Cost of Goods Sold, Capacity Charges

[Table of Contents](#ie9658fba2baf4e3799b1175f69eaed46_7)BIOGEN INC. AND SUBSIDIARIESNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(unaudited, continued)ADUHELM Collaboration AgreementUnder our initial ADUHELM Collaboration Agreement, we would lead the ongoing development of ADUHELM, and we and Eisai would co-promote ADUHELM with a region-based profit split. Beginning January 1, 2019, Eisai was reimbursing us for 45.0% of development costs incurred by the collaboration for the advancement of ADUHELM (ADUHELM development expense). In June 2021 ADUHELM was granted accelerated approval by the FDA for the treatment of Alzheimer's disease and had its first commercial sale. As a result of the launch of ADUHELM in the U.S., we made a $100.0 million milestone payment to Neurimmune. During the second quarter of 2021 we recognized net profit-sharing income of $45.0 million to reflect Eisai's 45.0% share of the $100.0 million milestone payment, which was recorded in collaboration profit (loss) sharing in our condensed consolidated statements of income.In March 2022 we amended our ADUHELM Collaboration Agreement with Eisai. Effective March 2022 we have sole decision making and commercialization rights worldwide on ADUHELM and beginning January 1, 2023, Eisai will receive a tiered royalty based on net sales of ADUHELM, rather than sharing global profits and losses. Eisai's share of development, commercialization and manufacturing expense is limited to $335.0 million for the period from January 1, 2022 to December 31, 2022. Once the tiered royalty model commences on January 1, 2023, Eisai will not participate in ADUHELM’s economics beyond these royalties.A summary of development expense, sales and marketing expense and milestone payments related to the ADUHELM Collaboration Agreement is as follows:

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|  |  | For the Three Months Ended March 31, |  |  |
| (In millions) |  | 2022 |  | 2021 |  |  |  |  |
| Total ADUHELM development expense |  | $ | 44.2  |  |  | $ | 47.0  |  |  |  |  |  |
| Biogen's share of ADUHELM development expense reflected in research and development expense in our condensed consolidated statements of income |  | 24.3  |  |  | 25.8  |  |  |  |  |  |
| Total ADUHELM sales and marketing expense incurred by the ADUHELM Collaboration Agreement |  | 95.0  |  |  | 111.8  |  |  |  |  |  |
| Biogen's share of ADUHELM sales and marketing expense reflected in selling, general and administrative expense and collaboration profit (loss) sharing in our condensed consolidated statements of income |  | 50.9  |  |  | 60.3  |  |  |  |  |  |
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Co-promotion Profits and LossesIn the U.S. we recognize revenue on sales to third parties as a component of product revenue, net in our condensed consolidated statements of income. We also record the related cost of revenue and sales and marketing expense in our condensed consolidated statements of income as these costs are incurred. Payments made to and received from Eisai for its 45.0% share of the co-promotion profits or losses in the U.S. are recognized in collaboration profit (loss) sharing in our condensed consolidated statements of income. For the three months ended March 31, 2022, we recognized a net reduction to our operating expense of $181.7 million to reflect Eisai's 45.0% share of net collaboration losses in the U.S.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.During the first quarter of 2022 we recorded approximately $275.0 million of gross charges associated with inventory and purchase commitments in excess of forecasted demand related to ADUHELM, as well as approximately $45.0 million of gross idle capacity charges, which were recognized in cost of sales within our condensed consolidated statements of income. We have recognized approximately $160.0 million related to Eisai's 45.0% share of these charges in collaboration profit (loss) sharing within our condensed consolidated statements of income.Amounts receivable from Eisai related to the agreements discussed above were $402.7 million and $285.4 million as of March 31, 2022 and December 31, 2021, respectively. Amounts payable to Eisai related to the agreements discussed above were $36.5 million and $46.5 million as of March 31, 2022 and December 31, 2021, respectively.For additional information on the ADUHELM Collaboration Agreement, please read Note 18, Collaborative and Other Relationships, to our consolidated financial statements included in our 2021 Form 10-K.30
