconciliation of GAAP to Non-GAAP financial measures included in this news release can be found in Table 3 at the end of this news release.

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Revenue Highlights

(In millions)Q3 '20 Q3 '19 Q3 '20 v. Q3 '19

Multiple Sclerosis:
Total Fumarate	$	968		$	1,122	(14%)
TECFIDERA	$	953		$	1,122	(15%)
VUMERITY®	$	15		$	-		NMF
Total Interferon	$	474		$	530	(11%)
AVONEX®	$	381		$	420	(9%)
PLEGRIDY®	$	93		$	110	(15%)
TYSABRI®	$	516		$	484	7%
FAMPYRA™	$	27		$	24	10%
Spinal Muscular Atrophy:
SPINRAZA	$	495		$	547	(10%)
Biosimilars:
BENEPALI™	$	124		$	116	7%
IMRALDI™	$	56		$	49	14%
FLIXABI™	$	27		$	18	49%
Other Product Revenues:
FUMADERM™	$	3		$	4	(16%)
Total Product Revenues:	$	2,690		$	2,895	(7%)
OCREVUS Royalties	$	272		$	188	45%
RITUXAN®/GAZYVA®	$	288		$	408	(29%)
Revenues
Other Revenues	$	126		$	110	15%
Total Revenues	$	3,376		$	3,600	(6%)
MS Product Revenues +	$	2,257		$	2,348	(4%)
OCREVUS Royalties

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Expense Highlights

(In millions)		Q3 '20				Q3 '19 Q3 '20 v. Q3 '19
GAAP cost of sales	$	449			$	430		(4%)
Non-GAAP cost of sales	$	449	$	430	(4%)
GAAP R&D	$	1,141	$	540	(111%)
Non-GAAP R&D	$	540	$	540	0%
GAAP SG&A	$	573	$	555	(3%)
Non-GAAP SG&A	$	569	$	547	(4%)

Note: Percent changes represented as favorable/(unfavorable)

• GAAP R&D expenses in the third quarter of 2020 included a $601 million charge related to Biogen's collaboration with Denali Therapeutics Inc. (Denali), which Biogen entered into in the third quarter of 2020 ($560 million upfront and a $41 million premium paid on Denali common stock purchased). These amounts are excluded from Non-GAAP R&D expense. Beginning in the third quarter of 2020, material upfront payments associated with significant collaboration and licensing arrangements are excluded from Non-GAAP R&D expense in order to better reflect the Company's core operating performance. Year-to-dateNon-GAAP results also reflect this change as the $125 million upfront payment related to the collaboration with Sangamo Therapeutics, Inc. (Sangamo) in the second quarter of 2020 has also now been excluded from Non- GAAP R&D expense.

Other Financial Highlights

• For the third quarter of 2020 GAAP and Non-GAAP net expense related to collaboration profit sharing was $73 million.
• For the third quarter of 2020 GAAP other expense was $129 million, primarily driven by net interest expense of $50 million and unrealized losses on strategic equity investments of $82 million. Non-GAAP other expense for the third quarter of 2020 was $46 million, primarily driven by net interest expense of $50 million partially offset by foreign exchange rate gains of $3 million.
• For the third quarter of 2020 the Company's GAAP effective tax rate was approximately 25%, an increase from approximately 12% in the third quarter of 2019. This increase was primarily due to prior year favorability on Swiss tax reform as well as current year unfavorability, primarily driven by non-cash deferred tax adjustments related to TECFIDERA. For the third quarter of 2020 the Company's Non-GAAP effective tax rate was approximately 18%, an increase from approximately 16% in the third quarter of 2019.
• In the third quarter of 2020 Biogen repurchased approximately 4.5 million shares of the Company's common stock for a total value of approximately $1,250 million. The share repurchase program authorized in December 2019 was completed as of September 30,

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2020.

• On October 20, 2020, Biogen's Board of Directors authorized a program to repurchase up to $5.0 billion of the Company's common stock (the 2020 Share Repurchase Program). The 2020 Share Repurchase Program does not have an expiration date. All shares repurchased under the 2020 Share Repurchase Program will be retired.
• As of September 30, 2020, Biogen had cash, cash equivalents, and marketable securities totaling $4,590 million and $7,425 million in notes payable. In the third quarter of 2020 the Company generated approximately $1,181 million in net cash flow from operations. Capital expenditures were $84 million in the third quarter of 2020, and free cash flow, defined as net cash flow from operations less capital expenditures, was $1,097 million.
• For the third quarter of 2020 the Company's weighted average diluted shares were 157 million.

2020 Financial Guidance

Biogen is providing an update to its full year 2020 financial guidance, which was last updated in July 2020 and assumed no generic entry for TECFIDERA. During the third quarter of 2020, the Company began to experience the impact of multiple TECFIDERA generic entrants in the U.S., and this financial guidance assumes significant erosion of TECFIDERA in the fourth quarter of 2020, the pace of which is difficult to predict. As a result, Biogen currently expects:

• 2020 Full Year Revenue to be approximately $13.2 billion to $13.4 billion, compared to the prior guidance range of $13.8 billion to $14.2 billion.
• 2020 Full Year GAAP diluted EPS to be between $25.50 and $26.50, compared to the prior guidance range of $32.00 to $34.00.
• 2020 Full Year Non-GAAP diluted EPS to be between $32.50 and $33.50, compared to the prior guidance range of $34.00 to $36.00. This range excludes the upfront payments associated with the Sangamo and Denali collaborations during the second and third quarters of 2020, respectively.

This financial guidance does not include potential impacts from new acquisitions or large business development transactions, as both have elements that are hard to predict. This financial guidance assumes that foreign exchange rates as of September 30, 2020, remain in effect for the remainder of the year.

Biogen may incur charges, realize gains or losses, or experience other events or circumstances in 2020 that could cause actual results to vary from this financial guidance.

Recent Events

• In October 2020 Biogen submitted the Marketing Authorization Application (MAA) to the European Medicines Agency (EMA) for the review of aducanumab, an

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