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Fair Value Measurements | 12 Months Ended
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Dec. 31, 2022
Fair Value Disclosures [Abstract] |
Fair Value Measurements |
Note 8: | 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 December 31, 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 |  | $ | 2,847.6 |  |  | $ | — |  |  | $ | 2,847.6 |  |  | $ | — |
Marketable debt securities: |  |  |  |  |  |  |  |
Corporate debt securities |  | 1,231.6 |  |  | — |  |  | 1,231.6 |  |  | — |
Government securities |  | 810.3 |  |  | — |  |  | 810.3 |  |  | — |
Mortgage and other asset backed securities |  | 137.3 |  |  | — |  |  | 137.3 |  |  | — |
Marketable equity securities |  | 791.1 |  |  | 791.1 |  |  | — |  |  | — |
Other current assets: |  |  |  |  |  |  |  |
Receivable from Samsung BioLogics(1) |  | 798.8 |  |  | — |  |  | — |  |  | 798.8 |
Other assets: |  |  |  |  |  |  |  |
Derivative contracts |  | 63.0 |  |  | — |  |  | 63.0 |  |  | — |
Plan assets for deferred compensation |  | 32.8 |  |  | — |  |  | 32.8 |  |  | — |
Receivable from Samsung BioLogics(1) |  | 405.4 |  |  | — |  |  | — |  |  | 405.4 |
Total |  | $ | 7,117.9 |  |  | $ | 791.1 |  |  | $ | 5,122.6 |  |  | $ | 1,204.2 |
Liabilities: |  |  |  |  |  |  |  |
Derivative contracts |  | $ | 26.0 |  |  | $ | — |  |  | $ | 26.0 |  |  | $ | — |
Total |  | $ | 26.0 |  |  | $ | — |  |  | $ | 26.0 |  |  | $ | — |
(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 3, Dispositions, to these consolidated financial statements.
|  | 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. In the third quarter of 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 December 31, 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. 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 December 31, 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. Although the contractual holding period restrictions on our investments in Denali, Sage and Sangamo have expired, our ability to liquidate these investments may be limited by the size of our interest, the volume of market related activity, our concentrated level of ownership and potential restrictions resulting from our status as a collaborator. Therefore, we may realize significantly less than the current value of such investments. For additional information on our investments in Denali, Sangamo and Sage common stock, please read Note 19, Collaborative and Other Relationships, to these consolidated financial statements. There have been no material impairments of our assets measured and carried at fair value as of December 31, 2022 and 2021. In addition, there have been no changes in valuation techniques as of December 31, 2022 and 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 the Fair Value Measurements section within Note 1, Summary of Significant Accounting Policies, to these consolidated financial statements. 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 |  |  |  | Significant Unobservable Input(s) |  | Range |  | Weighted Average
(In millions) |  | 2022(1) |  | 2021 |  | Valuation Technique |  |  | 2021 |  | 2022(1) |  | 2021
Liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Contingent consideration obligations |  | $ | — |  |  | $ | 209.1 |  |  | Discounted cash flow |  | Discount rate |  | 1.30% |  | — | % |  | 1.30 | %
|  |  |  |  |  | Expected timing of achievement of development milestones |  | 2023 to 2027 |  | — |  |  | — |
(1) During the year ended December 31, 2022, we discontinued the development of vixotrigine and as a result we adjusted the fair value of our contingent consideration obligations to zero. 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 December 31, 2021. There were no transfers of assets or liabilities into or out of Level 3 as of December 31, 2022 and 2021. Contingent Consideration Obligations In connection with our acquisitions of Convergence and BIN, 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:
|  | As of December 31,
(In millions) |  | 2022 |  | 2021
Fair value, beginning of year |  | $ | 209.1 |  |  | $ | 259.8 |
Changes in fair value |  | (209.1) |  |  | (50.7) |
Fair value, end of year |  | $ | — |  |  | $ | 209.1 |
As of December 31, 2021, approximately $209.1 million of the fair value of our total contingent consideration obligations was reflected as a component of other long-term liabilities in our consolidated balance sheets. Changes in the fair values of our contingent consideration obligations are recorded in (gain) loss on fair value remeasurement of contingent consideration in our consolidated statements of income. For the year ended December 31, 2022, the changes in fair value of our contingent consideration obligations were primarily due to the discontinuation of further development efforts related to vixotrigine for the potential treatment of TGN and DPN, resulting in a reduction of our contingent consideration obligations of approximatel y $195.4 million, and changes in the interest rates used to revalue our contingent consideration liabilities. For the year ended December 31, 2021, the changes in 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. The fair values of the contingent consideration liabilities were based on a probability-adjusted discounted cash flow calculation using Level 3 fair value measurements and inputs. For additional information on the valuation techniques and inputs utilized in the valuation of our financial assets and liabilities, please read Note 1, Summary of Significant Accounting Policies, to these consolidated financial statements. Convergence Pharmaceuticals Holdings Limited In connection with our acquisition of Convergence in February 2015 we recorded a contingent consideration obligation of $274.5 million. As of December 31, 2021, the fair value of this contingent consideration obligation was $209.1 million. During the fourth quarter of 2022 we discontinued further development of vixotrigine based on regulatory, development and commercialization challenges. As a result, the fair value of the contingent consideration obligations related to Convergence has been adjusted to zero, resulting in a pre-tax gain of approximately $209.1 million for the year ended December 31, 2022. This pre-tax gain was recorded in (gain) loss on fair value remeasurement of contingent consideration within our consolidated statements of income. Biogen International Neuroscience GmbH In connection with our acquisition of BIN in December 2010 we recorded a contingent consideration obligation of $81.2 million. We discontinued further development of BIIB054 for the potential treatment of Parkinson's disease based on the results of a Phase 2 study of BIIB054. Additionally, during the third and fourth quarters of 2020 we discontinued other programs related to our acquisition of BIN for which we had immaterial contingent consideration obligations. As a result, the fair value of the contingent consideration obligations related to our acquisition of BIN was adjusted to zero, resulting in a gain of $101.5 million for the year ended December 31, 2020. This pre-tax gain was recorded in (gain) loss on fair value remeasurement of contingent consideration within our consolidated statements of income. Nonrecurring Fair Value Measurements For the year ended December 31, 2022, we recorded impairment charges of $119.6 million related to vixotrigine. As a result, the remaining book values associated with these programs were reduced to zero. For the year ended December 31, 2021, we recorded impairment charges of $365.0 million related to BIIB111 and $220.0 million related to BIIB112. As a result, the remaining book values associated with these programs were reduced to zero. For additional information on our impairments for intangible assets, please read Note 7, Intangible Assets and Goodwill, to these consolidated financial statements. 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 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 values of our debt instruments, which are Level 2 liabilities, are summarized as follows:
|  | Fair Value As of December 31,
(In millions) |  | 2022 |  | 2021
3.625% Senior Notes due September 15, 2022(1) |  | $ | — |  |  | $ | 1,020.0 |
4.050% Senior Notes due September 15, 2025 |  | 1,699.9 |  |  | 1,895.2 |
2.250% Senior Notes due May 1, 2030 |  | 1,219.0 |  |  | 1,475.9 |
5.200% Senior Notes due September 15, 2045 |  | 1,033.2 |  |  | 1,463.0 |
3.150% Senior Notes due May 1, 2050 |  | 989.0 |  |  | 1,457.7 |
3.250% Senior Notes due February 15, 2051 |  | 469.1 |  |  | 692.9 |
Total |  | $ | 5,410.2 |  |  | $ | 8,004.7 |
(1) In July 2022 we redeemed our 3.625% Senior Notes due September 15, 2022 in full. For additional information on the redemption, please read Note 13, Indebtedness, to these 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 December 31, 2022, compared to 2021, are primarily related to increases in U.S. treasury yields used to value our Senior Notes since December 31, 2021. For additional information related to our Senior Notes, please read Note 13, Indebtedness, to these consolidated financial statements.

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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 https://asc.fasb.org/extlink&oid=126976982&loc=d3e19207-110258 + Details
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