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Fair Value Measurements | 9 Months Ended
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Sep. 30, 2022
Fair Value Disclosures [Abstract] |
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:
|  | Fair Value Measurements on a Recurring Basis
|  | As of September 30, 2022
(In millions) |  | Total |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 3,191.8 |  |  | $ | — |  |  | $ | 3,191.8 |  |  | $ | — |
Marketable debt securities: |  |  |  |  |  |  |  |
Corporate debt securities |  | 1,219.1 |  |  | — |  |  | 1,219.1 |  |  | — |
Government securities |  | 702.0 |  |  | — |  |  | 702.0 |  |  | — |
Mortgage and other asset backed securities |  | 174.7 |  |  | — |  |  | 174.7 |  |  | — |
Marketable equity securities |  | 896.0 |  |  | 896.0 |  |  | — |  |  | — |
Other current assets: |  |  |  |  |  |  |  |
Receivable from Samsung BioLogics(1) |  | 790.8 |  |  | — |  |  | — |  |  | 790.8 |
Other assets: |  |  |  |  |  |  |  |
Derivative contracts |  | 195.9 |  |  | — |  |  | 195.9 |  |  | — |
Plan assets for deferred compensation |  | 32.2 |  |  | — |  |  | 32.2 |  |  | — |
Receivable from Samsung BioLogics(1) |  | 402.8 |  |  | — |  |  | — |  |  | 402.8 |
Total |  | $ | 7,605.3 |  |  | $ | 896.0 |  |  | $ | 5,515.7 |  |  | $ | 1,193.6 |
Liabilities: |  |  |  |  |  |  |  |
Derivative contracts |  | $ | 22.8 |  |  | $ | — |  |  | $ | 22.8 |  |  | $ | — |
Contingent consideration obligations |  | 195.4 |  |  | — |  |  | — |  |  | 195.4 |
Total |  | $ | 218.2 |  |  | $ | — |  |  | $ | 22.8 |  |  | $ | 195.4 |
(1) Represents the fair value of the current and non-current payments due from Samsung BioLogics as a result of the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics during the second quarter of 2022, for which we elected the fair value option. For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 2, Dispositions, to these condensed consolidated financial statements.
|  | Fair Value Measurements on a Recurring Basis
|  | As of December 31, 2021
(In millions) |  | Total |  | Quoted Prices in Active Markets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Assets: |  |  |  |  |  |  |  |
Cash equivalents |  | $ | 1,632.2 |  |  | $ | — |  |  | $ | 1,632.2 |  |  | $ | — |
Marketable debt securities: |  |  |  |  |  |  |  |
Corporate debt securities |  | 1,108.2 |  |  | — |  |  | 1,108.2 |  |  | — |
Government securities |  | 1,192.7 |  |  | — |  |  | 1,192.7 |  |  | — |
Mortgage and other asset backed securities |  | 132.2 |  |  | — |  |  | 132.2 |  |  | — |
Marketable equity securities |  | 1,048.5 |  |  | 181.7 |  |  | 866.8 |  |  | — |
Derivative contracts |  | 80.9 |  |  | — |  |  | 80.9 |  |  | — |
Plan assets for deferred compensation |  | 33.4 |  |  | — |  |  | 33.4 |  |  | — |
Total |  | $ | 5,228.1 |  |  | $ | 181.7 |  |  | $ | 5,046.4 |  |  | $ | — |
Liabilities: |  |  |  |  |  |  |  |
Derivative contracts |  | $ | 10.8 |  |  | $ | — |  |  | $ | 10.8 |  |  | $ | — |
Contingent consideration obligations |  | 209.1 |  |  | — |  |  | — |  |  | 209.1 |
Total |  | $ | 219.9 |  |  | $ | — |  |  | $ | 10.8 |  |  | $ | 209.1 |
The fair value of Level 2 instruments classified as cash equivalents and marketable debt securities was determined through third-party pricing services. As of September 30, 2022, we elected to early adopt ASU 2022-03 on a prospective basis, which resulted in removing the impact of contractual sale restrictions from the fair value measurement of our remaining Sage common stock subject to certain holding period restrictions. As of September 30, 2022, our entire investment in the common stock of Sage was classified as a Level 1 measurement. Prior to the adoption of this standard, the fair value of Level 2 instruments classified as marketable equity securities represented a portion of our investment in the common stock of Sage and was valued using an option pricing valuation model. The initial holding period restriction for a portion of our investment in the common stock of Sage expired during the second quarter of 2022 with the remaining holding period restriction set to expire in the fourth quarter of 2022. Our investments in the common stock of Sangamo Therapeutics, Inc. (Sangamo) and Denali Therapeutics Inc. (Denali) had holding period restrictions that expired during 2022. As of September 30, 2022, the fair values of our investments in Sangamo and Denali common stock were classified as Level 1 measurements. Prior to the expiration of these holding period restrictions the investments were classified as Level 2 measurements. For additional information on our investments in Sangamo, Denali and Sage common stock, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K. There have been no material impairments of our assets measured and carried at fair value as of September 30, 2022 and December 31, 2021. There have been no significant changes to our valuation techniques as of September 30, 2022 and December 31, 2021. For a description of our validation procedures related to prices provided by third-party pricing services and our option pricing valuation model, please read Note 1, Summary of Significant Accounting Policies - Fair Value Measurements, to our consolidated financial statements included in our 2021 Form 10-K. Level 3 Assets and Liabilities Held at Fair Value The following table presents quantitative information, as of the dates indicated, about the valuation techniques and significant unobservable inputs used in the valuation of our level 3 financial assets and liabilities measured at fair value on a recurring basis:
|  | Quantitative Information about Level 3 Fair Value Measurements
|  | Fair Value |  |  |  |  |  |  |  | Weighted Average
(In millions) |  | September 30, 2022 |  | December 31, 2021 |  | Valuation Technique |  | Significant Unobservable Input(s) |  | Range |  | September 30, 2022 |  | December 31, 2021
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration obligations |  | $ | 195.4 |  |  | $ | 209.1 |  |  | Discounted cash flow |  | Discount rate |  | 4.50% |  | 4.50 | % |  | 1.30 | %
|  |  |  |  |  | Expected timing of achievement of development milestones |  | 2023 to 2028 |  | — |  |  | — |
The weighted average discount rates were calculated based on the relative fair value of our contingent consideration obligations. In addition, we apply various probabilities of technological and regulatory success to the valuation models to estimate the fair values of our contingent consideration obligations, which ranged from 10.9% to certain probability as of September 30, 2022 and December 31, 2021. There were no transfers of assets or liabilities into or out of Level 3 as of September 30, 2022 and December 31, 2021. Contingent Consideration Obligations In connection with our acquisitions of Convergence and Biogen International Neuroscience GmbH, 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 are classified as Level 3 measurements:
|  | For the Three Months Ended September 30, |  | For the Nine Months Ended September 30,
(In millions) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Fair value, beginning of period |  | $ | 197.5 |  |  | $ | 226.3 |  |  | $ | 209.1 |  |  | $ | 259.8 |
Changes in fair value |  | (2.1) |  |  | (15.6) |  |  | (13.7) |  |  | (49.1) |
Fair value, end of period |  | $ | 195.4 |  |  | $ | 210.7 |  |  | $ | 195.4 |  |  | $ | 210.7 |
As of September 30, 2022 and December 31, 2021, approximately $195.4 million and $209.1 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 any remaining balances reflected as a component of accrued expense and other. Changes in the fair values of our contingent consideration obligations are recorded in (gain) loss on fair value remeasurement of contingent consideration in our condensed consolidated statements of income. For the three and nine months ended September 30, 2022, the changes in the fair value of our contingent consideration obligations were primarily due to increases in the discount rates used to revalue these obligations and delays in the expected timing of the achievement of certain remaining developmental milestones related to our vixotrigine programs. For the three and nine months ended September 30, 2021, the changes in the fair value of our contingent consideration obligations were primarily due to reductions in the probability of technical and regulatory success and delays in the expected timing of the achievement of certain remaining developmental milestones related to our vixotrigine programs. Financial Instruments Not Carried at Fair Value Other Financial Instruments Due to the short-term nature of certain financial instruments, the carrying value reflected in our condensed consolidated balance sheets for current accounts receivable, due from anti-CD20 therapeutic programs, other current assets, accounts payable and accrued expense and other, approximates fair value. Debt Instruments The fair and carrying values of our debt instruments, which are Level 2 liabilities, are summarized as follows:
|  | As of September 30, 2022 |  | As of December 31, 2021
(In millions) |  | Fair Value |  | Carrying Value |  | Fair Value |  | Carrying Value
3.625% Senior Notes due September 15, 2022(1) |  | $ | — |  |  | $ | — |  |  | $ | 1,020.0 |  |  | $ | 999.1 |
4.050% Senior Notes due September 15, 2025 |  | 1,697.8 |  |  | 1,744.3 |  |  | 1,895.2 |  |  | 1,742.9 |
2.250% Senior Notes due May 1, 2030 |  | 1,183.0 |  |  | 1,492.7 |  |  | 1,475.9 |  |  | 1,492.0 |
5.200% Senior Notes due September 15, 2045 |  | 997.2 |  |  | 1,100.2 |  |  | 1,463.0 |  |  | 1,099.9 |
3.150% Senior Notes due May 1, 2050 |  | 965.6 |  |  | 1,473.6 |  |  | 1,457.7 |  |  | 1,473.2 |
3.250% Senior Notes due February 15, 2051 |  | 452.8 |  |  | 468.4 |  |  | 692.9 |  |  | 466.0 |
Total |  | $ | 5,296.4 |  |  | $ | 6,279.2 |  |  | $ | 8,004.7 |  |  | $ | 7,273.1 |
(1) Our 3.625% Senior Notes due September 15, 2022, were redeemed in full in July 2022. For additional information, please read Note 12, Indebtedness, to these condensed consolidated financial statements. The fair values of each of our series of Senior Notes were determined through market, observable and corroborated sources. The changes in the fair values of our Senior Notes as of September 30, 2022, compared to December 31, 2021, are related to increases in U.S. treasury yields and wider credit spreads used to value our Senior Notes since December 31, 2021. For additional information related to our Senior Notes, please read Note 12, Indebtedness, to our consolidated financial statements included in our 2021 Form 10-K.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=123874694&loc=d3e19207-110258 + Details
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