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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 June 30, 2003

Commission File Number 0-12042

BIOGEN, INC.

(Exact name of registrant as specified in its charter)


|                                |  |                    
|------------------------------- |  | -------------------
|Massachusetts                   |  | 04-3002117         
|                                |  |                    
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | 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 [   ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934)

Yes [ X ]     No [   ]

The number of shares of the registrants Common Stock, $0.01 par value,
outstanding as of July 1, 2003 was 149,468,321 shares.





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|                                                   |                                                                                       |  |  |  |  |  |  | 
|-------------------------------------------------- | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|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-31.1 CERTIFICATION OF THE CEO                  
|EX-31.2 CERTIFICATION OF THE CFO                  
|EX-32.1 CERTIFICATION (SARBANES-OXLEY ACT OF 2002)



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BIOGEN, INC.

INDEX

|                                                                                                |  |        |    | 
|----------------------------------------------------------------------------------------------- |  | ------ | -- | 
|                                                                                                |  | Page  
|                                                                                                |  | Number
|                                                                                                |  |       
|PART I  FINANCIAL INFORMATION                                                                  |  |        |    | 
|Condensed Consolidated Statements of Income  Three and six months ended June 30, 2003 and 2002 |  |        | 3  | 
|Condensed Consolidated Balance Sheets  June 30, 2003 and December 31, 2002                     |  |        | 4  | 
|Condensed Consolidated Statements of Cash Flows  Six months ended June 30, 2003 and 2002       |  |        | 5  | 
|Notes to Condensed Consolidated Financial Statements                                            |  |        | 6  | 
|Managements Discussion and Analysis of Financial Condition and Results of Operations           |  |        | 14 | 
|PART II  OTHER INFORMATION                                                                     |  |        | 24 | 

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

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

|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|-------------------------- | ----------------------------------- | - | ------------------ | ------- | ---------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                           |                                     |   | Three months ended |         | Six months ended
|                           |                                     |   | June 30,           |         | June 30,        
|                           |                                     |   | 2003               |         | 2002             |   | 2003    |         | 2002
|                           |                                     |   |                    |         |                  |   |         |         |     
|REVENUES:                  |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |        
|                           | Product                             |   | $                  | 293,149 |                  |   | $       | 250,542 |      |   | $       | 571,326 |  |   | $       | 516,527 | 
|                           | Royalties                           |   |                    | 30,510  |                  |   |         | 18,721  |      |   |         | 71,883  |  |   |         | 41,079  | 
|                           | Contract                            |   |                    | 1,987   |                  |   |         |        |      |   |         | 3,136   |  |   |         |        | 
|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|Total revenues             |                                     |   | 325,646            |         |                  |   | 269,263 |         |      |   | 646,345 |         |  |   | 557,606 |        
|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|COSTS AND EXPENSES:        |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |        
|                           | Cost of product revenues            |   |                    | 43,434  |                  |   |         | 35,042  |      |   |         | 87,287  |  |   |         | 72,936  | 
|                           | Cost of royalty revenues            |   |                    | 2,212   |                  |   |         | 1,167   |      |   |         | 4,625   |  |   |         | 2,591   | 
|                           | Research and development            |   |                    | 116,083 |                  |   |         | 89,348  |      |   |         | 201,189 |  |   |         | 171,815 | 
|                           | Selling, general and administrative |   |                    | 92,147  |                  |   |         | 91,567  |      |   |         | 187,570 |  |   |         | 164,957 | 
|                           | Merger related expenses             |   |                    | 3,804   |                  |   |         |        |      |   |         | 3,804   |  |   |         |        | 
|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|Total costs and expenses   |                                     |   | 257,680            |         |                  |   | 217,124 |         |      |   | 484,475 |         |  |   | 412,299 |        
|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|Income from operations     |                                     |   | 67,966             |         |                  |   | 52,139  |         |      |   | 161,870 |         |  |   | 145,307 |        
|Other income, net          |                                     |   | 12,411             |         |                  |   | 8,104   |         |      |   | 6,747   |         |  |   | 15,132  |        
|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|INCOME BEFORE INCOME TAXES |                                     |   | 80,377             |         |                  |   | 60,243  |         |      |   | 168,617 |         |  |   | 160,439 |        
|Income taxes               |                                     |   | 22,506             |         |                  |   | 16,868  |         |      |   | 47,213  |         |  |   | 44,923  |        
|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|NET INCOME                 |                                     | $ | 57,871             |         |                  | $ | 43,375  |         |      | $ | 121,404 |         |  | $ | 115,516 |        
|                           |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |         | 
|BASIC EARNINGS PER SHARE   |                                     | $ | 0.39               |         |                  | $ | 0.29    |         |      | $ | 0.81    |         |  | $ | 0.78    |        
|DILUTED EARNINGS PER SHARE |                                     | $ | 0.38               |         |                  | $ | 0.29    |         |      | $ | 0.80    |         |  | $ | 0.76    |        
|SHARES USED IN COMPUTING:  |                                     |   |                    |         |                  |   |         |         |      |   |         |         |  |   |         |        
|Basic earnings per share   |                                     |   | 149,493            |         |                  |   | 149,231 |         |      |   | 149,552 |         |  |   | 148,945 |        
|Diluted earnings per share |                                     |   | 151,440            |         |                  |   | 152,033 |         |      |   | 151,467 |         |  |   | 152,118 |        

See Notes to Condensed Consolidated Financial Statements.

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

|                                     |                                        |   |             |           |              |   |           |           |  
|------------------------------------ | -------------------------------------- | - | ----------- | --------- | ------------ | - | --------- | --------- | -
|                                     |                                        |   | June 30,    |           | December 31,
|                                     |                                        |   | 2003        |           | 2002        
|                                     |                                        |   |             |           |             
|                                     |                                        |   | (unaudited) |           |              |   |          
|ASSETS                               |                                        |   |             |           |              |   |           |          
|Current assets                       |                                        |   |             |           |              |   |           |          
|                                     | Cash and cash equivalents              |   | $           | 62,151    |              |   | $         | 45,113    |  
|                                     | Marketable securities                  |   |             | 795,744   |              |   |           | 821,996   |  
|                                     | Accounts receivable, net               |   |             | 197,154   |              |   |           | 171,067   |  
|                                     | Deferred tax assets                    |   |             | 31,556    |              |   |           | 38,592    |  
|                                     | Inventory                              |   |             | 83,505    |              |   |           | 95,378    |  
|                                     | Other current assets                   |   |             | 46,268    |              |   |           | 43,878    |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Total current assets                   |   |             | 1,216,378 |              |   |           | 1,216,024 |  
|                                     |                                        |   |             |           |              |   |           |          
|Property, plant and equipment        |                                        |   |             |           |              |   |           |          
|                                     | Cost                                   |   |             | 1,008,717 |              |   |           | 953,805   |  
|                                     | Less accumulated depreciation          |   |             | 244,119   |              |   |           | 215,746   |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Property, plant and equipment, net     |   |             | 764,598   |              |   |           | 738,059   |  
|                                     |                                        |   |             |           |              |   |           |          
|Patents, net                         |                                        |   | 16,762      |           |              |   | 15,994    |          
|Other assets                         |                                        |   | 40,610      |           |              |   | 36,911    |          
|                                     |                                        |   |             |           |              |   |           |          
|                                     |                                        | $ | 2,038,348   |           |              | $ | 2,006,988 |          
|                                     |                                        |   |             |           |              |   |           |           |  
|LIABILITIES AND SHAREHOLDERS EQUITY |                                        |   |             |           |              |   |           |          
|Current liabilities                  |                                        |   |             |           |              |   |           |          
|                                     | Accounts payable                       |   | $           | 31,924    |              |   | $         | 64,876    |  
|                                     | Current portion of long-term debt      |   |             | 4,888     |              |   |           | 4,888     |  
|                                     | Current taxes payable                  |   |             | 70,916    |              |   |           | 73,824    |  
|                                     | Accrued expenses and other             |   |             | 132,757   |              |   |           | 182,745   |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Total current liabilities              |   |             | 240,485   |              |   |           | 326,333   |  
|                                     |                                        |   |             |           |              |   |           |          
|Long-term debt, less current portion |                                        |   | 34,966      |           |              |   | 37,410    |          
|Long-term deferred tax liabilities   |                                        |   | 33,702      |           |              |   | 33,678    |          
|Other long-term liabilities          |                                        |   | 19,053      |           |              |   | 14,146    |          
|Commitments and contingencies        |                                        |   |            |           |              |   |          |          
|Shareholders equity                 |                                        |   |             |           |              |   |           |          
|                                     | Common stock                           |   |             | 1,517     |              |   |           | 1,517     |  
|                                     | Additional paid-in capital             |   |             | 840,237   |              |   |           | 829,993   |  
|                                     | Treasury stock, at cost                |   |             | (73,391   | )            |   |           | (90,844   | )
|                                     | Retained earnings                      |   |             | 913,296   |              |   |           | 838,756   |  
|                                     | Accumulated other comprehensive income |   |             | 28,483    |              |   |           | 15,999    |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Total shareholders equity             |   |             | 1,710,142 |              |   |           | 1,595,421 |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     |                                        | $ | 2,038,348   |           |              | $ | 2,006,988 |          
|                                     |                                        |   |             |           |              |   |           |           |  

See Notes to Condensed Consolidated Financial Statements.

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

|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |          |          |         |   | 
|---------------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | -------- | ------- | ---------------- | ------- | -------- | -------- | ------- | - | 
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         | Six months ended
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         | June 30,        
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                 
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         | 2003             |         | 2002    
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|CASH FLOWS FROM OPERATING ACTIVITIES                 |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|                                                     | Net income                                                                          |                                                                   | $                                                                                                     | 121,404  |         |                  | $       | 115,516  |         
|                                                     | Adjustments to reconcile net income to net cash provided from operating activities: |                                                                   |                                                                                                       |          |         |                  |         |          |         
|                                                     |                                                                                     | Depreciation and amortization                                     |                                                                                                       |          | 28,766  |                  |         |          | 20,530   |        
|                                                     |                                                                                     | Tax benefit of stock options                                      |                                                                                                       |          | 9,720   |                  |         |          | 14,294   |        
|                                                     |                                                                                     | Equity in net loss of unconsolidated affiliate                    |                                                                                                       |          |        |                  |         |          | 2,828    |        
|                                                     |                                                                                     | Stock based compensation                                          |                                                                                                       |          | 524     |                  |         |          | 1,023    |        
|                                                     |                                                                                     | Realized (gain) loss on sale of non-current marketable securities |                                                                                                       |          | (1,431  | )                |         |          | 301      |        
|                                                     |                                                                                     | Impairment of non-current investments or marketable securities    |                                                                                                       |          | 3,079   |                  |         |          | 2,182    |        
|                                                     |                                                                                     | Writedown of inventory to net realizable value                    |                                                                                                       |          | 9,520   |                  |         |          |         |        
|                                                     |                                                                                     | Changes in:                                                       |                                                                                                       |          |         |                  |         |          |          |        
|                                                     |                                                                                     |                                                                   | Accounts receivable                                                                                   |          |         | (23,157          | )       |          |          | (833    | )
|                                                     |                                                                                     |                                                                   | Inventory                                                                                             |          |         | 2,353            |         |          |          | (28,210 | )
|                                                     |                                                                                     |                                                                   | Other current and other assets                                                                        |          |         | (11,750          | )       |          |          | (15,417 | )
|                                                     |                                                                                     |                                                                   | Accounts payable, accrued
expenses, current taxes payable
and other current and long-term
liabilities |          |         | (84,789          | )       |          |          | (11,316 | )
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |          |         
|                                                     |                                                                                     | Net cash flows from operating activities                          |                                                                                                       |          | 54,239  |                  |         |          | 100,898  |        
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|CASH FLOWS FROM INVESTING ACTIVITIES                 |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|                                                     | Purchases of current marketable securities                                          |                                                                   |                                                                                                       | (204,248 | )       |                  |         | (220,539 | )       
|                                                     | Proceeds from sales and maturities of current marketable securities                 |                                                                   |                                                                                                       | 240,175  |         |                  |         | 201,957  |         
|                                                     | Proceeds from sales of non-current marketable securities                            |                                                                   |                                                                                                       | 2,143    |         |                  |         | 493      |         
|                                                     | Proceeds from withdrawal from an equity fund                                        |                                                                   |                                                                                                       | 7,217    |         |                  |         |         |         
|                                                     | Acquisitions of property and equipment, net                                         |                                                                   |                                                                                                       | (49,584  | )       |                  |         | (113,436 | )       
|                                                     | Additions to patents                                                                |                                                                   |                                                                                                       | (1,617   | )       |                  |         | (1,574   | )       
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|                                                     |                                                                                     | Net cash flows from investing activities                          |                                                                                                       |          | (5,914  | )                |         |          | (133,099 | )      
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|CASH FLOWS FROM FINANCING ACTIVITIES                 |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|                                                     | Repayments on long-term debt                                                        |                                                                   |                                                                                                       | (2,444   | )       |                  |         | (2,443   | )       
|                                                     | Purchases of treasury stock                                                         |                                                                   |                                                                                                       | (45,785  | )       |                  |         | (8,384   | )       
|                                                     | Issuance of treasury stock related to stock option exercises                        |                                                                   |                                                                                                       | 16,376   |         |                  |         | 18,406   |         
|                                                     | Other                                                                               |                                                                   |                                                                                                       | 451      |         |                  |         | 84       |         
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|                                                     |                                                                                     | Net cash flows from financing activities                          |                                                                                                       |          | (31,402 | )                |         |          | 7,663    |        
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|                                                     | Effect of exchange rate changes on cash                                             |                                                                   |                                                                                                       | 115      |         |                  |         | 731      |         
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                                     |                                                                   | 17,038                                                                                                |          |         |                  | (23,807 | )       
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       |                                                                                     |                                                                   | 45,113                                                                                                |          |         |                  | 54,042  |         
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |         
|CASH AND CASH EQUIVALENTS, END OF PERIOD             |                                                                                     | $                                                                 | 62,151                                                                                                |          |         | $                | 30,235  |         
|                                                     |                                                                                     |                                                                   |                                                                                                       |          |         |                  |         |          |         

See Notes to Condensed Consolidated Financial Statements.

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

(unaudited)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Biogen, Inc. (Biogen or the Company) is a global biopharmaceutical company
that develops, manufactures and markets novel human therapeutic products.
Biogens primary focus is developing pharmaceutical products that meet unmet
medical needs particularly in its core therapeutic areas of neurology,
dermatology and rheumatology. Biogen currently sells AVONEX® (Interferon
beta-1a) for the treatment of relapsing multiple sclerosis (MS) and
AMEVIVE® (alefacept) for the treatment of adult patients with
moderate-to-severe chronic plaque psoriasis who are candidates for systemic
therapy or phototherapy. Biogen also receives revenues from royalties on sales
by its licensees of a number of products covered under patents that Biogen
controls and from contract revenues related to a collaborative agreement with
IDEC Pharmaceuticals Corporation (IDEC).

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 and its subsidiaries. The Companys
accounting policies are described in the Notes to the Consolidated Financial
Statements in the Companys 2002 Annual Report on Form 10-K and updated, as
necessary, in this Form 10-Q. Interim results are not necessarily indicative of
the operating results for the full year.

The preparation of financial
statements in conformity with accounting principles generally
accepted in the United States of America 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.

On June 20, 2003, Biogen entered into an Agreement and Plan of Merger with IDEC
and Bridges Merger Corporation, a wholly owned subsidiary of IDEC. Under the
merger agreement, if all of the applicable conditions are met, Biogen will
merge with and into Bridges Merger Corporation and become a wholly owned
subsidiary of IDEC and IDEC will change its name to BIOGEN IDEC INC. If the merger is completed, Biogen
stockholders will receive 1.15 shares of IDEC common stock for each share of
Biogen common stock, plus cash in lieu of fractional shares. The shares of the combined
company are expected to be traded on the NASDAQ National Market under a new trading
symbol. IDEC will account for the merger under the purchase method of
accounting for business combinations under accounting principles generally
accepted in the United States, which means that the assets and
liabilities of Biogen will be recorded, as of the completion of the merger, at
their fair values and added to those of IDEC. The merger has been unanimously
approved by the board of directors of both IDEC and Biogen. The transaction is
subject to approval by the stockholders of both companies, as well as
regulatory approvals and satisfaction of other customary closing conditions.
The transaction is expected to be completed in late 2003. The
merger agreement provides for the payment of a termination fee of up to $230
million, under certain termination scenarios. In connection with the
proposed merger with IDEC, the Company has agreed to pay certain
advisors up to $15 million upon completion of the merger, in
addition to amounts previously paid, and a lesser amount should the
merger terminate, contingent upon certain conditions.

INVENTORIES

Inventories are stated at the lower of cost or market with cost determined
under the first-in/first-out (FIFO) method. 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:

|                |  |          |        |              |  |   |        | 
|--------------- |  | -------- | ------ | ------------ |  | - | ------ | 
|                |  | June 30, |        | December 31,
|(in thousands)  |  | 2003     |        | 2002        
|                |  |          |        |             
|Raw materials   |  | $        | 30,852 |              |  | $ | 27,027 | 
|Work in process |  |          | 17,927 |              |  |   | 25,892 | 
|Finished goods  |  |          | 34,726 |              |  |   | 42,459 | 
|                |  |          |        |              |  |   |        | 
|                |  | $        | 83,505 |              |  | $ | 95,378 | 
|                |  |          |        |              |  |   |        | 

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 $6.1 million and

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$9.5 million of unmarketable inventory for the three and six months ended June
30, 2003, respectively, which was charged to cost of product revenues. Biogen
wrote down an additional $2.9 million of inventory to research and development since it met
clinical specifications but not commercial specifications.

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE

SEC Staff Accounting Bulletin No. 101 (SAB 101) provides guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
SAB 101 establishes the SECs view that it is not appropriate to recognize
revenue until all of the following criteria are met: persuasive evidence of an
arrangement exists; delivery has occurred or services have been rendered; the
sellers price to the buyer is fixed or determinable; and collectibility is
reasonably assured. Further, SAB 101 requires that both title and the risks and
rewards of ownership be transferred to the buyer before revenue can be
recognized. The Company believes that its revenue recognition policies are in
compliance with SAB 101.

Revenues from product sales are recognized when product is shipped and title
and risk of loss has passed to the customer. When customers have inspection and
approval rights for products, Biogen defers revenue until lapse of that right.
Revenues are recorded net of applicable allowances for returns, rebates and
other applicable discounts and allowances. The Company prepares its estimates
for sales returns and allowances, discounts and rebates quarterly based
primarily on historical experience updated for changes in facts and
circumstances, as appropriate.

In January 2003, Biogen received regulatory approval to market AMEVIVE in the
U.S. In connection with the introduction of AMEVIVE, Biogen implemented a limited launch period
initiative undertaken in cooperation with one of Biogens distributors which
provides a refund on purchases of AMEVIVE made after a private payor has
initially verified that it will cover the product but later denies the claim
after appeal and where the other requirements of the initiative are met. Under
this initiative, Biogens exposure is contractually limited to
10% of the price of all
AMEVIVE purchased by the distributor. As a result, Biogen will defer
recognition of revenue of 10% of AMEVIVE purchased by the distributor while
this initiative is in effect until such time as sufficient history of insurance claims
reimbursement becomes available.  In connection with the launch
initiative, the Company has recorded $0.9 million of deferred
revenue in accrued expenses and other at June 30, 2003. This launch initiative is
applicable to purchases of AMEVIVE made on or before July 31, 2003 and will be
replaced with a new initiative undertaken in cooperation with the same
distributor. Under this new initiative, the distributor will provide a
purchaser with a discount on future purchases
of AMEVIVE if a payor has initially verified that it will cover the purchase of
AMEVIVE by the purchaser but later denies the claim after appeal and where the other
requirements of the initiative are met. Biogen will provide the distributor
with a discount on its future purchases of AMEVIVE by the purchaser equal to the amount of the
discount provided by the distributor under the initiative, up to a maximum
discount of 5% on any purchase order submitted to Biogen by the distributor.
This initiative is applicable to purchases of AMEVIVE made on or after August
1, 2003 through July 31, 2004. As a result, effective as of August 1, 2003,
Biogen will defer recognition of revenue of 5% of AMEVIVE purchased by the
distributor until such time as sufficient history of insurance claims
reimbursement becomes available.

In February 2002, the FASB Emerging Issues Task Force (EITF) released EITF
Issue No. 01-09 (EITF 01-09), Accounting for Consideration Given by a Vendor
to a Customer (Including a Reseller of the Vendors Products). EITF 01-09
states that cash consideration (including a sales incentive) given by a vendor
to a customer is presumed to be a reduction of the selling prices of the
vendors products or services and, therefore, should be characterized as a
reduction of revenue when recognized in the vendors income statement, rather
than a sales and marketing expense. The Company has various contracts with
distributors that provide for discounts and rebates. These contracts are
classified as a reduction of revenue. The Company also maintains select
customer service contracts with distributors and other customers in the
distribution channel. In accordance with EITF 01-09, the Company has
established the fair value of these contracts and, as provided by EITF 01-09,
classified these customer service contracts as sales and marketing expense. If
the Company should not be able to sustain the fair value of these contracts,
the Company would be required to classify these costs as a reduction of
revenue. The adoption of EITF 01-09 did not have a significant impact on the
Companys financial statements.

The Company receives royalty revenues under license agreements with a number of
third parties that sell products based on technology developed by the Company
or to which the Company has rights. The license agreements provide for the
payment of royalties to the Company based on sales of the licensed product. The
Company records these revenues based on estimates of the sales that occurred
during the relevant period. Differences between actual
royalty revenues and estimated royalty revenues are reconciled and adjusted for
in the period which they become known, typically the following quarter.
Historically, adjustments have not been material based on actual amounts paid
by licensees. During the second quarter of 2003, royalty revenues were
negatively impacted by approximately $8 million due to
Schering-Ploughs announced first quarter 2003 INTRON® A
(interferon alpha-2b) sales decline, which Schering-Plough indicated
was driven by a channel inventory reduction and an increasingly competitive
environment. There are no future performance obligations on the part of the
Company under these license agreements.

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Revenue is not recognized in any circumstances unless collectibility is
reasonably assured.

Biogen maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of Biogens customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required, which could affect future earnings.

In January 2003, the Company signed a collaboration agreement (the IDEC
Agreement) with IDEC, under which Biogen
and IDEC are collaborating on the development of three oncology therapeutics
from Biogens pipeline of early-stage product candidates. Under the terms of
the IDEC Agreement, IDEC initially will be responsible for the development
costs of the product candidates, until that time, if any, when the Company
exercises its opt-in rights (which must be done within a certain timeframe)
with respect to each specific product candidate. Prior to exercising its opt-in
rights, to the extent that the Company incurs any development costs in relation
to the programs contained in the IDEC Agreement, they will be recorded as
research and development expense. The reimbursement by IDEC of these costs will
be recorded as contract revenue. For the three and six months ended June 30,
2003, the Company recorded $2.0 million and $3.1 million, respectively, for
contract revenue. Upon completion of the proposed merger, contract revenue
related to this collaboration agreement will be eliminated.

ACCOUNTING FOR STOCK BASED COMPENSATION

The Company has several stock-based compensation plans. The Company applies APB
Opinion No. 25 Accounting for Stock Issued to Employees in accounting for
qualifying options granted to its employees under its plans and applies
Statement of Financial Accounting Standards No. 123 Accounting for Stock
Issued to Employees (SFAS 123) for disclosure purposes only. The SFAS 123
disclosures include pro forma net income and earnings per share as if the fair
value method of accounting had been used. Stock issued to non-employees
is accounted for in accordance with SFAS 123 and related interpretations.

If compensation for employee options had been determined based on SFAS 123, the
Companys pro forma net income, and pro forma earnings per share for the three
and six months ending June 30, would have been as follows:

|                                                 |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|------------------------------------------------ |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------- | 
|                                                 |  | Three months ended |        | Six months ended
|                                                 |  | June 30,           |        | June 30,        
|                                                 |  |                    |        |                 
|(in thousands, except per share data)            |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                                 |  |                    |        |                  |  |      |        |     
|Reported net income                              |  | $                  | 57,871 |                  |  | $    | 43,375 |      |  | $ | 121,404 |  |  | $ | 115,516 | 
|Pro forma stock compensation
expense, net of tax |  |                    | 10,195 |                  |  |      | 10,384 |      |  |   | 20,757  |  |  |   | 21,707  | 
|                                                 |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|Pro forma net income                             |  | $                  | 47,676 |                  |  | $    | 32,991 |      |  | $ | 100,647 |  |  | $ | 93,809  | 
|                                                 |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|Reported basic earnings per share                |  | $                  | 0.39   |                  |  | $    | 0.29   |      |  | $ | 0.81    |  |  | $ | 0.78    | 
|                                                 |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|Pro forma basic earnings per share               |  | $                  | 0.32   |                  |  | $    | 0.22   |      |  | $ | 0.67    |  |  | $ | 0.63    | 
|                                                 |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|Reported diluted earnings per share              |  | $                  | 0.38   |                  |  | $    | 0.29   |      |  | $ | 0.80    |  |  | $ | 0.76    | 
|                                                 |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |         | 
|Pro forma diluted earnings per share             |  | $                  | 0.31   |                  |  | $    | 0.22   |      |  | $ | 0.66    |  |  | $ | 0.62    | 
|                                                 |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |         | 

The fair value of options granted was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

|                                |  |                    |      |                  |  |      |      |      |  |  |      |   |  |  |      |  
|------------------------------- |  | ------------------ | ---- | ---------------- |  | ---- | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                |  | Three months ended |      | Six months ended
|                                |  | June 30,           |      | June 30,        
|                                |  | 2003               |      | 2002             |  | 2003 |      | 2002
|                                |  |                    |      |                  |  |      |      |     
|Expected dividend yield         |  |                    | 0    | %                |  |      | 0    | %    |  |  | 0    | % |  |  | 0    | %
|Expected stock price volatility |  |                    | 45.8 | %                |  |      | 43.3 | %    |  |  | 45.8 | % |  |  | 43.3 | %
|Risk-free interest rate         |  |                    | 3.50 | %                |  |      | 4.25 | %    |  |  | 3.50 | % |  |  | 4.25 | %
|Expected option term in years   |  |                    | 7.43 |                  |  |      | 7.44 |      |  |  | 7.43 |   |  |  | 7.44 |  
|                                |  |                    |      |                  |  |      |      |      |  |  |      |   |  |  |      |  

The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 did not apply to awards prior to 1995.
Additional awards in future years are anticipated.

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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 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 June 30, 2003, the Company had $11.7 million outstanding under a floating
rate loan collateralized by one of the Companys laboratory and office
buildings in Cambridge, Massachusetts and $28.2 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 $4.9
million and $5.1 million at June 30, 2003 and December 31, 2002, 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 six months ended June 30, 2003 or in the comparable periods of 2002, 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 June 30, 2003 was approximately $72.7 million. These contracts
had a fair value of approximately $7.8 million, representing an unrealized
loss, and were included in accrued expenses and other at June 30, 2003.

For the three and six months ended June 30, 2003, there were no significant
amounts recognized in earnings due to hedge ineffectiveness. For the three and
six months ended June 30, 2002, approximately $0.7 million and $0.6 million,
respectively, were recognized as expenses due to hedge ineffectiveness. For the
three and six months ended June 30, 2003 and 2002, 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 $3.2 million and
$5.1 million of losses in product revenue for the settlement of certain
effective cash flow hedge instruments for the three and six months ended June
30, 2003, respectively. The Company recognized approximately $1.4 million and
$2.7 million of losses in royalty revenue for the settlement of certain
effective cash flow hedge instruments for the three and six months ended June
30, 2003, respectively. The Company recognized approximately $1.2 million and
$0.5 million of losses in product revenue for the settlement of certain
effective cash flow hedge instruments for the three and six months ended June
30, 2002, respectively. The Company recognized approximately $0.4 million and
$0.3 million of losses in royalty revenue for the settlement of certain
effective cash flow hedge instruments for the three and six months
ended June 30, 2002, respectively. These settlements were recorded in the same period as
the related forecasted transactions affected earnings.

3.     COMPREHENSIVE INCOME

Comprehensive income comprises 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 and derivative instruments,
net of tax. Comprehensive income for the three months
ended June 30, 2003 and 2002 was $69.6 million and $42.9 million, respectively.
Comprehensive income for the six months ended June 30, 2003 and 2002 was
$133.9 million and $108.7 million, respectively.

4.     EARNINGS PER SHARE

The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per

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Share (SFAS 128). SFAS
128 requires the presentation of basic earnings per share and diluted
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, as determined using the treasury stock method.

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

|                                                              |  |                    |         |                  |  |      |         |      |  |  |         |  |  |  |         | 
|------------------------------------------------------------- |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  |  | ------- |  |  |  | ------- | 
|                                                              |  | Three months ended |         | Six months ended
|                                                              |  | June 30,           |         | June 30,        
|(in thousands)                                                |  | 2003               |         | 2002             |  | 2003 |         | 2002
|                                                              |  |                    |         |                  |  |      |         |     
|Weighted average number of shares of common stock outstanding |  |                    | 149,493 |                  |  |      | 149,231 |      |  |  | 149,552 |  |  |  | 148,945 | 
|Dilutive stock options and warrants                           |  |                    | 1,947   |                  |  |      | 2,802   |      |  |  | 1,915   |  |  |  | 3,173   | 
|                                                              |  |                    |         |                  |  |      |         |      |  |  |         |  |  |  |         | 
|Shares used in calculating diluted earnings per share         |  |                    | 151,440 |                  |  |      | 152,033 |      |  |  | 151,467 |  |  |  | 152,118 | 
|                                                              |  |                    |         |                  |  |      |         |      |  |  |         |  |  |  |         | 

Options to purchase approximately 13.3 million and 8.4 million shares were
outstanding at June 30, 2003 and 2002, 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. During the first six months of 2003, the
Company repurchased approximately 1.2 million shares of the common stock under
this program at a cost of $45.8 million. The Company purchased 145,000 shares
during the first six months of 2002 at a cost of $8.4 million.
During 2001, the Company repurchased approximately 1.5 million
shares of its common stock at a cost of $88.3 million. Approximately
1.2 million shares remain authorized for repurchase under this program at June
30, 2003.

6.     OTHER INCOME, NET

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

|                        |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|----------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                        |  | Three months ended |        | Six months ended
|                        |  | June 30,           |        | June 30,        
|                        |  |                    |        |                 
|                        |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                        |  |                    |        |                  |  |      |        |     
|Interest income         |  | $                  | 8,558  |                  |  | $    | 10,466 |      |  | $ | 17,997 |   |  | $ | 21,064 |  
|Interest expense        |  |                    | (988   | )                |  |      | (909   | )    |  |   | (1,634 | ) |  |   | (1,922 | )
|Other income (expense)  |  |                    | 4,841  |                  |  |      | (1,453 | )    |  |   | (9,616 | ) |  |   | (4,010 | )
|                        |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Total other income, net |  | $                  | 12,411 |                  |  | $    | 8,104  |      |  | $ | 6,747  |   |  | $ | 15,132 |  
|                        |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  

Other income (expense) for the three months ended June 30, 2003 consists
primarily of $1.4 million of realized gains from the sale of noncurrent
marketable securities, $1 million of realized gains related to
certain current marketable securities classified as trading, $0.9 million of foreign exchange
remeasurement gains, and $0.8 million of gains on sales of
current marketable securities. Other income (expense) for the three months ended June 30, 2002 consisted
primarily of $2.9 million of losses attributable to an equity method investee,
partially offset by $1.9 million of foreign exchange remeasurement gains.

Other income (expense) for the six months ended June 30, 2003 consists
primarily of a $12.9 million charge related to the settlement of a patent
infringement dispute, a $3.1 million writedown of Biogens investment in Eos
Biotechnology Inc. (Eos) due to a third partys acquisition of Eos in the
first quarter of 2003, $2.2 million of foreign exchange remeasurement gains,
$1.4 million of realized gains from the sale of noncurrent marketable
securities, and $1.3 million of gains on sales of current marketable
securities.
Other income (expense) for the six months ended June 30, 2002 consisted
primarily of $2.8 million of losses attributable to an equity method investee
and $2.5 million of charges from the writedown and sales of certain noncurrent
marketable securities.

7.     INCOME TAX EXPENSE

Income tax expense as a percentage of pre-tax income was 28% for the three and
six months ended June 30, 2003 and 2002. The effective tax rate varied from the
U.S. statutory rates for the first six months of 2003 and 2002 primarily due to
higher sales in

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European jurisdictions with lower tax rates and to the
utilization of research and development credits.

8.     LITIGATION

On October 13, 1998, the Company filed an opposition with the Opposition
Division of the European Patent Office opposing the grant of a European patent
(the Rentschler II Patent) issued to Dr. Rentschler Biotechnologie GmbH
(Rentschler) claiming compositions of matter of beta interferon having
specific glycosylation patterns. On November 6, 2002, a hearing took place with
regard to the Companys opposition of the Rentschler II Patent in the European
Patent Office. The Opposition Board of the European Patent Office ruled that
the present claims of the Rentschler II Patent should be maintained. Following
this decision, Rentschler Biotechnologie GmbH & Co. KG sued the
Companys German
subsidiary, Biogen GmbH, for infringement of the Rentschler II Patent in
Germany. In April 2003, the Company and Rentschler settled their litigation
which brought to a close all pending legal proceedings in the German district
court and the European Patent Office. Under the Settlement and License
Agreement, the Company agreed to pay Rentschler $12.9 million as a one-time
payment in settlement of litigation and has agreed to an ongoing
royalty on
sales of AVONEX in the relevant European countries in which the Rentschler II
patent is in effect. As part of the settlement, both parties agreed not to
pursue further litigation on these patents, including any appeal of the
decision in the European Patent Office.

Because the substantive terms of the Rentschler settlement arrangement were
agreed to in the first quarter of 2003, the Company determined that the
provisions of SFAS 5, Accounting for Contingencies, required that the Company
account for this settlement in the first quarter of 2003. As a result, the
Company recorded a charge of $12.9 million related to the settlement in other
income (expense), net in its March 31, 2003 financial statements.

Along with most other major pharmaceutical and biotechnology companies, the
Company has been named as a defendant in a lawsuit filed by the County of
Suffolk, New York, in the U.S. District Court in the Eastern District of New
York in January 2003. In March 2003, the case was transferred to the U.S.
District Court for the District of Massachusetts. The complaint alleges that
the defendants overstated the Average Wholesale Price (AWP) for drugs for
which Medicaid provides reimbursement (Covered Drugs), marketed and promoted
the sale of Covered Drugs to providers based on the providers ability to
collect inflated payments from the government and Medicaid beneficiaries that
exceeded payments possible for competing drugs, provided financing incentives
to providers to over-prescribe Covered Drugs or to prescribe Covered Drugs in
place of competing drugs, and overcharged Medicaid for illegally inflated
Covered Drugs reimbursements. The complaint further alleges that the defendants
failed to accurately report the best price on the Covered Drugs to New Yorks
Medicaid program. Under Medicaid, pharmaceutical and biotechnology companies
agree to pay Medicaid programs a rebate for each product reimbursed by
Medicaid. The amount of the rebate is often the difference between the average
manufacturers price and the best price reported by companies to the Medicaid
program. Plaintiff claims that it was harmed because it could have allotted the
dollars that it wrongfully spent on Medicaid to other public needs. Plaintiff
has brought the action under the Racketeering Influence and Corrupt
Organizations Act (RICO), and for breach of contract, unjust enrichment,
Medicaid fraud and common law fraud. The Company intends to vigorously defend
itself against all of the allegations and claims in this lawsuit. As a result,
an estimate of any potential loss or range of loss cannot be made at this time.

On June 25, 2003, a suit was filed in the Superior Court of California, County
of San Diego, on behalf of a purported class of Biogen stockholders against
Biogen, IDEC and members of Biogens board of directors alleging, among other
things, that members of Biogens board of directors breached their fiduciary
duties of candor, loyalty, due care, independence, good faith and fair dealing
by tailoring the structural terms of the proposed merger between Biogen and
IDEC to meet the specific needs of IDEC rather than attempting to obtain the
highest price reasonably available for Biogen. The complaint, which Biogen
contends is without merit, seeks, among other things, to enjoin the
merger and to impose constructive trusts in favor of the plaintiff class.
Biogen intends to vigorously defend this action. As a result, an estimate of
any potential loss or range of loss cannot be made at this time.

On July 15, 2003, Biogen, along with Genzyme Corporation and
Abbott Bioresearch Center, Inc., filed suit against Trustees of Columbia
University in the City of New York (Columbia) in the United States District
Court for the District of Massachusetts, contending that it no longer has any
obligation to pay royalties to Columbia on sales of AVONEX in the U.S. under a
1993 License Agreement between Biogen and Columbia related to U.S. Patent Nos.
4,399,216; 4,634,665; and 5,179,017 (the Original Patents) or under a newly
issued patent, U.S. Patent No. 6,455,275 (the 275 Patent). In its suit,
Biogen is seeking a declaratory judgment that it has no obligation to pay any
further royalties under the license agreement because the Original Patents have
expired and the 275 Patent is invalid and unenforceable; and that Columbia
should be permanently enjoined from demanding any further royalties based on
the 275 Patent or on any pending continuations, continuations-in-part, or
divisional applications of the Original Patents. Columbia has taken the
position that Biogen still owes it royalties under the license agreement on the
basis of the 275 Patent which was issued on September 24, 2002, over two years
after the expiration of the Original Patents. In the event
that

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Biogen is unsuccessful in the present litigation, Biogen may be liable for damages
suffered by Columbia with respect to withheld royalties and such other relief
as Columbia may seek and be granted by the Court. In the second
quarter 2003, as a
result of the Companys assessment of the invalidity of the
275 Patent, the Company determined that it was probable that no
additional amounts would be paid to Columbia. As a result, the
Company eliminated a related
accrual of $8 million in cost of product revenues and no longer
provides for any royalties related to the 275 Patent.

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 primarily from sales of its AVONEX
product for the treatment of relapsing forms of MS, and to a lesser extent,
from sales of its AMEVIVE product, approved by the U.S. Food and Drug
Administration in January 2003 for the treatment of adult patients with
moderate-to-severe chronic plaque psoriasis who are candidates for systemic
therapy or phototherapy. 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 and from contract revenues related to a collaborative
agreement with IDEC.

10.     GUARANTEES

Under its charter, the Company has agreed to indemnify any person who is made a
party to any action or threatened with any action as a result of such persons
serving or having served as an officer or director of the Company or having
served, at the Companys request, as an officer or director of another company.
The indemnification does not apply if the person is adjudicated not to have
acted in good faith in the reasonable belief that his or her actions were in
the best interests of the Company. The indemnification obligation survives
termination of the indemnified partys involvement with the Company but only as
to those claims arising from such persons role as an officer or director. The
Company has separate indemnification agreements with certain of its officers
and directors that do not provide any greater coverage than that found in the
charter provisions. The maximum potential amount of future payments that the
Company could be required to make under the charter provision and the
corresponding indemnification agreements is unlimited; however, the Company has
Director and Officer insurance policies that, in most cases, would limit its
exposure and enable it to recover a portion of any future amounts paid. The
estimated fair value of these indemnification provisions is minimal. Accordingly, we have no
liabilities recorded for these provisions as of June 30, 2003.

The Company enters into indemnification provisions under its agreements with
other companies in its ordinary course of business, typically with business
partners, financial advisors, contractors, clinical sites and customers. Under
these provisions the Company generally indemnifies and hold harmless the
indemnified party for losses suffered or incurred by the indemnified party as a
result of the Companys activities. These indemnification provisions generally
survive termination of the underlying agreement. The maximum potential amount
of future payments the Company could be required to make under these
indemnification provisions is unlimited. The Company has not incurred material
costs to defend lawsuits or settle claims related to these indemnification
agreements. As a result, the estimated fair value of these agreements is
minimal. Accordingly, the Company has no liabilities recorded for these
agreements as of June 30, 2003.

11.     NEW ACCOUNTING PRONOUNCEMENTS

In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under FASB Statement No.
133, Accounting for Derivative Instruments and Hedging Activities.

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The adoption of SFAS 149 is not expected to have a material effect
on the Companys financial statements.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. This Statement is effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The adoption of SFAS 150 is not expected to have a
material effect on the Companys financial statements.

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




OVERVIEW

Biogen, Inc. (Biogen or the Company) is a global biopharmaceutical company
that develops, manufactures and markets novel human therapeutic products.
Biogens primary focus is developing pharmaceutical products that meet unmet
medical needs, particularly in its core therapeutic areas of neurology,
dermatology and rheumatology. Biogen currently sells AVONEX® (Interferon
beta-1a) for the treatment of relapsing multiple sclerosis (MS) and
AMEVIVE® (alefacept) for the treatment of adult patients with
moderate-to-severe chronic plaque psoriasis who are candidates for systemic
therapy or phototherapy. Biogen also receives revenues from royalties on sales
by the Companys licensees of a number of products covered under patents that
Biogen controls. In addition, Biogen has a pipeline of development stage
products and a number of research programs in its core therapeutic areas and in
other areas of interest.

On June 20, 2003, Biogen entered into an Agreement and Plan of Merger with IDEC
and Bridges Merger Corporation, a wholly owned subsidiary of IDEC. Under the
merger agreement, if all of the applicable conditions are met, Biogen will
merge with and into Bridges Merger Corporation and become a wholly owned
subsidiary of IDEC and IDEC will change its name to BIOGEN IDEC INC. upon
completion of the proposed merger. If the merger is completed, Biogen
stockholders will receive 1.15 shares of IDEC common stock for each share of
Biogen common stock, plus cash in lieu of fractional shares. The shares of the combined
company are expected to be traded on the NASDAQ National Market under a new trading
symbol. IDEC will account for the merger under the purchase method of
accounting for business combinations under accounting principles generally
accepted in the United States of America, which means that the assets and
liabilities of Biogen will be recorded, as of the completion of the merger, at
their fair values and added to those of IDEC. The merger has been unanimously
approved by the board of directors of each company. The transaction is
subject to approval by the stockholders of both companies, as well as
regulatory approvals and satisfaction of other customary closing conditions.
The transaction is expected to be completed in late 2003. The
merger agreement provides for the payment of a termination fee of up to $230
million under certain termination scenarios.

RESULTS OF OPERATIONS

For the quarter ended June 30, 2003, the Company reported net income of $57.9
million or $0.38 per diluted share as compared to $43.4 million or $0.29 per
diluted share for the comparable period of 2002. For the six months ended June
30, 2003, the Company reported net income of $121.4 million or $0.80 per
diluted share as compared to $115.5 million or $0.76 per diluted share for the
comparable period of 2002.

Revenues

|                  |               |       |       |                    |       |        |       |          |       |                  |     |        |    |   |       |       |       |   |       |       |       |  |     |    |    |  
|----------------- | ------------- | ----- | ----- | ------------------ | ----- | ------ | ----- | -------- | ----- | ---------------- | --- | ------ | -- | - | ----- | ----- | ----- | - | ----- | ----- | ----- |  | --- | -- | -- | -
|                  |               |       |       | Three months ended |       |        |       |          |       | Six months ended |     |        |    |  
|                  |               |       |       | June 30,           |       |        |       | June 30, |       |                 
|                  |               |       |       |                    |       | %      |       |          |       | %               
|(in millions)     |               | 2003  |       | 2002               |       | Change |       | 2003     |       | 2002             |     | Change
|                  |               |       |       |                    |       |        |       |          |       |                  |     |       
|Product revenues  |               |       |       |                    |       |        |       |          |       |                  |     |        |    |   |       |       |       |   |       |       |       |  |     |   
|                  | United States |       | $     | 203.3              |       |        | $     | 175.8    |       |                  |     | 16     | %  |   | $     | 396.5 |       |   | $     | 373.1 |       |  |     | 6  | % 
|                  | Rest of world |       |       | 89.8               |       |        |       | 74.8     |       |                  |     | 20     | %  |   |       | 174.8 |       |   |       | 143.4 |       |  |     | 22 | % 
|                  |               |       |       |                    |       |        |       |          |       |                  |     |        |    |   |       |       |       |   |       |       |       |  |     |    |   
|                  |               | Total |       |                    | 293.1 |        |       |          | 250.6 |                  |     |        | 17 | % |       |       | 571.3 |   |       |       | 516.5 |  |     |    | 11 | %
|Royalty revenues  |               |       | 30.5  |                    |       |        | 18.7  |          |       |                  | 63  | %      |    |   | 71.9  |       |       |   | 41.1  |       |       |  | 75  | % 
|Contract revenues |               |       | 2.0   |                    |       |        |      |          |       |                  | 100 | %      |    |   | 3.1   |       |       |   |      |       |       |  | 100 | % 
|                  |               |       |       |                    |       |        |       |          |       |                  |     |        |    |   |       |       |       |   |       |       |       |  |     |    |   
|Total revenues    |               | $     | 325.6 |                    |       | $      | 269.3 |          |       |                  | 21  | %      |    | $ | 646.3 |       |       | $ | 557.6 |       |       |  | 16  | % 
|                  |               |       |       |                    |       |        |       |          |       |                  |     |        |    |   |       |       |       |   |       |       |       |  |     |    |   

Product revenues

Product revenues related to AVONEX for
the three and six months ended June 30, 2003 were
$286.3 million and $560.6 million, respectively. Product
revenues related to AMEVIVE for the three and six months ended
June 30, 2003 were $6.8 million and $10.7 million,
respectively. All product revenue in 2002 related to AVONEX. Product revenues, consisting primarily of revenues from sales of AVONEX,
represented approximately 90% and 88%, respectively, of the Companys total
revenues in the three and six months ended June 30, 2003. Product revenues from
sales of AVONEX represented approximately 93% of the Companys total revenues
in the three and six months ended June 30, 2002. The 16% growth in U.S.

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product revenue for the three months ended June 30, 2003 over the comparable period in
2002 was primarily attributable to price
increases on AVONEX, increases in the sales volume of AVONEX, and sales of
AMEVIVE. The 6% growth in U.S. product revenue for the six months ended June
30, 2003 over the comparable period in 2002 was primarily attributable to price
increases on AVONEX and sales of AMEVIVE. Product revenues growth in the U.S.
was affected by increased competition and a softening of the MS marketplace
growth rate for the three and six month periods ended June 30, 2003 over the
comparable periods of 2002. For the three and six months ending June 30, 2003,
product revenues outside of the U.S. increased 20% and 22%, respectively,
compared to the three and six months ended June 30, 2002. For the three months
ended June 30, 2003, the 20% growth in product revenues outside
the U.S. represented 6% growth on a local currency basis, primarily
attributable to a higher sales volume of AVONEX, and 14% growth due
to foreign
exchange rate changes at June 30, 2003 over the comparable period in 2002. For
the six months ended June 30, 2003, the 22% growth in product revenues outside
the U.S. represented 8% growth on a local currency basis, primarily
attributable to a  higher sales volume of AVONEX, and 14% growth due
to foreign exchange rate changes at June 30, 2003 over the comparable period in
2002.

The Company expects to face increasing competition in the MS marketplace in and
outside the U.S. from existing and new MS treatments that may impact sales of
AVONEX. The Company 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 slower growth in the MS
market. See Outlook  Dependence on AVONEX and AMEVIVE Sales and Outlook
 Competition. The Company expects a substantial portion of its product
revenue growth in subsequent quarters to be related to sales of AMEVIVE in the
U.S. AMEVIVE was approved by the U.S. Food and Drug Administration (FDA) in
January 2003 for the treatment of adult patients with moderate-to-severe
chronic plaque psoriasis who are candidates for systemic therapy or
phototherapy. For further discussion of AMEVIVE and the factors that may
affect the revenues generated by AMEVIVE sales, see Critical Accounting
Estimates, Outlook  Competition and
Outlook  Dependence on AVONEX
and AMEVIVE Sales.

Royalty revenues

Revenues from royalties represented approximately 9% and 11%, respectively, of
total revenues for the three and six months ended June 30, 2003. Revenues from
royalties represented approximately 7% of total revenues for the three and six
months ended June 30, 2002. The increase in royalty revenues in the three and
six months ended June 30, 2003 over the comparable periods in 2002 is primarily
attributable to the resumption of royalty payments by Schering-Plough
Corporation (Schering-Plough) starting in the fourth quarter of 2002 on U.S. sales of its alpha
interferon products. During the second quarter of 2003, royalty
revenues were negatively impacted by approximately $8 million due to
Schering-Ploughs announced first quarter 2003 INTRON® A (interferon alpha-2b) sales decline, which Schering-Plough indicated
was driven by a channel inventory reduction and an increasingly competitive
environment.

Royalty revenues may fluctuate as a result of fluctuations in sales levels of
products sold by the Companys licensees from quarter to
quarter. For a discussion
of some of the factors that may affect royalty revenues in the future,
see Outlook  Royalty Revenue and Outlook  Patents and Other
Proprietary Rights. The Company expects royalty revenues as a percentage of
total revenues to continue to decrease in the near and long term as the Company
continues to market and sell AVONEX and AMEVIVE worldwide. See
Outlook 
Royalty Revenue and Outlook  Patents and Other Proprietary Rights.

Contract revenues

In January 2003, the Company signed a collaboration agreement with IDEC, under
which Biogen and IDEC are collaborating on the development of three oncology
therapeutics from Biogens pipeline of early-stage product candidates. Under
the terms of the IDEC Agreement, IDEC initially will be responsible for the
development costs of the product candidates, until that time, if any, when the
Company exercises its opt-in rights (which must be done within a certain
timeframe) with respect to each specific product candidate. Prior to exercising
its opt-in rights, to the extent that the Company incurs any development costs
in relation to the programs contained in the IDEC Agreement, they will be
recorded as research and development expenses. The reimbursement by IDEC of
these costs will be recorded as contract revenue. For the three and six months
ended June 30, 2003, the Company recorded $2.0 million and $3.1 million,
respectively, for contract revenue. Upon completion of the proposed merger,
contract revenue related to this collaboration agreement will be eliminated.

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COSTS AND EXPENSES

|                                  |  |                    |       |      |  |          |       |                  |  |      |     |        |  |   |       |  |  |   |       |  |  |  |     |  
|--------------------------------- |  | ------------------ | ----- | ---- |  | -------- | ----- | ---------------- |  | ---- | --- | ------ |  | - | ----- |  |  | - | ----- |  |  |  | --- | -
|                                  |  | Three months ended |       |      |  |          |       | Six months ended |  |      |     |       
|                                  |  | June 30,           |       |      |  | June 30, |       |                 
|                                  |  |                    |       | %    |  |          |       | %               
|(in millions)                     |  | 2003               |       | 2002 |  | Change   |       | 2003             |  | 2002 |     | Change
|                                  |  |                    |       |      |  |          |       |                  |  |      |     |       
|Cost of product revenues          |  | $                  | 43.4  |      |  | $        | 35.0  |                  |  |      | 24  | %      |  | $ | 87.3  |  |  | $ | 72.9  |  |  |  | 20  | %
|Cost of royalty revenues          |  |                    | 2.2   |      |  |          | 1.2   |                  |  |      | 83  | %      |  |   | 4.6   |  |  |   | 2.6   |  |  |  | 77  | %
|Research and development          |  |                    | 116.1 |      |  |          | 89.3  |                  |  |      | 30  | %      |  |   | 201.2 |  |  |   | 171.8 |  |  |  | 17  | %
|Selling, general & administrative |  |                    | 92.2  |      |  |          | 91.6  |                  |  |      | 1   | %      |  |   | 187.6 |  |  |   | 165.0 |  |  |  | 14  | %
|Merger
related expenses           |  |                    | 3.8   |      |  |          |      |                  |  |      | 100 | %      |  |   | 3.8   |  |  |   |      |  |  |  | 100 | %
|                                  |  |                    |       |      |  |          |       |                  |  |      |     |        |  |   |       |  |  |   |       |  |  |  |     |  
|                                  |  | $                  | 257.7 |      |  | $        | 217.1 |                  |  |      | 19  | %      |  | $ | 484.5 |  |  | $ | 412.3 |  |  |  | 18  | %
|                                  |  |                    |       |      |  |          |       |                  |  |      |     |        |  |   |       |  |  |   |       |  |  |  |     |  

The increase in cost of product revenues in the three and six months ended June
30, 2003 compared to the comparable periods of 2002 was primarily attributable
to the higher sales volume of AVONEX, combined with $6.1 million and $9.5
million, respectively, of writedowns of commercial inventory which did not meet
quality specifications to its net realizable value. Included in cost
of product revenues for the three and six months ended June 30, 2003
was the elimination of an $8 million accrual related to Columbia
University, which the Company has determined is not likely to be paid. Gross margins on product
sales for the three and six months ended June 30, 2003 were approximately 85%
compared to 86% for the same periods in 2002. The Company expects that gross
margins on product revenues will fluctuate in the future based on changes in
product mix and new product initiatives. In addition, in June 2003, the Company licensed from
Genentech, Inc. worldwide patent rights
relating to fusion proteins, described as immunoadhesons. The non-exclusive
licenses will apply to AMEVIVE and other potential products in the Companys
product pipeline. The Company pays a royalty to Genentech on sales of
AMEVIVE. The increases in cost of royalty
revenues for the three and six months ended June 30, 2003 were primarily
attributable to increased royalties from sales on alpha interferon products
sold in the second quarter and first six months of 2003 over the comparable
periods of 2002. Gross margins on royalty revenue were approximately 93% and
94%, respectively, for the three and six months ended June 30, 2003 and 94% for
the comparable periods of 2002. The Company expects that gross margins on
royalty revenues will fluctuate in the future based on changes in sales volumes
for specific products from which the Company receives royalties.

The 30% increase in research and
development expenses for the three months ended June 30, 2003
versus the comparable period of 2002 was primarily due to higher
clinical trial costs of $5 million, primarily related to
ANTEGREN® (natalizumab), $17.6 million related to
increased supply chain, manufacturing and engineering costs,
and increased depreciation of $4.2 million related to
capitalization of several large projects in 2003. The 17%
increase in research and development expenses for the six months ended
June 30, 2003 versus the comparable period of 2002 was primarily due
to higher clinical trial costs of $13.6 million, primarily
related to ANTEGREN, $8.2 million related to increased
supply chain, manufacturing and engineering costs, and increased
depreciation of $7.6 million related to capitalization of
several large projects in 2003. The Company expects that, in the long-term, research and development expenses may increase as the Company
continues to expand its development efforts with respect to new
products and conducts clinical trials of these products. Costs for upfront fees and milestone payments may
cause variability in future research and development expense.

Selling, general and administrative
expenses increased 1% in the second quarter
and 14% in the first six months of 2003 compared to the same periods in 2002.
For the three and six months ended June 30, 2003, the increases were primarily due to an increase in selling and marketing
expenses related to both the sale of AVONEX and costs incurred for the launch
of AMEVIVE, which received FDA approval in the U.S., in January 2003.
AVONEX-related increases were driven by heightened competition in the U.S.
market. The Company expects that selling, general and administrative expenses
will continue to increase in the near and long term as the Company continues to
expand its sales and marketing organizations and efforts necessary to sell
AVONEX worldwide in response to increased competition, continues to expand its
sales and marketing organizations and efforts necessary to sell AMEVIVE in the
U.S., and prepares for the possible future approval of additional products.

In the three months ended June 30, 2003, the Company incurred approximately $3.8
million of expenses relating to legal, financial and accounting advisory
services performed in connection with the proposed merger with IDEC. The
Company expects to incur significant additional merger-related expenses in
subsequent quarters in connection with the proposed merger with IDEC.

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OTHER INCOME, NET

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

|                        |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|----------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                        |  | Three months ended |        | Six months ended
|                        |  | June 30,           |        | June 30,        
|                        |  |                    |        |                 
|                        |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                        |  |                    |        |                  |  |      |        |     
|Interest income         |  | $                  | 8,558  |                  |  | $    | 10,466 |      |  | $ | 17,997 |   |  | $ | 21,064 |  
|Interest expense        |  |                    | (988   | )                |  |      | (909   | )    |  |   | (1,634 | ) |  |   | (1,922 | )
|Other income (expense)  |  |                    | 4,841  |                  |  |      | (1,453 | )    |  |   | (9,616 | ) |  |   | (4,010 | )
|                        |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Total other income, net |  | $                  | 12,411 |                  |  | $    | 8,104  |      |  | $ | 6,747  |   |  | $ | 15,132 |  
|                        |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  

Total other income, net consists primarily of interest income, offset by
interest expense and other non-operating income and expense. Total other
income, net in the second quarter of 2003 was $12.4 million as compared to $8.1
million in the second quarter of 2002, an increase of $4.3 million. Total other
income, net for the six months ended June 30, 2003 was $6.7 million as compared
to $15.1 million in the first six months of 2002, a decrease of $8.4 million

Interest income for the three months ended June 30, 2003 was $8.6 million
compared to $10.5 million in the same period of 2002, a decrease of $1.9
million or 18%. Interest income for the six months ended June 30, 2003 was $18
million compared to $21.1 million in the same period of 2002, a decrease of
$3.1 million or 15%. The decrease in interest income for the three and six
months ended June 30, 2003 compared to the same periods in 2002 was due
primarily to lower average yields on invested funds, offset by higher average
balances. 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 June 30, 2003 was approximately $1.0
million compared to $0.9 million for the same period in 2002, an increase of
$0.1 million or 11%. Interest expense in the six months ended June 30, 2003 was
approximately $1.6 million compared to $1.9 million for the same period in
2002, a decrease of $0.3 million or 16%. The decrease in
interest expense for the six months ended June 30, 2003 was
due to lower borrowings outstanding.

Other income (expense) for the three months ended June 30, 2003 consists
primarily of $1.4 million of realized gains from the sale of noncurrent
marketable securities, $1 million of realized gains related to
certain current marketable securities classified as trading, $0.9 million of foreign exchange
remeasurement gains, and $0.8 million of gains on sales of current
marketable securities. Other expense for the three months ended June 30, 2002 consisted primarily of
$2.9 million of losses attributable to an equity method investee, partially
offset by $1.9 million of foreign exchange remeasurement gains.

Other income (expense) for the six months ended June 30, 2003 consists
primarily of a $12.9 million charge related to the settlement of a patent
infringement dispute, a $3.1 million writedown of Biogens investment in Eos
Biotechnology Inc. (Eos) due to a third partys acquisition of Eos in the
first quarter of 2003, $2.2 million of foreign exchange remeasurement gains,
$1.4 million of realized gains from the sale of noncurrent marketable
securities, and $1.3 million of gains on sales of current marketable
securities. Other expense
for the six months ended June 30, 2002 consisted primarily of $2.8 million of
losses attributable to an equity method investee and $2.5 million of charges
from the writedown and sales of certain noncurrent marketable securities.

INCOME TAXES

Income tax expense as a percentage of pre-tax income was 28% for the three and
six months ended June 30, 2003 and 2002. The effective tax rate varied from the
U.S. statutory rates for the first three months of 2003 and 2002 primarily due
to higher sales in European jurisdictions with lower tax rates and to the
utilization of research and development credits. The Company expects its
effective tax rate to remain consistent throughout 2003.

FINANCIAL CONDITION

At June 30, 2003, cash, cash equivalents and short-term marketable securities
were $857.9 million compared with $867.1 million at December 31, 2002, a
decrease of $9.2 million. Working capital increased $86.2 million to $975.9
million. Net cash from operating activities which included net income, for the
six month period ending June 30, 2003 was $54.2 million compared with $100.9
million for the same period in 2002, and included tax benefits related to stock
options of $9.7 million, a $3.1 million writedown of the Companys investment
in Eos, a non-cash adjustment of $9.5 million related to the writedowns of
inventory to its net realizable value, and a $1.4 million gain on the sale on
noncurrent marketable investments. Cash outflows from investing activities
during the six months ended June 30, 2003 included investments in property and
equipment and patents of $51.2 million. Cash inflows from

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investing consisted of net cash inflows from investing activities related to marketable securities
totaling $38.1 million and $7.2 million of proceeds from withdrawal from an equity fund investment. Significant cash
outflows from financing activities included $45.8 million for purchases of the
Companys common stock under its stock repurchase program in the
first six months of
2003 and $2.4 million for repayments under loan agreements with banks. Cash
inflows from financing included $16.4 million from common stock option
exercises and employee stock purchase plan activity.

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. During the first six months of 2003, the
Company repurchased approximately 1.2 million shares of its common stock under
this program at a cost of $45.8 million. The Company purchased 145,000 shares
during the first six months of 2002 at a cost of $8.4 million.
During 2001, the Company repurchased approximately 1.5 million shares
of its common stock at a cost of $88.3 million. Approximately
1.2 million shares remain authorized for repurchase under this program at June
30, 2003.

The Company has commenced preliminary work on a large-scale manufacturing
facility (LSM) in Hillerod, Denmark, which is intended to have 90,000 liters
of bioreactor capacity. The estimated cost of the 340,000 square foot LSM is
$275 million. At June 30, 2003, approximately
$76 million had been committed for costs related to the LSM, of which approximately $61 million had been
spent. The Company is currently evaluating the timing and
continuation of the LSM project. In addition, the Company is continuing further expansion of its Research
Triangle Park, North Carolina complex with ongoing construction of several
projects to create additional manufacturing capacity. These additional projects
are expected to be completed by the end of 2003 at a total cost of
approximately $90 million. As of June 30, 2003, the Company had committed
approximately $86 million for construction costs related to these additional
projects, of which $84 million had been spent.

In connection with the proposed merger with IDEC, the Company has agreed to pay
certain advisors up to $15 million upon completion of the merger
in addition to amounts previously paid, and a lesser amount should the merger terminate, contingent upon certain
conditions.

Several legal proceedings involving the Company were pending during the current
quarter. See Note 8 of the Notes to the Condensed Consolidated Financial
Statements.

The Company currently generates cash from operations primarily due to the sale
of AVONEX and AMEVIVE, and from royalties on sales generated by the Companys
licensees. In the future, the Company expects to continue generating cash from
these sources. 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.

In June 2003, the Company signed a collaboration agreement (the Genentech
Agreement) with Genentech, Inc (Genentech), under which Biogen and Genentech
will collaborate on the development of a BR3 (BAFF-R) protein therapeutic from
Biogens pipeline of early-stage product candidates. Under the terms of the
Genentech Agreement, Genentech initially will be responsible for the
development costs of the product candidates, until that time, if any, when the
Company exercises its opt-in rights (which must be done within a certain
timeframe). Prior to exercising its opt-in rights, to the extent that the
Company incurs any development costs in relation to the programs
covered by the Genentech Agreement, they will be recorded as research and development
expenses. The reimbursement by Genentech of these costs will be recorded as
contract revenue. For the three and six months ended June 30, 2003, the
Company has not recorded contract revenues related to the collaboration.

In June 2003, the Company concluded
its collaboration with ICOS Corporation (ICOS) on the
development and commercialization of orally active, small molecule
LFA-1 antagonists. During the first six months of 2003, the Company
provided $5.4 million to ICOS under a line of credit that was
initially recorded as a loan receivable and subsequently charged to research and
development expenses upon the achievement of certain clinical
milestones by ICOS. The Company does not expect to pay any additional
material amounts in connection with this collaboration.

NEW ACCOUNTING PRONOUNCEMENTS

In April 2003, the FASB issued SFAS 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies
financial accounting and reporting for derivative instruments, including
certain derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under FASB Statement No.
133, Accounting for Derivative Instruments and Hedging Activities.

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The adoption of SFAS 149 is not
expected to have a material effect on the Company's financial
statements.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS 150
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. It
requires that an issuer classify a financial instrument that is within its
scope as a liability (or an asset in some circumstances). Many of those
instruments were previously classified as equity. This Statement is effective
for financial instruments entered into or modified after May 31, 2003, and
otherwise is effective at the beginning of the first interim period beginning
after June 15, 2003. The adoption of SFAS 150 is not expected to have a
material effect on the Companys financial statements.

CRITICAL ACCOUNTING ESTIMATES

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE

SEC Staff Accounting Bulletin No. 101 (SAB 101) provides guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
SAB 101 establishes the SECs view that it is not appropriate to recognize
revenue until all of the following criteria are met: persuasive evidence of an
arrangement exists; delivery has occurred or services have been rendered; the
sellers price to the buyer is fixed or determinable; and collectibility is
reasonably assured. Further, SAB 101 requires that both title and the risks and
rewards of ownership be transferred to the buyer before revenue can be
recognized. The Company believes that its revenue recognition policies are in
compliance with SAB 101.

Revenues from product sales are recognized when product is shipped and title
and risk of loss has passed to the customer. When customers have inspection and
approval rights for products, Biogen defers revenue until lapse of that right.
Revenues are recorded net of applicable allowances for returns, rebates and
other applicable discounts and allowances. The Company prepares its estimates
for sales returns and allowances, discounts and rebates quarterly based
primarily on historical experience updated for changes in facts and
circumstances, as appropriate.

In January 2003, Biogen received regulatory approval to market AMEVIVE in the
U.S. In connection with the introduction of AMEVIVE, Biogen implemented a limited launch period
initiative undertaken in cooperation with one of Biogens distributors which
provides a refund on purchases of AMEVIVE made after a private payor has
initially verified that it will cover the product but later denies the claim
after appeal and where the other requirements of the initiative are met. Under
this initiative, Biogens exposure is contractually limited to
10% of the price of all
AMEVIVE purchased by the distributor. As a result, Biogen will defer
recognition of revenue of 10% of AMEVIVE purchased by the distributor while
this initiative is in effect until such time as sufficient history of insurance claims
reimbursement becomes available. In connection with the launch
initiative, the Company has recorded $0.9 million of deferred
revenue in accrued expenses and other at June 30, 2003. This launch initiative is
applicable to purchases of AMEVIVE made on or before July 31, 2003 and will be
replaced with a new initiative undertaken in cooperation with the same
distributor. Under this new initiative, the distributor will provide a
purchaser with a discount on future purchases
of AMEVIVE if a payor has initially verified that it will cover the purchase of
AMEVIVE by the purchaser but later denies the claim after appeal and where the other
requirements of the initiative are met. Biogen will provide the distributor
with a discount on its future purchases of AMEVIVE equal to the amount of the
discount provided by the distributor under the initiative, up to a maximum
discount of 5% on any purchase order submitted to Biogen by the distributor.
This initiative is applicable to purchases of AMEVIVE made on or after August
1, 2003 through July 31, 2004. As a result, effective as of August 1, 2003,
Biogen will defer recognition of revenue of 5% of AMEVIVE purchased by the
distributor until such time as sufficient history of insurance claims reimbursement becomes available.

In February 2002, the FASB Emerging Issues Task Force (EITF) released EITF
Issue No. 01-09 (EITF 01-09), Accounting for Consideration Given by a Vendor
to a Customer (Including a Reseller of the Vendors Products). EITF 01-09
states that cash consideration (including a sales incentive) given by a vendor
to a customer is presumed to be a reduction of the selling prices of the
vendors products or services and, therefore, should be characterized as a
reduction of revenue when recognized in the vendors income statement, rather
than a sales and marketing expense. The Company has various contracts with
distributors that provide for discounts and rebates. These contracts are
classified as a reduction of revenue. The Company also maintains select
customer service contracts with distributors and other customers in the
distribution channel. In accordance with EITF 01-09, the Company has
established the fair value of these contracts and, as provided by EITF 01-09,
classified these customer service contracts as sales and marketing expense. If
the Company should not be able to sustain the fair value of these contracts,
the Company would be required to classify these costs as a reduction of
revenue. The adoption of EITF 01-09 did not have a significant impact on the
Companys financial statements.

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The Company receives royalty revenues under license agreements with a number of
third parties that sell products based on technology developed by the Company
or to which the Company has rights. The license agreements provide for the
payment of royalties to the Company based on sales of the licensed product. The
Company records these revenues based on estimates of the sales that occurred
during the relevant period. Differences between actual
royalty revenues and estimated royalty revenues are reconciled and adjusted for
in the period which they become known, typically the following quarter.
Historically, adjustments have not been material based on actual amounts paid
by licensees. During the second quarter of 2003, royalty revenues
were negatively impacted by approximately $8 million due to
Schering-Ploughs announced first quarter 2003 INTRON® A
(interferon alpha-2b) sales decline, which Schering-Plough indicated
was driven by a channel inventory reduction and an increasingly
competitive environment. There are no future performance obligations on the part of the
Company under these license agreements.

Revenue is not recognized in any circumstances unless collectibility is
reasonably assured.

Biogen maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of Biogens customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required, which could affect future earnings.

In January 2003, the Company signed a collaboration agreement with IDEC, under
which Biogen and IDEC are collaborating on the development of three oncology
therapeutics from Biogens pipeline of early-stage product candidates. Under
the terms of the IDEC Agreement, IDEC initially will be responsible for the
development costs of the product candidates, until that time, if any, when the
Company exercises its opt-in rights (which must be done within a certain
timeframe) with respect to each specific product candidate. Prior to exercising
its opt-in rights, to the extent that the Company incurs any development costs
in relation to the programs contained in the IDEC Agreement, they will be
recorded as research and development expense. The reimbursement by IDEC of
these costs will be recorded as contract revenue. For the three and
six months ended June 30, 2003, the Company recorded
$2.0 million and $3.1 million, respectively, for contract
revenue. Upon
completion of the proposed merger, contract revenue related to this
collaboration agreement will be eliminated.

CONTROLS AND PROCEDURES

(a) Evaluation of Disclosure Controls and Procedures. Our principal executive
officer and principal financial officer, after evaluating the effectiveness of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly
Report on Form 10-Q, have concluded that, based on such evaluation, our
disclosure controls and procedures were adequate and effective to ensure that
material information relating to us, including our consolidated subsidiaries,
was made known to them by others within those entities, particularly during the
period in which this Quarterly Report on Form 10-Q was being prepared.

(b) Changes in Internal Controls. There were no changes in our internal control
over financial reporting, identified in connection with the evaluation of such
internal control that occurred during our last fiscal quarter, that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

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 Companys expectations regarding its level of future
product sales, profits, product revenues, royalty revenues, costs and expenses,
gross margins on product revenues and royalty revenues, its effective tax rate,
regulatory approvals, development and commercialization of additional products,
competition and the impact of competitive products, the outcome of pending or
anticipated litigation and patent-related proceedings, facility
expansion, the value of investments in certain marketable securities and the expected
benefits of its proposed merger with IDEC. These and all other forward-looking
statements in this report 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 Managements Discussion and Analysis of Financial Condition and
Results of Operations. Unless required by law, Biogen does not undertake any
obligation to publicly update any forward-looking statements.

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Dependence on AVONEX and AMEVIVE Sales

Biogens ability to sustain increases in revenues and profitability is
primarily dependent on the level of revenues and profitability from AVONEX and
AMEVIVE sales.

The level of revenues from sales of AVONEX will depend on a number of factors,
including: Biogens ability to sustain market share of AVONEX in light of
competitive products for the treatment of MS, continued market acceptance of
AVONEX worldwide; Biogens ability to maintain a high level of physician and
patient satisfaction with AVONEX; the nature of regulatory and pricing
decisions related to AVONEX worldwide; the overall growth of the MS market; the
extent to which AVONEX continues to receive and maintains reimbursement
coverage; the success of ongoing development related to AVONEX in expanded MS
indications; the success in manufacturing the
pre-filled syringe formulation of AVONEX and in execution of the plans to replace the currently
available form of AVONEX with the pre-filled syringe formulation; the
continued availability of sufficient supplies of AVONEX and accessibility of
third parties to vial, label, and distribute AVONEX on acceptable terms.

AMEVIVE was approved in the U.S. in January 2003. The level of revenues from
sales of AMEVIVE in the U.S. will depend on a number of factors, including: the
ability to gain and to sustain market share and to continue to increase market
share of AMEVIVE as the competitive landscape for AMEVIVE becomes more
challenging; Biogens ability to maintain a high level of physician and patient
satisfaction with AMEVIVE; the nature of regulatory and pricing decisions
related to AMEVIVE; the extent to which AMEVIVE receives and maintains adequate
reimbursement coverage; the continued availability of sufficient supplies of
AMEVIVE and the accessibility of third parties to vial, label, and distribute
AMEVIVE on acceptable terms. In February 2003, Biogen withdrew its application
for approval to market AMEVIVE in the EU. Biogens decision was based on a
determination by the Committee for Proprietary Medicinal Products, the
scientific advisory board of the regulatory authority in the EU, that more
clinical information is needed to approve AMEVIVE. Biogen plans to develop the
additional information necessary to obtain approval of AMEVIVE for psoriasis
patients in the EU. Developing the data and re-filing the application may take
several years and there is no assurance that Biogen will ever obtain approval
of AMEVIVE in the EU. There is also no assurance that the
Companys commercial efforts in
the U.S. will be successful.

Competition

AVONEX competes in the U.S. and EU markets primarily with four products:
COPAXONE® glatiramer acetate, sold by Teva Neuroscience, Inc. (Teva) in the
U.S. and co-promoted by Teva and Aventis Pharma in the EU; BETASERON®, sold
by Berlex in the U.S. and sold under the name BETAFERON® by Schering A.G. in
the EU; NOVANTRONE® (mitoxantrone for injection) sold by Amgen, Inc.
(Amgen) and Serono S.A. in the U.S. and sold by Amgen in the EU; and
REBIF®, sold in the EU by Serono and sold in the U.S. by Serono, with Pfizer
Inc. as a co-promotion partner. A number of companies, including Biogen, are
working to develop products to treat MS which may in the future compete with
AVONEX. AVONEX also faces competition from off-label uses of drugs approved for
other indications. Some of Biogens current competitors are also working to
develop alternative formulations for delivery of their products which may in
the future compete with AVONEX. Biogen believes that competition among
treatments for MS will be based on product performance, service and price.

AMEVIVE competes with existing therapies for moderate-to-severe psoriasis, such
as oral retinoids, steroids, methotrexate and cyclosporin, along with other
drugs, as discussed below, approved for other indications. In the future,
AMEVIVE will also compete with new drugs currently in development for
psoriasis, drugs now approved for other indications that may be approved for
psoriasis, and off-label uses of drugs approved for other indications.
Genentech and Xoma Corporation are co-developing RAPTIVA® (efalizumab), an
antibody designed to block certain immune cells as a potential treatment for
moderate-to-severe psoriasis. Genentech has filed for regulatory approval of
the drug in the U.S. Serono has an exclusive license to RAPTIVA in the EU and
other countries and has filed for regulatory approval of the drug in the EU.
ENBREL® (etanercept), a drug sold by Amgen, has been approved by the FDA as a
treatment for psoriatic arthritis, a joint disease that can be associated with
the skin plaques of moderate to severe chronic plaque psoriasis. In January
2003, Amgen announced positive results from a Phase 3 clinical study of ENBREL
in the treatment of moderate to severe plaque psoriasis and is conducting a
second Phase 3 clinical study in psoriasis. Centocor, Inc., a subsidiary of
Johnson & Johnson, sells REMICADE® (infliximab) worldwide as a treatment for
Crohns disease and rheumatoid arthritis, and has initiated two Phase 3 trials
in patients with moderate-to-severe chronic plaque psoriasis. HUMIRA®
(adalimumab), a drug sold by Abbott Laboratories, was also recently approved by
the FDA as a treatment for rheumatoid arthritis. Abbott is undertaking clinical
trials in psoriasis and psoriatic arthritis. In addition, a number of other
companies are working to develop products to treat psoriasis which may
ultimately compete with AMEVIVE.

See the Competition section of the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2002.

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Royalty Revenue

Biogen receives royalty revenues which, prior to 2001, contributed a
significant amount to its overall profitability. Royalty revenues decreased
significantly in recent years and through the third quarter of 2002 primarily
as the result of patent expirations and a royalty dispute with Schering-Plough
Corporation, which was settled in October 2002. As a result of the settlement,
royalty revenues increased in the fourth quarter of 2002, and the first six
months of 2003 as compared to the corresponding six months of 2002. In the
future, royalty revenues may fluctuate as a result of future patent expirations
and other factors such as pricing reforms, health care reform initiatives,
other legal and regulatory developments and the introduction of competitive
products that 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. For a further discussion of risks regarding drug development, patent
matters, including future patent expirations affecting royalty revenues, and
regulatory matters, see  Outlook  Patents and Other Proprietary
Rights, Outlook  Litigation and Government Regulation, and the
Business  Risks Associated with Drug Development, Business 
Patents and Other Proprietary Rights, and Business  Regulation
sections of the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2002.

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 by Biogen. 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 filed patent applications
and have been granted patents in the U.S. 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 U.S. and certain other countries, which it may allege are currently used
by Biogen and the rest of 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. 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. See Outlook  Litigation and Government Regulation, and the
Business  Risks Associated with Drug Development and Business 
Patents and Other Proprietary Rights sections of the Companys Annual Report
on Form 10-K for the fiscal year ended December 31, 2002.

Products

AVONEX and AMEVIVE are currently the only products 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 continues to expand its development
efforts related to other potential products in its pipeline. The expansion of
the pipeline may include increases in spending on internal projects, 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 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

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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 Biogen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.

Risks Related to the Proposed Merger with IDEC

The Companys expectations with
respect to the proposed merger transaction with IDEC are subject to a
number of risks and uncertainties that could cause actual results to
differ. For example, Biogen and IDEC may be unable to
obtain shareholder or regulatory approvals required for the merger. Problems
may arise in successfully integrating the businesses of Biogen and IDEC. The
merger may involve unexpected costs. Biogen and IDEC may be unable to achieve
cost-cutting synergies. The businesses of Biogen and IDEC may suffer as a
result of uncertainty surrounding the merger.

Failure to complete the merger with IDEC could negatively impact Biogens stock
price and future business and operations. For example,



| |  |  | if the merger agreement is terminated, Biogen may be required
in specific circumstances, to pay a termination fee of up to $230
million to IDEC,                                                                                        
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the price of Biogen common stock may decline to the extent that
the current market price reflects an assumption that
the merger will be completed, and                                                                                  
|
| |  |  | Biogen must pay its expenses related to the merger, including
substantial legal and accounting fees, even if
the merger is not completed. This could affect our results of
operations for the period during which the fees are incurred.

Current and prospective employees may experience uncertainty about their
future role with the combined company until the combined companys strategies
are announced or executed. This may adversely affect Biogens ability to
attract and retain key management, research and development, manufacturing,
sales and marketing and other personnel.

Since Biogen stockholders will receive shares of IDEC common stock in the
merger, Biogen believes that the price of Biogens common stock may be affected
by changes in the price of IDEC common stock. The price of IDECs common stock
may be affected by factors different from those affecting the price of Biogen
common stock.

Pricing Pressures/Healthcare Reform

In the U.S., many pharmaceutical and biologic products are subject to
increasing pricing pressures, which could be significantly impacted by the
outcome of the current national debate over Medicare reform. If the Medicare
program provided outpatient pharmaceutical coverage for its beneficiaries, the
federal government, through its enormous purchasing power under the program,
could demand discounts from pharmaceutical and biotechnology companies that may
implicitly create price controls on prescription drugs. On the other hand, a
Medicare drug reimbursement provision may increase the volume of pharmaceutical
drug purchases, offsetting at least in part these potential price discounts. In
addition, Managed Care Organizations (MCOs), institutions and other
government agencies continue to seek price discounts. Government efforts to
reduce Medicare and Medicaid expenses are expected to increase the use of MCOs.
This may result in managed cares influencing prescription decisions for a
larger segment of the population. In addition, certain states have proposed and
certain other states have adopted various programs to control prices for their
seniors drug programs, including price or patient reimbursement constraints,
restrictions on access to certain products, importation from other countries
and bulk purchasing of drugs. Biogen encounters similar regulatory and
legislative issues in most other countries. In the EU

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and some other international markets, the government provides health
care at low direct cost to consumers and regulates pharmaceutical prices or
patient reimbursement levels to control costs for the government-sponsored
health care system. This international patchwork of price regulation may lead
to inconsistent prices and some third-party trade in Biogens products from
markets with lower prices. Such trade exploiting price differences between
countries could undermine sales of Biogen products in markets with higher prices. See the
Business  Regulation section of the Companys Annual Report on Form
10-K for the fiscal year ended December 31, 2002.

Manufacturing

Biogen currently produces all of its bulk drug products at its manufacturing
facilities located in Cambridge, Massachusetts and Research Triangle Park,
North Carolina. Problems with manufacturing processes could result in variability in costs and
expenses. They could also result in product
defects, which could require Biogen to delay shipment of products, recall
products previously shipped or be unable to supply products at all. In
addition, any prolonged interruption in the operations of Biogens
manufacturing facilities could result in cancellations of shipments or loss of
product in the process of being manufactured. Because Biogens manufacturing
processes are highly complex and are subject to a lengthy FDA approval process,
alternative qualified production capacity may not be available on a timely
basis or at all. Biogen sources all of its fill-finish and final product
storage operations, along with a substantial portion of its packaging
operations, to a concentrated group of third party contractors. Problems with
the operations of these third party contractors could also require Biogen to
delay shipment of saleable products, recall products previously shipped or be
unable to supply products at all. Difficulties or delays in Biogens
manufacturing of existing or new products, including difficulties or delays in
the operations of third party contractors retained by Biogen to perform
fill-finish, packaging and storage of saleable products, could increase
Biogens costs, cause Biogen to lose revenue or market share and damage
Biogens reputation. See the Business  Manufacturing and Raw Materials
section of the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2002.

Litigation and Governmental Regulation

Pharmaceutical companies have been the target of lawsuits and investigations
including: those with claims asserting antitrust violations, claims asserting
violations of the Federal False Claim Act, Anti-Kickback Act, the Prescription
Drug Marketing Act or other violations in connection with Medicare and/or
Medicaid reimbursement, derivative actions, product liability claims, disputes
over intellectual property rights (including patents), and claims under state
laws, including state anti-kickback and fraud laws. Public companies may also
be the subject of certain other types of claims, including those asserting
violations of securities laws or related to environmental matters. There is no
assurance that if Biogen were to be involved in any such lawsuits or
investigation, that Biogen would be successful in defending itself or asserting
its rights. There is also no assurance, for example, that Biogen will be
successful in defending itself in the current AW
P litigation. Biogens business
is also subject to extensive government regulation and oversight. Biogen may
also become subject to other governmental actions which could adversely affect
its business or financial condition, including: (i) new laws, regulations and
judicial decisions related to health care availability, method of delivery and
payment for health care products and services, (ii) changes in the Federal Food
and Drug Administration and foreign regulatory approval processes that may
delay or prevent the approval of new products and result in lost market
opportunity, (iii) new laws, regulations and judicial decisions affecting
pricing or marketing and (iv) changes in the tax laws relating to Biogens
operations. See Outlook  Patents and Other Proprietary Rights, and the
Business  Risks Associated with Drug Development, Business  Patents
and Other Proprietary Rights, and Business  Legal Proceedings sections
of the Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2002.




Part II  OTHER INFORMATION

Item 1. Legal Proceedings.

The section Notes to Condensed Consolidated Financial Statements in Part I of
this Quarterly Report on Form 10-Q is incorporated into this item by reference.

Item 2. Changes in Securities and Use of Proceeds



|(a) |  | On June 20, 2003, the Company amended and supplemented certain
information in Items 1 and 2 of its Registration Statement on Form 8-A
filed with the Securities and Exchange Commission on May 6, 1999, as
follows:
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Preferred Share Purchase Rights

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In 1989, the Board of Directors of the Company declared a dividend to
holders of the Companys common stock, $.01 par value per share (Common
Shares), of rights (the Old Rights) to purchase shares of Series A Junior
Participating Preferred Stock (the Old Preferred Stock). Each Old Right
entitled the registered holder to purchase from the Company one one-hundredth
of a share of Old Preferred Stock upon the terms and subject to the conditions
set forth in a Rights Agreement dated as of May 8, 1989, between Biogen, Inc.
and The First National Bank of Boston (the Old Plan). The Old Plan and Old
Rights expired on May 8, 1999. Accordingly, on April 16, 1999, the Board of
Directors declared a dividend of one new preferred share purchase right (a New
Right) for each outstanding Common Share of the Company, which was made to the
stockholders of record on May 8, 1999. Each New Right entitles the registered
holder to purchase from the Company one one-thousandth of a share of a new
series of preferred stock (the Series A-1 Junior Participating Preferred Stock,
referred to herein as the Preferred Shares), at a price of $850 per one
one-thousandth of a Preferred Share (the Purchase Price), subject to
adjustment. Each one one-thousandth of a Preferred Share has rights, privileges
and preferences which make its value approximately equal to the value of one
Common Share. A full description of the terms of the New Rights is set forth in
a new shareholder rights agreement dated as of May 8, 1999, between the Company
and EquiServe Trust Company, N.A., as Rights Agent (the Rights Agent), as
amended by the Agreement and Amendment to Rights Agreement, dated as of May 31,
2002, between the Company, the Rights Agent and State Street Bank and Trust
Company and the Second Agreement and Amendment to Rights Agreement, dated as of
June 20, 2003, between the Company and the Rights Agent (the New Rights
Agreement).

Amendments to New Rights Agreement

The Company, the Rights Agent and State Street Bank and Trust Company
entered into an Agreement and Amendment to Rights Agreement, dated as of May
31, 2002, to effect the appointment of EquiServe Trust Company, N.A., as rights
agent, to replace State Street Bank and Trust Company.

On June 20, 2003, the Company, IDEC Pharmaceuticals Corporation, a
Delaware corporation (IDEC), and Bridges Merger Corporation, a Massachusetts
corporation and a wholly owned subsidiary of IDEC (Merger Sub), entered into
an Agreement and Plan of Merger (the Merger Agreement) providing for, among
other things, the merger of Merger Sub with and into the Company with the
Company continuing as the surviving corporation. Immediately prior to the
execution and delivery of the Merger Agreement, the Company and the Rights
Agent entered into a Second Agreement and Amendment to Rights
Agreement which, among other things, (i) provides that neither the
execution and delivery of the Merger Agreement, nor the consummation
of the merger or the transactions contemplated by the Merger
Agreement, will result in the rights becoming exercisable or in IDEC
or its existing and future affiliates and associates being deemed an
Acquiring Person under the Rights Agreement (generally, a
person (other than certain excluded persons) who acquires beyond a
certain percentage of beneficial ownership of the Companys then
outstanding common stock, which could result in the rights becoming
exercisable), (ii) reduces the beneficial ownership threshold
for determining who may be an Acquiring Person from 20%
of the Companys then outstanding common stock to 10%, subject
to certain exceptions, and (iii) provides that, in general, the
outstanding rights may be redeemed by the Companys Board of
Directors during a 10-business day period following the day it
becomes publicly known that a person (other than certain excluded
persons) has acquired beneficial ownership of 10% or more the
Companys then outstanding common stock.



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

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



|(a) |  | The information set forth in this Item 4 relates to matters submitted to
a vote at the Companys Annual Meeting of Stockholders on June 6, 2003.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Not applicable.                                                                                                                                 
|   
|(c) |  | (i)                                                                                                                                             

|                 |  |  |             |  |  |  |           | 
|---------------- |  |  | ----------- |  |  |  | --------- | 
|Lawrence C. Best |  |  | 115,153,410 |  |  |  | 5,558,380 | 
|Eckhard Pfeiffer |  |  | 115,839,188 |  |  |  | 4,872,602 | 
|Alan K. Simpson  |  |  | 115,780,309 |  |  |  | 4,931,481 | 



|    |  | (ii)            | A proposal to ratify the selection of PricewaterhouseCoopers
LLP as the Companys independent accountants for the fiscal year
ending December 31, 2003 was approved with 117,413,555 votes for,
2,450,259 votes against, and 847,976 abstentions.                                  
|--- |  | --------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    |  | (iii)           | A proposal to approve the Companys 2003 Omnibus Equity Plan
was approved with 107,218,420 votes for, 12,446,410 votes against,
and 1,046,960 abstentions.                                                                                                                         
|   
|    |  | (iv)            | A proposal to approve the Companys 2003 Performance Based
Management Incentive Plan was approved with 112,079,968 votes for,
7,610,209 votes against, and 1,021,613 abstentions.                                                                                                  
|    |  |                 |                                                                                                                                                                                                                                                                                    
|    |  | (v)             | A proposal to approve an amendment to the Companys 1983
Employee Stock Purchase Plan to increase the number of shares
available for issuance under the plan from 1,000,000 to 1,500,000 was
approved with 117,858,523 votes for, 1,879,180 votes against, and
974,087 abstentions.
|    |  |                 |                                                                                                                                                                                                                                                                                    
|(d) |  | Not applicable.

Item 6. Exhibits and Reports on Form 8-K



|(a) |  | Exhibits
|--- |  | --------

|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1  |  | Agreement and Plan of Merger, dated as of June 20, 2003, by and among
IDEC Pharmaceuticals Corporation, a Delaware corporation (IDEC), Bridges
Merger Corporation, a Massachusetts corporation and wholly-owned
subsidiary of IDEC, and the Company (filed as Exhibit 2.1 to the Companys
Current Report on Form 8-K filed with the SEC on June 23, 2003, File No.
000-12042, and incorporated herein by reference).
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|4.1  |  | Second Agreement and Amendment to Rights Agreement, dated June 20, 2003,
by and between the Company and EquiServe Trust Company, N.A., as rights
agent (filed as Exhibit 4.1 to the Companys Current Report on Form 8-K
filed with the SEC on June 23, 2003, File No. 000-12042, and incorporated
herein by reference).                                                                                               
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.1 |  | Biogen, Inc. 2003 Omnibus Equity Plan (filed as Appendix B to the
Companys Definitive Proxy Statement filed with the SEC on April 17, 2003,
File No. 000-12042, and incorporated herein by reference).                                                                                                                                                                                                                
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.2 |  | Biogen, Inc. Performance Based Management Incentive Plan (filed as
Appendix C to the Companys Definitive Proxy Statement filed with the SEC
on April 17, 2003, File No. 000-12042, and incorporated herein by
reference).                                                                                                                                                                                             
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|10.3 |  | Biogen, Inc. 1983 Employee Stock Purchase Plan, as amended and restated
through April 11, 2003 (filed as Appendix D to the Companys Definitive
Proxy Statement filed with the SEC on April 17, 2003, File No. 000-12042,
and incorporated herein by reference).                                                                                                                                                       
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|31.1 |  | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                 
|     |  |                                                                                                                                                                                                                                                                                                                                                                                                                        
|31.2 |  | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                 

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|      |  |                                                                                                                                                                                                          
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |  |                                                                                                                                                                                                          
|32.1  |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                  
|      |  |                                                                                                                                                                                                          
|(b)   |  | Reports on Form 8-K                                                                                                                                                                                      
|      |  |                                                                                                                                                                                                          
|(i)   |  | On April 4, 2003, the Company filed a Current Report on Form 8-K to
furnish a press release under Item 9 and Item 12 of Form 8-K that included
non-GAAP financial measures for completed fiscal periods. 
|      |  |                                                                                                                                                                                                          
|(ii)  |  | On April 17, 2003, the Company filed a Current Report on Form 8-K to
furnish a press release under Item 9 and Item 12 of Form 8-K that included
non-GAAP financial measures for completed fiscal periods.
|      |  |                                                                                                                                                                                                          
|(iii) |  | On June 23, 2003, the Company filed a Current Report on Form 8-K for the
following:                                                                                                                      

|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | To file under Item 5 of Form 8-K, an Agreement and Plan of
Merger, dated as of June 20, 2003, by and among IDEC Pharmaceuticals
Corporation, a Delaware corporation (IDEC), Bridges Merger
Corporation, a Massachusetts corporation and wholly-owned subsidiary
of IDEC (Merger Sub), and the Company (the Merger Agreement).
Pursuant to the Merger Agreement, Merger Sub will be merged with and
into the Company, with the Company surviving as a wholly-owned
subsidiary of IDEC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(b) |  | Second Agreement and Amendment to the Rights Agreement, dated
June 20, 2003, between the Company and EquiServe Trust Company, N.A.
(EquiServe) (the Rights Agreement Amendment) The Rights Agreement
Amendment, among other things, (i) provides that neither the execution
and delivery of the Merger Agreement, nor the consummation of the
merger or the transactions contemplated by the Merger Agreement, will
result in the rights becoming exercisable or in IDEC or its existing
and future affiliates and associates being deemed an Acquiring
Person under the Rights Agreement (generally, a person (other than
certain excluded persons) who acquires beyond a certain percentage of
beneficial ownership of the Companys then outstanding common stock,
which could result in the rights becoming exercisable), (ii) reduces
the beneficial ownership threshold for determining who may be an
Acquiring Person from 20% of the Companys then outstanding common
stock to 10%, subject to certain exceptions, and (iii) provides that,
in general, the outstanding rights may be redeemed by the Companys
Board of Directors during a 10-business day period following the day
it becomes publicly known that a person (other than certain excluded
persons) has acquired beneficial ownership of 10% or more the
Companys then outstanding common stock.
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(c) |  | To furnish the press release issued by IDEC and the Company
announcing the Merger Agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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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:
July 31, 2003 |  | /s/ Peter N. Kellogg                  
|                     |  |                                       
|                     |  | Executive Vice President  Finance and
|                     |  | Chief Financial Officer               

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