What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-04-28 compared with 2022-11-04 · 302 added, 388 removed, 527 unchanged (57% of the section changed)

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

Product sales $ 5,846 $ 5,731

4 unchanged sentences

Research and development 1,058 959

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

Selling, general and administrative 1,258 1,228

18 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

Net income $ 2,841 $ 1,476

Other comprehensive income, net of reclassification adjustments and taxes:

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

Foreign currency translation 28 ( 51 )

Cash flow hedges ( 86 ) 84

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

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

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

Other comprehensive (loss) income, net of reclassification adjustments and taxes ( 37 ) 33

Comprehensive income $ 2,804 $ 1,509

2 unchanged sentences

(In millions, except per-share data)

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Current assets:

39 unchanged sentences

Net income — — 2,841 — 2,841

Other comprehensive income, net of taxes — — — 33 33

Dividends declared on common stock ($ 1.94 per share)

Other comprehensive loss, net of taxes — — — ( 37 ) ( 37 )

Dividends declared on common stock

($ 2.13 per share)

— — ( 1,138 ) — ( 1,138 )

4 unchanged sentences

— ( 37 ) — — ( 37 )

Repurchases of common stock (Note 10) ( 24.6 ) ( 900 ) ( 5,410 ) — ( 6,310 )

Balance as of March 31, 2023

534.3 $ 32,535 $ ( 26,919 ) $ ( 268 ) $ 5,348

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

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)

(In millions, except per-share data)

paid-in capital Accumulated

8 unchanged sentences

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

Stock-based compensation expense — 57 — — 57

Tax impact related to employee stock-based compensation expense

0.5 18 — — 18

Repurchases of common stock ( 3.7 ) — ( 865 ) — ( 865 )

Balance as of March 31, 2021

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 — 78 — — 78

2 unchanged sentences

Repurchases of common stock ( 24.6 ) ( 900 ) ( 5,410 ) — ( 6,310 )

Other — — 5 — 5

Balance as of June 30, 2021

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

Balance as of March 31, 2022

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

2 unchanged sentences

(In millions)

Nine months ended

September 30,

Three months ended

Cash flows from operating activities:

2 unchanged sentences

Deferred income taxes ( 49 ) ( 251 )

Acquired in-process research and development — 1,505

Adjustments for equity method investments ( 31 ) 305

Loss on divestiture 565 —

(Gains) losses on equity securities ( 1,830 ) 211

Other items, net ( 13 ) 29

9 unchanged sentences

Cash flows from investing activities:

Purchases of marketable securities ( 2,363 ) ( 8,901 )

Proceeds from sales of marketable securities 1,124 —

1 unchanged sentence

Purchases of property, plant and equipment ( 344 ) ( 190 )

Cash paid for acquisitions, net of cash acquired — ( 1,639 )

Other ( 59 ) ( 234 )

Net cash (used in) provided by investing activities ( 2,571 ) 963

Net cash provided by (used in) investing activities 1,358 ( 111 )

Cash flows from financing activities:

1 unchanged sentence

Extinguishment of debt ( 420 ) —

Repurchases of common stock (Note 10)

( 6,360 ) ( 3,532 )

Repayment of debt ( 704 ) —

Repurchases of common stock — ( 6,360 )

Dividends paid ( 1,137 ) ( 1,080 )

Other ( 28 ) ( 26 )

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

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

Net cash provided by (used in) financing activities 21,509 ( 3,514 )

Increase (decrease) in cash and cash equivalents 23,931 ( 1,461 )

Cash and cash equivalents at beginning of period 7,629 7,989

2 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

March 31, 2023

Summary of significant accounting policies

3 unchanged sentences

Basis of presentation

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.

The financial information for the three months ended March 31, 2023 and 2022, 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 Reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 2022.

Principles of consolidation

7 unchanged sentences

Property, plant and equipment, net

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.

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization, of $ 9.4 billion and $ 9.3 billion as of March 31, 2023 and December 31, 2022, respectively.

Recent accounting pronouncements

In March 2020, the FASB issued a new accounting standard to ease the financial reporting burdens caused by the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, commonly referred to as reference rate reform.

The new standard provides temporary optional expedients and exceptions to current GAAP guidance on contract modifications and hedge accounting.

Specifically, a modification to transition to an alternative reference rate is treated as an event that does not require contract remeasurement or reassessment of a previous accounting treatment.

Moreover, for all types of hedging relationships, an entity is permitted to change the reference rate without having to dedesignate the hedging relationship.

The standard is generally effective for all contract modifications made and hedging relationships evaluated through December 31, 2022.

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 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.

The new standard clarifies that contract assets and contract liabilities acquired in a business combination from an acquiree should initially be recognized by applying revenue recognition principles and not at fair value.

The standard is effective for interim and annual periods beginning on January 1, 2023, and early adoption is permitted.

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

No new accounting pronouncements were issued or adopted for the three months ended March 31, 2023, that materially impacted the Company.

Restructuring

In the first quarter of 2023, we initiated a restructuring plan to enhance continued innovation, including investments in first-in-class medicines, while improving our cost structure.

As part of the plan, we are reallocating resources to the areas of the business that will enable long-term growth.

We estimate that we will incur $ 300 million to $ 400 million of pretax charges in 2023 in connection with our restructuring plan, including (i) separation and other headcount-related costs with respect to staff reductions and (ii) asset-related charges that consist primarily of asset impairments, accelerated depreciation and other related costs resulting from the rationalization of our geographic footprint.

During the three months ended March 31, 2023, we incurred total separation and other headcount-related costs of $ 141 million recorded in Other operating expenses in the Condensed Consolidated Statements of Income and asset-related and other charges of $ 38 million, consisting primarily of asset-related impairments recorded in Cost of sales in the Condensed Consolidated Statements of Income.

As of March 31, 2023, the total restructuring liability of $ 132 million was included in Accrued liabilities in the Condensed Consolidated Balance Sheets.

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 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 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 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

Contingent consideration 299

Total consideration $ 1,292

Proposed acquisition of Horizon Therapeutics plc

On December 12, 2022, we announced that we had entered into a transaction agreement under which Amgen will acquire all shares of Horizon for $ 116.50 per share in cash for a transaction equity value of approximately $ 27.8 billion.

Horizon is a global biotechnology company headquartered in Dublin, Ireland and is focused on the discovery, development and commercialization of medicines that address critical needs for people impacted by rare, autoimmune and severe inflammatory diseases.

Horizon has 12 marketed medicines and a pipeline with more than 20 development programs.

The closing of this transaction is contingent upon satisfaction of certain regulatory (including FTC review) and other customary closing conditions.

On January 30, 2023, the Company and Horizon each received a request for additional information and documentary materials (Second Request) from the FTC in connection with the FTC’s review of the Company’s proposed acquisition of Horizon.

We and Horizon have been working cooperatively with the FTC and will continue to do so.

Additionally, the Irish High Court set a court hearing date of May 22, 2023, to consider the application to sanction our proposed acquisition of Horizon.

The Irish High Court will be informed in advance if the hearing date needs to be adjourned to a later date as a result of a condition to closing, including required regulatory clearances, not having been satisfied by the scheduled hearing date.

In connection with our proposed acquisition of Horizon, we entered into several debt and financing arrangements.

See Note 10, Financing arrangements.

Acquisition of ChemoCentryx, Inc.

On October 20, 2022, we acquired all the outstanding stock of ChemoCentryx, a publicly traded biotechnology company focused on orally-administered therapeutics to treat autoimmune diseases, inflammatory disorders and cancer, for $ 52.00 per share in cash, representing a total consideration of $ 3.9 billion.

The acquisition, which was accounted for as a business combination, includes TAVNEOS, an orally administered selective complement 5a receptor inhibitor that was approved by the FDA in October 2021 as an adjunctive therapy for adults with severe active anti-neutrophil cytoplasmic autoantibody-associated vasculitis (ANCA-associated vasculitis).

TAVNEOS is commercialized by us in the United States;

for markets outside the United States, TAVNEOS is commercialized by a collaboration partner, and Amgen is entitled to royalties and milestones based off future sales of the product.

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

Measurement period adjustments during the three months ended March 31, 2023, included changes to the purchase price allocation and total consideration, resulting in a net decrease of approximately $ 4 million to goodwill.

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

The adjustments did not have a significant impact on Amgen’s results of operations during the three months ended March 31, 2023, and would not have had a significant impact on prior-period results if the 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):

Cash and cash equivalents $ 86

In-process research and development 991

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

Finite-lived intangible assets – licensing rights 41

Other assets, net 16

Deferred tax liability ( 244 )

Marketable securities 235

Inventories 41

Finite-lived intangible assets – developed-product-technology rights 3,499

Other liabilities, net ( 83 )

Deferred tax liability, net ( 516 )

Total assets acquired, net $ 3,925

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 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.

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.

The estimated fair values for these intangible assets were determined using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets.

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 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 $ 3.9 billion total consideration consisted of (i) a $ 3.7 billion cash payment to outstanding common stockholders of ChemoCentryx and (ii) a $ 181 million cash payment to equity award holders of ChemoCentryx for services rendered prior to the acquisition date of October 20, 2022, under the ChemoCentryx equity award plans.

The developed-product-technology rights acquired relates to TAVNEOS, which is approved in the United States and European Union for ANCA-associated vasculitis.

The estimated fair values of $ 3.5 billion were determined by using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets.

The developed-product-technology rights are being amortized on a straight-line basis over a weighted-average period of approximately 11 years using the straight-line method.

The estimated fair value of the acquired inventory of $ 41 million was determined using the comparative sales method, which uses actual or expected selling prices of inventory as the base amount to which adjustments for selling effort and a profit on the buyer’s effort are applied.

The inventory fair value adjustment is being amortized as inventory turns over, which we estimate to be approximately 13 months.

A net deferred tax liability of $ 516 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.

The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $ 663 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.

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 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.

The goodwill value is primarily attributable to the expected synergies from the TAVNEOS asset.

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.

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 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.

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.

On November 2, 2022, we sold our shares in Gensenta, a subsidiary in Turkey, to Eczacıbaşı for net cash proceeds of approximately $ 130 million.

The transaction was accounted for as a sale of a business and did not meet the criteria to be classified as discontinued operations.

Upon closing of this transaction, net assets related to Gensenta of $ 86 million were divested, and during the year ended December 31, 2022, we recognized a loss on divestiture of $ 567 million, recorded in Other operating expenses in the Consolidated Statements of Income, primarily due to the reclassification of $ 615 million of cumulative foreign currency translation losses from AOCI into earnings.

We operate in one business segment:

4 unchanged sentences

Revenues were as follows (in millions):

Three months ended September 30,

Three months ended March 31,

ROW Total U.S.

ENBREL $ 1,086 $ 20 $ 1,106 $ 1,263 $ 26 $ 1,289

Prolia $ 623 $ 304 $ 927 $ 582 $ 270 $ 852

Otezla 529 98 627 495 114 609

XGEVA 363 132 495 372 145 517

Aranesp 128 230 358 149 247 396

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)

$ 4,466 $ 1,771 6,237 $ 4,558 $ 1,762 6,320

Other revenues 415 386

Total revenues $ 6,652 $ 6,706

Nine months ended September 30,

ROW Total U.S.

ENBREL 564 15 579 843 19 862

Prolia 1,783 853 2,636 1,569 806 2,375

Otezla 1,366 306 1,672 1,284 335 1,619

XGEVA 384 152 536 368 134 502

Aranesp 397 676 1,073 409 709 1,118

Otezla 294 98 392 350 101 451

Repatha 197 191 388 165 164 329

KYPROLIS 626 296 922 547 277 824

Neulasta 772 133 905 1,215 168 1,383

Nplate 246 116 362 156 110 266

KYPROLIS 234 124 358 196 91 287

Aranesp 115 240 355 137 221 358

EVENITY 164 90 254 110 60 170

Other products (1)

4 unchanged sentences

Total revenues $ 6,105 $ 6,238

(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.

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

(2) Hedging gains and losses, which are included in product sales, were not material for the three months ended March 31, 2023 and 2022.

The effective tax rates for the three months ended March 31, 2023 and 2022, were 17.5 % and 11.9 %, respectively.

The increase in our effective tax rate for the three months ended March 31, 2023, was primarily due to the new Puerto Rico income tax beginning in 2023 and an increase in interest expense on tax reserves.

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.

3 unchanged sentences

tax at a reduced rate of 10.5%.

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.

We are no longer subject to a 4% excise tax in the U.S.

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

As of January 1, 2023, we qualify for the alternative income tax rate on industrial development income of our Puerto Rico affiliate.

In the United States, this income tax qualifies for foreign tax credits.

Both this income tax and the associated foreign tax credits are generally recognized in our provision for income taxes.

We account for the 2022 excise tax that was capitalized in Inventories as an expense in Cost of sales when the related products are sold in 2023, and a foreign tax credit will not be recognized in 2023 with respect to the excise tax.

One or more of our legal entities file income tax returns in the 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 filed a motion to consolidate the two periods into one case in the U.S.

We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process.

The two cases were consolidated in the U.S.

Tax Court on December 19, 2022.

On February 10, 2023, the U.S.

Tax Court entered an order setting a trial date of November 4, 2024.

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.

In addition, we are under examination by a number of state and foreign tax jurisdictions.

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

We believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities;

We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities;

however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our condensed consolidated financial statements.

1 unchanged sentence

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

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.

See our Annual Report on Form 10-K for the year ended December 31, 2022, Part I, Item 1A, Risk Factors— The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability, for further discussion.

During the three months ended March 31, 2023, the gross amounts of our UTBs increased by $ 60 million as a result of tax positions taken during the current year.

Substantially all of the UTBs as of March 31, 2023, if recognized, would affect our effective tax rate.

Earnings per share

3 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

Income (Numerator):

6 unchanged sentences

Diluted EPS $ 5.28 $ 2.68

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.

For the three months ended March 31, 2023 and 2022, 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 September 30, 2022 Amortized

Treasury notes $ — $ — $ — $ —

Types of securities as of March 31, 2023 Amortized

Treasury bills $ — $ — $ — $ —

3 unchanged sentences

Types of securities as of December 31, 2022 Amortized

Treasury notes $ 47 $ — $ — $ 47

Treasury bills $ 1,676 $ — $ — $ 1,676

3 unchanged sentences

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 September 30, 2022 December 31, 2021

Condensed Consolidated Balance Sheets locations March 31, 2023 December 31, 2022

Cash and cash equivalents $ 31,064 $ 2,659

1 unchanged sentence

Total interest-bearing securities $ 31,065 $ 4,335

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.

Cash and cash equivalents in the above table excludes bank account cash of $ 496 million and $ 4,970 million as of March 31, 2023 and December 31, 2022, respectively.

Cash and cash equivalents as of March 31, 2023 was $ 31.6 billion, of which $ 27.8 billion is anticipated to be used for the proposed acquisition of Horizon.

See Note 3, Acquisitions and divestitures.

All interest-bearing securities as of March 31, 2023 and December 31, 2022, mature in one year or less.

For the three months ended March 31, 2023 and 2022, 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.

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Equity securities

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.

BeiGene, Ltd.

Effective January 30, 2023, we relinquished our right to appoint a director to BeiGene’s Board of Directors.

We no longer have the ability to exert significant influence over BeiGene.

As a result, in the first quarter of 2023, we began to account for our ownership interest as an equity security with a readily determinable fair value, with changes in fair value recorded in Other income (expense), net.

See Note 12, Fair value measurement.

During the three months ended March 31, 2023, we recognized a net unrealized gain of $ 1.9 billion recorded to Other income (expense), net, in our Condensed Consolidated Statements of Income.

As of March 31, 2023, the carrying and fair value of our investment in BeiGene was $ 4.1 billion and was included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

As of December 31, 2022, under the equity method of accounting, the carrying value of our investment in BeiGene was $ 2.2 billion and was included in Other noncurrent assets in the Condensed Consolidated Balance Sheets, and our ownership percentage was 18.2 %.

During the three months ended March 31, 2022, under the equity method of accounting, our carrying value in BeiGene was adjusted by our share of BeiGene’s net losses of $ 108 million and amortization of the basis difference of $ 47 million.

Other equity securities

Excluding our equity investment in BeiGene, we held investments in other equity securities with readily determinable fair values (publicly traded securities) of $ 462 million and $ 480 million as of March 31, 2023 and December 31, 2022, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three months ended March 31, 2023 and 2022, net unrealized gains and losses on these publicly traded securities were a gain of $ 5 million and a loss of $ 170 million, respectively.

Realized gains and losses on sales of publicly traded securities for the three months ended March 31, 2023 and 2022, were not material.

We held investments of $ 250 million and $ 233 million in equity securities without readily determinable fair values as of March 31, 2023 and December 31, 2022, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three months ended March 31, 2023 and 2022, upward and downward adjustments on these securities were not material.

Adjustments were based on observable price transactions.

Equity method investments

BeiGene, Ltd.

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 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.

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.

As of March 31, 2023 and December 31, 2022, our ownership interest in Neumora was approximately 24.5 % and 24.9 %, respectively, and the fair values of our investment were $ 288 million and $ 335 million, respectively.

Accordingly, during the three months ended March 31, 2023 and 2022, we recognized a loss of $ 47 million and $ 50 million, respectively, in Other income (expense), net, in the Condensed Consolidated Statements of Income.

For information on determination of fair values, see Note 12, Fair value measurement.

Limited partnerships

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.

We held limited partnership investments of $ 268 million and $ 249 million as of March 31, 2023 and December 31, 2022, 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 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.

As of March 31, 2023, unfunded additional commitments to be made for these investments during the next several years were $ 160 million.

For the three months ended March 31, 2023 and 2022, we recognized net gains of $ 20 million and net losses of $ 160 million, respectively, in Other income (expense), net, in the Condensed Consolidated Statements of Income on these investments.

Inventories consisted of the following (in millions):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Raw materials $ 903 $ 828

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

Nine months ended

September 30, 2022

Three months ended

March 31, 2023

Beginning balance $ 15,529

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Ending balance $ 15,531

(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.

(1) For the three months ended March 31, 2023, adjustments to goodwill consisted of a measurement period adjustment related to our acquisition of ChemoCentryx.

See Note 3, Acquisitions and divestitures.

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

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 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.

During the three months ended March 31, 2023 and 2022, we recognized amortization associated with our finite-lived intangible assets of $ 693 million and $ 637 million, respectively.

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 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.

The total estimated amortization of our finite-lived intangible assets for the remaining nine months ending December 31, 2023, and the years ending December 31, 2024, 2025, 2026, 2027 and 2028, are $ 2.1 billion, $ 2.7 billion, $ 2.5 billion, $ 2.2 billion, $ 2.1 billion and $ 1.1 billion, respectively.

Financing arrangements

Our borrowings consisted of the following (in millions):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

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

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5.25 % notes due 2025 (5.25% 2025 Notes)

3.125 % notes due 2025 (3.125% 2025 Notes)

2.00 % € 750 million notes due 2026 (2.00% 2026 euro Notes)

5.507 % notes due 2026 (5.507% 2026 Notes)

2.60 % notes due 2026 (2.60% 2026 Notes)

5.50 % £ 475 million notes due 2026 (5.50% 2026 pound sterling Notes)

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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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4.20 % notes due 2052 (4.20% 2052 Notes)

4.875 % notes due 2053 (4.875% 2053 Notes)

5.65 % notes due 2053 (5.65% 2053 Notes)

2.77 % notes due 2053 (2.77% 2053 Notes)

4.40 % notes due 2062 (4.40% 2062 Notes)

March 31, 2023 December 31, 2022

5.75 % notes due 2063 (5.75% 2063 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.

The 3.00 % 2029 Notes were issued to finance eligible projects that meet specified criteria to benefit the environment.

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.

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.

Debt issuances and acquisition-related financing

During the three months ended March 31, 2023, in connection with the proposed acquisition of Horizon (see Note 3, Acquisitions and divestitures —Proposed acquisition of Horizon Therapeutics plc ), we issued the following series of notes (in millions):

Principal Amount

5.25 % 2025 Notes

5.507 % 2026 Notes

5.15 % 2028 Notes

5.25 % 2030 Notes

5.25 % 2033 Notes

5.60 % 2043 Notes

5.65 % 2053 Notes

5.75 % 2063 Notes

Total $ 24,000

If the consummation of the proposed acquisition of Horizon does not occur on or before the later of:

(i) January 31, 2024, or such later date to which the agreement to acquire Horizon (Transaction Agreement) may be extended in accordance with its terms, (ii) the Transaction Agreement is terminated, or (iii) we otherwise notify the trustee of the notes that consummation of the acquisition will not be pursued, we will be required to redeem each series of notes, other than the 5.75 % 2063 Notes, at a price equal to 101 % of the principal amount of the notes plus accrued and unpaid interest.

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.

Except with respect to the 5.25 % 2025 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, except for the 5.507 % 2026 Notes, which may be redeemed without payment of the make-whole amount if redemption occurs after two years prior to maturity.

In December 2022, in connection with the proposed acquisition of Horizon, we entered into a bridge credit agreement, which provided for borrowings with an aggregate principal amount of $ 24.5 billion as of December 31, 2022.

Subsequent to our March 2023 debt issuance described above, we terminated the bridge credit agreement.

Accordingly, during the three months ended March 31, 2023, we recognized $ 98 million of financing cost associated with the bridge credit agreement, primarily in Other income (expense), net, in the Condensed Consolidated Statements of Income.

Also in connection with the proposed acquisition of Horizon, we entered into a $ 4.0 billion term loan credit agreement in December 2022.

No amounts under this agreement were outstanding as of March 31, 2023 and December 31, 2022.

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.

During the three months ended March 31, 2023, we repurchased portions of the 2.00 % 2032 Notes, 3.15 % 2040 Notes, 2.80 % 2041 Notes, 3.375 % 2050 Notes, 3.00 % 2052 Notes, 4.20 % 2052 Notes and 4.40 % 2062 Notes for an aggregate cost of $ 420 million, which resulted in the recognition of a $ 113 million gain on extinguishment of debt recorded in Other income (expense), net, in the Condensed Consolidated Statements of Income.

Debt repayments

During the three months ended March 31, 2023, we repaid the CHF 700 million aggregate principal amount ($ 704 million upon settlement of the related cross-currency swap) of the 0.41 % 2023 Swiss franc Bonds.

Shelf registration statement and other facilities

In February 2023, we filed a shelf registration statement with the SEC that allows us to issue unspecified amounts of debt securities;

common stock;

preferred stock;

warrants to purchase debt securities, common stock, preferred stock or depositary shares;

rights to purchase common stock or preferred stock;

securities purchase contracts;

securities purchase units;

and depositary shares.

Under this shelf registration statement, all of the securities available for issuance may be offered from time to time with terms to be determined at the time of issuance.

This shelf registration statement expires in February 2026.

During the three months ended March 31, 2023, we amended and restated our syndicated, unsecured, revolving credit agreement under which we may borrow up to $ 4.0 billion (increased from $ 2.5 billion prior to the amendment) for general corporate purposes, including as a liquidity backstop for our commercial paper program.

The commitments under the revolving credit agreement may be increased by up to $ 1.25 billion with the agreement of the banks (increased from $ 750 million prior to the amendment).

Each bank that is a party to the agreement has an initial commitment term of five years .

This term may be extended for up to two additional one-year periods with the agreement of the banks.

Annual commitment fees for this agreement are 0.09 % of the unused portion of the facility based on our current credit rating.

Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) SOFR plus 1.01 % or (ii) the highest of (A) the administrative agent bank base commercial lending rate, (B) the overnight federal funds rate plus 0.50 % or (C) one-month SOFR plus 1.1 %.

As of March 31, 2023 and December 31, 2022, no amounts were outstanding under this facility.

Stockholders’ equity

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First quarter — $ — 24.6 $ 5,410

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

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

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 remained to be delivered by the Dealers.

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.

As of March 31, 2023, $ 7.0 billion of authorization remained available under our stock repurchase program.

In March 2023, the Board of Directors declared a quarterly cash dividend of $ 2.13 per share, which will be paid in June 2023.

In December 2022, the Board of Directors declared a quarterly cash dividend of $ 2.13 per share, which was paid in March 2023.

Accumulated other comprehensive income (loss)

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translation Cash flow

hedges Available-for-sale

securities Other AOCI

hedges Other AOCI

Balance as of December 31, 2022 $ ( 348 ) $ 128 $ ( 11 ) $ ( 231 )

Foreign currency translation adjustments 28 — — 28

Unrealized gains — 56 — — 56

Reclassification adjustments to income — 51 — — 51

Income taxes — ( 23 ) — — ( 23 )

Balance as of March 31, 2022

( 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 )

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

Unrealized gains — 45 — — 45

Unrealized losses — ( 71 ) — ( 71 )

Reclassification adjustments to income — ( 30 ) — ( 30 )

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Income taxes — 15 — 15

Balance as of September 30, 2022

Balance as of March 31, 2023

$ ( 320 ) $ 42 $ 10 $ ( 268 )

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

Three months ended September 30,

Components of AOCI 2022 2021 Condensed Consolidated

Statements of Income locations

Cash flow hedges:

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

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

( 129 ) ( 109 ) Income before income taxes

28 23 Provision for income taxes

$ ( 101 ) $ ( 86 ) Net income

Nine months ended September 30,

Three months ended March 31,

Components of AOCI 2023 2022 Condensed Consolidated

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Cash flow hedges:

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

Foreign currency contract gains $ 52 $ 27 Product sales

Cross-currency swap contract losses ( 22 ) ( 78 ) Other income (expense), 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 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 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.

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

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The fair values of each major class of the Company’s financial assets and liabilities measured at fair value on a recurring basis were as follows (in millions):

Quoted prices in

active markets for

identical assets

Quoted prices

in active markets

for identical assets

(Level 1) Significant

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(Level 2) Significant

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

Fair value measurement as of March 31, 2023, using:

Available-for-sale securities:

Treasury notes $ — $ — $ — $ —

Treasury bills $ — $ — $ — $ —

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Equity securities 4,545 — 288 4,833

Foreign currency contracts — 639 — 639

Foreign currency forward contracts — 252 — 252

Cross-currency swap contracts — — — —

Interest rate swap contracts — — — —

Total assets $ 35,609 $ 384 $ 288 $ 36,281

Foreign currency contracts $ — $ 22 $ — $ 22

Foreign currency forward contracts $ — $ 73 $ — $ 73

Cross-currency swap contracts — 517 — 517

Interest rate swap contracts — 662 — 662

Forward interest rate contracts — — — —

Contingent consideration obligations

Total liabilities $ — $ 1,252 $ 273 $ 1,525

Quoted prices in

active markets for

identical assets

Quoted prices

in active markets

for identical assets

(Level 1) Significant

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Available-for-sale securities:

Treasury notes $ 47 $ — $ — $ 47

Treasury bills $ 1,676 $ — $ — $ 1,676

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Equity securities 480 — 335 815

Foreign currency contracts — 183 — 183

Foreign currency forward contracts — 287 — 287

Cross-currency swap contracts — 54 — 54

Interest rate swap contracts — 16 — 16

Total assets $ 4,815 $ 471 $ 335 $ 5,621

Foreign currency contracts $ — $ 39 $ — $ 39

Foreign currency forward contracts $ — $ 76 $ — $ 76

Cross-currency swap contracts — 541 — 541

Interest rate swap contracts — 776 — 776

Forward interest rate contracts — 5 — 5

Contingent consideration obligations

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The fair values of our U.S.

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.

Treasury securities, money market mutual funds and equity investments in publicly traded securities, including our equity investment in BeiGene as of March 31, 2023, are based on quoted market prices in active markets, with no valuation adjustment.

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.

We estimate the fair values of these contracts by taking into consideration valuations obtained from a third-party valuation service that uses an income-based industry-standard valuation model for which all significant inputs are observable either directly or indirectly.

These inputs include foreign currency exchange rates, LIBOR, swap rates and obligor credit default swap rates.

In addition, inputs for our foreign currency option contracts include implied volatility measures.

These inputs, when applicable, are at commonly quoted intervals.

See Note 12, Derivative instruments.

Our cross-currency swap contracts are with counterparties that have minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch.

The fair value of equity securities without readily determinable fair values is 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.

See Note 7, Investments— Neumora Therapeutics, Inc.

As of the first quarter of 2023, we no longer account for our equity investment in BeiGene under the equity method of accounting.

As of December 31, 2022, the fair value and carrying value were $ 4.2 billion and $ 2.2 billion, respectively.

The fair value of our investment in BeiGene was estimated by using Level 1 inputs.

See Note 7, Investments— BeiGene, Ltd.

All of our foreign currency forward contracts, cross-currency swap contracts and interest rate swap contracts are with counterparties that have minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch.

These inputs include foreign currency exchange rates, LIBOR, swap rates, obligor credit default swap rates and cross-currency-basis swap spreads.

See Note 12, Derivative instruments.

Our interest rate swap contracts are with counterparties that have minimum credit ratings of A– or equivalent by S&P, Moody’s or Fitch.

We estimate the fair values of these contracts by using an income-based industry-standard valuation model for which all significant inputs are observable either directly or indirectly.

These inputs include LIBOR, swap rates and obligor credit default swap rates.

These inputs, as applicable, include foreign currency exchange rates, LIBOR, swap rates, obligor credit default swap rates and cross-currency basis swap spreads.

Certain inputs, when applicable, are at commonly quoted intervals.

See Note 13, Derivative instruments.

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Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

Beginning balance $ 270 $ 342

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Ending balance $ 273 $ 330

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.

As of March 31, 2023 and December 31, 2022, our contingent consideration obligations are primarily the result of our acquisition of Teneobio, Inc., 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.

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 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 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.

As of March 31, 2023 and December 31, 2022, the aggregate fair values of our borrowings were $ 59.8 billion and $ 35.0 billion, respectively, and the carrying values were $ 61.6 billion and $ 38.9 billion, respectively.

During the three months ended March 31, 2023 and 2022, 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.

Derivative instruments

The Company is exposed to foreign currency exchange rate and interest rate risks related to its business operations.

To reduce our risks related to such exposures, we use or have used certain derivative instruments, including foreign currency forward, cross-currency swap, forward interest rate and interest rate swap contracts.

To reduce our risks related to such exposures, we use or have used certain derivative instruments, including foreign currency forward, foreign currency option, cross-currency swap, forward interest rate and interest rate swap contracts.

We have designated certain of our derivatives as cash flow and fair value hedges;

we also have derivatives not designated as hedges.

We do not use derivatives for speculative-trading purposes.

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We are exposed to possible changes in the values of certain anticipated foreign currency cash flows resulting from changes in foreign currency exchange rates primarily associated with our euro-denominated international product sales.

Increases and decreases in the cash flows associated with our international product sales due to movements in foreign currency exchange rates are partially offset by corresponding increases and decreases in the cash flows from our international operating expenses resulting from these foreign currency exchange rate movements.

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;

The foreign currency exchange rate fluctuation exposure associated with cash inflows from our international product sales is partially offset by corresponding cash outflows from our international operating expenses.

To further reduce our exposure, 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 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.

As of March 31, 2023 and December 31, 2022, we had outstanding foreign currency forward contracts with aggregate notional amounts of $ 6.1 billion and $ 6.0 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 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):

The notional amounts and interest rates of our cross-currency swaps as of March 31, 2023, were as follows (notional amounts in millions):

Foreign currency U.S.

Hedged notes Notional amounts Interest rates Notional amounts Interest rates

0.41% 2023 Swiss franc Bonds CHF 700 0.4 % $ 704 3.4 %

2.00% 2026 euro Notes € 750 2.0 % $ 833 3.9 %

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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 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):

Amounts recognized in connection with forward interest rate contracts during the three months ended March 31, 2023, and amounts expected to be recognized during the subsequent 12 months, are not material.

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

Three months ended

September 30, Nine months ended

September 30,

Derivatives in cash flow hedging relationships 2023 2022

Foreign currency contracts $ 324 $ 136 $ 654 $ 273

Foreign currency forward contracts $ — $ 78

Cross-currency swap contracts ( 40 ) ( 22 )

Total unrealized gains $ 45 $ 16 $ 168 $ 93

Forward interest rate contracts ( 31 ) —

Total unrealized (losses) gains $ ( 71 ) $ 56

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 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.

As of March 31, 2023 and December 31, 2022, 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 September 30, 2022 December 31, 2021 September 30, 2022 December 31, 2021

Condensed Consolidated Balance Sheets locations March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022

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

Long-term debt $ 6,112 $ 6,017 $ ( 425 ) $ ( 519 )

(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.

(1) Current portion of long-term debt includes $ 82 million of carrying value with discontinued hedging relationships as of both March 31, 2023 and December 31, 2022.

Long-term debt includes $ 337 million and $ 357 million of carrying value with discontinued hedging relationships as of March 31, 2023 and December 31, 2022, respectively.

(2) Current portion of long-term debt includes $ 82 million of hedging adjustments on discontinued hedging relationships as of both March 31, 2023 and December 31, 2022.

Long-term debt includes $ 237 million and $ 257 million of hedging adjustments on discontinued hedging relationships as of March 31, 2023 and December 31, 2022, 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 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

Three months ended March 31, 2023

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 $ 5,846 $ 2,064 $ ( 543 )

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Gains (losses) on cash flow hedging relationships reclassified out of AOCI:

Foreign currency contracts $ 69 $ — $ — $ 149 $ — $ —

Foreign currency forward contracts $ 52 $ — $ —

Cross-currency swap contracts $ — $ ( 22 ) $ —

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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Derivatives designated as hedging instruments $ — $ — $ 114

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

Three months ended March 31, 2022

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 $ 5,731 $ ( 530 ) $ ( 295 )

The effects of cash flow and fair value hedging:

Losses on cash flow hedging relationships reclassified out of AOCI:

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

Gains (losses) on cash flow hedging relationships reclassified out of AOCI:

Foreign currency forward contracts $ 27 $ — $ —

Cross-currency swap contracts $ — $ ( 78 ) $ —

5 unchanged sentences

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

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.

As of March 31, 2023, we expected to reclassify $ 97 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 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.

As of March 31, 2023 and December 31, 2022, the total notional amounts of these foreign currency forward contracts were $ 582 million and $ 517 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, 2023 and 2022.

Fair values of derivatives

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

Derivative assets Derivative liabilities

September 30, 2022 Condensed Consolidated

March 31, 2023 Condensed Consolidated

Balance Sheets locations Fair values Condensed Consolidated

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Derivatives designated as hedging instruments:

Foreign currency contracts Other current assets/ Other noncurrent assets $ 639 Accrued liabilities/ Other noncurrent liabilities

Foreign currency forward contracts Other current assets/ Other noncurrent assets $ 252 Accrued liabilities/ Other noncurrent liabilities

Cross-currency swap contracts Other current assets/ Other noncurrent assets — Accrued liabilities/ Other noncurrent liabilities

Interest rate swap contracts Other current assets/ Other noncurrent assets — Accrued liabilities/ Other noncurrent liabilities

Forward interest rate contracts Other current assets/ Other noncurrent assets — Accrued liabilities/ Other noncurrent liabilities

Total derivatives designated as hedging instruments

$ 645 $ 1,586

Total derivatives $ 252 $ 1,252

Derivative assets Derivative liabilities

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Derivatives designated as hedging instruments:

Foreign currency contracts Other current assets/ Other noncurrent assets $ 183 Accrued liabilities/ Other noncurrent liabilities

Foreign currency forward contracts Other current assets/ Other noncurrent assets $ 287 Accrued liabilities/ Other noncurrent liabilities

Cross-currency swap contracts Other current assets/ Other noncurrent assets 54 Accrued liabilities/ Other noncurrent liabilities

Interest rate swap contracts Other current assets/ Other noncurrent assets — Accrued liabilities/ Other noncurrent liabilities

Forward interest rate contracts Other current assets/ Other noncurrent assets

— Accrued liabilities/ Other noncurrent liabilities

Total derivatives designated as hedging instruments

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.

Total derivatives $ 341 $ 1,398

For additional information, see Note 12, Fair value measurement.

Our derivative contracts that were in liability positions as of March 31, 2023, 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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In addition, our derivative contracts are not subject to any type of master netting arrangement, and amounts due either to or from a counterparty under the contracts may be offset against other amounts due either to or from the same counterparty only if an event of default or termination, as defined, were to occur.

The cash flow effects of our derivative contracts in the Condensed Consolidated Statements of Cash Flows are included in Net cash provided by operating activities, except for the settlement of notional amounts of cross-currency swaps, which are included in Net cash used in financing activities.

Contingencies and commitments

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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;

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 Reports on Form 10-Q for the periods ended March 31, 2022 and June 30, 2022.

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, 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;

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 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.

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, 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;

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 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.

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, 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.

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.

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

1 unchanged sentence

Otezla ANDA Patent Litigation

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.

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.

Sandoz Inc., et al.

On April 19, 2023, the U.S.

Court of Appeals for the Federal Circuit affirmed the permanent injunction entered by the U.S.

District Court for the District of New Jersey prohibiting Sandoz and Zydus Pharmaceuticals (USA) Inc.

from making, using, selling, offering to sell, or importing each of the generic versions of Otezla until February 2028.

Repatha Patent Litigation

1 unchanged sentence

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.

Oral argument before the U.S.

Supreme Court took place on March 27, 2023.

Patent Disputes in the International Region

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.

In Amgen’s counterclaim litigation alleging that PRALUENT ® infringes Amgen’s European Patent No.

2,641,917 (the ’917 Patent), on February 27, 2023, Amgen filed a notice of appeal of the European Patent Office’s Opposition Division order invalidating the claims of the ’917 Patent.

On March 13, 2023, Amgen appealed to the Japanese Supreme Court the High Court’s decision that Amgen’s Japanese patent claims relating to PCSK9 were invalid for lacking adequate support.

On April 24, 2023, Amgen filed its Grounds for Acceptance of Appeal and Grounds for Appeal with the Japanese Supreme Court.

ABP 654 (ustekinumab) Patent Litigation

Janssen Biotech, Inc.

On February 21, 2023, Janssen filed a first amended complaint adding, among other things, a request for declaratory judgment that four additional patents, together with the two patents it previously asserted, would be infringed by Amgen’s submission of an application for FDA licensure of ABP 654, Amgen’s biosimilar version of Janssen’s STELARA ® (ustekinumab).

On March 5, 2023, Janssen filed a motion for preliminary injunction based on the alleged infringement of the two patents it had originally asserted, specifically U.S.

9,217,168 and 9,475,858, seeking to enjoin Amgen from manufacturing or using in commercial quantities, offering to sell, or selling within the United States, or importing for commercial purposes into the United States, ABP 654.

On March 23, 2023, the District Court Judge issued a scheduling order for this preliminary injunction proceedings, setting such hearing for August 4, 2023.

Janssen Biotech Inc.

Amgen Technology (Ireland) Unlimited Company

On March 22, 2023, Janssen initiated an action in the Irish High Court alleging infringement of Irish Supplementary Protection Certificate No.

2009/015, indicating intent to seek an interlocutory injunction restraining ABP 654 manufacturing activities in Ireland.

The trial date for preliminary Supplementary Protection Certificate issues, potentially followed by a hearing with respect to interlocutory injunction, has been set to begin on July 4, 2023.

Antitrust Actions

Sensipar Antitrust Class Actions

On February 16, 2023, the U.S.

District Court for the District of Delaware (the Delaware District Court) denied Amgen’s motion for interlocutory appeal.

On March 2, 2023, Amgen filed a motion for reargument, which the Delaware District Court denied while also certifying a question regarding whether the current judge has the authority to certify a question decided by a predecessor judge.

On April 17, 2023, Amgen filed a petition with the U.S.

Court of Appeals for the Third Circuit, seeking a grant of our request for interlocutory appeal of the certified question as well as the Delaware District Court’s denial of our motion to dismiss the reverse payment claim.

Amgen’s response to the class action complaints are due 30 days after resolution or denial of the interlocutory appeal.

Regeneron Pharmaceuticals, Inc.

Antitrust Action

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.

On February 10, 2023, the Delaware District Court denied Amgen’s motion to stay this action but left open the possibility of Amgen re-raising the motion if the U.S.

Supreme Court rules in Amgen’s favor in its patent infringement cases against Sanofi and Regeneron Pharmaceuticals, Inc.

On March 21, 2023, the Delaware District Court denied Amgen’s motion to dismiss the complaint.

Tax Litigation

1 unchanged sentence

Commissioner of Internal Revenue

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.

See Note 5, Income taxes, for discussion of the IRS tax dispute and the Company’s petitions in the U.S.

Securities Class Action Litigation

On March 13, 2023, Roofers Local No.

149 Pension Fund filed a purported class action against Amgen, Robert Bradway and Peter Griffith.

The action was brought on behalf of an alleged class of Amgen shareholders who owned stock between July 29, 2020 and April 27, 2022 (the alleged class period).

Plaintiffs allege that the defendants made a series of materially false and misleading statements and omissions during the alleged class period regarding the failure to timely disclose the potential tax liability claimed by the IRS.

Plaintiffs further allege that they and other purported class members suffered losses and damages resulting from declines in the market value of Amgen’s common stock after the potential tax liability claimed by the IRS was disclosed.

On April 4, 2023, the U.S.

District Court for the Southern District of New York entered an order setting May 12, 2023 as the deadline for filing motions for appointment of lead counsel.

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.

Securities Class Action Litigation

In May 2022, ChemoCentryx, which was acquired by Amgen in October 2022 and is now a subsidiary of Amgen, filed a motion to dismiss the shareholder class action claims.

On February 23, 2023, the U.S.

District Court for the Northern District of California (Northern District Court of California) substantially denied ChemoCentryx’s motion to dismiss the matter in its entirety, while granting the motion to dismiss with respect to certain allegations of the plaintiffs.

On April 4, 2023, the parties submitted a case management statement to the Northern District Court of California , and on April 10, 2023, the Northern District Court of California entered an order setting dates for amendment of pleadings and briefing on class certification.

On April 27, 2023, ChemoCentryx submitted its answer to the complaint.

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