UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑K

Commission file number: 001‑37859

Bioverativ Inc.

(Exact name of Registrant as Specified in its Charter)

(781) 663‑4400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Securities to be registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well‑known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐  No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐  No ☒

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 ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files): Yes ☒  No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S‑K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10‑K or any amendment to this Form 10‑K. ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b‑2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in rule 12b‑2) of the Act. Yes ☐  No ☒

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) computed by reference to the price at which the common stock was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter was $6,433.3 million.

The number of shares of the registrant’s common stock, $0.001 par value, outstanding as of February 9, 2018 was 108,223,644.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement for the registrant’s 2018 annual meeting of stockholders to be filed within 120 days of the end of its fiscal year ended December 31, 2017 are incorporated into Part III (Items 10, 11, 12, 13 and 14) of this Annual Report on Form 10-K where indicated.

BIOVERATIV INC.

ANNUAL REPORT ON FORM 10‑K

For the Year Ended December 31, 2017

TABLE OF CONTENTS

NOTE REGARDING FORWARD‑LOOKING STATEMENTS

This report contains forward‑looking statements that are being made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995 (the Act) with the intention of obtaining the benefits of the "Safe Harbor" provisions of the Act. Use by Bioverativ of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” or the negative of those words or other similar expressions is intended to identify forward‑looking statements.

These forward‑looking statements may include statements with respect to:

These forward‑looking statements involve risks and uncertainties, including those that are described in Item 1A. Risk Factors and elsewhere in this report, that could cause actual results to differ materially from those reflected in such statements. You should not place undue reliance on these statements. Forward‑looking statements speak only as of the date of this report. Except as required by law, we do not undertake any obligation to publicly update any forward‑looking statements, whether as a result of new information, future developments or otherwise.

NOTE REGARDING PRESENTATION OF INFORMATION

Unless the context otherwise requires, references in this report to the following terms shall have the following respective meanings:

See “Glossary of Scientific Terms” starting on page 62 of this report for definitions of certain additional terms as they are used in this report.

This report describes the business transferred to Bioverativ by Biogen in the separation as if the transferred business was Bioverativ’s business for all historical periods described. References in this report to Bioverativ’s historical assets, liabilities, products, businesses or activities of Bioverativ’s business are generally intended to refer to the historical assets, liabilities, products, businesses or activities of the transferred business as the business was conducted as part of Biogen prior to the separation. Since the separation date, Bioverativ has operated as a standalone company.

NOTE REGARDING TRADEMARKS, TRADE NAMES AND SERVICE MARKS

Bioverativ owns or has rights to use the trademarks, service marks and trade names that it uses in conjunction with the operation of its business. Some of the trademarks that Bioverativ owns or has rights to use that appear in this report include: ALPROLIX® and ELOCTATE®, which may be registered or trademarked in the United States and other jurisdictions. Bioverativ’s rights to some of its trademarks may be limited to select markets. Each trademark, trade name or service mark of any other company appearing in this report is, to Bioverativ’s knowledge, owned by such other company. References to ELOCTATE in this report shall also refer to ELOCTA, the approved trade name for ELOCTATE in the European Union, as the context may require.

PART I

Item 1. Business

Merger Agreement with Sanofi

On January 21, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), with Sanofi (“Parent” or “Sanofi”), a French société anonyme, and Blink Acquisition Corp. (“Merger Sub”), a Delaware corporation and indirect wholly-owned subsidiary of Parent.  See Note 21, Subsequent Events to our audited consolidated financial statements included in this Form 10-K.

Pursuant to the terms of Merger Agreement, upon the terms and subject to the conditions thereof, Merger Sub commenced a tender offer on February 7, 2018 (the “Offer”), to acquire all of the outstanding shares of common stock of the Company, par value $0.001 per share (the “Shares”), at a purchase price of $105.0 per Share in cash, net of applicable withholding taxes and without interest (the “Offer Price”).  Unless extended by Merger Sub in accordance with the Merger Agreement, the offering period for the Offer will expire at 11:59 p.m. (New York City time), on March 7, 2018.

As soon as practicable following (but on the same day as) the consummation of the Offer and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as an indirect wholly-owned subsidiary of Parent.  The Merger will be governed by Section 251(h) of the Delaware General Corporation Law (“DGCL”) and effected without a vote of the Company’s stockholders. 

The Merger Agreement includes representations and warranties, and covenants of the parties customary for a transaction of this nature.

We have prepared this Form 10-K and the forward-looking statements contained in this Form 10-K as if we were going to remain an independent company. If the Offer and Merger are consummated, many of the forward-looking statements contained in this Form 10-K will no longer be applicable.

Business Overview

Bioverativ Inc., a Delaware corporation, was formed to hold the hemophilia business of Biogen Inc. On February 1, 2017, we separated from Biogen and became an independent public company.

Bioverativ is a global biopharmaceutical company focused on the discovery, research, development and commercialization of innovative therapies for the treatment of rare blood diseases including hemophilia. 

Our strategy is to lead in hemophilia, build a complement disease franchise, and transform the treatment of hemoglobinopathies. We aim to raise the standards of care and improve outcomes for patients as we pursue our vision to become the leading rare blood disease company.

Lead in Hemophilia. We have two marketed products, ELOCTATE [Antihemophilic Factor (Recombinant), Fc Fusion Protein] and ALPROLIX [Coagulation Factor IX (Recombinant), Fc Fusion Protein], extended half‑life clotting‑factor therapies for the treatment of hemophilia A and hemophilia B, respectively. These therapies, when originally introduced in 2014, were the first major advancements in the treatment of hemophilia A and B in nearly two decades. We continue to research and explore the potential benefits and science behind these therapies to address areas of serious need, including long-term joint health and immune tolerance induction in people with hemophilia who develop inhibitors.  We currently market our products primarily in the United States, Japan, Canada and Australia, and our collaboration partner, Swedish Orphan Biovitrum AB (publ) (Sobi), markets the products primarily in the European Union. Geographic expansion in additional markets is a priority, with a primary focus on certain countries in Latin America. 

Our new product development for the treatment of hemophilia includes discovery, preclinical and clinical programs studying next generation extended half-life hemophilia product candidates, gene therapies for both hemophilia A and B, and non-factor products to treat hemophilia leveraging mimetic bi-specific antibody technology and a novel bicyclic peptide product platform.

Build a Complement Disease Franchise. We plan to build a complement disease franchise with our initial focus on developing a treatment for cold agglutinin disease. Cold agglutinin disease is a global, chronic rare blood disease characterized by hemolytic anemia, with a significant portion of patients requiring transfusions and having crippling fatigue, poor quality of life and the potential for life-threatening complications such as thrombotic events, including pulmonary embolism and stroke. Our efforts in this therapeutic area are initially focused on advancing the development of BIVV009, a first-in-class monoclonal antibody for cold agglutinin disease in Phase 3 trials, which we obtained through the acquisition of True North Therapeutics in June 2017.

Transform Treatment of Hemoglobinopathies. We have early and research-stage programs for the treatment of hemoglobinopathies, including gene-edited cell therapies for the treatment of transfusion-dependent beta-thalassemia and sickle cell disease and several discovery programs seeking to target the root cause of sickle cell disease. We believe there is a significant unmet need for therapies to treat beta-thalassemia and sickle cell disease, which are life-long rare blood disorders linked to shorter life expectancies and with few treatment options. 

2017 Highlights

In 2017, we focused on three key business priorities: maximizing our potential in hemophilia, advancing our pipeline, and executing on strategic business development.

Maximizing Our Potential In Hemophilia

Advancing Our Pipeline

Executing on Strategic Business Development

Background on Hemophilia A and B

Hemophilia A and hemophilia B are rare, x‑linked genetic disorders that impair the ability of a person’s blood to clot due to reduced levels of a protein known as factor VIII or factor IX, respectively. This impairment can lead to recurrent and extended bleeding episodes that may cause pain, irreversible joint damage and life‑threatening hemorrhages. In its Annual Global Survey 2016, the World Federation of Hemophilia (WFH) estimated that nearly 150,000 people worldwide were identified as living with hemophilia A and nearly 30,000 people were diagnosed with hemophilia B.

Hemophilia is usually diagnosed at birth or at a very young age, and predominantly affects males. An individual’s hemophilia is classified as mild, moderate or severe and is based on the level of factor activity in the blood. Although hemophilia care varies widely across the globe, in the United States a majority of patients receive care from specialized hemophilia treatment centers.

Joint disease, which is caused by frequent bleeds into joints over time, is the leading cause of morbidity for people with hemophilia, often resulting in chronic pain and disability. The ability to minimize joint damage over the long term is a critical unmet need that could have a positive impact on patient outcomes.

Hemophilia is treated by injecting the missing clotting factor directly into the patient’s bloodstream. Therapies can be administered either on a schedule to help prevent or reduce bleeding episodes (prophylaxis) or to control bleeding when it occurs (on‑demand). Over time, regimens have shifted from on‑demand treatment to routine prophylaxis due to observed improvements in long‑term clinical outcomes, such as joint damage. In the United States, the February 2016 guidelines of the Medical and Scientific Advisory Council of the National Hemophilia Foundation recommend routine prophylaxis as optimal for the treatment of people with severe hemophilia.

Historically, hemophilia treatments were derived from factors taken from human blood plasma. In the early 1990s, recombinant factor products, developed in a lab through the use of recombinant DNA technology, became available. In 2016, use of recombinant factor product accounted for over 75% of sales globally. In 2014, ELOCTATE

and ALPROLIX became the first available extended half‑life recombinant factor therapies in the United States with the benefit of an effective treatment even with less frequent, more convenient dosing requirements.

Patients may experience complications with factor therapies. In some cases, patients may develop inhibitors that recognize the infused factor as a foreign protein and create antibodies to it. Inhibitor antibodies occur when a person with hemophilia has an immune response to treatment with clotting factor concentrates. According to the WFH, an inhibitor usually occurs within the first 75 exposures to factor concentrates and thus is most often seen in children with severe hemophilia. In 2014, the WFH estimated that approximately 25% to 30% of children with severe hemophilia A and approximately 1% to 6% of individuals with hemophilia B will develop inhibitors. A common treatment to eradicate inhibitors is immune tolerance induction. Immune tolerance induction involves exposure to frequent and higher doses of recombinant factor until the body can tolerate the factor. While this treatment can be effective, the treatment burden is high as it can take months or even years for the inhibitor antibodies to be removed.

Our Marketed Products

Our marketed products, ELOCTATE and ALPROLIX, leverage expertise in Fc fusion technology that was originally acquired by Biogen from Syntonix Pharmaceuticals (Syntonix, and now known as Bioverativ Therapeutics Inc., our wholly owned subsidiary) in 2007. Fc fusion is a proprietary technology used to link recombinant factor VIII and factor IX in the case of ELOCTATE and ALPROLIX, respectively, to a protein fragment in the body known as Fc. The fusion with Fc uses a naturally occurring pathway and is designed to extend the half‑life of the factor, thereby making the product last longer in a patient’s blood than traditional factor therapies. ELOCTATE consists of the Coagulation Factor VIII molecule (historically known as Antihemophilic Factor) linked to Fc and ALPROLIX consists of the Coagulation Factor IX molecule linked to Fc.

We collaborate with Sobi to develop and commercialize ELOCTATE and ALPROLIX globally. Under the collaboration, we have rights to commercialize ELOCTATE and ALPROLIX in the United States, Japan, Canada, Australia, Latin American countries and all other markets excluding Sobi’s commercialization territory. Sobi’s commercialization territory includes Europe, Russia and certain countries in Northern Africa and the Middle East. ELOCTATE and ALPROLIX were approved in the United States, Canada and Japan in 2014, and in the European Union in 2015 and 2016, respectively.  For a further description of our development and collaboration agreement with Sobi, see “—Our Development and Commercialization Arrangements with Sobi” below.

Product sales for ELOCTATE and ALPROLIX each accounted for approximately 62% and 31%, respectively, of our total revenue for the year ended December 31, 2017, 58% and 38%, respectively of our total revenue for the year ended December 31, 2016, and approximately 57% and 42%, respectively of our total revenue for the year ended December 31, 2015. For additional financial information about our product and other revenues, long lived assets and geographic areas in which we operate, please read Note 19, Segment Information to our audited consolidated financial statements, Item 6. Selected Financial Data and Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report. A discussion of the risks attendant to our global operations is set forth in this report under Item 1A. Risk Factors.

Our research activities relating to ELOCTATE and ALPROLIX include ongoing and planned post‑marketing studies exploring the potential impact of the Fc fusion technology on long‑term joint health, immunogenicity and immune tolerance induction in hemophilia patients who develop inhibitors. 

Research and Development Activities

We are engaged in discovery, preclinical, and clinical programs focused on advancing new technologies for the treatment of hemophilia and other blood disorders, such as cold agglutinin disease, sickle cell disease, and beta‑thalassemia. Our scientific and medical leaders are focused on advancing large and small molecules and cell and gene therapy in the hopes of developing treatments for these diseases.

A brief description of certain of our research and development programs, together with certain related business relationships and collaborations, is described below.

BIVV009

We have initiated site start-up for two parallel BIVV009 Phase 3 clinical trials for primary cold agglutinin disease, CARDINAL and CADENZA.  BIVV009 is designed to selectively target C1s, the proximal initiator of the classical complement cascade, while leaving other complement cascade pathways intact. 

Cold agglutinin disease is a global, chronic rare blood disease characterized by hemolytic anemia, with a significant portion of patients requiring transfusions and having crippling fatigue, poor quality of life and the potential for life-threatening complications such as thrombotic events, including pulmonary embolism and stroke. People living with cold agglutinin disease currently have no approved treatment options, and risk chronic iron overload from frequent blood transfusions to normalize hemoglobin levels. In addition, natural history data we published at the 2017 Annual Meeting for the American Society of Hematology (ASH) show a statistically significant increase in risk of thromboembolic events, like stroke, for people living with cold agglutinin disease.  According to Berensten et al 2006, the diagnosed prevalence is approximately 16 people per million globally, leading to an estimated 10,000 people in the United States and Europe.

Cold agglutinin disease is caused by auto-immune mediated destruction of red blood cells. It is triggered by IgM auto-antibodies that bind to the surface of red blood cells and activate the classical complement pathway, leading to

red blood cell destruction. The classical complement pathway is a normal component of the innate immune system. However, when dysregulated, it is associated with multiple disease processes, including cold agglutinin disease.

We also have an ongoing Phase 1b clinical trial of BIVV009 for refractory immune thrombocytopenia.

Hemophilia Programs

BIVV001 (rFVIIIFc‑VWF‑XTEN).  A Phase 1/2a clinical program of the combination of recombinant factor VIII‑Fc fusion protein with part of Von Willebrand factor, another component of the clotting cascade, attached with proprietary XTEN technology. The product candidate is being developed with the objective of achieving once weekly or less frequent dosing by intravenous administration in patients with hemophilia A. 

BIVV002 (rFIXFc‑XTEN).  A preclinical program for a next generation recombinant factor IX replacement product using XTEN technology exploring the use of subcutaneous dosing for patients with hemophilia B with the objective of achieving once weekly or less frequent dosing, which we believe would simplify the administration process for patients with hemophilia B.

Gene Therapy Programs.  We are collaborating with Fondazione Telethon and Ospedale San Raffaele S.r.l. in preclinical programs to develop gene therapies for hemophilia A and B. This collaboration centers on advanced lentiviral gene transfer technology of the San Raffaele Telethon Institute for Gene Therapy.

Bi‑specific Antibody Program.  A preclinical program to develop a non‑factor bi‑specific antibody for the treatment of patients with hemophilia A with inhibitors and the general hemophilia A population.

Beta Thalassemia and Sickle Cell Disease

ST-400.    A Phase 1/2 clinical trial is planned to assess the safety, tolerability and efficacy of ST-400, a gene-edited cell therapy candidate, in adults with transfusion-dependent beta-thalassemia. This program is being developed pursuant to an exclusive worldwide research, development and commercialization collaboration and license agreement with Sangamo under which both companies are working to develop and commercialize product candidates for the treatment of sickle cell disease and beta‑thalassemia. For more information on our collaboration with Sangamo, refer to Item 7. Management’s Discussion and Analysis and of Financial Condition and Results of Operations—Contractual Obligations—Funding Commitments—Sangamo Therapeutics, Inc.

We are also building a clinical-stage pipeline in sickle cell disease by developing programs that intersect at all points of the biology, and these include a gene-edited cell therapy program and multiple small molecule programs. 

Our expenses for research and development activities were $224.6 million in 2017, $210.1 million in 2016, and $236.9 million in 2015. For the periods prior to separation, these expenses include costs associated with research and development activities performed while part of Biogen. These expenses include allocations from Biogen to us for depreciation and other facility‑based expenses, regulatory affairs function, pharmacovigilance, other infrastructure and management costs supporting multiple projects. As a result, these expenses are not necessarily indicative of Bioverativ’s expenses for research and development activities as a standalone company.

Investment in research and development is critical to our future growth and our ability to remain competitive in the markets in which we participate. We intend to continue to make significant investment in research and development programs in addition to seeking to enhance future growth through internal efforts, acquisitions and collaborations with third parties.

Our Development and Commercialization Arrangements with Sobi

Bioverativ Therapeutics Inc., our wholly owned subsidiary, is a party to a development and commercialization agreement with Sobi.  Under this agreement, the parties develop and commercialize in defined territories ELOCTATE, ALPROLIX and certain compound constructs that Sobi elects to designate as subject to the parties’ collaboration.

Generally, these compound constructs include fusion proteins containing both a recombinant factor and the Fc portion of an immunoglobulin, including certain constructs that may be developed using technology we obtained from Amunix.

The agreement generally defines Bioverativ’s commercialization territory as the United States, Japan, Canada, Australia, Latin American countries and all other markets excluding Sobi’s commercialization territory, and Sobi’s commercialization territory as Europe, Russia and certain countries in Northern Africa and the Middle East.

Under the agreement, prior to May 5, 2024, either Bioverativ or Sobi may present a compound construct as a potential product candidate that the parties may consider developing and commercializing under the collaboration. Upon Sobi’s election to treat a compound construct as a product, and in the case of a novel compound construct Sobi’s payment of an upfront fee to us, Sobi is granted the right to opt‑in to such compound construct and become responsible for final development and commercialization of that compound construct in Sobi’s commercialization territory. Generally, upon opt‑in, Sobi becomes obligated to make an advance payment and reimburse Bioverativ for certain development expenses incurred with respect to the compound construct. Until Sobi’s portion of the development expenses are fully paid, Sobi’s royalty rate payable to Bioverativ is increased, and the royalty payment payable by Bioverativ to Sobi for the sale of products in Bioverativ’s territory is decreased.

In 2016, Sobi assumed final development and commercialization activities and became the marketing authorization holder for ELOCTA and ALPROLIX in the European Union. Sobi has also elected to treat BIVV001 (rFVIIIFc-VWF-XTEN) and BIVV002 (rFIXFc‑XTEN), each compound constructs developed using the XTEN technology we obtained from Amunix, as subject to the collaboration.

The agreement provides for royalty payments between the parties for sales of collaboration products, including ELOCTATE and ALPROLIX, that vary based upon, among other things, the territory in which the sale was made and how the product is commercialized.

The agreement is terminable in its entirety or with respect to a product developed under the collaboration by either party upon six months’ written notice. The agreement is also terminable in its entirety under certain conditions and subject to certain dispute resolution procedures following a party’s uncured material breach of a material obligation of the agreement. Unless earlier terminated, the duration of the agreement continues with respect to each product, for so long as such product is being sold anywhere in the world.

Bioverativ and Sobi are also parties to ancillary agreements, including manufacturing and supply agreements for ELOCTATE and ALPROLIX pursuant to which Sobi forecasts, orders and purchases drug substance and drug product that is supplied to Sobi by Bioverativ.

For more information on our collaboration with Sobi, see Note 4, Collaborations, to the audited consolidated financial statements included elsewhere in this report.

Our International Operations

Outside of the United States, Japan remains a significant near term focus for growth of ELOCTATE and ALPROLIX. We have conducted research and development activities for hemophilia treatments in Japan since 2010. Through our dedicated Japanese sales force and marketing team, we have sold ELOCTATE and ALPROLIX in Japan since receipt of marketing approval in December 2014 and June 2014, respectively. For the years ended December 31, 2017 and 2016, we generated revenue of approximately $138.8 and $105.7 million, respectively, from our sales of ELOCTATE and ALPROLIX in Japan. In addition to Japan, we continue to make progress in other geographic areas, including Canada, Australia and countries in Latin America.

Intellectual Property

We rely on patents and other proprietary rights to develop, maintain and strengthen our competitive position. We own a number of patents and trademarks throughout the world and have entered into license arrangements relating to various third party patents and technologies.

Patents

Patents are important to obtaining and protecting exclusivity in our products and product candidates. We regularly seek patent protection in the U.S. and in selected countries outside of the U.S. for inventions originating from our research and development efforts. In addition, we license rights from others to various patents and patent applications.

U.S. patents, as well as most non‑U.S. patents, are generally effective for 20 years from the date the earliest application was filed; however, U.S. patents that issue on applications filed before June 8, 1995 may be effective until 17 years from the issue date, if that is later than the 20 year date. In some cases, the patent term may be extended to recapture a portion of the term lost during regulatory review of the claimed therapeutic, and in the case of the United States, also because of U.S. Patent and Trademark Office (USPTO) delays in prosecuting the application. Specifically, in the U.S., under the Drug Price Competition and Patent Term Restoration Act of 1984, commonly known as the Hatch‑Waxman Act, a patent that covers a U.S. Food and Drug Administration (FDA) approved drug may be eligible for patent term extension (for up to five years, but not beyond a total of 14 years from the date of product approval) as compensation for patent term lost during the FDA regulatory review process, but only one patent per approved drug product may be so extended. The duration and extension of the term of foreign patents varies, in accordance with local law.

Our patent portfolio includes issued patents and pending applications relating to our marketed products and our product pipeline. We hold patents for ELOCTATE and ALPROLIX that cover the composition of matter and methods of treatment of those therapies. Patents of primary importance to ELOCTATE and ALPROLIX have issued in the United States, Europe and Japan, and based on the applicable patent statutes and in the ordinary course, generally expire between 2024 and 2032. We also continue to pursue additional patents and patent term extensions in the United States and other territories covering various aspects of our products that may, if issued, extend exclusivity beyond the expiration of these patents.

The existence of patents does not guarantee our right to practice the patented technology or commercialize the patented product. Patents relating to biopharmaceutical and biotechnology products, compounds and processes, such as those that cover our existing compounds, products and processes and those that we will likely file in the future, do not always provide complete or adequate protection. Our patents may be invalidated earlier based on a competitor’s challenge in an applicable patent office or court proceeding.

Regulatory Exclusivity

In addition to patent protection, certain of our products are entitled to regulatory exclusivity which may consist of regulatory data protection and market protection. The expected expiration of this regulatory exclusivity in the United States and the European Union is set forth below:

Regulatory data protection provides to the holder of a drug or biologic marketing authorization, for a set period of time, the exclusive use of the proprietary preclinical and clinical data that it created at significant cost and submitted

to the applicable regulatory authority to obtain approval of its product. After the applicable set period of time, third parties are then permitted to rely upon our data to file for approval of their abbreviated applications for, and to market (subject to any applicable market protection), their generic drugs and biosimilars referencing our data. Market protection provides to the holder of a drug or biologic marketing authorization the exclusive right to commercialize its product for a set period of time, thereby preventing the commercialization of another product containing the same active ingredient(s) during that period. Although the World Trade Organization’s agreement on trade‑related aspects of intellectual property rights requires signatory countries to provide regulatory exclusivity to innovative pharmaceutical products, implementation and enforcement varies widely from country to country. In the United States, biologics, such as ELOCTATE and ALPROLIX, are entitled to exclusivity under the Biologics Price Competition and Innovation Act, which was passed on March 23, 2010 as Title VII to the Patient Protection and Affordable Care Act (PPACA). PPACA provides a pathway for approval of biosimilars following the expiration of 12 years of exclusivity for the innovator biologic and a potential additional 180 day‑extension term for conducting pediatric studies. Under this framework, FDA cannot make a product approval effective for any biosimilar application until at least 12 years after the reference product’s date of first licensure. The PPACA also includes an extensive process for the innovator biologic and biosimilar manufacturer to litigate patent infringement, validity, and enforceability prior to the approval of the biosimilar. The PPACA does not, however, change the duration of patents granted on biologic products.

Japan also provides for market exclusivity through a re‑examination system, which prevents the entry of generics and biosimilars until the end of the re‑examination period (REP), which can be up to eight years from marketing approval. ELOCTATE and ALPROLIX are expected to have REPs ending in 2022.

Other Proprietary Rights

We also rely upon other forms of unpatented confidential information to remain competitive. We protect such information principally through confidentiality and non‑use agreements with our employees, consultants, outside scientific collaborators and scientists whose research we sponsor and other advisers. In the case of our employees, these agreements also provide, in compliance with relevant law, that inventions and other intellectual property conceived by such employees during their employment shall be our exclusive property.

Our trademarks are important to us and are generally covered by trademark applications or registrations in the USPTO and the patent or trademark offices of other countries. Trademark protection varies in accordance with local law, and continues in some countries as long as the trademark is used and in other countries as long as the trademark is registered. Trademark registrations generally are for fixed but renewable terms.

Litigation, interferences, oppositions, inter partes reviews or other proceedings are, have been and may in the future be necessary in some instances to determine the validity and scope of certain of our patents, regulatory exclusivities or other proprietary rights, and in other instances to determine the validity, scope or non‑infringement of certain patent rights claimed by others to be pertinent to the manufacture, use or sale of our products. We may also face challenges to our patents, regulatory exclusivities and other proprietary rights covering our products by manufacturers of generic drugs and biosimilars. A discussion of certain risks and uncertainties that may affect our patent position, regulatory exclusivities and other proprietary rights is set forth in Item 1A. Risk Factors.

Manufacturing and Facilities

ELOCTATE and ALPROLIX are currently manufactured at Biogen‑owned facilities located in North Carolina. The manufacturing process for bulk drug substance includes protein production, purification and viral clearance. Manufacture and supply of drug product, which includes fill finish, labeling and packaging, are provided primarily through third party contract manufacturing organizations.

In connection with our separation from Biogen, we entered into a manufacturing and supply agreement with Biogen for hemophilia products, pursuant to which Biogen manufactures and supplies, exclusively for us, drug substance, drug product and finished goods with respect to ELOCTATE and ALPROLIX, as well as for certain of our pipeline product candidates. Fill finish, label and packaging, distribution and logistics services for ELOCTATE and ALPROLIX drug product are being provided by Biogen directly or through third party contract manufacturing

organizations. Additionally, we have increased and continue to increase our level of direct contractual responsibility with other third party contract manufacturing organizations, logistics providers and distributors as we scale up our internal supply management capabilities.

Our properties include facilities which, in our opinion, are suitable and adequate for development and distribution of our products. For additional information regarding our properties, see Item 2. Properties.

Raw Materials

We rely on Biogen for all supplies and raw materials used in the production of ELOCTATE and ALPROLIX drug substance. We also rely on third party contract manufacturers and suppliers for the materials we require for our clinical trials. A discussion of certain risks and uncertainties that may affect the availability of sufficient quantities of supplies and raw materials is set forth in Item 1A. Risk Factors.

Sales, Marketing and Distribution

We have our own direct sales force. Our products are distributed to and through specialty pharmacies, hemophilia treatment centers, public and private hospitals and independent distributors. For the year ended December 31, 2017, ASD Specialty Healthcare, a specialty distributor, and CVS Health Corporation, a specialty pharmacy, individually represent 16% and 13%, respectively, of total revenues. Our sales, particularly to specialty pharmacies and hemophilia treatment centers, are subject to discounted pricing. See “—Regulatory Matters—Pricing and Reimbursement” below. We review our sales channels from time to time, and from time to time will make changes in our sales and distribution model as we believe necessary to best implement our business plan and strategies.

In the United States, third parties warehouse and ship our products through their distribution centers. These centers are generally stocked with adequate inventories to facilitate prompt customer service. Sales and distribution methods include frequent contact by sales and customer service representatives, automated communications via various electronic purchasing systems, circulation of catalogs and merchandising bulletins, direct‑mail campaigns, trade publication presence and advertising. Our Japanese sales and product distributions are made on a direct basis.

We use and expect to continue to use a variety of collaboration, distribution and other marketing arrangements with one or more third parties to commercialize our products in certain other markets outside of the United States. Under our development and commercialization arrangement with Sobi, for example, Sobi has assumed responsibility for commercializing ELOCTATE and ALPROLIX in its territory. See “—Our Development and Commercialization Arrangements with Sobi” above.

Competition

We face substantial competition from biotechnology, biopharmaceutical and other companies of all sizes, in the United States and other countries, as such competitors continue to expand their manufacturing capacity and sales and marketing channels related to our hemophilia products. Many of our competitors are working to develop products similar to those we are developing or those that we already market. Competition is primarily focused on cost‑effectiveness, price, service, product effectiveness and quality, patient convenience and technological innovation. The introduction of new products by competitors and changes in medical practices and procedures can impact our products.  The principal sources of competition for Bioverativ’s marketed products globally are as follows:

Our products also compete with a number of plasma derived Factor VIII and IX products. We are also aware of other longer‑acting products and non-factor technologies, such as bi-specific antibodies and gene therapies that are in development and, if successfully developed and approved, would compete with our hemophilia products. New therapies and technologies have the potential to transform the standard of care for hemophilia patients, and our products may be unable to compete successfully with such new therapies and technologies that may be developed and marketed by other companies.

There are additional competitive products or alternative therapy regimens available on a more limited geographic basis throughout the world.  For additional information regarding competition, see the discussion of such matters in Item 1A. Risk Factors, including the following: “Risk Factors—Risks Related to Our Business—If our hemophilia products fail to compete effectively, our business and market position would suffer.”

Regulatory Matters

Our operations and products are subject to extensive regulation by numerous government agencies, both within and outside of the United States. The FDA, the EMA, the Ministry of Health, Labour and Welfare in Japan (the MHLW) and other government agencies both inside and outside of the United States, regulate the testing, safety, effectiveness, manufacturing, labeling, promotion and advertising, distribution and post‑market surveillance of our products. We must obtain specific approval from the FDA and non‑U.S. regulatory authorities before we can market and sell our products in a particular country. The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country.

Clinical Trial and Approval Process

The FDA, the EMA and other regulatory agencies promulgate regulations and standards for designing, conducting, monitoring, auditing and reporting the results of clinical trials to ensure that the data and results are accurate and that the rights and welfare of trial participants are adequately protected commonly referred to as current good clinical practices (cGCPs). Regulatory agencies enforce cGCPs through inspections of trial sponsors, principal investigators and trial sites, contract research organizations (CROs), and institutional review boards. If studies fail to comply with applicable cGCPs, the clinical data generated may be deemed unreliable and relevant regulatory agencies may conduct additional audits or require additional clinical trials before approving a marketing application. Noncompliance can also result in civil or criminal sanctions. We rely on third parties, including CROs, to carry out many of our clinical trial‑related activities. Failure of such third parties to comply with cGCPs can likewise result in rejection of our clinical trial data or other sanctions.

Before new products may be sold in the United States, preclinical studies and clinical trials of the products must be conducted and the results submitted to the FDA for approval. With limited exceptions, the FDA requires companies

to register both pre‑approval and post‑approval clinical trials and disclose clinical trial results in public databases. Failure to register a trial or disclose study results within the required time periods could result in penalties, including civil monetary penalties. To support marketing approval, clinical trial programs must establish a product candidate’s efficacy, determine an appropriate dose and dosing regimen and define the conditions for safe use. This is a high‑risk process that requires stepwise clinical studies, usually conducted in three phases, in which the candidate product must successfully meet predetermined endpoints. The results of the preclinical and clinical testing of a product are then submitted to the FDA in the form of a marketing application. In response to a marketing application, the FDA may grant marketing approval, request additional information or deny the application if it determines the application does not provide an adequate basis for approval.

Product development and receipt of regulatory approval takes a number of years, involves the expenditure of substantial resources and depends on a number of factors, including the severity of the disease in question, the availability of alternative treatments, potential safety signals observed in preclinical or clinical tests and the risks and benefits of the product as demonstrated in clinical trials. Many research and development programs do not result in the commercialization of a product. The FDA has substantial discretion in the product approval process, and it is impossible to predict with any certainty whether and when the FDA will grant marketing approval, or whether an approval, if granted, will be subject to limitations based on the FDA’s interpretation of the relevant pre‑clinical or clinical data. The agency also may require the sponsor of a marketing application to conduct additional clinical studies or to provide other scientific or technical information about the product, and these additional requirements may lead to unanticipated delay or expense.

Most non‑U.S. jurisdictions have product approval and post‑approval regulatory processes that are similar in principle to those in the United States. In Europe, for example, there are several tracks for marketing approval, depending on the type of product for which approval is sought. Under the centralized procedure in Europe, a company submits a single application to the EMA that is similar to the marketing application in the United States. A marketing application approved by the EC is valid in all member states. In addition to the centralized procedure, Europe also has various other methods for submitting applications and receiving approvals. Regardless of the approval process employed, various parties share responsibilities for the monitoring, detection and evaluation of adverse events post‑approval, including national authorities, the EMA, the EC and the marketing authorization holder. In some regions, it is possible to receive an “accelerated” review whereby the national regulatory authority will commit to truncated review timelines for products that meet specific medical needs.

Under the U.S. Orphan Drug Act, the FDA may grant orphan drug designation to biologics intended to treat a “rare disease or condition,” which generally is a disease or condition that affects fewer than 200,000 individuals in the United States. If a product which has an orphan drug designation subsequently receives the first FDA approval for the indication for which it has such designation, the product is entitled to orphan exclusivity. This means that the FDA may not approve any other applications to market the same drug for the same indication for a period of seven years following marketing approval, except in certain very limited circumstances, such as if the later product is shown to be clinically superior to the orphan product. Legislation similar to the U.S. Orphan Drug Act has been enacted in other countries to encourage the research, development and marketing of medicines to treat, prevent or diagnose rare diseases. In the European Union, medicinal products intended for diagnosis, prevention or treatment of life‑threatening or very serious diseases affecting less than five in 10,000 people receive 10‑year market exclusivity, protocol assistance, and access to the centralized procedure for marketing authorization. ELOCTATE and ALPROLIX have each received an orphan drug designation in the United States and have received orphan exclusivity through June 2021 and March 2021, respectively. ALPROLIX has also received an orphan drug designation in the European Union.

Biologic products may be subject to increased competition from biosimilar formulations of reference biologic products in the future. The complex nature of biologic products has warranted the creation of biosimilar regulatory approval pathways with strict, science‑based approval standards that take into account patient safety considerations. These biosimilar approval pathways are considered to be more abbreviated than for new biologics, although they are significantly different from the abbreviated approval pathways available for “generic drugs” (small‑molecule drugs that are the same as, and bioequivalent to, an already‑approved small molecule drug). The European Union has created a pathway for the approval of biosimilars, and has published guidance for approval of certain biosimilar products. More recently, in 2010, the PPACA authorized the FDA to approve biosimilars, but only a small number of biosimilars have

been approved by the FDA to date and the U.S. approval pathway for biosimilars remains subject to ongoing guidance from the FDA. While mature pathways for regulatory approval of generic drugs and healthcare systems exist around the globe that support and promote the substitutability of generic drugs, the approval pathways for biosimilar products remain in various stages of development, as do private and public initiatives or actions supporting the substitutability of biosimilar products. Thus, the extent to which biosimilars will be viewed as readily substitutable, and in practice readily substituted, for the reference biologic product is largely yet to be determined.

Post‑Approval Requirements

The FDA may require a sponsor to conduct additional post‑marketing studies as a condition of approval to provide data on safety and effectiveness. If a sponsor fails to conduct the required studies, the agency may withdraw its approval. In addition, if the FDA concludes that a product that has been shown to be effective can be safely used only if distribution or use is restricted, it can mandate post‑marketing restrictions as necessary to assure safe use. These may include requiring the sponsor to establish rigorous systems, such as risk evaluation and mitigation strategies (REMS), to assure use of the product under safe conditions. The FDA can impose financial penalties for failing to comply with certain post‑marketing commitments, including REMS. In addition, any changes to approved REMS must be reviewed and approved by the FDA prior to implementation.

Changes to approved products, such as adding an indication, making certain manufacturing changes, or changing manufacturers or suppliers of certain ingredients or components, may be subject to rigorous review, including multiple regulatory submissions, and approvals are not certain. For example, to obtain a new indication, a company must demonstrate with additional clinical data that the product is safe and effective for the new use. FDA regulatory review may result in denial or modification of the planned changes, or requirements to conduct additional tests or evaluations that can substantially delay or increase the cost of the planned changes.

Even after a company obtains regulatory approval to market a product, the product and the company’s manufacturing processes and quality systems are subject to continued review by the FDA and other regulatory authorities globally. We and our contract manufacturers also must adhere to current good manufacturing practices (cGMPs) and product‑specific regulations enforced by regulatory agencies both before and after product approval. Regulatory agencies regulate and inspect equipment, facilities and processes used in the manufacturing and testing of products prior to approving a product, as well as periodically following the initial approval of a product. If, as a result of these inspections, it is determined that our equipment, facilities or processes or that of our manufacturers do not comply with applicable regulations and conditions of product approval, we may face civil, criminal or administrative sanctions or remedies, including significant financial penalties and the suspension of our manufacturing operations.

Manufacturers are also required to monitor information on side effects and adverse events reported during clinical studies and after marketing approval and report such information and events to regulatory agencies. Non‑compliance with the FDA’s safety reporting requirements may result in civil or criminal penalties. Side effects or adverse events that are reported during clinical trials can delay, impede or prevent marketing approval. Based on new safety information that emerges after approval, the FDA can mandate product labeling changes, impose a new REMS or the addition of elements to an existing REMS, require new post‑marketing studies (including additional clinical trials) or suspend or withdraw approval of the product. These requirements may affect a company’s ability to maintain marketing approval of its products or require a company to make significant expenditures to obtain or maintain such approvals.

Pricing and Reimbursement

In both U.S. and non‑U.S. markets, sales of our products depend, in part, on the availability and amount of reimbursement by third party payors, including governments, private health plans and other organizations. Substantial uncertainty exists regarding the coverage, pricing and reimbursement of our products. Governments may regulate coverage, reimbursement and pricing of our products to control healthcare cost or affect utilization of the products. The U.S. and non‑U.S. governments have enacted and regularly consider additional reform measures that affect health care and drug coverage and costs. Private health plans may also seek to manage cost and utilization by implementing coverage and reimbursement limitations. Other payors, including managed care organizations, health insurers, pharmacy benefit managers, government health administration authorities and private health insurers, seek price discounts or

rebates in connection with the placement of our products on their formularies and, in some cases, the imposition of restrictions on access or coverage of particular drugs or pricing determined based on perceived value.

Within the United States

Medicare Part D provides coverage to enrolled Medicare patients for self‑administered drugs (i.e., drugs that are not administered by a physician). Medicare Part D is administered by private prescription drug plans approved by the U.S. government and each drug plan establishes its own Medicare Part D formulary for prescription drug coverage and pricing, which the drug plan may modify from time‑to‑time. The prescription drug plans negotiate pricing with manufacturers and may condition formulary placement on the availability of manufacturer discounts. In addition, manufacturers, including us, are required to provide to CMS a 50% discount on brand name prescription drugs utilized by Medicare Part D beneficiaries when those beneficiaries reach the coverage gap in their drug benefits.

Outside of the United States

Outside of the United States, products are paid for by a variety of payors, with governments being the primary source of payment. Governments may determine or influence reimbursement of products. Governments may also set prices or otherwise regulate pricing. Negotiating prices with governmental authorities can delay commercialization of our products. Governments may use a variety of cost‑containment measures to control the cost of products, including price cuts, mandatory rebates, “value‑based pricing” and reference pricing (i.e., referencing prices in other countries and using those reference prices to set a price). Budgetary pressures in many countries, including in the European Union, are continuing to cause governments to consider or implement various cost‑containment measures, such as price freezes, increased price cuts and rebates and expanded generic substitution and patient cost‑sharing.

Japanese Regulatory Matters

In Japan, the MHLW is responsible for regulating biological and pharmaceutical products under the Pharmaceuticals and Medical Devices Law, which provides a regulatory framework similar to that of the United States. Specifically, with regard to the clinical trial and approval process, before a new biological product may be sold in Japan, clinical trials must be conducted for the product of which the MHLW and the Pharmaceuticals and Medical Devices Agency (PMDA), a governmental organization authorized by the MHLW, must be notified. For the product to be approved, the results of such clinical trials must then be submitted to the PMDA. Approved products are subject to regulatory requirements similar to those of the United States, including (i) the possibility of the MHLW requiring post‑marketing studies to gather data on a product’s safety and efficacy as a condition for approval, (ii) re‑examination of the approved product within a specific time period following approval (e.g., 8 years for a new product) to verify its safety and efficacy and (iii) the reporting of any adverse event to the PMDA. With regard to pricing and reimbursement, Japan has a single health insurance system (National Health Insurance), under which drugs are provided to patients at a price designated by the MHLW in its discretion after negotiations between the applicable biopharmaceutical company and the MHLW under the National Health Insurance Act.

Other Laws

We and our products are also subject to various other regulatory regimes both inside and outside of the United States. Various laws, regulations and recommendations relating to data privacy and protection, safe working conditions, laboratory practices, the experimental use of animals, and the purchase, storage, movement, import, export and use and disposal of hazardous or potentially hazardous substances, including radioactive compounds and infectious disease agents, used in connection with our research work are or may be applicable to our activities. In the United States alone, we are subject to the oversight of the FDA, the Office of the Inspector General within the Department of Health and Human Services, the CMS, the Department of Justice, the Environmental Protection Agency, the Department of Defense and Customs and Border Protection, in addition to others. In jurisdictions outside of the United States, our activities are subject to regulation by government agencies including the EMA in Europe, and other agencies in other jurisdictions. Many of the agencies enforcing these laws have increased their enforcement activities with respect to healthcare companies in recent years. These actions appear to be part of a general trend toward increased enforcement activity globally. In addition, certain agreements entered into by us involving exclusive license rights may be subject to national or international antitrust regulatory control, the effect of which cannot be predicted. The extent of government regulation, which might result from future legislation or administrative action, cannot accurately be predicted.

Patient Engagement, Patient Access and Humanitarian Aid

We interact with patients, advocacy organizations and healthcare societies in order to gain insights into unmet needs, particularly in the hemophilia treatment community. The insights gained from these engagements help develop services, programs and applications that are designed to help patients lead better lives.

We are dedicated to helping patients obtain access to our therapies. For example, we provide charitable contributions that may assist eligible patients to receive our products.  We have also continued our commitment, together with Sobi, to donate up to one billion international units (IUs) of clotting factor therapy for humanitarian use over a ten-year period, of which up to 500 million IUs will be donated to the WFH over a period of five years. We are responsible for half of the committed donation. Through the end of 2017, we have donated over 262 million of IUs, treating over 15,000 people in the developing world.

Employees

We employ approximately 460 persons as of December 31, 2017. We believe that we have good relations with our employees.

Environmental Matters

Our environmental policies require compliance with all applicable environmental regulations and contemplate, among other things, appropriate capital expenditures for environmental protection. While it is impossible to predict accurately the future costs associated with environmental compliance and potential remediation activities, compliance with environmental laws is not expected to require significant capital expenditures and has not had, and is not expected to have, a material adverse effect on our operations or competitive position.

Available Information

Bioverativ’s principal executive offices are 225 Second Avenue, Waltham, MA 02451, and our telephone number is 781‑663‑4400. Our website address is www.bioverativ.com. We make available free of charge through the Investors section of our website our Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. We include our website address in this report only as an inactive textual reference and do not intend it to be an active link to our website. The contents of our website are not incorporated into this report.

Item 1A. Risk Factors

You should carefully consider the following risks and other information in this report in evaluating Bioverativ and Bioverativ’s common stock. Any of the following risks could materially and adversely affect our results of operations or financial condition and could adversely impact, or result in volatility to, our stock price.

Risks Related to the Merger

The conditions under the Merger Agreement to Sanofi’s consummation of the Offer and the subsequent Merger may not be satisfied at all or in the anticipated timeframe.

On January 21, 2018, Bioverativ entered into the Merger Agreement with Sanofi.  The obligation of Merger Sub to purchase Shares tendered in the Offer is subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including (i) that the number of Shares validly tendered and not withdrawn as of the expiration of the Offer, together with any Shares (if any) owned by Parent and its affiliates and excluding any Shares tendered pursuant to guaranteed delivery procedures that have not yet been “received” (as such term is defined in Section 251(h)(6)(f) of the DGCL), represents at least a majority of the then outstanding Shares (the “Minimum Tender Condition”); (ii) (x) the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and (y) that all consents of, and/or filings with, any governmental authority of

competent jurisdiction or pursuant to any antitrust laws have been obtained and are in full force and effect and any applicable waiting period with respect thereto has expired; (iii) the absence of any law or order prohibiting the consummation of the Offer or the Merger; (iv) the accuracy of the Company’s representations and warranties under the Merger Agreement (subject to customary materiality qualifiers); (v) the Company’s performance in all material respects of its obligations under the Merger Agreement; (vi) the absence, since the date of the Merger Agreement, of any fact, circumstance, condition, event, change, development, occurrence, result or event which, individually or in the aggregate, has had, or would reasonably be expected to have, a Company Material Adverse Effect (as defined in the Merger Agreement); (vii) the delivery to Parent and Merger Sub of a certificate, dated as of the expiration time of the Offer, certifying that the conditions in clauses (iv), (v) and (vi) have been satisfied; (viii) the Merger Agreement has not been terminated; and (ix) that the Company has received and delivered to Biogen and Parent a copy of the tax opinion required by a letter agreement dated January 21, 2018 between Biogen, Parent and the Company (the “Letter Agreement”) and the requirement that the Company deliver such tax opinion pursuant to the Tax Matters Agreement between Biogen and the Company dated January 31, 2017 has been satisfied pursuant to the Letter Agreement. These conditions are more specifically described in the Merger Agreement, which we filed as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the SEC on January 22, 2018.

We intend to pursue all required approvals in accordance with the Merger Agreement. However, no assurance can be given that the required approvals will be obtained and, even if all such approvals are obtained, no assurance can be given as to the terms, conditions and timing of the approvals or that they will satisfy the terms of the Merger Agreement. In addition, there can be no assurances that our stockholders will tender their shares, or that any or all of the other conditions will be satisfied.

The announcement of the Offer and the Merger could negatively impact our business, financial condition, results of operations or our stock price.

Our announcement of having entered into the Merger Agreement and Sanofi and Merger Sub’s commencement of the Offer could cause a material disruption to our business and there can be no assurance that the conditions to the completion of the Offer and the Merger will be satisfied. The Merger Agreement may also be terminated by us or Sanofi in certain specified circumstances, including, subject to compliance with the terms of the Merger Agreement, by us in order to accept a third-party acquisition proposal that our board of directors determines constitutes a superior proposal upon payment of a termination fee to Sanofi of $326.0 million. We are subject to several risks as a result of the announcement of the Merger Agreement and the Offer, including, but not limited to, the following:

Any of the above matters could adversely affect our stock price or harm our financial condition, results of operations or business prospects.

If the proposed transactions are not consummated, our business and stock price could be adversely affected.

The consummation of the transactions contemplated by the Merger Agreement (the “Transactions”) is subject to the satisfaction or waiver of certain conditions set forth in the Merger Agreement. If the Offer and/or the Merger are delayed or otherwise not consummated, we could suffer a number of consequences that may adversely affect our business, results of operations and stock price, including the following:

Our executive officers and directors may have interests that are different from, or in addition to, those of our stockholders generally.

Our executive officers and directors may have interests in the Offer and Merger that are different from, or are in addition to, those of our stockholders generally. These interests include direct or indirect ownership of our common stock, stock options, and restricted stock units, and the receipt or potential receipt of change in control or other retention or severance payments in connection with the proposed transactions.

The Merger Agreement contains provisions that could make it difficult for a third party to acquire us prior to the completion of the Offer and the Merger.

The Merger Agreement contains restrictions on our ability to obtain a third-party proposal for an acquisition of our company. These provisions include our agreement not to initiate, solicit or knowingly encourage or knowingly facilitate any discussions with third parties regarding other proposals to acquire us, as well as restrictions on our ability to respond to such proposals, subject to fulfillment of certain fiduciary requirements of our board of directors. The Merger Agreement also contains certain termination rights, including, under certain circumstances, a requirement for us to pay (or cause to be paid) to Sanofi a termination fee of $326.0 million.

These provisions might discourage an otherwise-interested third party from considering or proposing an acquisition of our company, even one that may be deemed of greater value to our stockholders than the Offer. Furthermore, even if a third party elects to propose an acquisition, the concept of a termination fee may result in that third-party’s offering a lower value to our stockholders than such third party might otherwise have offered.

Risks Related to Our Business

We are dependent on revenues from our products, ELOCTATE and ALPROLIX. If we or Sobi are unable to successfully commercialize ELOCTATE or ALPROLIX, our results of operations would be materially harmed.

Net sales of ELOCTATE and ALPROLIX represent substantially all of our revenues, and this concentration makes us dependent on these two products.  If we or our collaboration partner Sobi were to experience difficulty with the

commercialization of ELOCTATE or ALPROLIX, we could experience a significant reduction in revenue and may not be profitable.

The commercial success of ELOCTATE and ALPROLIX and our ability to generate revenues will depend on many factors, including the following:

Many of these factors are beyond our control, and success in any one of these factors will not guarantee success in any of the others. Accordingly, we cannot assure you that we will be able to continue to generate revenue through the sale of ELOCTATE or ALPROLIX.

If our hemophilia products fail to compete effectively, our business and market position would suffer.

Due to our dependence on sales of our hemophilia products, our business may be harmed if our products are unable to successfully compete in the hemophilia treatment market. The hemophilia treatment market is highly competitive. We compete in the marketing and sale of our products, and in the development of, and acquisition of rights to, new products and technologies.

We compete with biotechnology and biopharmaceutical companies that have greater financial, technological and other resources than we do. One or more of our competitors may benefit from significantly greater sales and marketing capabilities, may develop products that are accepted more widely than ours or may receive patent protection that dominates, blocks or adversely affects our product development or business.

Our ability to successfully compete with other hemophilia treatments may be adversely affected if our therapies are not regarded by patients, healthcare providers or payors as offering significant benefits and value as compared to other current treatments. If we fail to successfully educate the medical and scientific community about our products or if we fail to demonstrate that our products and technologies are differentiated from competing drugs, our business may be harmed. 

A number of companies, including some mid-to-large biopharmaceutical companies, such as Alnylam Pharmaceuticals, Bayer AG, Novo Nordisk, CSL Ltd., Pfizer Inc., Roche Holding AG, Sanofi Genzyme and Shire Plc., currently market or are pursuing the development of products for the treatment of hemophilia. We are also aware of other extended half‑life factor products as well as other new technologies, such as gene therapies, bi‑specific antibodies and RNA interference technologies, that are in development and, if successfully developed and approved, would compete with ELOCTATE or ALPROLIX. New therapies and technologies have the potential to transform the standard of care for hemophilia patients, and our products may be unable to compete successfully with such new therapies and technologies that may be developed and marketed by other companies.

Our reliance on third parties for our manufacturing and distribution processes increases the risk that we will not have available sufficient quantities of ELOCTATE and ALPROLIX, or that such quantities may not be available at an acceptable cost, which could delay, prevent or impair our commercialization efforts and materially harm our business, results of operations and financial condition.

We rely, and expect to continue to rely, on third parties for the commercial manufacture and distribution of ELOCTATE and ALPROLIX.  Biogen is currently our sole manufacturer and supplier of ELOCTATE and ALPROLIX. Biogen also relies on third parties with respect to certain aspects of its manufacturing process, including certain sole sources of raw materials. We also rely, and expect to continue to rely, on third parties to distribute our products, including global, regional, and specialty distribution and logistics providers.

Biogen and other third party providers are independent entities subject to their own unique operational and financial risks that are outside of our control. Any of these third parties may not perform their obligations in a timely and cost‑effective manner or in compliance with applicable regulations. A third party, for instance, may be unable or unwilling to increase production capacity commensurate with demand for our products. Finding alternative providers could take a significant amount of time and involve significant expense due to the specialized nature of these services.

We have entered into, and plan to enter into other agreements, with additional manufacturing partners. Establishing relationships with additional manufacturing partners could take a significant amount of time and involve significant expense. In the event we change manufacturing partners or the third parties providing raw materials, drug substance, drug product, fill finish, packaging, labeling and/or storage of our products, we may need to obtain approval from applicable regulatory authorities. Manufacturers are generally required to maintain compliance with current good manufacturing practices, or cGMPs, and other stringent requirements and are subject to inspections by the FDA and comparable agencies in other jurisdictions to confirm such compliance. These cGMP requirements and regulations are not prescriptive instructions on how to manufacture products, but rather a series of principles that must be observed during manufacturing; as a result, their implementation may not be clearly delineated and may present a challenging task as these regulatory requirements are complex, time‑consuming and expensive. Moreover, as our current products are biologics, they require processing steps that are more difficult than those required for most chemical pharmaceuticals. Any delay, interruption or other issues that arise in the manufacture, fill‑finish, packaging or storage of our products as a result of a failure of our facilities or the facilities or operations of third parties to pass any regulatory agency inspection could result in administrative sanctions by the FDA or other U.S. or non‑U.S. regulatory agencies. Significant noncompliance could also result in the imposition of monetary penalties or other civil or criminal sanctions. We cannot be certain that we could reach agreement with alternative providers or that the FDA or other regulatory authorities would approve our use of alternative manufacturers or providers on a timely basis.

Any adverse developments affecting our supply chain may result in development delays, shipment delays, inventory shortages, lot failures, product withdrawals or recalls or other interruptions in the commercial supply of our products and/or the timing of our clinical trials. In addition, loss or damage to a manufacturing facility or storage site due to a natural disaster or otherwise could adversely affect our ability to manufacture sufficient quantities of our products or to deliver products to meet customer demand or contractual requirements, any of which may result in a loss of revenue and other adverse business consequences. We may also have to take inventory write‑offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Such developments could increase our manufacturing or development costs, cause us to lose revenue or market share as patients and physicians turn to competing therapeutics, diminish our profitability or damage our reputation. Moreover, any failure of Biogen or other third party to supply ELOCTATE and ALPROLIX could cause us to breach our supply agreements to Sobi for these products, which may subject us to liability under those agreements and impair our relationship with Sobi.

Issues with product quality or safety, including the perception of such issues, could negatively affect our business, subject us to regulatory or other actions and cause a loss of confidence in us or our products.

Our success depends upon the quality and safety of our products. Even after a product is approved for marketing, new safety data may emerge from adverse event reports or post‑marketing studies. Previously unknown risks and adverse effects of our products may also be discovered in connection with unapproved or off‑label uses of our

products. Additionally, global regulatory authorities, at their discretion, may review and raise new or additional questions related to approved product information. This could result in changes to the approved product prescribing information or to the product approval itself. 

A quality or safety issue, including the perception of such issues, may result in one or more adverse events such as:

An inability to address any of these issues in an effective and timely manner may cause negative publicity, loss of physician and patient confidence in the company or its current or future products and may negatively impact physicians’ decisions to prescribe our products. These issues could also result in liabilities, loss of revenue, material write‑offs of inventory, withdrawal or voluntary recall of our products from the marketplace, delays or limitations in regulatory approvals, material impairments of intangible assets, goodwill and fixed assets, material restructuring charges, difficulty in successfully launching new products and other adverse impacts on our results of operations.

Our inability to maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business and results of operations.

Sales of ELOCTATE and ALPROLIX are dependent, in large part, on the availability and extent of coverage, pricing and reimbursement from government health administration authorities, private health insurers and other organizations. When a new biopharmaceutical product is approved, the availability of government and private insurance coverage for that product may be uncertain, as may be the pricing of the product and extent to which the product will be reimbursed. Failure to maintain adequate coverage, pricing or reimbursement for our products could have an adverse effect on our business and results of operations.

Pricing and reimbursement for our products may be adversely affected by a number of factors, including:

Our ability to set the price for our products can vary significantly from country to country and, as a result, so can the price of our products. For example, in some countries, pricing, coverage and level of reimbursement or funding of prescription drugs, are subject to governmental control, and we may be unable to timely or successfully negotiate coverage, pricing, and reimbursement on terms that are favorable to us.  Further, we are subject to risks due to the tendering process required in certain countries, as well as the comparison of dose pricing of our products against other available treatments. If we are unable to demonstrate to healthcare providers and payors the value of our products, our products may not be accepted or we may not secure adequate prices in a particular country. Our inability to secure

adequate prices in a particular country may limit the marketing of our products within that country, and may also adversely affect our ability to obtain acceptable prices in other markets. This may create the opportunity for third party cross‑border trade or influence our decision to sell or not to sell a product in a particular country, thus adversely affecting our geographic expansion plans and revenues.

Pricing for therapies and other health care costs are under significant scrutiny in the markets in which our products are prescribed and continue to be subject to intense political and societal pressures, which we anticipate will continue and escalate. For example, there is significant discussion and proposed legislation in the U.S. designed to bring more transparency to drug pricing, review of relationships between pricing and manufacturer patient programs, and reform around government program reimbursement methodologies.  We cannot predict the extent to which our business may be affected by these or other potential future legislative or regulatory developments.  However, future price controls or other changes in pricing regulation or negative publicity related to our product pricing or the pricing of pharmaceutical drugs generally could restrict the amount that we are able to charge, which would adversely affect our revenue and results of operations.

If we are unable to obtain and maintain adequate protection for our intellectual property and other proprietary rights, or if we are unable to avoid violation of the intellectual property or proprietary rights of others, we may be subject to liability, the operation of our business may be interrupted or our business or prospects may be otherwise harmed.

Our commercial success depends in part on our ability to obtain and defend patent and other intellectual property rights that are important to the development, manufacture and commercialization of our products and product candidates. The degree of patent protection that will be afforded to our products and processes in the United States and in other important non‑U.S. markets remains uncertain and is dependent upon the scope of protection decided upon by the patent offices, courts and lawmakers in those countries. We can provide no assurance that we will successfully obtain or preserve patent protection for the technologies incorporated into our products and processes, or that the scope of patent protection obtained will be sufficient to protect our commercial interests in all countries where we conduct business. If we cannot prevent others from exploiting our inventions, we will not derive the benefit from them that we currently expect.

We rely on third party licenses for certain aspects of our products and product candidates, including for the treatment of hemophilia and cold agglutinin disease.  If an agreement with a third party was to be terminated or if we otherwise lost our rights to such technology, our ability to develop, manufacture and commercialize products and product candidates could be adversely affected, and could materially harm our business prospects.

We also rely on regulatory exclusivity for protection of our products. Implementation and enforcement of regulatory exclusivity varies widely from country to country. Failure to qualify for regulatory exclusivity, or failure to obtain or maintain the extent or duration of such protections that we expect for our products in each of these markets due to challenges, changes of interpretations in the law or otherwise, could affect the revenue for our products, our decision on whether to market our products in a particular country or countries or could otherwise have an adverse impact on our results of operations.

Additionally, we rely in part on confidentiality and non‑use agreements with our employees, consultants, collaborators and other business partners to protect our proprietary technology and processes. If any of these individuals or entities breaches their confidentiality, non‑use or similar agreements with us, we may not have adequate remedies for that breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors and even patented by them. If that happens, the potential competitive advantages provided by our intellectual property may be adversely affected. We may then need to license such competing technologies, and we may not be able to obtain licenses on reasonable terms, if at all, which could cause material harm to our business. Moreover, to the extent that our employees, consultants, parties to collaboration agreements and other business partners use intellectual property owned by others in their work for the company, disputes may arise as to the rights in related or resulting know‑how and inventions.

Our success also depends in part on our, and on the people with whom we collaborate and do business, not infringing patents and proprietary rights of others, and not breaching any licenses or other agreements that we or they

have entered into with regard to our technologies, products and business. We cannot be certain that patents have not or will not be issued to others that would block our ability to obtain patents or to operate our business as we would like or at all. There may be patents in some countries that, if valid and if we are unsuccessful in circumventing or acquiring rights to them, could block our ability to commercialize products in those countries. There also may be claims in patent applications filed in some countries that, if granted and valid, and if we are unable to circumvent or license them, could also block our ability to commercialize products or processes in those countries.

Litigation and other disputes over intellectual property and other proprietary rights in the pharmaceutical and biotechnology industry is inherently costly and unpredictable.

Litigation, interferences, oppositions, inter partes reviews or other proceedings are, and may in the future be, necessary in some instances to determine the validity and scope of certain of our proprietary rights, and in other instances to determine the validity, scope or non‑infringement of certain patent rights claimed by third parties to be pertinent to the manufacture, use or sale of our products. Patent‑related claims could include challenges to the scope and validity of our patents on products or processes as well as allegations that our products infringe patents held by competitors or others. We may also face challenges to regulatory or patent protections covering our products by manufacturers of biosimilars that may choose to launch or attempt to launch their products before the expiration of our regulatory or patent exclusivity.

In July 2017, we filed complaints in the U.S. District Court for the District of Delaware and the U.S. International Trade Commission (“ITC”) against CSL Behring LLC, CSL Behring GmbH, and CSL Behring Recombinant Facility AG (“CSL Behring”), alleging that the use of Idelvion®, CSL Behring’s [Coagulation Factor IX (Recombinant), Albumin Fusion Protein], infringes three of our U.S. patents. The District Court complaint seeks injunctive relief and damages. The District Court action was stayed pending final determination in the ITC. Our ITC complaint requested that the ITC issue a limited exclusion order and cease and desist orders covering CSL Behring’s alleged infringing articles, and impose a bond for imports of such articles made during the applicable review period. On February 6, 2018, we filed a motion to terminate the ITC investigation in order to proceed without further delay in the District Court.  Patent enforcement proceedings can be expensive and time consuming, with no assurance of success.

The disposition of claims or proceedings is unpredictable and, regardless of the merits or the outcome, may be protracted, expensive and distracting to management. Moreover, the disposition and outcome of any such claims or proceedings could, among other things:

In addition, payments under any licenses that we are able to obtain would reduce our profits derived from the covered products and services. Furthermore, many of our collaboration agreements, including with Sobi, require us to indemnify the collaboration parties for third party intellectual property infringement claims, which would increase the cost to us of any such claim. Any of these adverse effects may be material and, consequently, may adversely impact our cash flow, financial position and results of operations.

Our presence in international markets subjects us to certain risks of doing business in such markets, which could adversely impact our business, results of operations and financial condition.

Our presence in international markets subjects us to many risks that could adversely affect our business and revenues, such as:

We cannot guarantee that our efforts to initiate or expand sales in these markets will succeed. Some non‑U.S. markets may be especially vulnerable to periods of financial instability or may have very limited resources to spend on health care. To successfully implement our strategy in non‑U.S. markets, we must attract and retain qualified personnel or may be required to increase our reliance on third party distributors within those markets. In addition, many of the countries in emerging markets have currencies that fluctuate substantially. If such currencies devalue and we cannot offset the devaluations, our financial performance within those countries could be adversely affected. In addition, price and currency exchange controls, limitations on participation in local enterprises, expropriation, nationalization and other governmental actions could affect our business and results of operations in these markets.

In addition, our non‑U.S. operations are subject to regulation under U.S. law. For example, the U.S. Foreign Corrupt Practices Act (FCPA) prohibits U.S. companies and their representatives from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business abroad. In many countries, the health care professionals we regularly interact with may meet the definition of a foreign government official for purposes of the FCPA. Failure to comply with U.S. or non‑U.S. laws could result in various adverse consequences, including: possible delay in approval or refusal to approve a product; recalls, seizures or withdrawal of an approved product from the market; disruption in the supply or availability of our products or suspension of export or import privileges; the imposition of civil or criminal sanctions; the prosecution of executives overseeing our international operations; and damage to our reputation. Any significant impairment of our ability to sell products outside of the U.S. could adversely impact our business and financial results.

Development of our product candidates is expensive and uncertain. If we are unable to successfully develop and test our product candidates, our business, financial condition, results of operations and prospects will be harmed.

A part of our business strategy is the continued development and support of our marketed products and our product pipeline programs. Clinical trials and the research and development of drug treatments are subject to numerous risks and uncertainties and requires significant capital expenditures and management resources. Only a small percentage of product candidates that enter the development process ever receive regulatory approval. The process of conducting the preclinical and clinical testing required to establish safety and efficacy and obtain regulatory approval is expensive and uncertain and takes many years. The FDA and non‑U.S. regulatory agencies generally require pre‑clinical (animal) testing as well as multiple stages of clinical (human) testing before a product gains regulatory approval, and failure may occur at any stage of testing. It is possible that positive results in a trial may not be replicated in subsequent or confirmatory trials, and success in preclinical work or early stage clinical trials does not ensure that later stage or larger scale clinical trials will be successful or that regulatory approval will be obtained.

Our ability to commence and complete clinical trials may be delayed, and our existing trials may be stopped, due to various factors, including:

The occurrence of any of these events could result in significant costs and expenses and lost market opportunities, and could result in failure of a regulatory agency to grant approval of a product candidate in a timely manner, or at all.

Our product research and development efforts may be harmed if the third parties on whom we rely fail to perform satisfactorily. 

Our reliance on third parties for aspects of the research and development process subjects our product research and development efforts to risk of failure or delay if such third parties do not perform satisfactorily. For example, we rely, and expect to continue to rely, on third parties to store and distribute drug supplies for our clinical trials as well as contract research organizations (CROs), clinical data management organizations, medical institutions and clinical investigators to conduct and manage our preclinical and clinical trials and to accurately report their results. Reduced control over these activities may impact our ability to control the timing, conduct, expense, reliability and quality of our clinical trials, but does not relieve us of our regulatory responsibility for trials that we sponsor. For example, we remain responsible for ensuring that each of our clinical trials is conducted in accordance with the general investigational plan

and protocols for the trial as well as regulatory standards such as current cGCPs. Failure to fully comply with the study protocol or applicable regulations or regulatory standards could result in the clinical data generated in those studies being deemed unreliable. This failure may also result in the rejection of our product candidates by the FDA or a non‑U.S. regulatory agency, or may result in our having to conduct additional audits or require additional clinical studies, which would delay our development programs, require us to incur additional costs and could substantially harm our business and financial condition. If the third parties we rely on for research and development activities do not successfully carry out their contractual duties, do not meet expected deadlines, experience work stoppages, terminate their agreements with us, need to be replaced or do not conduct our clinical trials in accordance with regulatory requirements or our stated protocols, we may need to enter into new arrangements with alternative third parties, which could be difficult, costly or impossible. As a result, our clinical trials may be extended, delayed, terminated or may need to be repeated.

We also rely on third party contract manufacturers and suppliers for the materials we require for our clinical trials.  Reliance on third parties for manufacturing and supply of materials for our clinical trials subject us to risks similar to those we face due to our reliance on third parties for manufacturing of our commercial products.    If we suffer any manufacturing or supply disruptions, due to among other things, shortages in product raw materials, labor or technical difficulties, regulatory inspections or restrictions, shipping or customs delays or any other performance failure by any third party manufacturer on which we rely, our clinical trials may be adversely affected, including the timing and completion of the trials. 

The occurrence of any of these events could result in significant costs and expenses and lost market opportunities, and could result in failure of a regulatory agency to grant approval of a product candidate in a timely manner, or at all.

If our business development activities are unsuccessful, our business could suffer and our financial performance could be adversely affected.

We have engaged and intend to continue to engage in business development activities, including evaluating potential acquisitions, strategic alliances, collaborations, technology licensing arrangements and other opportunities. An example of these activities includes our recent acquisition of True North Therapeutics (now known as Bioverativ USA Inc.), through which we acquired rights to BIVV009, a monoclonal antibody in development for cold agglutinin disease, a rare and chronic autoimmune hemolytic condition that often leads to severe anemia.

Our business development activities may require a substantial investment of our resources, with no certainty of success. Further, our success in developing products or expanding our product portfolio from such business development activities will depend on a number of factors, including:

If we are unsuccessful in our business development activities, we may be unable to grow or meet our financial targets and our business and financial performance could be adversely affected.

Further, even if we are able to successfully identify and complete acquisitions and other strategic alliances, licenses and collaborations, we may face unanticipated costs or liabilities in connection with the transaction or we may not be able to integrate them or take full advantage of them or otherwise realize the benefits that we expect.

We depend on relationships with collaborators and other third parties for revenue, and for the development, regulatory approval, commercialization and marketing of certain products, which are outside our full control. If our collaborative efforts are unsuccessful, our commercialization strategies or product development may be delayed, which could have an adverse impact on our business, prospects and results of operations.

We rely, and expect to continue to rely, on a number of significant collaborative and other third party relationships for revenue, and for the development, regulatory approval, commercialization and marketing of our products and product candidates. These third parties may include other biotechnology and biopharmaceutical companies, academic and research institutions, governments and government agencies and other public and private research organizations. For example, in addition to our collaboration with Sobi, we are pursuing programs with other third parties in hemophilia using different technologies, including XTEN technology, gene therapy, gene editing, and non‑factor modalities. We also work with third parties to develop products and product candidates in other rare blood disorders.

Reliance on collaborative and other third party relationships subjects us to a number of risks, including:

Given these risks, there is considerable uncertainty regarding the success of our current and future collaborative efforts. If these efforts fail, our product development or commercialization of new products could be delayed or revenues from products could decline.

We may not be able to access the capital and credit markets on terms that are favorable to us.

We may need to raise additional capital to supplement our existing funds and cash generated from operations for working capital, capital expenditures, and strategic investments. Funding needs may shift and the amount of capital we may need depends on many factors, such as the cost of any new acquisition or collaborative, licensing or other commercial relationships that we may establish, and the progress, timing and scope of our research and development. The capital and credit markets can be volatile and, as a result, we may not receive additional funding when we need it or funding may only be available on unfavorable terms.

If we or third parties with whom we do business fail to comply with the extensive legal and regulatory requirements affecting the health care industry, we could face increased costs, penalties and harm to our business.

Our activities, and the activities of our collaborators, distributors and other third party providers, are subject to extensive government regulation and oversight both in the U.S. and in non‑U.S. jurisdictions.

To be approved for marketing, a potential product must undergo lengthy and rigorous testing and other extensive, costly and time‑consuming procedures mandated by the FDA and non‑U.S. regulatory authorities. Satisfaction of these regulatory requirements typically takes many years. Moreover, regulatory oversight continues to apply after product marketing approval and covers, among other things, testing, manufacturing, distribution, quality control, labeling, advertising, promotion, risk mitigation and adverse event reporting requirements. Our facilities, or those of third parties on which we rely, must be licensed prior to production and remain subject to inspection from time to time thereafter. Separately, if previously unknown problems occur with regard to our marketed products, any of our products may have to be withdrawn from the market or subject to restrictions. Regulatory agencies may also require additional clinical trials or testing for our products, and our products may be recalled or may be subject to reformulation, changes in labeling, warnings to the public and negative publicity.

Further, even if we are successful in gaining regulatory approval of any of our product candidates, the extent to which we are able to commercialize the product may be less than we anticipate. Regulatory authorities may grant marketing approval that is more restricted than anticipated. These restrictions may include limiting indications to narrow patient populations and imposing safety monitoring, educational requirements and risk evaluation and mitigation strategies (REMS). In addition, if we seek to expand or change the use of any of our marketed products, those changes may be subject to vigorous review and include multiple regulatory submissions, and approvals are not certain.

In addition to FDA and related regulatory requirements, we are subject to health care “fraud and abuse” laws governing our interactions in the U.S. and non‑U.S. jurisdictions with physicians or other health care providers that prescribe or purchase our products. In the United States, these laws include the federal False Claims Act, the anti‑kickback provisions of the federal Social Security Act, the Physician Payment Sunshine provisions, and other state and federal laws and regulations. In both the United States and other jurisdictions, health care companies such as ours are facing heightened scrutiny of their relationships with health care providers from anti‑corruption enforcement officials and private individuals. Many biotechnology and biopharmaceutical companies have been the target of lawsuits and investigations alleging violations of government regulation, including claims asserting submission of incorrect pricing information, impermissible off‑label promotion of biotechnology and biopharmaceutical products, payments intended to influence the referral of health care business, submission of false claims for government reimbursement, antitrust violations or violations related to environmental matters. There also recently has been enhanced scrutiny of company‑sponsored patient assistance programs, including insurance premium and co‑pay assistance programs and donations to third party charities that provide such assistance. If we, or our vendors or donation recipients, fail to comply with relevant laws, regulations or government guidance in the operation of these programs, we could be subject to significant fines or penalties. Our risks under health care fraud and abuse laws may be heightened as we continue to expand our global operations and if we enter new therapeutic areas with different patient populations, which may have product distribution methods distinct from those we currently utilize.

Violations of governmental regulation, such as a failed inspection or a failure in our adverse event reporting system, or any health care fraud and abuse law may be punishable by criminal, civil and administrative sanctions against us as well as against executives overseeing our business. These may include adverse inspection reports; refusal to grant approvals or licenses; warning letters; fines and civil monetary penalties; withdrawal of regulatory approval or licenses; interruption of production; operating restrictions; product recall or seizure; injunctions; criminal prosecution and exclusion from participation in government programs, including Medicare and Medicaid, as well as against executives overseeing our business. In addition to penalties for violation of laws and regulations, we could be required to repay amounts we received from government payors, or pay additional rebates and interest if we are found to have miscalculated the pricing information we have submitted to the government. We cannot ensure that our compliance controls, policies and procedures will, in every instance, protect us from acts committed by our employees, collaborators, partners or third party providers that would violate the laws or regulations of the jurisdictions in which we operate. Whether or not we have complied with the law, an investigation into alleged unlawful conduct could increase our expenses, damage our reputation, divert management time and attention and adversely affect our business. Any of these actions could cause a loss of confidence in us and our products, which could adversely affect our sales. Even if it is later determined that we are not in violation of these laws, we may be faced with negative publicity, incur significant expenses defending our position and have to divert significant management resources from other matters.

Our business and results of operations may be adversely affected by current and potential future health care reforms.

In the United States, federal and state legislatures, health agencies and third party payors continue to focus on containing the cost of health care. Legislative and regulatory proposals and enactments to reform health care insurance programs could significantly influence the manner in which our products are prescribed and purchased. We continue to face uncertainties as a result of federal and administrative efforts to repeal, substantially modify or invalidate or replace some or all of the provisions of the Patient Protection and Affordable Care Act (PPACA). There is no assurance that the PPACA, as currently enacted or as amended or replaced in the future, will not adversely affect our business and financial results, and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business. 

There is also significant economic pressure on U.S. state budgets that may result in states increasingly seeking to achieve budget savings through mechanisms that limit coverage or payment for our drugs. Some states have considered legislation and ballot initiatives that would control the prices of drugs, including laws to allow importation of biotechnology and biopharmaceutical products from lower cost jurisdictions outside of the United States and laws intended to impose price controls on state drug purchases. State Medicaid programs are increasingly requesting manufacturers pay supplemental rebates and requiring prior authorization by the state program for use of any drug for which supplemental rebates are not paid. Government efforts to reduce Medicaid expenses may lead to increased use of managed care organizations by Medicaid programs. This may result in managed care organizations influencing prescription decisions for a larger segment of the population and a corresponding constraint on prices and reimbursement for our products.

In the European Union and some other non‑U.S. markets, the government provides health care at low cost to consumers and regulates biotechnology and biopharmaceutical prices, patient eligibility or reimbursement levels to control costs for the government‑sponsored health care system. Many countries have announced or implemented measures to reduce health care costs to constrain their overall level of government expenditures. These measures vary by country and may include, among other things, patient access restrictions, suspensions on price increases, prospective and possibly retroactive price reductions and other recoupments and increased mandatory discounts or rebates, recoveries of past price increases and greater importation of drugs from lower‑cost countries. These measures have negatively impacted our revenues and may continue to adversely affect our revenues and results of operations in the future.

If we fail to attract and retain key personnel, our business may suffer.

Our success depends in large part upon the leadership and performance of our management team and other key employees. Operating as an independent company demands a significant amount of time and effort from our management and other employees and may give rise to increased employee turnover. If we lose the services of members of our management team or other key employees, we may not be able to successfully manage our business or achieve our business objectives.

Our ability to attract, recruit and retain such talent will depend on a number of factors, including the hiring practices of our competitors, the performance of our commercial products and pipeline programs, our compensation and benefits, work location and work environment and economic conditions affecting our industry generally, and, as described above, uncertainty as a result of the potential merger with Sanofi. If we cannot effectively hire and retain qualified employees, our business, results of operations and prospects could suffer.

A breakdown or breach of our or third parties’ technology systems could subject us to liability or interrupt the operation of our business.

We are increasingly dependent upon technology systems and data, many of which are new or unfamiliar systems. Our intellectual property, computer systems, other proprietary technology and other sensitive company data is potentially vulnerable to loss, damage or misappropriation from system malfunction, computer viruses, unauthorized access to data or misappropriation or misuse thereof by those with permitted access and other events. Likewise, data privacy or security breaches by individuals authorized to access our technology systems or others may pose a risk that sensitive data, including intellectual property, trade secrets or personal information belonging to us, our patients,

customers or other business partners, may be exposed to unauthorized persons or to the public. The increasing use and evolution of technology, including cloud‑based computing, creates additional opportunities for the unintentional dissemination of information and the intentional destruction of confidential information stored in the company’s systems or in non‑encrypted portable media or storage devices. Cyber attacks continue to increase in their frequency, sophistication and intensity. While we believe we take appropriate security measures to reduce these risks to our intellectual property, data and information technology systems, there can be no assurance that our efforts will prevent breakdowns, breaches, cyber incidents or other events. Such events could have a negative effect on our reputation, business, financial condition or results of operations. Further, the misappropriation or other loss of our intellectual property from any of the foregoing could have an adverse effect on our competitive position and may cause us to incur substantial litigation costs.

Our business involves environmental risks, which include the cost of compliance and the risk of contamination or injury, which could harm our business.

Our business and the business of several of our third party contractors involve the controlled use of hazardous materials, chemicals, biologics and radioactive compounds. Although we believe that our and their safety procedures for the handling and disposing of such materials comply with state, federal and non‑U.S. laws and standards, there will always be the risk of accidental contamination or injury. If we were to become liable for an accident, or if a facility in which our products or product candidates were manufactured suffered an extended shutdown, we could incur significant costs, damages or penalties that could harm our business. Manufacturing, distribution and disposal of our products and product candidates also requires compliance with environmental laws and may require permits from government agencies, including governmental authorizations or permits for water supply, wastewater discharge and waste disposal. If we or our contract parties do not obtain or comply with appropriate permits and other requirements of environmental laws, we or they could incur significant penalties and other costs and limits on manufacturing volumes that could harm our business.

Significant legal proceedings may adversely affect our results of operations or financial condition.

We are subject to the risk of litigation, derivative claims, securities class actions, regulatory and governmental investigations and other proceedings, including proceedings arising from investor dissatisfaction with us or our performance. If any claims were brought against us and resulted in a finding of substantial legal liability, the finding could materially adversely affect our business, financial condition or results of operations or cause significant reputational harm to us, which could seriously adversely impact our business. Allegations of improper conduct by private litigants or regulators, regardless of veracity, may harm our reputation and adversely impact our ability to grow our business.

Risks Related to the Separation

We face a number of risks as a standalone, independent public company following our separation from Biogen.

Prior to our separation from Biogen in February 2017, we were fully part of Biogen’s organizational structure, including from an operational and financial perspective.  Following the separation, we have worked to develop our own systems, processes and operations, though we continue to rely on Biogen for certain activities.  As a result of the separation, we remain subject to risks as a standalone, independent public company.  These risks include the following:

These restrictions may limit our ability to pursue certain strategic transactions or other transactions that we may believe to otherwise be in the best interests of our stockholders or that might increase the value of our business. In addition, under the tax matters agreement, we will be required to indemnify Biogen against any such tax liabilities as a result of the acquisition of our stock or assets, even if we do not participate in or otherwise facilitate the acquisition. In connection with the transactions contemplated by the Merger, we entered into a letter agreement with Biogen and Sanofi to waive provisions under the Tax Matters Agreement that would have otherwise prohibited us from entering into the Merger Agreement.  Further, so long as we receive the tax opinion referenced in the letter agreement, Biogen has agreed to waive the restrictions as they apply to the consummation of the Merger.  See also the risks described under the heading “—Risks Related to the Merger”.

Risks Related to Our Common Stock

The market price for our common stock may fluctuate widely.

The market price of our shares of common stock may fluctuate widely, depending upon many factors, some of which are beyond our control, including the following:

Stock markets in general often experience volatility that is unrelated to the operating performance of a particular company. These broad market fluctuations may adversely affect the trading price of our shares of common stock. You may not be able to resell your shares of common stock following periods of volatility because of the market’s adverse reaction to volatility.  When the market price of a company’s common stock drops significantly, stockholders often institute securities class action lawsuits against the company.  This type of lawsuit against us could cause us to incur substantial costs and could divert the time and attention of management and other resources.

Your percentage ownership in the company may be diluted in the future.

In the future, your percentage ownership in the company may be diluted because of equity issuances for acquisitions, capital market transactions or otherwise, including equity awards that we grant to our directors, officers and employees. Such awards will have a dilutive effect on our earnings per share, which could adversely affect the market price of our common stock. From time to time, we issue stock options or other share‑based awards to employees under our employee benefits plans.

In addition, our amended and restated certificate of incorporation authorizes us to issue, without the approval of stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over the company’s common stock respecting dividends and distributions, as the board of directors generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, we could grant the holders of preferred stock the right to elect some number of directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of the common stock.

We do not expect to declare any dividends in the foreseeable future.

We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, stockholders must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on the value of their shares of our common stock.

Provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt.

Our amended and restated certificate of incorporation and amended and restated bylaws contain certain provisions that could have the effect of rendering more difficult or discouraging an acquisition deemed undesirable by our board of directors. For example, our corporate governance documents include provisions:

These provisions, alone or together, could delay hostile takeovers and changes in control of our company or changes in our management.

As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the Delaware General Corporation Law (DGCL), which prevents some stockholders holding more than 15% of our outstanding common stock from engaging in certain business combinations without approval of the holders of substantially all of our outstanding common stock. Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

In addition, an acquisition or further issuance of our stock could trigger the application of Section 355(e) of the Code.  Under the tax matters agreement we entered into with Biogen in connection with the separation, we would be required to indemnify Biogen for any resulting taxes, and this indemnity obligation might discourage, delay or prevent a change of control that our stockholders may consider favorable.  In connection with the transactions contemplated by the Merger, we entered into a letter agreement with Biogen and Sanofi to waive provisions under the Tax Matters Agreement that would have otherwise prohibited us from entering into the Merger Agreement.  Further, so long as we receive the tax opinion referenced in the letter agreement, Biogen has agreed to waive the restrictions as they apply to the consummation of the Merger.  See also the risks described under the heading “—Risks Related to the Merger”.

Our amended and restated certificate of incorporation designates the state courts of the State of Delaware, or, if no state court located in the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against us and our directors and officers.

Our amended and restated certificate of incorporation provides that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, will be the sole and exclusive forum for:

This exclusive forum provision may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against the company and our directors and officers. Alternatively, if a court outside of Delaware were to find this exclusive forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, operating results or financial condition.

Item 1B.  Unresolved Staff Comments

None.

Item 2. Properties

Below is a summary of our leased properties as of December 31, 2017.

United States

In Waltham, Massachusetts, we lease approximately 125,000 square feet of real estate space, consisting of a building that houses a research laboratory and general office space, pursuant to a ten-year lease. We also lease space in South San Francisco, California, for general office, research and development, laboratory uses.

International

We sublease office space from Biogen in Canada and Japan. In addition, we lease office space in Australia, Brazil and Colombia. Our international lease agreements expire at various dates through the year 2020.

Item 3. Legal Proceedings

For a discussion of legal matters as of December 31, 2017, please read Note 16, Litigation to our audited consolidated financial statements included in this report, which is incorporated into this item by reference.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market and Stockholder Information

Our common stock trades on the NASDAQ Global Select Market under the symbol “BIVV.” A “when issued” trading market for our common stock began on the NASDAQ Global Select Market on January 12, 2017, and “regular way” trading of our common stock began on February 2, 2017. The following table shows the high and low sales price for our common stock as reported by The NASDAQ Global Select Market for each quarter in the years ended December 31, 2017:

As of February 9, 2018, there were approximately 663 stockholders of record of our common stock.

Dividends

We do not expect to pay a regular cash dividend. The payment of any dividends in the future, and the timing and amount thereof, is within the discretion of our board of directors. Our board of directors’ decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, industry practice, legal requirements, regulatory constraints and other factors that our board of directors deems relevant. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and on our access to the capital markets. We cannot guarantee that we will pay a dividend in the future or continue to pay any dividends if and when we commence paying dividends.

Item 6. Selected Financial Data

The following table sets forth Bioverativ’s selected financial information derived from its (i) audited consolidated financial statements as of and for the year ended December 31, 2017; and (ii) audited consolidated financial statements for the hemophilia business of Biogen for the years ended December 31, 2016, 2015, 2014 and 2013. For the periods prior to the separation, the historical consolidated financial statements have been prepared on a carve‑out basis for the purpose of presenting what our historical financial position, results of operations and cash flows would have been for the periods presented had Bioverativ operated the hemophilia business as a standalone entity. Bioverativ did not operate as a standalone entity in the past and accordingly the selected historical financial data presented herein is not necessarily indicative of the company’s future performance and does not reflect what the company’s performance would have been had Bioverativ operated as an independent, publicly traded company during the periods presented, and accordingly should not be relied upon as an indicator of our future results.

The selected financial information should be read in conjunction with Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and the audited consolidated financial statements and the corresponding notes included elsewhere in this report.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the audited consolidated financial statements and the corresponding notes included elsewhere in this report. This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward‑looking statements. The matters discussed in these forward‑looking statements are subject to risk, uncertainties and other factors that could cause actual results to differ materially from those made, projected or implied in the forward‑looking statements. Please see Item 1A. Risk Factors and “Note Regarding Forward‑Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these statements.

On May 3, 2016, Biogen announced its plans to separate into two independent, publicly traded companies. For purposes of the following discussion, Bioverativ refers to the hemophilia business of Biogen prior to the separation. To accomplish this separation, Biogen created a new company, Bioverativ Inc., to be the parent company for the hemophilia business. Bioverativ Inc. was incorporated in the State of Delaware on August 4, 2016. To effect the separation, Biogen made a 2‑1 pro rata distribution of Bioverativ Inc.’s common stock to Biogen’s stockholders. The distribution occurred on February 1, 2017 and since the distribution, Bioverativ Inc. has operated as an independent, publicly traded company.

Overview

We are a global biotechnology company focused on the discovery, research, development and commercialization of innovative therapies for the treatment of hemophilia and other blood disorders. We have two marketed products, ELOCTATE [Antihemophilic Factor (Recombinant), Fc Fusion Protein] and ALPROLIX [Coagulation Factor IX (Recombinant), Fc Fusion Protein], and an innovative product pipeline.

Our business strategy is aimed at improving treatment and standards of care for hemophilia and other blood disorder patients by further increasing sales and market share of our marketed products, advancing treatment attributes for our marketed products, leveraging our internal expertise to develop new products that meaningfully advance treatment and opportunistically pursuing strategic alliances and tactical acquisitions.

For the periods prior to the separation, the audited consolidated financial statements have been prepared on a carve‑out basis for the purpose of presenting our historical financial position, results of operations and cash flows. We did not operate on a standalone basis prior to the separation.

Our revenues are primarily derived from sales of ELOCTATE and ALPROLIX in the United States, Japan and Canada. We also earn revenue from the supply of ELOCTATE and ALPROLIX to Sobi and royalties on sales of ELOCTATE and ALPROLIX by Sobi in its commercialization territory, which is Europe, Russia and certain countries

in Northern Africa and the Middle East. See Item 1. Business—Our Development and Commercialization Arrangements with Sobi.

Merger Agreement with Sanofi

On January 21, 2018, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), with Sanofi (“Parent” or “Sanofi”), a French société anonyme, and Blink Acquisition Corp. (“Merger Sub”), a Delaware corporation and indirect wholly-owned subsidiary of Parent.  See Note 21, Subsequent Events to our audited consolidated financial statements included in this Form 10-K.

Pursuant to the terms of Merger Agreement, upon the terms and subject to the conditions thereof, Merger Sub commenced a tender offer on February 7, 2018 (the “Offer”), to acquire all of the outstanding shares of common stock of the Company, par value $0.001 per share (the “Shares”), at a purchase price of $105.0 per Share in cash, net of applicable withholding taxes and without interest (the “Offer Price”).  Unless extended by Merger Sub in accordance with the Merger Agreement, the offering period for the Offer will expire at 11:59 p.m. (New York City time), on March 7, 2018.

As soon as practicable following (but on the same day as) the consummation of the Offer and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger as an indirect wholly-owned subsidiary of Parent.  The Merger will be governed by Section 251(h) of the Delaware General Corporation Law (“DGCL”) and effected without a vote of the Company’s stockholders. 

Financial Results Overview—Years Ended December 31, 2017, 2016 and 2015

Refer to “—Results of Operations—Years Ended December 31, 2017, 2016 and 2015” section below for further discussion of our results.

Commercial Highlights

The United States, Japan and Canada are currently the principal markets outside of Sobi’s commercialization territory for our marketed products. We expect to continue to drive revenue growth and increased patient share of ELOCTATE and ALPROLIX by expanding into new geographies and continuing to penetrate our existing geographies. In addition, in 2016 we began earning royalties from Sobi on sales of ELOCTA and ALPROLIX following Sobi’s commercial launch of ELOCTA and ALPROLIX in the European Union.

Business Development Highlights

True North Acquisition - On June 28, 2017, we acquired all of the outstanding equity of True North Therapeutics, Inc. (True North), a clinical stage biopharmaceutical company focused on the discovery, development and commercialization of first-in-class product candidates for complement-mediated diseases. At closing, we paid True North equityholders upfront consideration of $395.7 million plus assumed cash. True North equityholders are also eligible to receive additional payments of up to $425.0 million contingent on the achievement of future development, regulatory and sales milestones. With the acquisition, we added BIVV009 (formerly TNT009), a first-in-class monoclonal antibody for cold agglutinin disease (CAgD), to our pipeline. BIVV009 has received breakthrough therapy designation from the FDA for the treatment of hemolysis in patients with primary CAgD, and orphan drug designation from the FDA and the European Medicines Agency. Late-stage clinical development planning for BIVV009, including a

phase 3 registrational program, is underway. Refer to Note 3, Acquisition of True North Therapeutics, Inc., for further discussion.

Bicycle Therapeutics Research Collaboration - In August 2017, we entered into a research collaboration agreement with Bicycle Therapeutics (Bicycle), a biotechnology company that is pioneering a new class of medicines based on its novel bicyclic peptide (Bicycle®) product platform. The collaboration will focus on the discovery, development and commercialization of therapies for hemophilia and sickle cell disease. Under this agreement, Bicycle will be responsible for leading initial discovery activities through lead optimization to candidate selection for three programs. Bioverativ will lead preclinical and clinical development, as well as subsequent marketing and commercialization efforts. Under the agreement, we paid Bicycle a $10.0 million upfront payment. Bicycle is eligible to receive up to $410.0 million related to development, regulatory and commercialization milestones as well as tiered single to low double-digit royalties related to product sales. Bioverativ will also reimburse Bicycle for internal and external program-related costs. 

Research and Development Highlights

IND for BIVV001 - On June 12, 2017, we announced that the U.S. Food and Drug Administration (FDA) accepted our Investigational New Drug (IND) application for BIVV001 (also known as rFVIIIFc-VWF-XTEN), an investigational factor VIII therapy designed to potentially extend protection from bleeds with prophylactic dosing of once weekly or longer for people with hemophilia A.

IND for ST-400 - In October 2017, we and Sangamo announced that the FDA accepted the IND application for ST-400, a gene-edited cell therapy candidate for people with transfusion-dependent beta-thalassemia. The IND enables Sangamo to initiate a Phase 1/2 clinical trial to assess the safety, tolerability and efficacy of ST-400 in adults with transfusion-dependent beta-thalassemia.

We expect to make substantial investments in research and development in support of our ongoing proprietary research programs and through collaborations with third parties for the development of new products and therapies. Research and development expenses were $224.6 million, $210.1 million and $236.9 million, or 19.2%, 23.7% and 42.3% of total revenue, respectively, during the years ended December 31, 2017, 2016 and 2015.

Our overall research and development strategy includes the continued pursuit of collaborations and strategic relationships with third parties that are developing new products and therapies. These collaborations and relationships generally involve the granting or obtaining development and commercialization rights to or from third parties in exchange for an upfront payment upon execution of the agreement and potential future payments related to the achievement of development, regulatory approval or commercial milestones, as well as royalties. Our most significant collaboration is our relationship with Sobi for the development and commercialization of ELOCTATE and ALPROLIX. Please refer to Note 4, Collaborations, to the audited consolidated financial statements included elsewhere in this report for additional details on our collaboration with Sobi.

Key Factors Affecting Results of Operations

Separation from Biogen on February 1, 2017

Bioverativ separated from Biogen on February 1, 2017 as a result of a special dividend distribution of all the outstanding shares of common stock of Bioverativ to Biogen stockholders. The distribution was made to Biogen stockholders of record as of the close of business on January 17, 2017, who received one share of Bioverativ common stock for every two shares of Biogen common stock held as of such date. As a result of the distribution, Bioverativ is now an independent public company.

Separation from Biogen

We did not operate as an independent, standalone company before the completion of the separation, but rather operated as a part of Biogen’s overall business. Accordingly, financial information for periods prior to the separation are

shown on a carve-out basis for the hemophilia business as part of Biogen. There are limitations inherent in the preparation of all carve‑out financial statements due to the fact that the business was previously part of a larger organization. The basis of preparation included in the notes to our audited consolidated financial statements included in this Form 10-K provides a detailed description of the treatment of historical transactions prior to the separation. Our historical net income for periods prior to the separation may not be indicative of future results. Our historical net income for periods prior to the separation has been most notably impacted by the following consequences of carve‑out accounting and the separation:

Results of Operations—Years Ended December 31, 2017, 2016 and 2015

Revenue

Total Revenues

Revenues totaled $1,168.5 million in 2017, an increase of 31.7% over 2016. In 2017, product revenues in the United States totaled $905.7 million, an increase of 27.0% over 2016 and sales outside of the United States totaled $183.4 million, an increase of 37.5% over 2016. Collaboration revenue totaled $79.4 million in 2017, an increase of 94.6% over 2016, due primarily to Sobi’s continued launch of ELOCTATE and ALPROLIX in additional markets in 2017.

Revenues totaled $887.4 million in 2016, an increase of 58.4% over 2015. In 2016, product revenues in the United States totaled $713.2 million, an increase of 37.9% over 2015 and sales outside of the United States totaled $133.4 million, an increase of 260.5% over 2015. In the first and second quarters of 2016, Sobi had its first commercial sales of ELOCTATE and ALPROLIX, respectively. As a result, collaboration revenue, consisting of manufacturing and royalty revenues totaled $40.8 million, an increase of 558.1% over 2015.

Product Revenues

Discounts and allowances

Discounts and allowances for the year ended December 31, 2017 was approximately 31% of gross sales, and approximately 28% of gross sales for the years ended December 31, 2016 and 2015.

Revenue from collaborative partners

For the year ended December 31, 2017, compared to the same period in 2016, the increase in revenue from collaborative partners is attributable to a $12.8 million increase in contract manufacturing revenue and $25.8 million of royalty revenue from Sobi as Sobi continued to expand product sales in additional markets in their territory.

For the year ended December 31, 2016, compared to the same period in 2015, the increase in revenue from collaborative partners is attributable to a $29.5 million increase in contract manufacturing revenue and $5.1 million of royalty revenue from Sobi. Revenue from collaborative partners for the year ended December 31, 2015 was solely from contract manufacturing revenue from Sobi.

See Note 4, Collaborations, to the audited consolidated financial statements included elsewhere in this report for additional information on our collaboration with Sobi.

Costs and Expenses

Cost of Sales

For the year ended December 31, 2017 cost of sales increased $41.7 million compared to the same period in 2016 as a result of increased unit sales of both ELOCTATE and ALPROLIX in our territory and manufacturing revenue in Sobi’s territory partially offset by impairment charges associated with the shutdown of a Biogen Cambridge manufacturing facility in 2016 and lower inventory write-offs.

For the year ended December 31, 2016 cost of sales increased $185.0 million compared to the same period in 2015 as a result of increased unit sales of both ELOCTATE and ALPROLIX, an increase in royalty rate as a result of Sobi’s first commercial sales of ELOCTATE and ALPROLIX, and higher inventory write-offs in 2016 compared to 2015 attributable to excess and obsolete inventory. Also included in product cost of sales in the year ended December 31, 2016 is approximately $41 million related to the shutdown of Biogen’s Cambridge manufacturing facility.

Royalty cost of sales consists mainly of our royalty to Sobi. Upon Sobi’s first commercial sale in 2016, and during the Reimbursement Period, the royalty rate the company will pay Sobi on sales of ELOCTATE and ALPROLIX in the Bioverativ North American Territory is 7% and Bioverativ Direct Territory is 12%. After the Reimbursement Period concludes, the royalty rate we pay to Sobi increases by 5%. For the year ended December 31, 2017, we are recording cost of sales at the effective royalty rate of approximately 11%. For the year ended December 31, 2016, the

effective royalty rate was approximately 10%.  Please refer to Note 4, Collaborations, to the audited consolidated financial statements included elsewhere in this report for further information regarding our royalty structure with Sobi.

Inventory and inventoriable costs written down as a result of excess, obsolescence, unmarketability or other reasons are charged to cost of sales. There were $8.8 million, $13.5 million and $1.3 million of write-offs in the years ended December 31, 2017, 2016 and 2015, respectively.

Research and Development Expenses