What changed in this filing

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Item 1. Financial Statements

2022-11-04 compared with 2022-08-05 · 221 added, 145 removed, 694 unchanged (35% of the section changed)

3 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

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Interest expense, net ( 368 ) ( 296 ) ( 991 ) ( 862 )

Other (expense) income, net ( 317 ) 11 ( 847 ) 24

Other income (expense), net 100 73 ( 747 ) 97

Income before income taxes 2,392 2,155 5,598 4,570

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

Net income $ 2,143 $ 1,884 $ 4,936 $ 3,994

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

Other comprehensive income, net of reclassification adjustments and taxes:

Foreign currency translation ( 109 ) ( 35 ) ( 225 ) ( 60 )

Cash flow hedges 138 99 378 241

Losses on available-for-sale securities — ( 1 ) — ( 1 )

Other ( 9 ) ( 3 ) ( 9 ) ( 3 )

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

Other comprehensive income, net of reclassification adjustments and taxes 20 60 144 177

Comprehensive income $ 2,163 $ 1,944 $ 5,080 $ 4,171

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(In millions, except per-share data)

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Current assets:

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

Net income — — 2,143 — 2,143

Other comprehensive income, net of taxes — — — 20 20

Dividends declared on common stock ($ 1.94 per share)

— — ( 1,057 ) — ( 1,057 )

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

0.1 15 — — 15

Stock-based compensation expense — 121 — — 121

Tax impact related to employee stock-based compensation expense

— ( 8 ) — — ( 8 )

Repurchases of common stock (Note 10) ( 1.5 ) 900 ( 900 ) — —

Balance as of September 30, 2022

533.5 $ 32,371 $ ( 28,066 ) $ ( 652 ) $ 3,653

See accompanying notes.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

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

Net income — — 1,884 — 1,884

Other comprehensive income, net of taxes — — — 60 60

Dividends declared on common stock ($ 1.76 per share)

— — ( 1,017 ) — ( 1,017 )

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

Stock-based compensation expense — 111 — — 111

Tax impact related to employee stock-based compensation expense

— ( 8 ) — — ( 8 )

Repurchases of common stock ( 4.6 ) — ( 1,069 ) — ( 1,069 )

Balance as of September 30, 2021

565.0 $ 31,989 $ ( 22,964 ) $ ( 808 ) $ 8,217

See accompanying notes.

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(In millions)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

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Net proceeds from issuance of debt 6,938 4,946

Extinguishment of debt ( 297 ) —

Repurchases of common stock (Note 10)

( 6,360 ) ( 3,532 )

Dividends paid ( 3,156 ) ( 3,023 )

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Net cash used in financing activities ( 2,988 ) ( 1,713 )

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

Increase in cash and cash equivalents 1,513 5,703

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Summary of significant accounting policies

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Basis of presentation

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.

The financial information for the three and nine months ended September 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 $ 9.0 billion and $ 8.8 billion as of June 30, 2022 and December 31, 2021, respectively.

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization, of $ 9.2 billion and $ 8.8 billion as of September 30, 2022 and December 31, 2021, respectively.

Recent accounting pronouncements

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In January 2021, the FASB issued a new accounting standard that expanded the scope of the original March 2020 standard to include derivative instruments on discounting transactions.

We do not expect the two standards to have a material impact on our condensed consolidated financial statements.

We do not expect the two standards to have a material impact on our consolidated financial statements.

In November 2021, the FASB issued a new accounting standard around the recognition and measurement of contract assets and contract liabilities from revenue contracts with customers acquired in a business combination.

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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 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.

Measurement period adjustments for the nine months ended September 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 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):

These adjustments did not have a significant impact on Amgen’s results of operations during the nine months ended September 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 final total consideration and allocated acquisition date fair values of assets acquired and liabilities assumed, inclusive of measurement period adjustments (in millions):

Cash purchase price $ 993

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Total assets acquired, net $ 1,292

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 of (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 lead 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 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.

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

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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 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.

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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.

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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.

On June 28, 2022, we entered into a share purchase agreement with Eczacıbaşı under which Eczacıbaşı would acquire all of our shares in Gensenta, a subsidiary in Turkey, in exchange for $ 135 million in cash.

Net assets related to Gensenta of $ 76 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.

The transaction closed on November 2, 2022, upon satisfaction of closing conditions, including approval from the Turkish Competition Authority.

See Note 14, Subsequent events.

As of September 30, 2022, held-for-sale assets and liabilities of $ 94 million and $ 18 million were included in Other current assets and Accrued liabilities, respectively, in the Condensed Consolidated Balance Sheets.

During the nine months ended September 30, 2022, we recognized a loss of $ 565 million recorded in 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 June 30,

Three months ended September 30,

ROW Total U.S.

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Aranesp 128 230 358 149 247 396

Neulasta 263 47 310 434 52 486

Repatha 142 167 309 139 133 272

KYPROLIS 217 101 318 198 95 293

Neulasta 205 42 247 360 55 415

Nplate 162 126 288 156 117 273

Other products (1)

1,044 583 1,627 896 557 1,453

Total product sales (2)

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Total revenues $ 6,652 $ 6,706

Six months ended June 30,

Nine months ended September 30,

ROW Total U.S.

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Aranesp 397 676 1,073 409 709 1,118

Neulasta 567 91 658 855 113 968

Repatha 461 502 963 421 423 844

KYPROLIS 626 296 922 547 277 824

Neulasta 772 133 905 1,215 168 1,383

Nplate 474 364 838 404 341 745

Other products (1)

2,983 1,708 4,691 2,655 1,633 4,288

Total product sales (2)

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Total revenues $ 19,484 $ 19,133

(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.

(1) Consists of product sales of our non-principal products, as well as our Gensenta and Bergamo subsidiaries.

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

The effective tax rates for the three and nine months ended September 30, 2022, were 10.4 % and 11.8 %, respectively, compared with 12.6 % for both of the corresponding periods of the prior year.

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

The decrease in our effective tax rate for the nine months ended September 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 net unfavorable items compared to last year and a nondeductible loss from a nonstrategic divestiture.

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.

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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 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 contesting the 2010–2012 and 2013–2015 Notices through the judicial process, and we filed a motion to consolidate 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.

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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—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.

See Part II, Item 1A, Risk Factors— The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability in our Quarterly Report on Form 10-Q for the period ended June 30, 2022, for further discussion.

During the three and nine months ended September 30, 2022, the gross amounts of our UTBs increased by $ 25 million and $ 120 million, respectively, as a result of tax positions taken during the current year.

Substantially all of the UTBs as of September 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

September 30, Nine months ended

September 30,

2022 2021 2022 2021

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Diluted EPS $ 3.98 $ 3.31 $ 9.11 $ 6.93

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.

For the three and nine months ended September 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 June 30, 2022 Amortized

Types of securities as of September 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 June 30, 2022 December 31, 2021

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

Cash and cash equivalents $ 8,945 $ 7,256

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Total interest-bearing securities $ 10,921 $ 7,304

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.

Cash and cash equivalents in the above table excludes bank account cash of $ 557 million and $ 733 million as of September 30, 2022 and December 31, 2021, respectively.

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

For the three and nine months ended September 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 income (expense), net, in the Condensed Consolidated Statements of Income.

The cost of securities sold is based on the specific-identification method.

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Equity securities

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.

We held investments in equity securities with readily determinable fair values (publicly traded securities) of $ 385 million and $ 611 million as of September 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 September 30, 2022 and 2021, net unrealized gains on publicly traded securities were $ 17 million and $ 135 million, respectively.

During the nine months ended September 30, 2022 and 2021, net unrealized gains and losses on publicly traded securities were a $ 259 million net loss and a $ 104 million net gain, respectively.

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

We held investments of $ 227 million and $ 262 million in equity securities without readily determinable fair values as of September 30, 2022 and December 31, 2021, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2022, downward adjustments on these securities were $ 55 million and $ 64 million, respectively, and upward adjustments for these periods were immaterial.

During the three and nine months ended September 30, 2021, downward and upward adjustments were immaterial.

Adjustments were based on observable price transactions.

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BeiGene, Ltd.

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.

As of September 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 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.

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

During the three months ended September 30, 2022 and 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net losses of $ 104 million and $ 98 million, respectively, and amortization of the basis difference of $ 48 million and $ 44 million, respectively.

During the nine months ended September 30, 2022 and 2021, the carrying value of our equity investment was adjusted by our share of BeiGene’s net losses of $ 292 million and $ 181 million, respectively, and amortization of the basis difference of $ 143 million and $ 128 million, respectively.

As of September 30, 2022 and December 31, 2021, the carrying values of our investment in BeiGene totaled $ 2.3 billion and $ 2.8 billion, respectively, and the fair values of our investment totaled $ 2.6 billion and $ 5.1 billion, respectively.

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

Neumora Therapeutics, Inc.

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

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.

During the three months ended September 30, 2022, we made an additional $ 10 million cash investment via participation in Neumora’s subsequent financing round.

As of September 30, 2022 and December 31, 2021, our ownership interest in Neumora was approximately 24.9 % and 25.9 %, respectively, and the fair values of our investment were $ 382 million and $ 220 million, respectively.

Accordingly, for t he increases in fair value of our investment during the three and nine months ended September 30, 2022, we recognized net gains of $ 240 million and $ 152 million, respectively, in Other income (expense), 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 $ 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.

We held limited partnership investments of $ 262 million and $ 573 million as of September 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 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.

As of September 30, 2022, unfunded additional commitments to be made for these investments during the next several years were $ 189 million.

For the three months ended September 30, 2022 and 2021, net unrealized losses from our limited partnership investments were $ 62 million and $ 43 million, respectively.

For the nine months ended September 30, 2022 and 2021, net unrealized gains and losses from our limited partnership investments were a $ 282 million net loss and a $ 122 million net gain, respectively.

Inventories consisted of the following (in millions):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Raw materials $ 801 $ 647

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

Six months ended

June 30, 2022

Nine months ended

September 30, 2022

Beginning balance $ 14,890

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Ending balance $ 14,845

(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.

(1) Consists 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.

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

June 30, 2022 December 31, 2021

September 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 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.

During the three months ended September 30, 2022 and 2021, we recognized amortization associated with our finite-lived intangible assets of $ 628 million and $ 642 million, respectively.

During the nine months ended September 30, 2022 and 2021, we recognized amortization associated with our finite-lived intangible assets of $ 1.9 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 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.

The total estimated amortization for our finite-lived intangible assets for the remaining three months ending December 31, 2022, and the years ending December 31, 2023, 2024, 2025, 2026 and 2027, are $ 0.6 billion, $ 2.5 billion, $ 2.4 billion, $ 2.2 billion, $ 1.8 billion and $ 1.8 billion, respectively.

Financing arrangements

Our borrowings consisted of the following (in millions):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

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

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3.00 % notes due 2029 (3.00% 2029 Notes)

4.05 % notes due 2029 (4.05% 2029 Notes)

4.00 % £ 700 million notes due 2029 (4.00% 2029 pound sterling Notes)

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4.875 % notes due 2053 (4.875% 2053 Notes)

2.77 % notes due 2053 (2.77% 2053 Notes)

4.40 % notes due 2062 (4.40% 2062 Notes)

Other notes due 2097 100 100

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There are no material differences between the effective interest rates and coupon rates of any of our borrowings, except for the 4.563 % 2048 Notes, the 4.663 % 2051 Notes and the 2.77 % 2053 Notes, which have effective interest rates of 6.3 %, 5.6 % and 5.2 %, respectively.

Debt issuances

During the three months ended March 31, 2022, we issued $ 4.0 billion of debt consisting of $ 750 million of the 3.00 % 2029 Notes, $ 1.0 billion of the 3.35 % 2032 Notes, $ 1.0 billion of the 4.20 % 2052 Notes and $ 1.25 billion of the 4.40 % 2062 Notes.

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Such time periods range from two months to six months prior to maturity.

During the three months ended September 30, 2022, we issued $ 3.0 billion of debt consisting of $ 1.25 billion of the 4.05 % 2029 Notes, $ 750 million of the 4.20 % 2033 Notes and $ 1.0 billion of the 4.875 % 2053 Notes.

In the event of a change-in-control triggering event, as defined in the terms of the notes, we may be required to purchase all or a portion of these notes at a price equal to 101 % of the principal amount of the notes plus accrued and unpaid interest.

In addition, these notes may be redeemed at any time at our option, in whole or in part, at the principal amount of the notes being redeemed plus accrued and unpaid interest and a make-whole amount, which are defined by the terms of the notes.

The notes may be redeemed without payment of make-whole amounts if redemption occurs during a specified period of time immediately prior to the maturing of the notes.

Such time periods range from two months to six months prior to maturity.

Debt extinguishment

During the three months ended September 30, 2022, we repurchased portions of the 2.20 % 2027 Notes, the 1.65 % 2028 Notes, the 2.00 % 2032 Notes, the 2.80 % 2041 Notes and the 3.00 % 2052 Notes for an aggregate cost of $ 297 million, which resulted in the recognition of a $ 78 million gain on extinguishment of debt recorded in Other income (expense), net, in the Condensed Consolidated Statements of Income.

Stockholders’ equity

4 unchanged sentences

Second quarter — — 6.5 1,592

Third quarter 1.5 900 4.6 1,069

Total stock repurchases 26.1 $ 6,310 14.8 $ 3,526

1 unchanged sentence

Under the ASR agreements, the Company made payments in an aggregate amount of $ 6.0 billion on February 25, 2022, to the Dealers and received and retired an initial 23.3 million shares of the Company’s common stock from the Dealers.

The payments were recorded as reductions to shareholders’ equity, consisting of a $ 5.1 billion increase to accumulated deficit, which reflects the value of the initial shares received, and a $ 0.9 billion decrease in additional paid-in capital, which reflects the value of the stock that remains to be delivered by the Dealers pending final settlement.

The final number of shares to be repurchased by the Company will be based on the daily volume-weighted average stock price of the Company’s common stock during the terms of the ASR agreements, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements.

At settlement, under certain circumstances, one or more of the Dealers may be required to deliver additional shares of common stock to the Company, or under certain circumstances, the Company may be required to deliver shares of common stock or to make a cash payment, at its election, to a Dealer.

The final settlement under the ASR agreements is scheduled to occur in the third quarter of 2022, subject to an earlier termination under certain limited circumstances, as set forth in the ASR agreements.

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 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.

During the third quarter of 2022, an additional 1.5 million shares of the Company’s common stock were received from the Dealers which constituted final settlement under the ASR agreements, and accordingly, the $ 0.9 billion decrease in additional paid-in capital recorded in February was reclassified to accumulated deficit.

In total, we repurchased 26.1 million shares of common stock during the nine months ended September 30, 2022, consisting primarily of the 24.8 million shares received under the ASR agreements.

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

In October 2022, the Board of Directors increased the amount authorized under our stock repurchase program by an additional $ 2.4 billion.

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

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

Accumulated other comprehensive income (loss)

16 unchanged sentences

( 960 ) 301 — ( 13 ) ( 672 )

Foreign currency translation adjustments ( 109 ) — — — ( 109 )

Unrealized gains — 45 — — 45

Reclassification adjustments to income — 129 — — 129

Other — — — ( 9 ) ( 9 )

Income taxes — ( 36 ) — — ( 36 )

Balance as of September 30, 2022

$ ( 1,069 ) $ 439 $ — $ ( 22 ) $ ( 652 )

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

Three months ended June 30,

Three months ended September 30,

Components of AOCI 2022 2021 Condensed Consolidated

2 unchanged sentences

Foreign currency contract gains (losses) $ 69 $ ( 5 ) Product sales

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

Cross-currency swap contract losses ( 198 ) ( 104 ) Other income (expense), net

( 129 ) ( 109 ) Income before income taxes

1 unchanged sentence

$ ( 101 ) $ ( 86 ) Net income

Six months ended June 30,

Nine months ended September 30,

Components of AOCI 2022 2021 Condensed Consolidated

2 unchanged sentences

Foreign currency contract gains (losses) $ 149 $ ( 24 ) Product sales

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

Cross-currency swap contract losses ( 461 ) ( 190 ) Other income (expense), net

( 312 ) ( 214 ) Income before income taxes

5 unchanged sentences

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:

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

Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access

12 unchanged sentences

(Level 2) Significant

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

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

Available-for-sale securities:

3 unchanged sentences

Other short-term interest-bearing securities — — — —

Other investments — 135 — 135

Equity securities 385 — 382 767

20 unchanged sentences

Other short-term interest-bearing securities — 1 — 1

Other investments — — — —

Equity securities 611 — 220 831

11 unchanged sentences

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 on a combination of market performance and publicly available market information for similar companies that have actively traded equity securities.

Other investments consist of interest-bearing deposits that are valued at amortized cost, which approximates fair value given their near term maturity.

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 observable price transactions, when available, 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.

21 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

Ending balance $ 302 $ 35 $ 302 $ 35

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.

As of September 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.

3 unchanged sentences

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

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.

As of September 30, 2022 and December 31, 2021, the aggregate fair values of our borrowings were $ 34.2 billion and $ 37.9 billion, respectively, and the carrying values were $ 38.7 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 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.

As of September 30, 2022 and December 31, 2021, the fair values were $ 2.6 billion and $ 5.1 billion, and the carrying values were $ 2.3 billion and $ 2.8 billion, respectively.

During the three and nine months ended September 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.

7 unchanged sentences

To further reduce our exposure to foreign currency exchange rate fluctuations with regard to our international product sales, we enter into foreign currency forward contracts to hedge a portion of our projected international product sales up to a maximum of three years into the future;

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 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.

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

As of September 30, 2022 and December 31, 2021, we had outstanding foreign currency forward contracts with aggregate notional amounts of $ 5.5 billion and $ 5.7 billion, respectively.

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

9 unchanged sentences

We have designated these cross-currency swap contracts as cash flow hedges.

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 June 30, 2022, were as follows (notional amounts in millions):

Accordingly, the unrealized gains and losses on these contracts are reported in AOCI in the Condensed Consolidated Balance Sheets and reclassified to Other income (expense), 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 September 30, 2022, were as follows (notional amounts in millions):

Foreign currency U.S.

7 unchanged sentences

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 six months ended June 30, 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 nine months ended September 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

September 30, Nine months ended

September 30,

Derivatives in cash flow hedging relationships 2022 2021 2022 2021

1 unchanged sentence

Cross-currency swap contracts ( 279 ) ( 120 ) ( 486 ) ( 180 )

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

Total unrealized gains $ 45 $ 16 $ 168 $ 93

Fair value hedges

1 unchanged sentence

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 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.

As of September 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.

3 unchanged sentences

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

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

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

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

Long-term debt $ 6,002 $ 6,729 $ ( 532 ) $ 199

(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.

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

Long-term debt includes $ 378 million and $ 440 million of carrying value with discontinued hedging relationships as of September 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 September 30, 2022 and December 31, 2021, respectively.

Long-term debt includes $ 278 million and $ 340 million of hedging adjustments on discontinued hedging relationships as of September 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 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

Three months ended September 30, 2022 Nine months ended September 30, 2022

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

Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income $ 6,237 $ 100 $ ( 368 ) $ 18,249 $ ( 747 ) $ ( 991 )

7 unchanged sentences

Derivatives designated as hedging instruments $ — $ — $ ( 220 ) $ — $ — $ ( 670 )

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

Three months ended September 30, 2021 Nine months ended September 30, 2021

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

Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income $ 6,320 $ 73 $ ( 296 ) $ 18,026 $ 97 $ ( 862 )

The effects of cash flow and fair value hedging:

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

Losses on cash flow hedging relationships reclassified out of AOCI:

Foreign currency contracts $ ( 5 ) $ — $ — $ ( 24 ) $ — $ —

Cross-currency swap contracts $ — $ ( 104 ) $ — $ — $ ( 190 ) $ —

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

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

Hedged items (1)

3 unchanged sentences

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

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.

As of September 30, 2022, we expected to reclassify $ 304 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

1 unchanged sentence

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

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.

As of September 30, 2022 and December 31, 2021, the total notional amounts of these foreign currency forward contracts were $ 501 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 nine months ended September 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

June 30, 2022 Condensed Consolidated

September 30, 2022 Condensed Consolidated

Balance Sheets locations Fair values Condensed Consolidated

15 unchanged sentences

Total derivatives designated as hedging instruments

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.

Our derivative contracts that were in liability positions as of September 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.

9 unchanged sentences

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.

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 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.

3 unchanged sentences

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.

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 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.

1 unchanged sentence

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.

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 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.

2 unchanged sentences

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.

On October 14, 2022, Apotex Inc.

(Apotex) filed its answer to Amgen’s complaint in the U.S.

District Court for the District of New Jersey (the New Jersey District Court) in a lawsuit filed by Amgen 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.

Apotex’s answer disputed infringement and/or validity of the patents-in-suit.

Along with its answer, Apotex also filed declaratory judgment counterclaims asserting that the patents-in-suit are not infringed and/or are invalid.

Amgen’s lawsuit is 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 November 18, 2021, Amgen filed a petition for writ of certiorari with the U.S.

Supreme Court seeking review of the invalidation of claims 19 and 29 of U.S.

8,829,165 and claim 7 of U.S.

8,859,741 as lacking an enabling disclosure of the invention.

On April 18, 2022, the U.S.

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.

On September 21, 2022, the Solicitor General submitted a brief expressing the view that the U.S.

Supreme Court should deny Amgen’s petition for writ of certiorari.

Patent Disputes in the International Region

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.

On August 16, 2022, the Opposition Division of the European Patent Office issued a written decision upholding the validity of the European Patent No.

2,756,004 claims at issue, with narrowing amendments.

Proceedings before the Technical Board of Appeal commenced on August 17, 2022.

Antitrust Actions

Sensipar Antitrust Class Actions

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.

On August 11, 2022, Amgen moved to stay the case pending the ultimate decision on the merits of the ongoing patent litigation between Amgen and Regeneron Pharmaceuticals, Inc.

in Amgen Inc., et al.

Sanofi, et al.

The motion to stay is scheduled for oral argument on January 6, 2023, and Amgen’s motion to dismiss that was filed on August 1, 2022 is also set to be heard on that date.

Tax Litigation

2 unchanged sentences

See Note 4, Income taxes, for discussion of the IRS tax dispute and the Company’s petition in the U.S.

ChemoCentryx, Inc.

Securities Matters

On May 5 and June 8 of 2021, ChemoCentryx and its Chief Executive Officer were named as defendants in two putative shareholder class actions filed in the U.S.

District Court for the Northern District of California (Northern District Court of California).

These cases were consolidated into Homyk v.

ChemoCentryx, Inc.

in which the plaintiffs allege violations of Sections 10(b) and 20(a) of the Securities Exchange Act in connection with statements regarding the New Drug Application for TAVNEOS ® (avacopan) and the underlying Phase 3 clinical trial, seeking an award of damages, interest and attorneys’ fees.

On March 28, 2022, the plaintiffs filed their consolidated amended complaint, and on May 19, 2022, ChemoCentryx moved to dismiss these claims.

On January 25, 2022, the Board of Directors and certain of ChemoCentryx’s officers were named as defendants in a putative shareholder derivative action filed in the Northern District Court of California, Napoli v.

Schall, and on March 11, 2022, the Northern District Court of California stayed the action until judgment is entered in the Homyk v.

ChemoCentryx, Inc.

Subsequent events

Acquisition of ChemoCentryx, Inc.

On October 20, 2022, Amgen completed its acquisition of ChemoCentryx for $ 52.00 per share in cash, for an aggregate merger consideration of approximately $ 3.7 billion.

ChemoCentryx is a biopharmaceutical company focused on orally administered therapeutics to treat autoimmune diseases, inflammatory disorders and cancer.

The accounting impact of this acquisition and the results of operations for ChemoCentryx will be included in our consolidated financial statements beginning in the fourth quarter of 2022.

The initial accounting for this acquisition is incomplete, pending identification and measurement of the assets acquired and liabilities assumed.

Divestiture of Gensenta İlaç Sanayi ve Ticaret A.Ş.

On November 2, 2022, Amgen completed its divestiture transaction with Eczacıbaşı.

The accounting impact upon completion of this divestiture will be included in our consolidated financial statements in the fourth quarter of 2022.

See Note 2, Acquisitions and divestitures.

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