##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended September 30, 2002

Commission File Number 0-12042

BIOGEN, INC.

(Exact name of registrant as specified in its charter)


|                                                                             |  |                                                
|---------------------------------------------------------------------------- |  | -----------------------------------------------
|Massachusetts
(State or other jurisdiction of
incorporation or organization) |  | 04-3002117
(I.R.S. Employer
Identification No.)

14 Cambridge Center, Cambridge, MA 02142
(617) 679-2000
(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)

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.

Yes [ X ]      No [   ]

The number of shares of the registrants Common Stock, $0.01 par value,
outstanding as of October 8, 2002 was 149,064,423 shares.

1



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TABLE OF CONTENTS



|                                                                                      |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                                                       
|CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                          
|CONDENSED CONSOLIDATED BALANCE SHEETS                                                
|CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
|NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                 
|MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II  OTHER INFORMATION                                                          
|EX-3.1 By-Laws                                                                       
|EX-10.1 Letter Agreement w/ J.L. Vincent, 7/15/02                                    
|EX-10.2 Letter Agreement re: J.L. Vincent, 7/15/02                                   
|EX-99.1 Certification Pursuant to Section 906                                        



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##### Table of Contents



BIOGEN, INC.

INDEX

|                                                                                                      |  |             |    | 
|----------------------------------------------------------------------------------------------------- |  | ----------- | -- | 
|                                                                                                      |  | Page Number
|                                                                                                      |  |            
|PART I  FINANCIAL INFORMATION                                                                        |  |             |    | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Condensed Consolidated Statements of Income  Three and nine months ended September
30, 2002 and 2001 |  |             | 3  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Condensed Consolidated Balance Sheets  September 30, 2002 and December 31, 2001                      |  |             | 4  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Condensed Consolidated Statements of Cash Flows 
Nine months ended September 30, 2002 and 2001       |  |             | 5  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Notes to Condensed Consolidated Financial Statements                                                  |  |             | 6  | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Managements Discussion and Analysis of Financial Condition and Results of Operations                 |  |             | 11 | 
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|PART II  OTHER INFORMATION                                                                           |  |             | 19 | 

Note concerning trademarks: AVONEX® and AMEVIVE® are registered trademarks of
Biogen, Inc.

2



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BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share amounts)

|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |         | 
|--------------------------- | ----------------------------------- | - | ------------------ | ------- | ----------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                            |                                     |   | Three Months Ended |         | Nine Months Ended
|                            |                                     |   | September 30,      |         | September 30,    
|                            |                                     |   |                    |         |                  
|                            |                                     |   | 2002               |         | 2001              |   | 2002    |         | 2001
|                            |                                     |   |                    |         |                   |   |         |         |     
|REVENUES:                   |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                           
|                           
|                           
|                           
|                            | Product                             |   | $                  | 261,563 |                   |   | $       | 248,107 |      |   | $       | 778,090 |  |   | $       | 711,244 | 
|                           
|                           
|                           
|                           
|                            | Royalties                           |   |                    | 26,765  |                   |   |         | 15,990  |      |   |         | 67,844  |  |   |         | 50,485  | 
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Total revenues              |                                     |   | 288,328            |         |                   |   | 264,097 |         |      |   | 845,934 |         |  |   | 761,729 |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|COSTS AND EXPENSES:         |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                           
|                           
|                           
|                           
|                            | Cost of revenues                    |   |                    | 42,050  |                   |   |         | 36,458  |      |   |         | 117,577 |  |   |         | 100,806 | 
|                           
|                           
|                           
|                           
|                            | Research and development            |   |                    | 104,551 |                   |   |         | 78,895  |      |   |         | 276,366 |  |   |         | 230,783 | 
|                           
|                           
|                           
|                           
|                            | Selling, general and administrative |   |                    | 72,646  |                   |   |         | 59,157  |      |   |         | 237,603 |  |   |         | 162,906 | 
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Total costs and expenses    |                                     |   | 219,247            |         |                   |   | 174,510 |         |      |   | 631,546 |         |  |   | 494,495 |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Income from operations      |                                     |   | 69,081             |         |                   |   | 89,587  |         |      |   | 214,388 |         |  |   | 267,234 |        
|                           
|                           
|                           
|                           
|Other income (expense), net |                                     |   | (10,459            | )       |                   |   | 10,147  |         |      |   | 4,673   |         |  |   | 38,143  |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|INCOME BEFORE INCOME TAXES  |                                     |   | 58,622             |         |                   |   | 99,734  |         |      |   | 219,061 |         |  |   | 305,377 |        
|                           
|                           
|                           
|                           
|Income taxes                |                                     |   | 16,414             |         |                   |   | 29,911  |         |      |   | 61,337  |         |  |   | 91,579  |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|NET INCOME                  |                                     | $ | 42,208             |         |                   | $ | 69,823  |         |      | $ | 157,724 |         |  | $ | 213,798 |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|BASIC EARNINGS PER SHARE    |                                     | $ | 0.28               |         |                   | $ | 0.47    |         |      | $ | 1.06    |         |  | $ | 1.44    |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|DILUTED EARNINGS PER SHARE  |                                     | $ | 0.28               |         |                   | $ | 0.46    |         |      | $ | 1.04    |         |  | $ | 1.40    |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|SHARES USED IN COMPUTING:   |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                           
|                           
|                           
|                           
|Basic earnings per share    |                                     |   | 149,521            |         |                   |   | 148,412 |         |      |   | 149,137 |         |  |   | 148,401 |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Diluted earnings per share  |                                     |   | 151,397            |         |                   |   | 152,636 |         |      |   | 151,878 |         |  |   | 153,155 |        
|                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        

See Notes to Condensed Consolidated Financial Statements.

3



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BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                     |                                        |   |               |           |              |   |           |           |  
|------------------------------------ | -------------------------------------- | - | ------------- | --------- | ------------ | - | --------- | --------- | -
|                                     |                                        |   | September 30, |           | December 31,
|                                     |                                        |   | 2002          |           | 2001        
|                                     |                                        |   |               |           |             
|                                     |                                        |   | (unaudited)   |           |              |   |          
|ASSETS                               |                                        |   |               |           |              |   |           |          
|                                    
|                                    
|                                    
|                                    
|Current assets                       |                                        |   |               |           |              |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Cash and cash equivalents              |   | $             | 50,507    |              |   | $         | 54,042    |  
|                                    
|                                    
|                                    
|                                    
|                                     | Marketable securities                  |   |               | 777,890   |              |   |           | 744,065   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts receivable, net               |   |               | 158,177   |              |   |           | 177,582   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred tax assets                    |   |               | 43,320    |              |   |           | 44,108    |  
|                                    
|                                    
|                                    
|                                    
|                                     | Other current assets                   |   |               | 117,023   |              |   |           | 77,930    |  
|                                     |                                        |   |               |           |              |   |           |          
|                                     | Total current assets                   |   |               | 1,146,917 |              |   |           | 1,097,727 |  
|                                     |                                        |   |               |           |              |   |           |          
|Property, plant and equipment        |                                        |   |               |           |              |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Cost                                   |   |               | 892,865   |              |   |           | 727,825   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Less accumulated depreciation          |   |               | 202,036   |              |   |           | 171,827   |  
|                                     |                                        |   |               |           |              |   |           |          
|                                     | Property, plant and equipment, net     |   |               | 690,829   |              |   |           | 555,998   |  
|                                     |                                        |   |               |           |              |   |           |          
|Patents, net                         |                                        |   | 15,574        |           |              |   | 16,562    |          
|                                    
|                                    
|                                    
|                                    
|Other assets                         |                                        |   | 31,652        |           |              |   | 50,759    |          
|                                     |                                        |   |               |           |              |   |           |          
|                                     |                                        | $ | 1,884,972     |           |              | $ | 1,721,046 |          
|                                     |                                        |   |               |           |              |   |           |          
|LIABILITIES AND SHAREHOLDERS EQUITY |                                        |   |               |           |              |   |           |          
|                                    
|                                    
|                                    
|                                    
|Current liabilities                  |                                        |   |               |           |              |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Accounts payable                       |   | $             | 43,442    |              |   | $         | 50,944    |  
|                                    
|                                    
|                                    
|                                    
|                                     | Current portion of long-term debt      |   |               | 4,888     |              |   |           | 4,888     |  
|                                    
|                                    
|                                    
|                                    
|                                     | Accrued expenses and other             |   |               | 225,670   |              |   |           | 239,110   |  
|                                     |                                        |   |               |           |              |   |           |          
|                                     | Total current liabilities              |   |               | 274,000   |              |   |           | 294,942   |  
|                                     |                                        |   |               |           |              |   |           |          
|Long-term debt, less current portion |                                        |   | 39,048        |           |              |   | 42,297    |          
|                                    
|                                    
|                                    
|                                    
|Other long-term liabilities          |                                        |   | 28,805        |           |              |   | 34,975    |          
|                                    
|                                    
|                                    
|                                    
|Commitments and contingencies        |                                        |   |              |           |              |   |          |          
|                                    
|                                    
|                                    
|                                    
|                                     |                                        |   |               |           |              |   |           |           |  
|                                    
|                                    
|                                    
|                                    
|Shareholders equity                 |                                        |   |               |           |              |   |           |          
|                                    
|                                    
|                                    
|                                    
|                                     | Common stock                           |   |               | 1,517     |              |   |           | 1,517     |  
|                                    
|                                    
|                                    
|                                    
|                                     | Additional paid-in capital             |   |               | 825,912   |              |   |           | 808,076   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Treasury stock, at cost                |   |               | (111,146  | )            |   |           | (176,123  | )
|                                    
|                                    
|                                    
|                                    
|                                     | Retained earnings                      |   |               | 812,131   |              |   |           | 705,893   |  
|                                    
|                                    
|                                    
|                                    
|                                     | Accumulated other comprehensive income |   |               | 14,705    |              |   |           | 9,469     |  
|                                     |                                        |   |               |           |              |   |           |          
|                                     | Total shareholders equity             |   |               | 1,543,119 |              |   |           | 1,348,832 |  
|                                     |                                        |   |               |           |              |   |           |          
|                                     |                                        | $ | 1,884,972     |           |              | $ | 1,721,046 |          
|                                     |                                        |   |               |           |              |   |           |          

See Notes to Condensed Consolidated Financial Statements.

4



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BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |          |          |         |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ------------------------------------------------------------------------------ | -------- | ----------------- | ------- | ------ | -------- | -------- | ------- | -
|                                                     |                                                                                     |                                                                   |                                                                                |          | Nine Months Ended
|                                                     |                                                                                     |                                                                   |                                                                                |          | September 30,    
|                                                     |                                                                                     |                                                                   |                                                                                |          |                  
|                                                     |                                                                                     |                                                                   |                                                                                |          | 2002              |         | 2001  
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |       
|CASH FLOWS FROM OPERATING ACTIVITIES                 |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net income                                                                          |                                                                   | $                                                                              | 157,724  |                   |         | $      | 213,798  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net income to
net cash provided from operating activities: |                                                                   |                                                                                |          |                   |         |        |          |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     | Depreciation and amortization                                     |                                                                                |          | 31,357            |         |        |          | 28,124   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     | Tax benefit of stock options                                      |                                                                                |          | 16,283            |         |        |          | 27,396   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     | Other                                                             |                                                                                |          | 5,282             |         |        |          | 1,022    |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     | Realized loss (gain) on sale of non-current marketable securities |                                                                                |          | 301               |         |        |          | (4,321   | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     | Impairment of non-current marketable securities                   |                                                                                |          | 10,095            |         |        |          |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     | Loan loss reserve                                                 |                                                                                |          | 10,500            |         |        |          |         |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     | Changes in:                                                       |                                                                                |          |                   |         |        |          |          |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     |                                                                   | Accounts receivable                                                            |          |                   | 22,729  |        |          |          | (15,844 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     |                                                                   | Other current and other assets                                                 |          |                   | (46,632 | )      |          |          | (17,948 | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                     |                                                                   | Accounts payable, accrued expenses and
other current and long-term liabilities |          |                   | (40,041 | )      |          |          | 27,022  |  
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|                                                     | Net cash flows from operating activities                                            |                                                                   |                                                                                | 167,598  |                   |         |        | 259,249  |         
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|CASH FLOWS FROM INVESTING ACTIVITIES                 |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchases of current marketable securities                                          |                                                                   |                                                                                | (319,965 | )                 |         |        | (758,033 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from sales and maturities of current marketable securities                 |                                                                   |                                                                                | 300,649  |                   |         |        | 681,479  |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from sales of non-current marketable securities                            |                                                                   |                                                                                | 493      |                   |         |        | 4,816    |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Acquisitions of property and equipment                                              |                                                                   |                                                                                | (162,268 | )                 |         |        | (131,718 | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Additions to patents                                                                |                                                                   |                                                                                | (406     | )                 |         |        | (3,481   | )       
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|                                                     |                                                                                     | Net cash flows from investing activities                          |                                                                                |          | (181,497          | )       |        |          | (206,937 | )      
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|CASH FLOWS FROM FINANCING ACTIVITIES                 |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Repayments on long-term debt                                                        |                                                                   |                                                                                | (3,249   | )                 |         |        | (3,249   | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchases of treasury stock                                                         |                                                                   |                                                                                | (8,384   | )                 |         |        | (63,131  | )       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Issuance of treasury stock related to stock option exercises                        |                                                                   |                                                                                | 21,876   |                   |         |        | 24,844   |         
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other                                                                               |                                                                   |                                                                                | 69       |                   |         |        | 10       |         
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|                                                     |                                                                                     | Net cash flows from financing activities                          |                                                                                |          | 10,312            |         |        |          | (41,526  | )      
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|                                                     | Effect of exchange rate changes on cash                                             |                                                                   |                                                                                | 52       |                   |         |        | 88       |         
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                                     |                                                                   | (3,535                                                                         | )        |                   |         | 10,874 |         
|                                                    
|                                                    
|                                                    
|                                                    
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       |                                                                                     |                                                                   | 54,042                                                                         |          |                   |         | 48,737 |         
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         
|CASH AND CASH EQUIVALENTS, END OF PERIOD             |                                                                                     | $                                                                 | 50,507                                                                         |          |                   | $       | 59,611 |         
|                                                     |                                                                                     |                                                                   |                                                                                |          |                   |         |        |         

See Notes to Condensed Consolidated Financial Statements.

5



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##### Table of Contents






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

1. BASIS OF PRESENTATION

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments, consisting of only normal
recurring accruals, necessary to present fairly the financial position, results
of operations and cash flows of Biogen, Inc. and its subsidiaries (the
Company). The Companys accounting policies are described in the Notes to the
Consolidated Financial Statements in the Companys 2001 Annual Report on Form
10-K. Interim results are not necessarily indicative of the operating results
for the full year.

Effective January 1, 2002, the Company adopted the provisions of Emerging
Issues Task Force Issue No. 01-09 (EITF 01-09) Accounting for Consideration
Given by a Vendor to a Customer or Reseller of the Vendors Products. EITF
01-09 requires the cost of certain vendor consideration to be classified as a
reduction of revenue rather than a sales and marketing expense. The impact of
EITF 01-09 is not significant.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

INVENTORIES

Inventories are stated at the lower of cost or market with cost determined
under the first-in/first-out (FIFO) method and are included in other current
assets. Included in inventory are raw materials used in the production of
pre-clinical and clinical products which are expensed as research and
development costs when consumed. The components of inventories are as follows:

|                |  |               |        |              |  |   |        | 
|--------------- |  | ------------- | ------ | ------------ |  | - | ------ | 
|                |  | September 30, |        | December 31,
|(in thousands)  |  | 2002          |        | 2001        
|                |  |               |        |             
|Raw materials   |  | $             | 24,292 |              |  | $ | 14,754 | 
|               
|               
|               
|               
|Work in process |  |               | 26,293 |              |  |   | 17,004 | 
|               
|               
|               
|               
|Finished goods  |  |               | 39,667 |              |  |   | 20,161 | 
|                |  |               |        |              |  |   |        | 
|                |  | $             | 90,252 |              |  | $ | 51,919 | 
|                |  |               |        |              |  |   |        | 

Biogen capitalizes inventory costs associated with certain products prior to
regulatory approval, based on managements judgment of probable future
commercialization. Biogen would be required to expense previously capitalized
costs related to pre-approval inventory upon a change in such judgment, due to,
among other potential factors, a denial or delay of approval by necessary
regulatory bodies. At September 30, 2002 and December 31, 2001, capitalized
inventory related to AMEVIVE® (alefacept), which has not yet received
regulatory approval, was $24.2 million and $8.4 million, respectively.

Biogen writes down obsolete or otherwise unmarketable inventory to its
estimated net realizable value. If the actual realizable value is less than
that estimated by Biogen, additional inventory write-downs may be required. The
Company wrote down $5.5 million and $6.1 million, respectively, of unmarketable
inventory for the three and nine months ended September 30,
2002, of which $4.2 million was charged to research and development
expense for product not yet commercialized, and the remainder was
charged to cost of revenues.

2. FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities, (SFAS 133) requires that all derivatives
be recognized on the balance sheet at their

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fair value. Changes in the fair value of derivatives are recorded each period
in current earnings or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and, if it is, the type
of hedge transaction. The Company assesses, both at its inception and on an
on-going basis, whether the derivatives that are used in hedging transactions
are highly effective in offsetting the changes in cash flows of hedged items.
The Company assesses hedge ineffectiveness on a quarterly basis and records the
gain or loss related to the ineffective portion to current earnings to the
extent significant. If the Company determines that a hedged forecasted
transaction is no longer probable of occurring, the Company discontinues hedge
accounting for the affected portion of the hedge instrument, and any unrealized
gain or loss on the contract is recognized in current earnings within other
income (expense).

As of September 30, 2002, the Company had $13.3 million outstanding under a
floating rate loan collateralized by one of the Companys laboratory and office
buildings in Cambridge, Massachusetts and $30.6 million outstanding under a
floating rate loan agreement for financing the construction of its biological
manufacturing facility in North Carolina. The Company uses interest rate swap
agreements to mitigate the risk associated with its floating rate debt. The
fair value of the interest rate swap agreements, representing the cash
requirements of the Company to settle the agreements, was approximately $5.4
million and $3.3 million at September 30, 2002 and December 31, 2001,
respectively, and was included in accrued expenses and other. The Company has
designated the interest rate swaps as cash flow hedges. There were no amounts
of hedge ineffectiveness related to the Companys interest rate swaps during
the three and nine months ended September 30, 2002 or in the
comparable periods
of 2001, and no gains or losses were excluded from the assessment of hedge
effectiveness. The Company records the differential to be paid or received on
the interest rate swaps as incremental interest expense.

The Company has foreign currency forward contracts to hedge specific forecasted
transactions denominated in foreign currencies. All foreign currency forward
contracts have durations of ninety days to nine months. These contracts have
been designated as cash flow hedges and accordingly, to the extent effective,
any unrealized gains or losses on these foreign currency forward contracts are
reported in other comprehensive income. Realized gains and losses for the
effective portion are recognized with the underlying hedge transaction. The
notional settlement amount of the foreign currency forward contracts
outstanding at September 30, 2002 was approximately $90.9 million. These
contracts had a fair value of approximately $5.8 million, representing an
unrealized loss, and were included in other current liabilities at September
30, 2002.

For the three months ended September 30, 2002, there were no significant
amounts recognized in earnings due to hedge ineffectiveness. For the nine
months ended September 30, 2002, approximately $620,000 was recognized in
expenses due to hedge ineffectiveness. For the three and nine months ended
September 30, 2001, there were no significant amounts recognized in earnings
due to hedge ineffectiveness. For the three and nine months ended September 30,
2002 and 2001, there were no significant amounts recognized as a result of the
discontinuance of cash flow hedge accounting because it was no longer probable
that the hedge forecasted transaction would occur. The Company recognized
approximately $2.3 million and $2.7 million of losses in product revenue for
the settlement of certain effective cash flow hedge instruments for the three
and nine months ended September 30, 2002, respectively. The Company recognized
approximately $617,000 and $911,000 of losses in royalty revenue for the
settlement of certain effective cash flow hedge instruments for the three and
nine months ended September 30, 2002, respectively. The Company recognized
$426,000 of losses and $6.3 million of gains in product revenue for the
settlement of certain effective cash flow hedge instruments for the three and
nine months ended September 30, 2001, respectively. The Company recognized
$29,000 of losses and $1.8 million of gains in royalty revenue for the
settlement of certain effective cash flow hedge instruments for the three and
nine months ended September 30, 2001, respectively. These settlements were
recorded in the same period as the related forecasted transactions affecting
earnings.

3. COMPREHENSIVE INCOME

Comprehensive income is comprised of net income and other comprehensive income.
Other comprehensive income includes certain changes in equity that are excluded
from net income, such as translation adjustments and unrealized holding gains
and losses on available-for-sale marketable securities, net of tax

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and certain derivative instruments, net of tax. Comprehensive income for the
three months ended September 30, 2002 and 2001 was $54.3 million and $60.7
million, respectively. Comprehensive income for the nine months ended September
30, 2002 and 2001 was $163 million and $196 million, respectively.

4. EARNINGS PER SHARE

The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per Share. Basic earnings
per share is computed by dividing the net income available to common
shareholders by the weighted average number of shares of common stock
outstanding. For purposes of calculating diluted earnings per share the
denominator includes both the weighted average number of shares of common stock
outstanding and the number of dilutive common stock equivalents such as stock
options and warrants.

Shares used in calculating basic and diluted earnings per share for the three
and nine month periods ending September 30, are as follows:

|                                                              |  |                    |         |                   |  |      |         |      |  |  |         |  |  |  |         | 
|------------------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                                                              |  | Three Months Ended |         | Nine Months Ended
|(in thousands)                                                |  | September 30,      |         | September 30,    
|                                                              |  |                    |         |                  
|                                                              |  | 2002               |         | 2001              |  | 2002 |         | 2001
|                                                              |  |                    |         |                   |  |      |         |     
|Weighted average number of shares
of common stock outstanding |  |                    | 149,521 |                   |  |      | 148,412 |      |  |  | 149,137 |  |  |  | 148,401 | 
|                                                             
|                                                             
|                                                             
|                                                             
|Dilutive
stock options and warrants                           |  |                    | 1,876   |                   |  |      | 4,224   |      |  |  | 2,741   |  |  |  | 4,754   | 
|                                                              |  |                    |         |                   |  |      |         |      |  |  |         |  |  |  |         | 
|Shares used in calculating diluted
earnings per share         |  |                    | 151,397 |                   |  |      | 152,636 |      |  |  | 151,878 |  |  |  | 153,155 | 
|                                                              |  |                    |         |                   |  |      |         |      |  |  |         |  |  |  |         | 

Options to purchase approximately 10.7 million and 3.6 million shares were
outstanding at September 30, 2002 and 2001, respectively, but not included in
the computation of diluted earnings per share because the options exercise
prices were greater than the average market price during the period.

5. SHARE REPURCHASE PROGRAM

On December 18, 2000, the Company announced that its Board of Directors had
authorized the repurchase of up to 4 million shares of the Companys common
stock. The repurchased stock provides the Company with treasury shares for
general corporate purposes, such as stock to be issued under employee stock
option and stock purchase plans. The Company purchased 145,000 shares
from January 1, 2002 through
September 30, 2002 at a cost of $8.4 million. During 2001, the Company
repurchased approximately 1.5 million shares of its common stock under this
program at a cost of $88.3 million. Approximately 2.4 million shares remain
authorized for repurchase under this program at September 30, 2002.

6. OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following (in thousands):

|                                  |  |                    |         |                   |  |      |        |      |  |   |         |   |  |   |        |  
|--------------------------------- |  | ------------------ | ------- | ----------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                  |  | Three Months Ended |         | Nine Months Ended
|                                  |  | September 30,      |         | September 30,    
|                                  |  |                    |         |                  
|                                  |  | 2002               |         | 2001              |  | 2002 |        | 2001
|                                  |  |                    |         |                   |  |      |        |     
|Interest income                   |  | $                  | 10,255  |                   |  | $    | 10,787 |      |  | $ | 31,320  |   |  | $ | 33,266 |  
|                                 
|                                 
|                                 
|                                 
|Interest expense                  |  |                    | (733    | )                 |  |      | (936   | )    |  |   | (2,655  | ) |  |   | (3,025 | )
|                                 
|                                 
|                                 
|                                 
|Other income (expense)            |  |                    | (19,981 | )                 |  |      | 296    |      |  |   | (23,992 | ) |  |   | 7,902  |  
|                                  |  |                    |         |                   |  |      |        |      |  |   |         |   |  |   |        |  
|Total other income
(expense), net |  | $                  | (10,459 | )                 |  | $    | 10,147 |      |  | $ | 4,673   |   |  | $ | 38,143 |  
|                                  |  |                    |         |                   |  |      |        |      |  |   |         |   |  |   |        |  

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Other income (expense) for the three and nine months ended September 30, 2002
includes $911,000 and $3.7 million, respectively, of losses
attributable to a fund in which Biogen has invested, and $7.9 million and $10.1 million, respectively, of
impairments of unrealized losses that were determined to be other than
temporary for certain non-current marketable securities. As a result of these
impairments, Biogens investment in these non-current marketable securities
totaled $5.3 million at September 30, 2002. Additionally, included in other
income (expense) was a $10.5 million charge for the establishment of a reserve
related to an outstanding loan to a collaborator at September 30, 2002. Other income (expense) for the three
and nine months ended September 30, 2001 includes realized gains on the sale of
certain non-current marketable securities totaling approximately $1 million and
$4.3 million, respectively.

7. INCOME TAX EXPENSE

Income tax expense as a percentage of pre-tax income was 28% for the three and
nine months ended September 30, 2002 and was 30% for the three and nine months
ended September 30, 2001. The effective tax rate varied from the U.S. statutory
rates for the first nine months of 2002 and 2001 primarily due to higher sales
in European jurisdictions with lower tax rates and to the utilization of
research and development credits. The Companys effective tax rate outside the
U.S. is lower than the U.S. tax rate, and the Company expects that the
corporate tax rate will decline as international sales increase.

8. LITIGATION

On July 3, 1996, Berlex Laboratories, Inc. (Berlex) filed suit against Biogen
in the United States District Court for the District of New Jersey alleging
infringement by Biogen of Berlexs McCormick patent (U.S. Patent No.
5,376,567) in the United States in the production of Biogens AVONEX®
(Interferon beta-1a) product. In November 1996, Berlexs New Jersey action was
transferred to the United States District Court in Massachusetts and
consolidated for pre-trial purposes with a related declaratory judgment action
previously filed by Biogen. On August 18, 1998, Berlex filed a second suit
against Biogen alleging infringement by Biogen of a patent which was issued to
Berlex in August 1998 and which is related to the McCormick patent (U.S. Patent
No. 5,795,779). On September 23, 1998, the cases were consolidated for
pre-trial and trial purposes. Berlex sought a judgment granting it damages, a
trebling of any damages awarded and a permanent injunction restraining Biogen
from the alleged infringement. A hearing on the parties summary judgment
motions in the case was completed in March 2000. In September 2000, the
District Court rendered final judgment in favor of Biogen and against Berlex
determining that Biogens production of AVONEX did not infringe any of the
claims of the Berlex patents. Berlex has appealed this decision with the Court
of Appeals for the Federal Circuit. Oral arguments were presented by the
parties to the Court of Appeals on November 7, 2001 and a decision is expected
in the second half of 2002. In January 2002, Biogen and Berlex reached a
settlement of the litigation pursuant to which the parties agreed to end the
dispute in return for a payment of $20 million from Biogen to Berlex and the
possibility of a second and final payment from Biogen to Berlex if the Court of
Appeals were to reverse the District Courts previous ruling granting summary
judgment in favor of Biogen. If the Court of Appeals were to rule against
Biogen and return the case to the District Court, Biogen believes that the most
likely decision would require it to make a second and final payment of $55
million to Berlex. In the event the ruling is significantly adverse to Biogen,
the second and final payment to Berlex would be $230 million. As part of the
settlement, Biogen and Berlex agreed not to pursue further litigation about
these patents. Biogen recorded a $20 million charge in Other Income, net in
the fourth quarter of 2001 to account for the first payment to Berlex. The
Company has determined that, based on information currently available, the most
probable outcome is that no additional payments will be required.

In 1995, the Company filed an opposition with the Opposition Division of the
European Patent Office to oppose a European patent (the Rentschler I Patent)
issued to Dr. Rentschler Biotechnologie GmbH (Rentschler) relating to
compositions of matter of beta interferon. In 1997, the European Patent Office
issued a decision to revoke the Rentschler I Patent. Rentschler appealed that
decision and an oral hearing on the appeal took place in December 2000. At the
oral hearing in order to gain reinstatement of the patent, Rentschler narrowed
the patent claims so as to claim only a specific cell line. Biogen does not use
the specific cell line now claimed. On October 13, 1998, the Company filed
another opposition with the

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Opposition Division of the European Patent Office to oppose a second European
patent issued to Rentschler (the Rentschler II Patent) with certain claims
regarding compositions of matter of beta interferon with specific regard to the
structure of the glycosylated molecule. A hearing on the Companys opposition
previously scheduled for October 2000 has been set for November 2002. While
Biogen believes that the Rentschler II Patent will be revoked, if the
Rentschler II Patent were to be upheld and if Rentschler were to obtain,
through legal proceedings, a determination that the Companys sale of AVONEX in
any European Union country in which Biogen has substantial sales of AVONEX
infringes a valid Rentschler II Patent, such result could have a material
adverse effect on the Companys results of operation and financial position.

9. SEGMENT INFORMATION

The Company operates in one segment, which is the business of developing,
manufacturing and marketing drugs for human health care. The chief operating
decision-makers review the profit and loss of the Company on an aggregate basis
and manage the operations of the Company as a single operating segment. The
Company currently derives product revenues from sales of its AVONEX product for
the treatment of relapsing forms of multiple sclerosis. The Company also
derives revenue from royalties on sales by the Companys licensees of
a number of products covered under patents controlled by the Company.

10. SIGNIFICANT EVENT

In the three months ended
September 30, 2002, the Company recorded a $440,000 final
charge for the acceleration of certain stock options associated with the retirement of James L. Vincent as Chairman of the
Board and as Director of Biogen. For the nine months ended September
30, 2002, the Company recorded charges of $6.2 million related to Mr.
Vincent's retirement. The severance and other benefits are
consistent with his 1985 employment agreement, as amended in 1996. Additionally, in connection with
his retirement, the Company sold to Mr. Vincent certain assets. The value of
those assets was determined by a third party appraiser and resulted in an
insignificant gain to the Company. In July 2002, the Board elected James C.
Mullen as the new Chairman.

11. NEW ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued SFAS
145, Rescission of FASB Statement No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections. SFAS 145
rescinds FASB Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt,and an amendment of that Statement, FASB
Statement No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. SFAS 145 also rescinds FASB Statement
No. 44, Accounting for Intangible Assets of Motor Carriers.
SFAS 145 amends FASB Statement No. 13, Accounting for Leases,
to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain
lease modifications that have economic effects that are similar to
sale-leaseback transactions. This Statement also amends other
existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under
changed conditions. The provisions of SFAS 145 are effective for
financial statements issued on or after May 15, 2002. The adoption of
SFAS 145 is not expected to have a material effect on the Company's
financial statements.

In July 2002, the FASB issued SFAS 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized at its fair market
value when the liability is incurred, rather than at the date of an entitys
commitment to an exit plan. The provisions of SFAS 146 are effective for exit
or disposal activities that are initiated after December 31, 2002. The adoption
of SFAS 146 is not expected to have a material effect on the Companys
financial statements.

12. SUBSEQUENT EVENT

In October 2002, Biogen settled its
arbitrations with Schering-Plough over royalties on U.S. sales of
alpha interferon products. As part of the settlement, Biogen expects
to receive in the fourth quarter of 2002 a  one-time payment in the
range of $45 to $50 million. In addition, Schering-Plough has agreed,
effective October 1, 2002, to commence its royalty obligations
to Biogen on United States sales of alpha interferon products based
on a 1998 agreement between the two companies.

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BIOGEN, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

Biogen, Inc. (the Company or Biogen) is a biopharmaceutical company
principally engaged in the business of developing, manufacturing and marketing
drugs for human health care. The Company currently derives revenues from sales
of its AVONEX® (Interferon beta-1a) product for the treatment of relapsing
forms of multiple sclerosis (MS). The Company also derives revenue from
royalties on sales by the Companys licensees of a number of products
covered under patents controlled by the Company.

RESULTS OF OPERATIONS

Effective January 1, 2002, the Company adopted the provisions of Emerging
Issues Task Force Issue No. 01-09 (EITF 01-09) Accounting for Consideration
Given by a Vendor to a Customer or Reseller of the Vendors Products. EITF
01-09 requires the cost of certain vendor consideration to be classified as a
reduction of revenue rather than a sales and marketing expense. The impact of
EITF 01-09 is not significant.

For the quarter ended September 30, 2002, the Company reported net income of
$42.2 million or $0.28 per diluted share as compared to $69.8 million or $0.46
per diluted share for the comparable period of 2001. For the nine months ended
September 30, 2002, the Company reported net income of $157.7 million or $1.04
per diluted share as compared to $213.8 million or $1.40 per diluted share for
the comparable period of 2001.

Revenues

|                 |               |               |       |                    |       |               |       |        |       |                   |    |      |   |        |       |       |       |   |       |       |       |  |    |    |   |  
|---------------- | ------------- | ------------- | ----- | ------------------ | ----- | ------------- | ----- | ------ | ----- | ----------------- | -- | ---- | - | ------ | ----- | ----- | ----- | - | ----- | ----- | ----- |  | -- | -- | - | -
|                 |               |               |       | Three months ended |       |               |       |        |       | Nine months ended |    |      |   |       
|(in millions)    |               | September 30, |       | %                  |       | September 30, |       | %     
|                 |               |               |       |                    |       |               |       |       
|                 |               |               |       | 2002               |       | 2001          |       | Change |       | 2002              |    | 2001 |   | Change
|                 |               |               |       |                    |       |               |       |        |       |                   |    |      |   |       
|Product revenues |               |               |       |                    |       |               |       |        |       |                   |    |      |   |        |       |       |       |   |       |       |       |  |    |   
|                
|                
|                
|                
|                 | United States |               | $     | 186.2              |       |               | $     | 182.8  |       |                   |    | 2    | % |        | $     | 559.3 |       |   | $     | 517.7 |       |  |    | 8  | %
|                
|                
|                
|                
|                 | Rest of world |               |       | 75.3               |       |               |       | 65.3   |       |                   |    | 15   | % |        |       | 218.8 |       |   |       | 193.5 |       |  |    | 13 | %
|                 |               |               |       |                    |       |               |       |        |       |                   |    |      |   |        |       |       |       |   |       |       |       |  |    |   
|                 |               | Total         |       |                    | 261.5 |               |       |        | 248.1 |                   |    |      | 5 | %      |       |       | 778.1 |   |       |       | 711.2 |  |    |    | 9 | %
|                
|                
|                
|                
|Royalty revenues |               |               | 26.8  |                    |       |               | 16.0  |        |       |                   | 67 | %    |   |        | 67.8  |       |       |   | 50.5  |       |       |  | 34 | % 
|                 |               |               |       |                    |       |               |       |        |       |                   |    |      |   |        |       |       |       |   |       |       |       |  |    |   
|Total revenues   |               | $             | 288.3 |                    |       | $             | 264.1 |        |       |                   | 9  | %    |   | $      | 845.9 |       |       | $ | 761.7 |       |       |  | 11 | % 
|                 |               |               |       |                    |       |               |       |        |       |                   |    |      |   |        |       |       |       |   |       |       |       |  |    |   

Product revenues
Product revenues from AVONEX represent approximately 91% and 92%, respectively,
of the Companys total revenues in the three and nine months ended September
30, 2002. Product revenues from AVONEX represented approximately 94% and 93%,
respectively, of the Companys total revenues in the three and nine months
ended September 30, 2001. The growth in product revenues in the three and nine
months ended September 30, 2002 over the comparable period in 2001 was
primarily attributable to increases in the sales volume of AVONEX in the United
States and in the fifteen member countries of the European Union
(EU). Product revenues in the United States grew 2%.
Growth was affected by increased competition and a softening of the MS
marketplace growth rate in the United States.

The Company expects to face increasing competition in the MS marketplace
worldwide from existing and new MS treatments that may impact sales of AVONEX.
Biogen expects future growth in AVONEX revenues to be dependent to a large
extent on the Companys ability to compete successfully. Biogen also expects
that future AVONEX sales may be affected by slowing growth in the
MS market. See Outlook  Dependence on AVONEX Sales; see also the Companys
Annual Report on Form 10-K for

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the period ended on December 31, 2001 under the heading Managements
Discussion and Analysis of Financial Condition and Results of Operations 
Outlook  Competition.

Royalty revenues
Revenues from royalties represented approximately 9% and 8%, respectively, of
total revenues for the three and nine months ended September 30, 2002. Revenues
from royalties represented approximately 6% and 7%, respectively, of
total revenues for three and
nine months ended September 30, 2001. The growth in royalty revenues for the
three and nine month periods of 2002 over the comparable periods in 2001 was
primarily attributable to royalties received on increased sales of alpha
interferon products in certain EU markets where the Company continues
to receive royalties. For a more detailed discussion of royalties, including a
discussion on the Companys recently settled arbitration with Schering-Plough
Corporation (Schering-Plough), see Outlook  Royalty Revenue.

COSTS AND EXPENSES

|                                  |                          |      |                    |       |   |        |               |       |                   |      |    |        |   |   |       |       |  |   |       |       |  |  |    |    |  
|--------------------------------- | ------------------------ | ---- | ------------------ | ----- | - | ------ | ------------- | ----- | ----------------- | ---- | -- | ------ | - | - | ----- | ----- |  | - | ----- | ----- |  |  | -- | -- | -
|                                  |                          |      | Three months ended |       |   |        |               |       | Nine months ended |      |    |        |  
|                                  |                          |      | September 30,      |       | % |        | September 30, |       | %                
|                                  |                          |      |                    |       |   |        |               |       |                  
|(in millions)                     |                          | 2002 |                    | 2001  |   | Change |               | 2002  |                   | 2001 |    | Change
|                                  |                          |      |                    |       |   |        |               |       |                   |      |    |       
|Cost of revenues                  |                          | $    | 42.0               |       |   | $      | 36.5          |       |                   |      | 15 | %      |   | $ | 117.6 |       |  | $ | 100.8 |       |  |  | 17 | % 
|                                 
|                                 
|                                 
|                                 
|Research and
development          |                          |      | 104.6              |       |   |        | 78.9          |       |                   |      | 33 | %      |   |   | 276.3 |       |  |   | 230.8 |       |  |  | 20 | % 
|                                 
|                                 
|                                 
|                                 
|Selling, general & administrative |                          |      | 72.6               |       |   |        | 59.1          |       |                   |      | 23 | %      |   |   | 237.6 |       |  |   | 162.9 |       |  |  | 46 | % 
|                                  |                          |      |                    |       |   |        |               |       |                   |      |    |        |   |   |       |       |  |   |       |       |  |  |    |   
|                                  | Total costs and expenses |      | $                  | 219.2 |   |        | $             | 174.5 |                   |      |    | 26     | % |   | $     | 631.5 |  |   | $     | 494.5 |  |  |    | 28 | %
|                                  |                          |      |                    |       |   |        |               |       |                   |      |    |        |   |   |       |       |  |   |       |       |  |  |    |   

Cost of revenues increased 15% in the third quarter and 17% in the first nine
months of 2002 from the comparable periods in 2001. The increase in cost of
revenues was attributable to the higher sales volume of AVONEX. Included in
cost of revenues for the three months ended September 30, 2002 and 2001 is
$40.3 million and $35.4 million, respectively, of costs related to product
revenues and $1.7 million and $1.1 million, respectively, of costs related to
royalty revenue. Included in cost of revenues for the nine months ended
September 30, 2002 and 2001 is $113.3 million and $97.6 million, respectively,
of costs related to product revenues and $4.3 million and $3.2 million,
respectively, of costs related to royalty revenue. Gross margins on product
revenues were approximately 85% and 86% for the three months ended September
30, 2002 and 2001, respectively. Gross margins on product revenues were
approximately 85% and 86% for the nine months ended September 30, 2002 and
2001, respectively. Gross margins on royalty revenue were approximately 93% for
the three months ended September 30, 2002 and 2001. Gross margins on royalty
revenue were approximately 94% for the nine months ended September 30, 2002 and
2001. The Company expects that gross margins on royalty revenue will fluctuate
in the future based on changes in sales volumes for specific products.

Research and development expenses increased 33% in the third quarter and 20% in
the first nine months of 2002 from the comparable periods in 2001. The increase
was due primarily to an increase in development costs related to the Companys
ongoing collaborative development programs, including
$14 million for the achievement of certain
milestones and related support during the quarter, and increases in clinical
trial costs. The Company expects that, in the near and long-term, research and
development expenses may increase as the Company continues to expand its
development efforts with respect to new products, conducts clinical trials of
these products and continues to work on new formulations for AVONEX.

Selling, general and administrative expenses increased 23% in the third quarter
and 46% in the first nine months of 2002 from the comparable periods in 2001.
These increases were primarily due to an increase in selling and marketing
expenses related to the sale of AVONEX and increased costs in anticipation of
the possible approval of AMEVIVE® (alefacept). Selling, general and
administrative expenses for the nine months ended September 30, 2002 also
includes approximately $6.2 million of severance and other benefits related to
the retirement of Mr. Vincent as the Chairman of the Board. If the Company
receives regulatory

12



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##### Table of Contents



approval to market AMEVIVE in the United States and the EU, selling, general
and administrative expenses will increase in the near and long term.

OTHER INCOME (EXPENSE), NET

Total other income (expense), net consists of the following (in thousands):

|                                  |  |                    |         |                    |  |      |        |      |  |   |         |   |  |   |        |  
|--------------------------------- |  | ------------------ | ------- | ------------------ |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                  |  | Three Months Ended |         | Nine Months Ended 
|                                  |  | September 30, 2002 |         | September 30, 2002
|                                  |  |                    |         |                   
|                                  |  | 2002               |         | 2001               |  | 2002 |        | 2001
|                                  |  |                    |         |                    |  |      |        |     
|Interest income                   |  | $                  | 10,255  |                    |  | $    | 10,787 |      |  | $ | 31,320  |   |  | $ | 33,266 |  
|                                 
|                                 
|                                 
|                                 
|Interest expense                  |  |                    | (733    | )                  |  |      | (936   | )    |  |   | (2,655  | ) |  |   | (3,025 | )
|                                 
|                                 
|                                 
|                                 
|Other income (expense)            |  |                    | (19,981 | )                  |  |      | 296    |      |  |   | (23,992 | ) |  |   | 7,902  |  
|                                  |  |                    |         |                    |  |      |        |      |  |   |         |   |  |   |        |  
|Total other income
(expense), net |  | $                  | (10,459 | )                  |  | $    | 10,147 |      |  | $ | 4,673   |   |  | $ | 38,143 |  
|                                  |  |                    |         |                    |  |      |        |      |  |   |         |   |  |   |        |  

Total other income (expense), net consists of interest income, offset by interest
expenses and other non-operating income and expenses. Total other income (expense),
net in the current quarter of 2002 was $10.5 million in losses as compared to
$10.1 million in income in 2001, a decrease of
$20.6 million. Total other income, net
in the nine months ended September 30, 2002 was $4.7 million as compared to
$38.1 million in 2001, a decrease of $33.4 million.

Interest income for the three months ended September 30, 2002 was $10.3 million
compared to $10.8 million in the same period of 2001, a decrease of $0.5
million or 5%. Interest income for the first nine months of 2002 was $31.3
million compared to $33.3 million in the same period of 2001, a decrease of $2
million or 6%. The decreases in interest income for the three and nine months
were due primarily to lower average yields on invested funds. The Company
expects interest income to vary based on changes in the amount of funds
invested and fluctuations in interest rates.

Interest expense in the three months ended September 30, 2002 was approximately
$0.7 million compared to $0.9 million for the same period in 2001, a decrease
of $0.2 million or 22%. Interest expense for the nine months ended September
30, 2002 was approximately $2.7 million compared to $3.0 million for the same
period in 2001, a decrease of $0.3 million or 12%. The decrease
in interest expense and was due to lower
borrowings outstanding.

Other income (expense) decreased by $20.3 million for the third quarter of 2002
compared to the same period in 2001. Other income (expense) decreased by $31.9
million for the nine months ended September 30, 2002 compared to the same
period in 2001. The decrease in other income (expense) for the three and nine
months ended September 30, 2002 is due in part to the Companys recognition of
$0.9 million and $3.7 million, respectively, of losses attributable to
a fund in which Biogen has invested, and $7.9 million and $10.1 million, respectively, of
impairments of unrealized losses that were determined to be other than
temporary for certain non-current marketable securities. As a result of these
impairments, Biogens investment in these non-current marketable securities
totaled $5.3 million at September 30, 2002. Additionally, included in other
income (expense) for the three and nine months ended September 30, 2002 was a
$10.5 million charge for the establishment of a reserve related to
an outstanding loan to a collaborator at
September 30, 2002. For the three and nine months ended September 30, 2001, other income (expense)  included $1 million and $4.3 million, respectively, of realized
gains from sales of certain non-current marketable securities.

INCOME TAXES

Income tax expense as a percentage of pre-tax income was 28% for the three and
nine months ended September 30, 2002 and was 30% for the three and nine months
ended September 30, 2001. The effective tax rate varied from the U.S. statutory
rates for the first nine months of 2002 and 2001 primarily due to higher sales
in European jurisdictions with lower tax rates and to the utilization of
research and development credits. The Companys effective tax rate outside the
U.S. is lower than the U.S. tax rate, and the Company expects that the
corporate tax rate will decline as international sales increase.

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FINANCIAL CONDITION

At September 30, 2002, cash, cash equivalents and short-term marketable
securities were $828.4 million compared with $798.1 million at December 31,
2001, an increase of $30.3 million. Working capital increased $70.1 million to
$872.9 million. Net cash from operating activities (which included net income)
for the nine-month period ending September 30, 2002 was $167.6 million compared
with $259.2 million for the same period in 2001, and included tax benefits
related to stock options of $16.3 million, a non-cash adjustment of $10.1
million related to the impairment of non-current marketable securities, and a
non-cash adjustment of $10.5 million for the establishment of a reserve related
to an outstanding loan to a collaborator at September 30, 2002. Cash outflows from investing activities during
the nine months ended September 30, 2002 included investments in property and
equipment and patents of $162.7 million and net cash outflows from investing
activities related to marketable securities totaling $18.8 million.
Significant cash outflows from financing activities included $8.4 million for
purchases of the Companys common stock under its stock repurchase program and
$3.2 million for repayments on loan agreements with banks. Cash inflows from
financing included $21.9 million from common stock option exercises and
employee stock purchase plan activity.

In October 2002, Biogen settled its
arbitrations with Schering-Plough over royalties on U.S. sales of
alpha interferon products. As part of the settlement, Biogen expects
to receive in the fourth quarter of 2002 a one-time payment in the
range of $45 to $50 million. In addition, Schering-Plough has agreed,
effective October 1, 2002, to commence its royalty obligations
to Biogen on United States sales of alpha interferon products based
on a 1998 agreement between the two companies.

On December 18, 2000, the Company announced that its Board of Directors had
authorized the repurchase of up to 4 million shares of the Companys common
stock. The repurchased stock provides the Company with treasury shares for
general corporate purposes, such as stock to be issued under employee stock
option and stock purchase plans. The Company purchased 145,000 shares during
the first nine months of 2002 at a cost of $8.4 million. During 2001, the
Company repurchased approximately 1.5 million shares of its common stock under
this program at a cost of $88.3 million. Approximately 2.4 million shares
remain authorized for repurchase under this program at September 30, 2002.

The Companys construction of the large scale manufacturing plant in Research
Triangle Park, North Carolina was substantially completed in the first quarter
of 2002. The Company began further expansion of its Research Triangle Park,
North Carolina complex in 2001 with commencement of construction of a
laboratory office building and additional manufacturing capacity. These
additional projects are expected to be completed by the summer of 2003 at a
total cost of approximately $92 million. As of September 30, 2002, the Company
had committed $76.1 million for construction costs related to these additional
projects, of which $60.9 million had been spent. The Company is also completing
plans to build a manufacturing plant in Denmark. The Company expects that
construction will commence in 2003 at an estimated cost of $250 million. At
September 30, 2002, $36.3 million had been authorized for costs related to the
manufacturing plant in Denmark, of which $21.7 million had been spent.

Several legal proceedings involving the Company were pending during the current
quarter. See Note 8 of the Notes to the Condensed Consolidated Financial
Statements. See also Item 1  Business, Patents and Other Proprietary Rights
of the Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2001 for discussions of these legal proceedings.

The Company believes that existing funds and cash generated from operations are
adequate to satisfy its working capital and capital expenditure requirements in
the foreseeable future. However, the Company may raise additional capital to
take advantage of favorable conditions in the market or in connection with the
Companys development activities.

NEW ACCOUNTING PRONOUNCEMENTS

In April 2002, the FASB issued SFAS
145, Rescission of FASB Statement No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections. SFAS 145
rescinds FASB Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt,and an amendment of that Statement, FASB
Statement No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements. SFAS 145 also rescinds FASB Statement
No. 44, Accounting for Intangible Assets of Motor Carriers.
SFAS 145 amends FASB Statement No. 13, Accounting for Leases,
to eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain
lease modifications that have economic effects that are similar to
sale-leaseback transactions. This Statement also amends other
existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under
changed conditions. The provisions of SFAS 145 are effective for
financial statements issued on or after May 15, 2002. The adoption of
SFAS 145 is not expected to have a material effect on the Company's
financial statements.

In July 2002, the FASB issued SFAS 146, Accounting for Costs Associated with
Exit or Disposal Activities. SFAS 146 requires that a liability for a cost
associated with an exit or disposal activity be recognized at its fair market
value when the liability is incurred, rather than at the date of an entitys
commitment to an exit plan. The provisions of SFAS 146 are effective for exit
or disposal activities that are initiated after December 31, 2002. The adoption
of SFAS 146 is not expected to have a material effect on the Companys
financial statements.

14



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CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls
and Procedures: The Companys Chief Executive
Officer and Executive Vice President-Finance and Chief Financial Officer, after
evaluating the effectiveness of the Companys disclosure controls and
procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c)) on
October 15, 2002, have concluded that the Companys disclosure controls and
procedures were adequate and effective to ensure that material information
relating to the Company, including its consolidated subsidiaries, was made
known to them by others within those entities, particularly during the period
in which this Form 10-Q was being prepared.

Changes in Internal Controls: There were no significant changes in the
Companys internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in the Companys internal
controls. Accordingly, no corrective actions were required or undertaken.

OUTLOOK

SAFE HARBOR

In addition to historical information, this quarterly report contains
forward-looking statements that involve risks and uncertainties that could
cause actual results to differ materially from those reflected in such
forward-looking statements. Reference is made in particular to forward-looking
statements regarding the anticipated level of future product sales, royalty
revenues, expenses and profits, timing of clinical trials, potential outcome of
clinical programs, regulatory approvals, marketing of additional products,
impact of competitive products, anticipated outcome of pending or anticipated
litigation and patent-related proceedings, facility expansion and
the value of investments in certain marketable securities. These and all other
forward-looking statements are made based on Biogens current belief as to the
outcome and timing of such future events. Factors which could cause actual
results to differ from Biogens expectations
and which could negatively impact Biogens financial condition and results of
operations are discussed below and elsewhere in this Managements Discussion
and Analysis of Financial Condition and Results of Operations. Biogen does not
undertake any obligation to publicly update any forward-looking statements.

DEPENDENCE ON AVONEX® SALES

Biogens ability to sustain increases in revenues and profitability until at
least approval and successful launch of a second product will be primarily
dependent on the level of revenues and profitability from AVONEX sales. The
level of revenues from sales of AVONEX will depend on a number of factors,
including: continued market acceptance of AVONEX worldwide; Biogens ability to
maintain a high level of patient satisfaction with AVONEX; the nature of
regulatory and pricing decisions related to AVONEX worldwide; the level of growth
in the overall MS marketplace; the extent to which AVONEX continues to receive
and maintains reimbursement coverage; the nature of legislative actions
affecting the pharmaceutical industry; the success of ongoing development
related to AVONEX in expanded MS indications; the continued accessibility of
third parties to vial, label, and distribute AVONEX on acceptable terms;
success in revoking the Rentschler II patent since if the patent were to be
upheld and if Rentschler were to obtain, through legal proceedings, a
determination that Biogens sale of AVONEX in any European
country in which Biogen has substantial sales of AVONEX infringes a valid
Rentschler II patent, such result could have a material adverse effect on the
Companys results of operation and financial condition; and the Companys
ability to sustain market share of AVONEX in light of the impact of competitive
products for the treatment of MS. AVONEX competes in the United States and EU
markets primarily with four products: COPAXONE®, sold by Teva Neuroscience,
Inc. (Teva) in the United States and co-promoted by Teva and Aventis Pharma
in the EU, BETASERON®, sold by Berlex in the United States and sold under the
name of BETAFERON® by Schering A.G. in the EU, NOVANTRONE®, sold by Amgen, Inc.
and REBIF® which was launched in the United States by Serono in March 2002.
Serono announced in July 2002 that it reached an agreement to co-promote REBIF
in the United States with Pfizer Inc. The Company expects there to be
aggressive

15



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##### Table of Contents



competition among these companies in the MS market worldwide. See the Companys
Annual Report on Form 10-K for the period ended on December 31, 2001 under the
headings Managements Discussion and Analysis of Financial Condition and
Results of Operation  Outlook  Competition and  Business  Patents and
Other Proprietary Rights.

ROYALTY REVENUE

Biogen receives royalty revenues which, prior to 2001, contributed a
significant amount to its overall profitability. Royalty revenues have
decreased significantly in recent years primarily as the result of patent
expirations, see Outlook  Patents and Other Proprietary Rights, and a
royalty dispute with Schering-Plough. In October 2002, Biogen settled
its arbitrations with Schering-Plough over royalties on U.S. sales of
alpha interferon products. As part of the settlement, Biogen expects
to receive in the fourth quarter of 2002 a one-time payment in the
range of $45 to $50 million. In addition, Schering-Plough has agreed,
effective October 1, 2002, to commence its royalty obligations
to Biogen on United States sales of alpha interferon products based
on a 1998 agreement between the two companies.

There are a number of other factors which could also cause the actual level of
royalty revenue to fluctuate. For example, pricing
reforms, health care reform initiatives, other legal and regulatory
developments and the introduction of competitive products may have an impact on
product sales by Biogens licensees. In addition, sales levels of products sold
by Biogens licensees may fluctuate from quarter to quarter due to the timing
and extent of major events such as new indication approvals or government
sponsored programs. Since Biogen is not involved in the development or sale of
products by its licensees, it cannot be certain of the timing or potential
impact of factors which may affect sales by licensees. See Outlook  Patents
and Other Proprietary Rights.

There can be no assurance that the Company will achieve a positive outcome with
respect to any of the factors discussed in this Section or that the timing and
extent of the Companys success with respect to any combination of these
factors will be sufficient to result in sustained increases in revenues or
profitability or the sustained profitability of the Company. For a further
discussion of risks regarding drug development, patent matters, including the
Berlex lawsuit regarding the McCormick patents and future patent expirations
affecting royalty revenues, and regulatory matters, see
the Companys Annual Report on Form 10-K for the period ended December 31, 2001
under the headings Business  Risks Associated with Drug Development,
Business Patents and Other Proprietary Rights, Business  Regulation,
Legal Proceedings and Managements Discussion and Analysis of Financial
Condition and Results of Operations  Outlook.

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PRODUCTS

AVONEX is currently the only product sold by Biogen. Biogens long-term
viability and growth will depend on the successful development and
commercialization of other products from its research and development
activities and collaborations.

Biogen expects that its next product on the market will be AMEVIVE for the
treatment of moderate-to-severe chronic plaque psoriasis. The applications for
marketing approval of AMEVIVE are currently under review by both the FDA and
regulatory authorities in the EU. On May 23, 2002, the Dermatologic and
Ophthalmic Drugs Advisory Committee of the FDA voted to recommend AMEVIVE for
marketing approval. In June 2002, Biogen received a Complete Response Letter
from the FDA on the AMEVIVE filing. No new clinical trials of AMEVIVE were
requested prior to approval. The FDA proposed post-marketing clinical studies
to further profile the safety and effectiveness of AMEVIVE. After review of
the information Biogen submitted to reply to the Complete Response Letter, FDA
determined that the AMEVIVE filing was a class 2 resubmission. Approval of AMEVIVE is subject to Biogens ability to work with the
FDA to adequately address the questions and provide the clarification and
information requested by the FDA. Approval is also subject to the other risks
and uncertainties inherent in drug development, including the risk of
unexpected new data or information. Even if approved, there is no assurance
that AMEVIVE will be free from technical issues affecting commercialization,
manufacturing, or intellectual property disputes or that it will achieve its
market potential.

Biogen continues to expand its development efforts for other potential
products. Expansion of development efforts may include increases in spending on
internal projects, collaborations with third parties, the acquisition of
third-party technologies or products or other types of investments. Product
development involves a high degree of risk. Only a small number of research and
development programs result in the commercialization of a product. Many
important factors affect Biogens ability to successfully develop and
commercialize AMEVIVE and its other potential products, including the ability
to obtain and maintain necessary patents and licenses, to demonstrate safety
and efficacy of drug candidates at each stage of the clinical trial process, to
overcome technical hurdles that may arise, to meet applicable regulatory
standards, to obtain reimbursement coverage for the products, to receive
required regulatory approvals, to be capable of producing drug candidates in
commercial quantities at reasonable costs, to compete successfully against
other products and to market products successfully. Success in early stage
clinical trials or preclinical work does not ensure that later stage or larger
scale clinical trials will be successful. Even if later stage clinical trials
are successful, the risk exists that unexpected concerns may arise from
analysis of data or from additional data or that obstacles may arise or issues
be identified in connection with review of clinical data with regulatory
authorities or that regulatory authorities may disagree with the Companys view
of the data or require additional data or information or additional studies.
There can be no assurance that Biogen will be successful in its efforts to
develop and commercialize new products.

PATENTS AND OTHER PROPRIETARY RIGHTS

Biogen has numerous issued patents and patent applications pending on a number
of its processes and products. Biogen has also obtained rights to certain
patents under licenses with third parties which provide for the payment of
royalties. There can be no assurances that Biogens existing patents or others,
if obtained, will substantially protect or commercially benefit Biogen. In
addition, Biogen does not know to what extent its pending patent applications
or patent applications licensed from third parties will be granted or whether
any of Biogens patents will prevail if they are challenged in litigation.
Also, there is also no assurance that third parties have not or will not be
granted patents claiming subject matter necessary to Biogens business. Biogen
is aware that others, including various universities and companies working in
the biotechnology field, have also filed patent applications and have been
granted patents in the United States and in other countries claiming subject
matter potentially useful or necessary to Biogens business. Some of those
patents and patent applications claim only specific products or methods of
making such products, while others claim more general processes or techniques
useful or now used in the biotechnology industry. For example, Genentech has
been granted patents and is prosecuting other patent applications in the United
States and certain other countries which it may allege are currently used by
Biogen and others in

17



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##### Table of Contents



the biotechnology industry to produce recombinant proteins in host cells.
Genentech has offered to Biogen and others in the industry non-exclusive
licenses under some of those patents and patent applications for various
proteins and in various fields of use, but not for others. Biogen is also aware
of certain patents held by Genentech relating to immunoadheson technology that
Genentech may take the position are valid and infringed by Biogens future
commercial activities with AMEVIVE. Biogen is evaluating these patents to
determine if a license should be taken. The ultimate scope and validity of
Genentechs patents, of other existing patents, or of patents which may be
granted to third parties in the future, and the extent to which Biogen may wish
or be required to acquire rights under such patents and the availability and
cost of acquiring such rights, currently cannot be determined by Biogen. There
has been, and Biogen expects that there may continue to be, significant
litigation in the industry regarding patents and other intellectual property
rights. Such litigation could create uncertainty and consume substantial
resources.

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PART II  OTHER INFORMATION

Item 4  Submission of Matters to a Vote of Security Holders



|(a) |  | Not applicable.
|--- |  | ---------------
|   
|(b) |  | Not applicable.
|   
|(c) |  | Not applicable.
|   
|(d) |  | Not applicable.

Item 5  Other Information

None.

Item 6  Exhibits and Reports on Form 8-K



|(a)  |  | Exhibits                                                                             
|---- |  | -------------------------------------------------------------------------------------
|    
|3.1  |  | By-Laws (as amended and restated through September 27, 2002)                         
|    
|10.1 |  | Letter agreement between the Company and James L. Vincent, dated as of
July 15, 2002.
|    
|10.2 |  | Letter agreement regarding James L. Vincent, dated as of July 15, 2002.              
|    
|99.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002              
|    
|(b)  |  | Reports on Form 8-K                                                                  
|    
|     |  | None.                                                                                

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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.                          
|                       
|                       
|                       
|                       
|                        |  |                                       
|                       
|                       
|                       
|                       
|Dated: October 18, 2002 |  | /s/ Peter N. Kellogg                  
|                       
|                       
|                       
|                       
|                        |  | Executive Vice President  Finance and
|                        |  | Chief Financial Officer               

20



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CERTIFICATIONS

Certifications:

I, James C. Mullen, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Biogen, Inc.:                                                                                                                                                                                                                                                           
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent functions):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: October 18, 2002

|                                                                                     
|-------------------------------------------------------------------------------------
|/s/ James C. MullenJames C. Mullen
Chairman, Chief Executive Officer and
   President

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I, Peter N. Kellogg, certify that:



| | 1. |  | I have reviewed this quarterly report on Form 10-Q of Biogen, Inc.:                                                                                                                                                                                                                                                           
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|
| | 3. |  | Based on my knowledge, the financial statements, and other
financial information included in this quarterly report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this quarterly report;                   
|
| | 4. |  | The registrants other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:                                                                                                        



| | a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c. |  | presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



| | 5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent functions):
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect the
registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors
any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        



| | 6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: October 18, 2002

|                                                                                                      
|------------------------------------------------------------------------------------------------------
|/s/ Peter N. KelloggPeter N. Kellogg
Executive Vice President  Finance and Chief   
Financial Officer

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