What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-05 compared with 2022-04-28 · 247 added, 142 removed, 592 unchanged (40% of the section changed)

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Three months ended

June 30, Six months ended

2022 2021 2022 2021

Product sales $ 6,281 $ 6,114 $ 12,012 $ 11,706

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Research and development 1,039 1,082 1,998 2,049

Acquired in-process research and development — 1,505 — 1,505

Selling, general and administrative 1,327 1,384 2,555 2,638

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Three months ended

June 30, Six months ended

2022 2021 2022 2021

Net income $ 1,317 $ 464 $ 2,793 $ 2,110

Other comprehensive income, net of reclassification adjustments and taxes:

Other comprehensive income (loss), net of reclassification adjustments and taxes:

Foreign currency translation ( 65 ) 14 ( 116 ) ( 25 )

Cash flow hedges 156 ( 48 ) 240 142

Other comprehensive income, net of reclassification adjustments and taxes 33 152

Other — ( 1 ) — —

Other comprehensive income (loss), net of reclassification adjustments and taxes 91 ( 35 ) 124 117

Comprehensive income $ 1,408 $ 429 $ 2,917 $ 2,227

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(In millions, except per-share data)

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Current assets:

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534.2 31,247 ( 29,568 ) ( 763 ) 916

Net income — — 1,317 — 1,317

Other comprehensive income, net of taxes — — — 91 91

Issuance of common stock in connection with the Company’s equity award programs

0.7 45 — — 45

Stock-based compensation expense — 120 — — 120

Tax impact related to employee stock-based compensation expense

— ( 69 ) — — ( 69 )

Other — — ( 1 ) — ( 1 )

Balance as of June 30, 2022

534.9 $ 31,343 $ ( 28,252 ) $ ( 672 ) $ 2,419

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(In millions, except per-share data)

paid-in capital Accumulated

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575.3 31,806 ( 21,639 ) ( 833 ) 9,334

Net income — — 464 — 464

Other comprehensive loss, net of taxes — — — ( 35 ) ( 35 )

Issuance of common stock in connection with the Company’s equity award programs

0.8 47 — — 47

Stock-based compensation expense — 100 — — 100

Tax impact related to employee stock-based compensation expense

— ( 76 ) — — ( 76 )

Repurchases of common stock ( 6.5 ) — ( 1,592 ) — ( 1,592 )

Other — — 5 — 5

Balance as of June 30, 2021

569.6 $ 31,877 $ ( 22,762 ) $ ( 868 ) $ 8,247

See accompanying notes.

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(In millions)

Three months ended

Six months ended

Cash flows from operating activities:

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Deferred income taxes ( 514 ) ( 137 )

Acquired in-process research and development — 1,505

Adjustments for equity method investments 497 ( 36 )

Loss on divestiture 560 —

Other items, net 436 206

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Purchases of property, plant and equipment ( 436 ) ( 351 )

Cash paid for acquisitions, net of cash acquired — ( 1,626 )

Other 61 ( 65 )

Net cash used in investing activities ( 111 ) ( 319 )

Net cash (used in) provided by investing activities ( 2,304 ) 890

Cash flows from financing activities:

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Net cash used in financing activities ( 4,576 ) ( 4,561 )

Decrease in cash and cash equivalents ( 1,461 ) ( 154 )

(Decrease) increase in cash and cash equivalents ( 2,786 ) 364

Cash and cash equivalents at beginning of period 7,989 6,266

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Summary of significant accounting policies

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Basis of presentation

The financial information for the three months ended March 31, 2022 and 2021, is unaudited but includes all adjustments (consisting of only normal, recurring adjustments unless otherwise indicated), which Amgen considers necessary for a fair presentation of its condensed consolidated results of operations for those periods.

The financial information for the three and six months ended June 30, 2022 and 2021, is unaudited but includes all adjustments (consisting of only normal, recurring adjustments unless otherwise indicated), which Amgen considers necessary for a fair presentation of its condensed consolidated results of operations for those periods.

Interim results are not necessarily indicative of results for the full fiscal year.

The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021, and with our condensed consolidated financial statements and the notes thereto contained in our Quarterly Report on Form 10-Q for the period ended March 31, 2022.

Principles of consolidation

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Property, plant and equipment, net

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization of $ 8.9 billion and $ 8.8 billion as of March 31, 2022 and December 31, 2021, respectively.

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization, of $ 9.0 billion and $ 8.8 billion as of June 30, 2022 and December 31, 2021, respectively.

Recent accounting pronouncements

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The impact of this standard will depend on the facts and circumstances of future transactions.

Teneobio, Inc.

Acquisitions and divestitures

Acquisition of Teneobio, Inc.

On October 19, 2021, we acquired all of the outstanding stock of Teneobio, a privately held, clinical-stage biotechnology company developing a new class of biologics called human heavy-chain antibodies, which are single-chain antibodies composed of the human heavy-chain domain.

The transaction, which was accounted for as a business combination, includes Teneobio’s proprietary bispecific and multispecific antibody technologies, which complement Amgen’s existing antibody capabilities and BiTE ® platform and will enable significant acceleration and efficiency in the discovery and development of new molecules to treat diseases across Amgen’s core therapeutic areas.

The transaction, which was accounted for as a business combination, includes Teneobio’s proprietary bispecific and multispecific antibody technologies, which complement Amgen’s existing antibody capabilities and bispecific T-cell engager (BiTE ® ) platform and will enable significant acceleration and efficiency in the discovery and development of new molecules to treat diseases across Amgen’s core therapeutic areas.

Upon its acquisition, Teneobio became a wholly owned subsidiary of Amgen, and its operations have been included in our condensed consolidated financial statements commencing on the acquisition date.

Measurement period adjustments for the three months ended March 31, 2022, included changes to the purchase price allocation and total consideration, resulting in a net increase of $ 22 million to goodwill.

Measurement period adjustments for the six months ended June 30, 2022, included changes to the purchase price allocation and total consideration, resulting in a net increase of $ 22 million to goodwill.

The measurement period adjustments resulted primarily from valuation inputs pertaining to certain acquired assets based on facts and circumstances that existed as of the acquisition date and did not result from events subsequent to the acquisition date.

These adjustments did not have a significant impact on Amgen’s results of operations for the three months ended March 31, 2022, and would not have had a significant impact on prior-period results if these adjustments had been made as of the acquisition date.

These adjustments did not have a significant impact on Amgen’s results of operations during the six months ended June 30, 2022, and would not have had a significant impact on prior-period results if these adjustments had been made as of the acquisition date.

The following table summarizes the total consideration and allocated acquisition date fair values of assets acquired and liabilities assumed, inclusive of measurement period adjustments (in millions):

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Cash and cash equivalents $ 100

Finite-lived intangible asset – R&D technology rights 115

In-process research and development 991

Finite-lived intangible asset – research and development technology rights 115

Finite-lived intangible assets – licensing rights 41

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Total assets acquired, net $ 1,292

The consideration for this transaction comprised (i) an upfront cash payment of $ 993 million, which included a working-capital adjustment, and (ii) future contingent milestone payments to Teneobio’s former equity holders of up to $ 1.6 billion in cash, based on the achievement of various development and regulatory milestones with regard to the leading asset (AMG 340, formerly TNB-585) and to various development milestones for other drug candidates.

Consideration for this transaction comprised (i) an upfront cash payment of $ 993 million, which included a working-capital adjustment, and (ii) future contingent milestone payments to Teneobio’s former equity holders of up to $ 1.6 billion in cash, based on the achievement of various development and regulatory milestones with regard to the leading asset (AMG 340, formerly TNB-585) and to various development milestones for other drug candidates.

The estimated fair values of the contingent consideration obligations aggregated $ 299 million as of the acquisition date and were determined using a probability-weighted expected return methodology.

The assumptions in this method include the probability of achieving the milestones and the expected payment dates, with such amounts discounted to present value based on our pre-tax cost of debt.

See Note 11, Fair value measurement, for information regarding the estimated fair value of these obligations as of March 31, 2022.

The estimated fair values of acquired IPR&D assets totaled $ 991 million, of which $ 784 million relates to AMG 340, that is in a phase 1 clinical trial for the treatment of mCRPC, and the balance relates to four separate preclinical oncology programs.

The R&D technology rights of $ 115 million relate to Teneobio’s proprietary bispecific and multispecific antibody technologies and will be amortized over 10 years using the straight-line method.

The assumptions in this method include the probability of achieving the milestones and the expected payment dates, with such amounts discounted to present value based on our pretax cost of debt.

See Note 11, Fair value measurement, for information regarding the estimated fair value of these obligations as of June 30, 2022.

The estimated fair values of acquired IPR&D assets totaled $ 991 million, of which $ 784 million relates to AMG 340, that is in a phase 1 clinical trial for the treatment of metastatic castration-resistant prostate cancer (mCRPC), and the balance relates to four separate preclinical oncology programs.

The R&D technology rights of $ 115 million relate to Teneobio’s proprietary bispecific and multispecific antibody technologies;

the amount is being amortized over 10 years by using the straight-line method.

Teneobio has also licensed its technology and certain identified targets to various third parties, representing contractual agreements valued at $ 41 million.

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The projected cash flows were based on certain assumptions attributable to the respective intangible asset, including estimates of future revenues and expenses, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other regulatory agencies.

A deferred tax liability of $ 244 million was recognized on the temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired.

A deferred tax liability of $ 244 million was recognized on temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired.

The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $ 273 million was recorded as goodwill, which is not deductible for tax purposes.

The goodwill value represents expected synergies from both AMG 340 and the technologies acquired.

Our accounting for this acquisition is preliminary and will be finalized upon completion of our analysis to determine the acquisition date fair values of certain assets acquired, liabilities assumed and tax-related items as we obtain additional information during the measurement period of up to one year from the acquisition date.

Our accounting for this acquisition is preliminary and will be finalized upon completion of our analysis of certain tax-related items as we obtain additional information during the measurement period of up to one year from the acquisition date.

Acquisition of Five Prime Therapeutics, Inc.

On April 16, 2021, Amgen completed its acquisition of Five Prime for a total cash consideration of $ 1.6 billion, net of cash acquired.

The purchase price was funded with cash on hand.

This transaction was accounted for as an asset acquisition because substantially all the value of the assets acquired was concentrated in the intellectual property rights of bemarituzumab, a phase 3 trial-ready, first-in-class program for gastric cancer.

Five Prime’s operations have been included in our condensed consolidated financial statements commencing after the acquisition date.

We allocated the consideration to acquire Five Prime to:

the bemarituzumab IPR&D program of $ 1.5 billion, which was expensed immediately in Acquired IPR&D expense in the Condensed Consolidated Statements of Income;

deferred tax assets of $ 177 million;

and other net liabilities of $ 47 million.

The Acquired IPR&D expense was not tax deductible.

Divestiture of Gensenta İlaç Sanayi ve Ticaret A.Ş.

On June 28, 2022, we entered into a share purchase agreement with Eczacıbaşı under which Eczacıbaşı will acquire all of our shares in Gensenta—a subsidiary in Turkey.

Net assets related to Gensenta of $ 80 million met the criteria to be classified as held-for-sale and did not meet the criteria to be classified as discontinued operations.

Upon closing of the transaction, we expect to receive $ 135 million in cash.

The transaction is expected to close in the third quarter of 2022 upon approval by the Turkish Competition Authority.

As of June 30, 2022, held-for-sale assets and liabilities of $ 100 million and $ 20 million were included in Other current assets and Accrued liabilities, respectively, in the Condensed Consolidated Balance Sheets.

During the three months ended June 30, 2022, we recognized a loss of $ 560 million recorded to Other operating expenses in the Condensed Consolidated Statements of Income, primarily due to the impact of the cumulative foreign currency translation loss, with valuation allowances to Other current assets and Accrued liabilities in the Condensed Consolidated Balance Sheets.

We operate in one business segment:

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Revenues were as follows (in millions):

Three months ended March 31,

Three months ended June 30,

ROW Total U.S.

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Prolia 611 311 922 538 276 814

Otezla 487 107 594 423 111 534

XGEVA 391 142 533 355 133 488

Aranesp 132 225 357 135 232 367

Neulasta 263 47 310 434 52 486

Repatha 154 171 325 143 143 286

KYPROLIS 213 104 317 190 90 280

Nplate 156 128 284 136 109 245

Other products 1,003 585 1,588 907 563 1,470

Total product sales (1)

$ 4,446 $ 1,835 6,281 $ 4,374 $ 1,740 6,114

Other revenues 313 412

Total revenues $ 6,594 $ 6,526

Six months ended June 30,

ROW Total U.S.

ENBREL $ 1,879 $ 34 $ 1,913 $ 2,007 $ 61 $ 2,068

Prolia 1,193 581 1,774 1,039 533 1,572

Otezla 837 208 1,045 789 221 1,010

XGEVA 759 276 1,035 689 267 956

Aranesp 269 446 715 260 462 722

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Total revenues $ 12,832 $ 12,427

(1) Hedging gains and losses, which are included in product sales, were not material for the three months ended March 31, 2022 and 2021.

The effective tax rates for the three months ended March 31, 2022 and 2021, were 11.9 % and 11.4 %, respectively.

The increase in our effective tax rate for the three months ended March 31, 2022, was primarily due to current year net unfavorable items compared to last year, offset by changes in earnings mix.

(1) Hedging gains and losses, which are included in product sales, were not material for the three and six months ended June 30, 2022 and 2021.

The effective tax rates for the three and six months ended June 30, 2022, were 14.0 % and 12.9 %, respectively, compared with 16.8 % and 12.6 %, respectively, for the corresponding periods of the prior year.

The decrease in our effective tax rate for the three months ended June 30, 2022, was primarily due to the prior year nondeductible IPR&D expense arising from the acquisition of Five Prime, partially offset by current year unfavorable items including a loss on a nonstrategic divestiture.

The increase in our effective tax rate for the six months ended June 30, 2022, was primarily due to current year unfavorable items compared to last year including a loss on a nonstrategic divestiture, partially offset by the prior year nondeductible IPR&D expense arising from the acquisition of Five Prime and changes in earnings mix.

The effective tax rates differ from the federal statutory rate primarily as a result of foreign earnings from the Company’s operations conducted in Puerto Rico, a territory of the United States treated as a foreign jurisdiction for U.S.

tax purposes, that are subject to a tax incentive grant through 2035.

tax purposes, that are currently subject to a tax incentive grant through 2035.

In addition, the Company’s operations conducted in Singapore are subject to a tax incentive grant through 2034.

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tax at a reduced rate of 10.5%.

territory of Puerto Rico imposes an excise tax on the gross intercompany purchase price of goods and services from our manufacturer in Puerto Rico.

The rate of 4% is effective through December 31, 2027.

We account for the excise tax as a manufacturing cost that is capitalized in inventory and expensed in cost of sales when the related products are sold.

See Note 2, Acquisitions and divestitures.

territory of Puerto Rico imposes a 4% excise tax on the gross intercompany purchase price of goods and services from our manufacturer in Puerto Rico.

We account for the excise tax as a manufacturing cost that is capitalized in Inventories and expensed in Cost of sales when the related products are sold.

income tax purposes, in 2022, the excise tax results in foreign tax credits that are generally recognized in our provision for income taxes when the excise tax is incurred.

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Tax authorities, including the IRS, are becoming more aggressive and are particularly focused on such matters.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010, 2011 and 2012 proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

territory of Puerto Rico.

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In July 2021, we filed a petition in the U.S.

Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for 2010, 2011 and 2012 that we received in May and July 2021, which seek to increase our U.S.

taxable income for 2010-2012 by an amount that would result in additional federal tax of approximately $ 3.6 billion plus interest.

Any additional tax that could be imposed for 2010-2012 would be reduced by up to approximately $ 900 million of repatriation tax previously accrued on our foreign earnings.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013, 2014 and 2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

territory of Puerto Rico similar to those proposed for the years 2010, 2011 and 2012.

Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S.

taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $ 3.6 billion plus interest.

Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $ 900 million of repatriation tax previously accrued on our foreign earnings.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S.

territory of Puerto Rico similar to those proposed for the years 2010–2012.

We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution.

In April 2022, we received a Notice that seeks to increase our U.S.

taxable income for 2013-2015 by an amount that would result in additional federal tax of approximately $ 5.1 billion, plus interest.

In July 2022, we filed a petition in the U.S.

Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S.

taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $ 5.1 billion, plus interest.

In addition, the Notice asserts penalties of approximately $ 2.0 billion.

Any additional tax that could be imposed for 2013-2015 would be reduced by up to approximately $ 2.2 billion of repatriation tax previously accrued on our foreign earnings.

Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $ 2.2 billion of repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit.

We are contesting the 2010-2012 Notices through the judicial process, and we expect to file a Petition in the U.S.

Tax Court to contest the 2013-2015 Notice through the judicial process.

We will seek consolidation of the two periods into one case in Tax Court.

We are also currently under examination by the IRS for the years 2016, 2017 and 2018 and by a number of state and foreign tax jurisdictions.

We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process, and we will seek consolidation of the two periods into one case in the U.S.

We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period.

In addition, we have examinations by a number of state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months.

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federal income tax examinations for years ended on or before December 31, 2009.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, Income Taxes for further discussion and Part II, Item 1A, Risk Factors— The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability .

During the three months ended March 31, 2022, the gross amounts of our UTBs increased $ 45 million, as a result of tax positions taken during the current year.

Substantially all of the UTBs as of March 31, 2022, if recognized, would affect our effective tax rate.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, Income Taxes, for further discussion and Part II, Item 1A, Risk Factors— The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability .

During the three and six months ended June 30, 2022, the gross amounts of our UTBs increased by $ 50 million and $ 95 million, respectively, as a result of tax positions taken during the current year.

Substantially all of the UTBs as of June 30, 2022, if recognized, would affect our effective tax rate.

Earnings per share

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Three months ended

June 30, Six months ended

2022 2021 2022 2021

Income (Numerator):

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Diluted EPS $ 2.45 $ 0.81 $ 5.13 $ 3.65

For the three months ended March 31, 2022 and 2021, the number of antidilutive employee stock-based awards excluded from the computation of diluted EPS was not significant.

For the three and six months ended June 30, 2022 and 2021, the number of antidilutive employee stock-based awards excluded from the computation of diluted EPS was not significant.

Available-for-sale investments

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of interest-bearing securities, which are considered available-for-sale, by type of security were as follows (in millions):

Types of securities as of March 31, 2022 Amortized

Types of securities as of June 30, 2022 Amortized

Treasury notes $ — $ — $ — $ —

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The fair values of interest-bearing securities by location in the Condensed Consolidated Balance Sheets were as follows (in millions):

Condensed Consolidated Balance Sheets locations March 31, 2022 December 31, 2021

Condensed Consolidated Balance Sheets locations June 30, 2022 December 31, 2021

Cash and cash equivalents $ 4,433 $ 7,256

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Total interest-bearing securities $ 6,413 $ 7,304

Cash and cash equivalents in the above table excludes bank account cash of $ 691 million and $ 733 million as of March 31, 2022 and December 31, 2021, respectively.

The fair values of available-for-sale investments by contractual maturity were as follows (in millions):

Contractual maturities March 31, 2022 December 31, 2021

Maturing in one year or less $ 5,853 $ 7,304

Total available-for-sale investments $ 5,853 $ 7,304

For the three months ended March 31, 2022 and 2021, realized gains and losses on interest-bearing securities were not material.

Cash and cash equivalents in the above table excludes bank account cash of $ 770 million and $ 733 million as of June 30, 2022 and December 31, 2021, respectively.

Total interest-bearing securities as of June 30, 2022 and December 31, 2021, mature in one year or less.

For the three and six months ended June 30, 2022 and 2021, realized gains and losses on interest-bearing securities were not material.

Realized gains and losses on interest-bearing securities are recorded in Other (expense) income, net, in the Condensed Consolidated Statements of Income.

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Equity securities

We held investments in equity securities with readily determinable fair values (publicly traded securities) of $ 473 million and $ 611 million as of March 31, 2022 and December 31, 2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

For the three months ended March 31, 2022 and 2021, net unrealized losses on publicly traded securities were $ 170 million and $ 56 million, respectively.

Realized gains and losses on sales of publicly traded securities for the three months ended March 31, 2022 and 2021, were not material.

We held investments of $ 261 million and $ 262 million in equity securities without readily determinable fair values as of March 31, 2022 and December 31, 2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

For the three months ended March 31, 2022 and 2021, upward adjustments and downward adjustments on these securities were not material.

We held investments in equity securities with readily determinable fair values (publicly traded securities) of $ 361 million and $ 611 million as of June 30, 2022 and December 31, 2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three months ended June 30, 2022 and 2021, net unrealized gains and losses on publicly traded securities were a $ 106 million net loss and a $ 25 million net gain, respectively.

During the six months ended June 30, 2022 and 2021, net unrealized losses on publicly traded securities were $ 276 million and $ 31 million, respectively.

Realized gains and losses on sales of publicly traded securities for the three and six months ended June 30, 2022 and 2021, were not material.

We held investments of $ 280 million and $ 262 million in equity securities without readily determinable fair values as of June 30, 2022 and December 31, 2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and six months ended June 30, 2022 and 2021, upward adjustments and downward adjustments on these securities were not material.

Adjustments were based on observable price transactions.

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BeiGene, Ltd.

As of March 31, 2022 and December 31, 2021, we had an ownership interest of approximately 18.4 % in BeiGene, which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets and accounted for under the equity method of accounting.

As of June 30, 2022 and December 31, 2021, we had an ownership interest in BeiGene of approximately 18.2 % and 18.4 %, respectively, which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets and accounted for under the equity method of accounting.

We amortize the difference between the fair value of equity securities acquired and our proportionate share of the carrying value of the underlying net assets of BeiGene over the useful lives of the assets that gave rise to this basis difference.

This amortization and our share of the results of operations of BeiGene are included in Other (expense) income, net , in the Condensed Consolidated Statements of Income one quarter in arrears.

During the three months ended March 31, 2022 and 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net losses of $ 108 million and $ 97 million, respectively, and amortization of the basis difference of $ 47 million and $ 42 million, respectively.

As of March 31, 2022 and December 31, 2021, the carrying values of our investment in BeiGene totaled $ 2.6 billion and $ 2.8 billion, respectively, and the fair values of the investment totaled $ 3.6 billion and $ 5.1 billion, respectively.

As of March 31, 2022, we believe the carrying value of our equity investment in BeiGene is fully recoverable.

During the three months ended June 30, 2022 and 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net loss of $ 80 million and net income of $ 14 million, respectively, and amortization of the basis difference of $ 48 million and $ 42 million, respectively.

During the six months ended June 30, 2022 and 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net losses of $ 188 million and $ 83 million, respectively, and amortization of the basis difference of $ 95 million and $ 84 million, respectively.

As of June 30, 2022 and December 31, 2021, the carrying values of our investment in BeiGene totaled $ 2.5 billion and $ 2.8 billion, respectively, and the fair values of our investment totaled $ 3.1 billion and $ 5.1 billion, respectively.

As of June 30, 2022, we believe the carrying value of our equity investment in BeiGene is fully recoverable.

Neumora Therapeutics, Inc.

On September 30, 2021, we acquired approximately 25.9 % ownership interest in Neumora, a privately held company, for $ 257 million, which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets, in exchange for a $ 100 million cash payment and $ 157 million in noncash consideration primarily related to future services.

On September 30, 2021, we acquired an approximately 25.9 % ownership interest in Neumora, a privately held company, for $ 257 million, which is included in Other noncurrent assets in the Condensed Consolidated Balance Sheets, in exchange for a $ 100 million cash payment and $ 157 million in noncash consideration primarily related to future services.

Although our equity investment provides us with the ability to exercise significant influence over Neumora, we have elected the fair value option to account for our equity investment.

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We believe the fair value option best reflects the economics of the underlying transaction.

As of March 31, 2022 and December 31, 2021, our ownership interest in Neumora was 25.8 % and 25.9 %, respectively, and the fair values of our investment were $ 170 million and $ 220 million, respectively.

Accordingly, during the three months ended March 31, 2022, we recognized a loss of $ 50 million for the reduction in fair value of our investment in Other (expense) income, net, in the Condensed Consolidated Statements of Income.

As of June 30, 2022 and December 31, 2021, our ownership interest in Neumora was approximately 25.7 % and 25.9 %, respectively, and the fair values of our investment were $ 131 million and $ 220 million, respectively.

Accordingly, for the reduction in fair value of our investment during the three and six months ended June 30, 2022, we recognized a loss of $ 39 million and $ 89 million, respectively, for the reduction in fair value of our investment in Other (expense) income, net, in the Condensed Consolidated Statements of Income.

For information on determination of fair values, see Note 11, Fair value measurement.

Limited partnerships

We held limited partnership investments of $ 403 million and $ 573 million as of March 31, 2022 and December 31, 2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

We held limited partnership investments of $ 338 million and $ 573 million as of June 30, 2022 and December 31, 2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

These investments, primarily investment funds of early-stage biotechnology companies, are accounted for by using the equity method of accounting and are measured by using our proportionate share of the net asset values of the underlying investments held by the limited partnerships as a practical expedient.

These investments are typically redeemable only through distributions upon liquidation of the underlying assets.

As of March 31, 2022, unfunded additional commitments to be made for these investments during the next several years were $ 182 million.

During the three months ended March 31, 2022 and 2021, we recognized net losses of $ 160 million and net gains of $ 208 million, respectively, in Other (expense) income, net in the Condensed Consolidated Statements of Income on these investments.

As of June 30, 2022, unfunded additional commitments to be made for these investments during the next several years were $ 209 million.

For the three months ended June 30, 2022 and 2021, net unrealized losses from our limited partnership investments were $ 60 million and $ 43 million, respectively.

For the six months ended June 30, 2022 and 2021, net unrealized gains and losses from our limited partnership investments were a $ 220 million net loss and a $ 165 million net gain, respectively.

Inventories consisted of the following (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Raw materials $ 779 $ 647

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The change in the carrying amount of goodwill was as follows (in millions):

Three months ended

March 31, 2022

Six months ended

June 30, 2022

Beginning balance $ 14,890

Goodwill resulting from acquisition of a business (1)

Adjustments to goodwill resulting from acquisitions and divestitures, net (1)

Currency translation adjustment ( 32 )

Ending balance $ 14,865

(1) Composed of adjustments to goodwill resulting from changes to the acquisition date fair values of net assets acquired in the acquisition of Teneobio (see Note 2, Acquisitions).

(1) Composed of adjustments to goodwill resulting from changes to the acquisition date fair values of net assets acquired in the acquisition of Teneobio and the nonstrategic Gensenta divestiture.

See Note 2, Acquisitions and divestitures.

Other intangible assets

Other intangible assets consisted of the following (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

amounts Accumulated

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We review IPR&D projects for impairment annually, whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable and upon the establishment of technological feasibility or regulatory approval.

During the three months ended March 31, 2022 and 2021, we recognized amortization associated with our finite-lived intangible assets of $ 637 million and $ 654 million, respectively.

During the three months ended June 30, 2022 and 2021, we recognized amortization associated with our finite-lived intangible assets of $ 629 million and $ 652 million, respectively.

During the six months ended June 30, 2022 and 2021, we recognized amortization associated with our finite-lived intangible assets of $ 1.3 billion in both periods.

Amortization of intangible assets is primarily included in Cost of sales in the Condensed Consolidated Statements of Income.

The total estimated amortization for our finite-lived intangible assets for the remaining nine months ending December 31, 2022, and the years ending December 31, 2023, 2024, 2025, 2026 and 2027, are $ 1.9 billion, $ 2.5 billion, $ 2.5 billion, $ 2.4 billion, $ 1.7 billion and $ 1.8 billion, respectively.

The total estimated amortization for our finite-lived intangible assets for the remaining six months ending December 31, 2022, and the years ending December 31, 2023, 2024, 2025, 2026 and 2027, are $ 1.3 billion, $ 2.5 billion, $ 2.5 billion, $ 2.4 billion, $ 1.7 billion and $ 1.8 billion, respectively.

Financing arrangements

Our borrowings consisted of the following (in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

0.41 % CHF 700 million bonds due 2023 (0.41% 2023 Swiss franc Bonds)

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First quarter 24.6 $ 5,410 3.7 $ 865

Second quarter — — 6.5 1,592

Total stock repurchases 24.6 $ 5,410 10.2 $ 2,457

On February 24, 2022, the Company entered into ASR agreements with three third-party financial institutions (Dealers).

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In total, we repurchased 24.6 million shares of common stock in the first quarter of 2022, including shares received under the ASR agreements.

As of March 31, 2022, $ 4.6 billion of authorization remained available under our stock repurchase program.

In March 2022, the Board of Directors declared a quarterly cash dividend of $ 1.94 per share, which will be paid in June 2022.

In December 2021, the Board of Directors declared a quarterly cash dividend of $ 1.94 per share, which was paid in March 2022.

As of June 30, 2022, $ 4.6 billion of authorization remained available under our stock repurchase program.

In March 2022 and December 2021, the Board of Directors declared a quarterly cash dividend of $ 1.94 per share, which were paid in June 2022 and March 2022, respectively.

In August 2022, the Board of Directors declared a quarterly cash dividend of $ 1.94 per share, which will be paid on September 8, 2022.

Accumulated other comprehensive income (loss)

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( 895 ) 145 — ( 13 ) ( 763 )

Foreign currency translation adjustments ( 65 ) — — — ( 65 )

Unrealized gains — 67 — — 67

Reclassification adjustments to income — 132 — — 132

Income taxes — ( 43 ) — — ( 43 )

Balance as of June 30, 2022

$ ( 960 ) $ 301 $ — $ ( 13 ) $ ( 672 )

Reclassifications out of AOCI and into earnings, including related income tax expenses, were as follows (in millions):

Three months ended March 31,

Three months ended June 30,

Components of AOCI 2022 2021 Condensed Consolidated

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Foreign currency contract gains (losses) $ 53 $ ( 18 ) Product sales

Cross-currency swap contract (losses) gains ( 185 ) 46 Other (expense) income, net

( 132 ) 28 Income before income taxes

28 ( 6 ) Provision for income taxes

$ ( 104 ) $ 22 Net income

Six months ended June 30,

Components of AOCI 2022 2021 Condensed Consolidated

Statements of Income locations

Cash flow hedges:

Foreign currency contract gains (losses) $ 80 $ ( 19 ) Product sales

Cross-currency swap contract losses ( 263 ) ( 86 ) Other (expense) income, net

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Observable inputs are inputs that market participants would use in pricing an asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing an asset or liability and are developed based on the best information available in the circumstances.

Unobservable inputs are inputs that reflect the Company’s assumptions about inputs that market participants would use in pricing an asset or liability and are developed based on the best information available in the circumstances.

The fair value hierarchy is divided into three levels based on the source of inputs as follows:

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To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

In certain cases, the inputs used for measuring fair value may fall into different levels of the fair value hierarchy.

In certain cases, inputs used for measuring fair value may fall into different levels of the fair value hierarchy.

In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level of input used that is significant to the overall fair value measurement.

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(Level 2) Significant

Fair value measurement as of March 31, 2022, using:

Fair value measurement as of June 30, 2022, using:

Available-for-sale securities:

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Treasury securities, money market mutual funds and equity investments in publicly traded securities are based on quoted market prices in active markets, with no valuation adjustment.

The fair value of equity securities without readily determinable fair values are initially valued at the transaction price and subsequently valued based upon a combination of market performance and publicly available market information for similar companies that have actively traded equity securities.

The fair value of equity securities without readily determinable fair values are initially valued at the transaction price and subsequently valued based on a combination of market performance and publicly available market information for similar companies that have actively traded equity securities.

All of our foreign currency forward derivative contracts have maturities of three years or less, and all are with counterparties that have minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch.

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Three months ended

June 30, Six months ended

2022 2021 2022 2021

Beginning balance $ 330 $ 39 $ 342 $ 33

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Ending balance $ 310 $ 48 $ 310 $ 48

As of March 31, 2022 and December 31, 2021, our contingent consideration obligations are primarily the result of our acquisition of Teneobio in October 2021, which obligates us to pay the former shareholders up to $ 1.6 billion upon achieving separate development and regulatory milestones with regard to various R&D programs.

See Note 2, Acquisitions.

As of June 30, 2022 and December 31, 2021, our contingent consideration obligations are primarily the result of our acquisition of Teneobio in October 2021, which obligates us to pay the former shareholders up to $ 1.6 billion upon achieving separate development and regulatory milestones with regard to various R&D programs.

See Note 2, Acquisitions and divestitures.

Summary of the fair values of other financial instruments

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We estimated the fair values of our borrowings by using Level 2 inputs.

As of March 31, 2022 and December 31, 2021, the aggregate fair values of our borrowings were $ 38.4 billion and $ 37.9 billion, respectively, and the carrying values were $ 36.9 billion and $ 33.3 billion, respectively.

During the three months ended March 31, 2022 and 2021, there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis.

Investment in BeiGene

As of June 30, 2022 and December 31, 2021, the aggregate fair values of our borrowings were $ 34.4 billion and $ 37.9 billion, respectively, and the carrying values were $ 36.5 billion and $ 33.3 billion, respectively.

Investment in BeiGene, Ltd.

We estimated the fair value of our investment in BeiGene by using Level 1 inputs.

As of March 31, 2022 and December 31, 2021, the fair values were $ 3.6 billion and $ 5.1 billion, and the carrying values were $ 2.6 billion and $ 2.8 billion, respectively.

During the three months ended March 31, 2022 and 2021, there were no transfers of assets or liabilities between fair value measurement levels, and there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis.

As of June 30, 2022 and December 31, 2021, the fair values were $ 3.1 billion and $ 5.1 billion, and the carrying values were $ 2.5 billion and $ 2.8 billion, respectively.

During the three and six months ended June 30, 2022 and 2021, there were no transfers of assets or liabilities between fair value measurement levels, and there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis, except with respect to the impairment of net assets in connection with the nonstrategic Gensenta divestiture.

See Note 2, Acquisitions and divestitures.

Derivative instruments

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and at any given point in time, a higher percentage of nearer-term projected product sales are being hedged than in successive periods.

As of March 31, 2022 and December 31, 2021, we had outstanding foreign currency forward contracts with aggregate notional amounts of $ 5.6 billion and $ 5.7 billion, respectively.

As of June 30, 2022 and December 31, 2021, we had outstanding foreign currency forward contracts with aggregate notional amounts of $ 5.6 billion and $ 5.7 billion, respectively.

We have designated these foreign currency forward contracts, which are primarily euro based, as cash flow hedges.

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Accordingly, the unrealized gains and losses on these contracts are reported in AOCI in the Condensed Consolidated Balance Sheets and reclassified to Other (expense) income, net, in the Condensed Consolidated Statements of Income in the same periods during which the hedged debt affects earnings.

The notional amounts and interest rates of our cross-currency swaps as of March 31, 2022, were as follows (notional amounts in millions):

The notional amounts and interest rates of our cross-currency swaps as of June 30, 2022, were as follows (notional amounts in millions):

Foreign currency U.S.

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Gains and losses on forward interest rate contracts, which are designated as cash flow hedges, are recognized in AOCI i n the Condensed Consolidated Balance Sheets and are amortized into Interest expense, net, in the Condensed Consolidated Statements of Income over the lives of the associated debt issuances.

Amounts recognized in connection with forward interest rate swaps during the three months ended March 31, 2022, and amounts expected to be recognized during the subsequent 12 months are not material.

Amounts recognized in connection with forward interest rate swaps during the six months ended June 30, 2022, and amounts expected to be recognized during the subsequent 12 months are not material.

The unrealized gains and losses recognized in AOCI for our derivative instruments designated as cash flow hedges were as follows (in millions):

Three months ended

June 30, Six months ended

Derivatives in cash flow hedging relationships 2022 2021 2022 2021

1 unchanged sentence

Cross-currency swap contracts ( 185 ) 15 ( 207 ) ( 60 )

Total unrealized gains $ 56 $ 108

Total unrealized gains (losses) $ 67 $ ( 31 ) $ 123 $ 77

Fair value hedges

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These interest rate swap contracts effectively convert fixed-rate coupons to floating-rate LIBOR-based coupons over the terms of the related hedge contracts.

As of both March 31, 2022 and December 31, 2021, we had interest rate swap contracts with aggregate notional amounts of $ 6.7 billion that hedge certain portions of our long-term debt issuances.

As of both June 30, 2022 and December 31, 2021, we had interest rate swap contracts with aggregate notional amounts of $ 6.7 billion that hedge certain portions of our long-term debt issuances.

For interest rate swap contracts that qualify for and are designated as fair value hedges, we recognize in Interest expense, net, in the Condensed Consolidated Statements of Income the unrealized gain or loss on the derivative resulting from the change in fair value during the period, as well as the offsetting unrealized loss or gain of the hedged item resulting from the change in fair value during the period attributable to the hedged risk.

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Cumulative amounts of fair value hedging adjustments related to the carrying amounts of the hedged liabilities (2)

Condensed Consolidated Balance Sheets locations March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

Condensed Consolidated Balance Sheets locations June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Current portion of long-term debt $ 82 $ 85 $ 82 $ 85

Long-term debt $ 6,241 $ 6,729 $ ( 292 ) $ 199

(1) Current portion of long-term debt includes $ 83 million and $ 85 million of carrying value with discontinued hedging relationships as of March 31, 2022 and December 31, 2021, respectively.

Long-term debt includes $ 419 million and $ 440 million of carrying value with discontinued hedging relationships as of March 31, 2022 and December 31, 2021, respectively.

(2) Current portion of long-term debt includes $ 83 million and $ 85 million of hedging adjustments on discontinued hedging relationships as of March 31, 2022 and December 31, 2021, respectively.

Long-term debt includes $ 319 million and $ 340 million of hedging adjustments on discontinued hedging relationships as of March 31, 2022 and December 31, 2021, respectively.

(1) Current portion of long-term debt includes $ 82 million and $ 85 million of carrying value with discontinued hedging relationships as of June 30, 2022 and December 31, 2021, respectively.

Long-term debt includes $ 399 million and $ 440 million of carrying value with discontinued hedging relationships as of June 30, 2022 and December 31, 2021, respectively.

(2) Current portion of long-term debt includes $ 82 million and $ 85 million of hedging adjustments on discontinued hedging relationships as of June 30, 2022 and December 31, 2021, respectively.

Long-term debt includes $ 299 million and $ 340 million of hedging adjustments on discontinued hedging relationships as of June 30, 2022 and December 31, 2021, respectively.

Impact of hedging transactions

The following tables summarize the amounts recorded in income and expense line items and the effects thereon from fair value and cash flow hedging, including discontinued hedging relationships (in millions):

Three months ended March 31, 2022

Product sales Other (expense) income, net Interest expense, net

Three months ended June 30, 2022 Six months ended June 30, 2022

Product sales Other (expense) income, net Interest expense, net Product sales Other (expense) income, net Interest expense, net

Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income $ 6,281 $ ( 317 ) $ ( 328 ) $ 12,012 $ ( 847 ) $ ( 623 )

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Derivatives designated as hedging instruments $ — $ — $ ( 135 ) $ — $ — $ ( 450 )

Three months ended March 31, 2021

Product sales Other (expense) income, net Interest expense, net

Three months ended June 30, 2021 Six months ended June 30, 2021

Product sales Other (expense) income, net Interest expense, net Product sales Other (expense) income, net Interest expense, net

Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income $ 6,114 $ 11 $ ( 281 ) $ 11,706 $ 24 $ ( 566 )

The effects of cash flow and fair value hedging:

Losses on cash flow hedging relationships reclassified out of AOCI:

(Losses) gains on cash flow hedging relationships reclassified out of AOCI:

Foreign currency contracts $ ( 18 ) $ — $ — $ ( 19 ) $ — $ —

Cross-currency swap contracts $ — $ 46 $ — $ — $ ( 86 ) $ —

Gains (losses) on fair value hedging relationships—interest rate swap agreements:

(Losses) gains on fair value hedging relationships—interest rate swap agreements:

Hedged items (1)

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No portions of our cash flow hedge contracts were excluded from the assessment of hedge effectiveness.

As of March 31, 2022, we expected to reclassify $ 120 million of net gains on our foreign currency and cross-currency swap contracts out of AOCI and into earnings during the next 12 months.

As of June 30, 2022, we expected to reclassify $ 179 million of net gains on our foreign currency and cross-currency swap contracts out of AOCI and into earnings during the next 12 months.

Derivatives not designated as hedges

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Most of these exposures are hedged on a month-to-month basis.

As of March 31, 2022 and December 31, 2021, the total notional amounts of these foreign currency forward contracts were $ 655 million and $ 680 million, respectively.

Gains and losses recognized in earnings for our derivative instruments not designated as hedging instruments were not material for the three months ended March 31, 2022 and 2021.

As of June 30, 2022 and December 31, 2021, the total notional amounts of these foreign currency forward contracts were $ 550 million and $ 680 million, respectively.

Gains and losses recognized in earnings for our derivative instruments not designated as hedging instruments were not material for the three and six months ended June 30, 2022 and 2021.

The fair values of derivatives included in the Condensed Consolidated Balance Sheets were as follows (in millions):

Derivative assets Derivative liabilities

March 31, 2022 Condensed Consolidated

June 30, 2022 Condensed Consolidated

Balance Sheets locations Fair values Condensed Consolidated

5 unchanged sentences

Total derivatives designated as hedging instruments

$ 442 $ 1,124

Derivative assets Derivative liabilities

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Total derivatives designated as hedging instruments

Our derivative contracts that were in liability positions as of March 31, 2022, contain certain credit-risk-related contingent provisions that would be triggered if (i) we were to undergo a change in control and (ii) our or the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that is below investment grade or a materially weaker creditworthiness after the change in control.

Our derivative contracts that were in liability positions as of June 30, 2022, contain certain credit-risk-related contingent provisions that would be triggered if (i) we were to undergo a change in control and (ii) our or the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that is below investment grade or a materially weaker creditworthiness after the change in control.

If these events were to occur, the counterparties would have the right, but not the obligation, to close the contracts under early-termination provisions.

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We describe our legal proceedings and other matters that are significant or that we believe could become significant in this footnote;

and in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021;

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2022.

We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated.

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In each of the matters described in this filing;

and in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021, in which we could incur a liability, our opponents seek an award of a not-yet-quantified amount of damages or an amount that is not material.

in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021;

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2022, in which we could incur a liability, our opponents seek an award of a not-yet-quantified amount of damages or an amount that is not material.

In addition, a number of the matters pending against us are at very early stages of the legal process, which in complex proceedings of the sort we face often extend for several years.

As a result, none of the matters described in this filing;

and in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021, in which we could incur a liability, have progressed sufficiently through discovery and/or the development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material.

While it is not possible to accurately predict or determine the eventual outcomes of these matters, an adverse determination in one or more of these matters currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.

in Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021;

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2022, in which we could incur a liability, have progressed sufficiently through discovery and/or the development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material.

Although it is not possible to accurately predict or determine the eventual outcomes of these matters, an adverse determination in one or more of these matters currently pending could have a material adverse effect on our consolidated results of operations, financial position or cash flows.

Certain recent developments concerning our legal proceedings and other matters are discussed below:

ANDA Patent Litigation

Otezla ANDA Patent Litigation

On June 14, 2022, Amgen filed a lawsuit in the U.S.

District Court for the District of New Jersey (the New Jersey District Court) against Apotex Inc.

(Apotex) for infringement of U.S.

7,427,638, 9,872,854 and 10,092,541, which are listed in the Orange Book for Otezla.

This lawsuit was based on Apotex’s submission of an ANDA seeking FDA approval to market a generic version of Otezla and seeks an order of the New Jersey District Court making any FDA approval of Apotex’s ANDA effective no earlier than the expiration of the applicable patents.

Repatha Patent Litigation

Amgen Inc., et al.

Sanofi, et al.

On March 28, 2022, Amgen filed a reply brief in support of its petition for certiorari to the U.S.

Supreme Court.

On April 18, 2022, the Supreme Court requested that the Office of the Solicitor General of the United States submit a brief providing the government’s view on the issues raised by Amgen’s petition.

Patent Disputes in the International Region

On March 23, 2022, Amgen filed counterclaims alleging that PRALUENT ® infringes Amgen’s European Patent 2,641,917 (the ‘917 Patent).

A European Patent Office (EPO) opposition to the ‘917 Patent, filed by Sanofi on February 5, 2021, is pending, and the hearing before the EPO’s Opposition Division is scheduled for February 21, 2023.

NEUPOGEN (filgrastim)/Neulasta Patent Litigation

Amgen Inc., et al.

On March 18, 2022, the parties filed a stipulation of dismissal, and the U.S.

District Court for the District of Delaware (the Delaware District Court) dismissed the case on March 21, 2022.

Patent Trial and Appeal Board (PTAB) Challenge

Apotex PTAB Challenge

On April 4, 2022, Amgen’s appeal of the PTAB’s decision, holding all claims of Amgen’s U.S.

8,952,138 (the ‘138 Patent) unpatentable, was submitted to the U.S.

Court of Appeals for the Federal Circuit (the Federal Circuit Court) for determination on the briefs without oral argument.

On April 14, 2022, the Federal Circuit Court held that the PTAB misconstrued the patent claims and reversed the PTAB’s decision because Apotex failed to prove the invention of the ‘138 Patent unpatentable.

P fizer PTAB Challenge

O n March 18, 2022, the parties filed a joint motion to terminate the inter partes review proceeding at the U.S.

Patent and Trademark Office of U.S.

On April 20, 2022, the PTAB granted the motion and terminated the proceeding.

Antitrust Class Action

On July 21, 2022, Sanofi Biotechnology SAS filed an action against Amgen GmbH and Amgen (Europe) B.V.

before the Regional Court of Dusseldorf alleging that the marketing and sale of Repatha infringes European Patent No.

2,756,004 (the EP’004 Patent), seeking infringement damages and injunctive relief.

The EP’004 Patent is currently in opposition proceedings, initiated by Amgen and an anonymous third party, before the European Patent Office (EPO).

A hearing before the Opposition Division of the EPO was held on June 8 and 9, 2022, and the Opposition Division upheld the validity of the claims at issue with narrowing amendments.

The parties are awaiting the Opposition Division’s written opinion.

Amgen filed a Notice of Appeal on July 6, 2022.

Antitrust Actions

Sensipar Antitrust Class Actions

On March 11, 2022, the Delaware District Court granted defendants’ (including Amgen’s) motion to dismiss except as to the reverse payment claim and various state law claims from ten of the states in which plaintiffs reside.

On May 11, 2022, the parties filed motions asking permission to seek interlocutory appeal of the U.S.

District Court for the District of Delaware’s (the Delaware District Court’s) March 11, 2022 order denying Amgen’s Motion to Dismiss solely with respect to the reverse payment claim and the various state law claims.

The plaintiffs did not oppose Amgen’s motion and instead argued all issues should be appealed at this time.

Amgen filed its opposition to plaintiffs’ motion on June 10, 2022, and reply briefs were filed on June 24, 2022.

HUMIRA ® Biosimilar Antitrust Actions

On August 1, 2022, the U.S.

Court of Appeals for the Seventh Circuit issued an opinion affirming the June 30, 2020 dismissal with prejudice by the U.S.

District Court for the Northern District of Illinois of a consolidated complaint against Amgen along with AbbVie Inc., AbbVie Biotechnology Ltd., Samsung Bioepis Co.

and Sandoz Inc.

Regeneron Pharmaceuticals, Inc.

Antitrust Action

On May 27, 2022, Regeneron Pharmaceuticals, Inc.

(Regeneron) filed suit against Amgen in the Delaware District Court for federal and state antitrust and unfair competition violations and tortious interference with prospective business relations.

Regeneron alleges that Amgen’s sales contracting practices for Repatha, ENBREL and Otezla with key insurers, third-party payors and PBMs have harmed the sales of its product PRALUENT ® and focuses on two primary arguments:

that Amgen improperly bundled sales of Repatha with ENBREL, Otezla and potentially other products and sought exclusive or de facto exclusive formulary positioning for Repatha.

Amgen’s initial responsive pleading was filed on August 1, 2022.

Tax Litigation

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements