What changed in this filing

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Item 1. Financial Statements

2023-10-31 compared with 2023-08-04 · 214 added, 194 removed, 727 unchanged (36% of the section changed)

3 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

11 unchanged sentences

Interest expense, net ( 759 ) ( 368 ) ( 2,054 ) ( 991 )

Other (expense) income, net ( 318 ) ( 317 ) 1,746 ( 847 )

Other income (expense), net 685 100 2,431 ( 747 )

Income before income taxes 1,947 2,392 7,003 5,598

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Net income $ 1,730 $ 2,143 $ 5,950 $ 4,936

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

Other comprehensive income, net of reclassification adjustments and taxes:

Foreign currency translation ( 44 ) ( 109 ) ( 5 ) ( 225 )

1 unchanged sentence

Other 17 ( 9 ) 37 ( 9 )

Other comprehensive (loss) income, net of reclassification adjustments and taxes ( 12 ) 91 ( 49 ) 124

Other comprehensive income, net of reclassification adjustments and taxes 154 20 105 144

Comprehensive income $ 1,884 $ 2,163 $ 6,055 $ 5,080

2 unchanged sentences

(In millions, except per-share data)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

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534.9 32,601 ( 25,540 ) ( 280 ) 6,781

Net income — — 1,730 — 1,730

Other comprehensive income, net of taxes — — — 154 154

Dividends declared on common stock ($ 2.13 per share)

— — ( 1,161 ) — ( 1,161 )

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

0.2 33 — — 33

Stock-based compensation expense — 124 — — 124

Tax impact related to employee stock-based compensation expense

— ( 5 ) — — ( 5 )

Balance as of September 30, 2023

535.1 $ 32,753 $ ( 24,971 ) $ ( 126 ) $ 7,656

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

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

Net income — — 2,143 — 2,143

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

Dividends declared on common stock ($ 1.94 per share)

— — ( 1,057 ) — ( 1,057 )

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

0.1 15 — — 15

Stock-based compensation expense — 121 — — 121

Tax impact related to employee stock-based compensation expense

— ( 8 ) — — ( 8 )

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

Balance as of September 30, 2022

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

See accompanying notes.

1 unchanged sentence

(In millions)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

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Purchases of property, plant and equipment ( 863 ) ( 596 )

Other 74 ( 59 )

Net cash provided by (used in) investing activities 885 ( 2,571 )

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Net cash provided by (used in) financing activities 18,294 ( 2,988 )

Increase (decrease) in cash and cash equivalents 26,619 ( 2,786 )

Increase in cash and cash equivalents 27,112 1,513

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

September 30, 2023

Summary of significant accounting policies

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Basis of presentation

The financial information for the three and six months ended June 30, 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.

The financial information for the three and nine months ended September 30, 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, 2022, and with our condensed consolidated financial statements and the notes thereto contained in our Quarterly Report on Form 10-Q for the period ended March 31, 2023.

Principles of consolidation

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Property, plant and equipment, net

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization, of $ 9.5 billion and $ 9.3 billion as of June 30, 2023 and December 31, 2022, respectively.

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization, of $ 9.7 billion and $ 9.3 billion as of September 30, 2023 and December 31, 2022, respectively.

Recent accounting pronouncements

No new accounting pronouncements were issued or adopted for the six months ended June 30, 2023, that materially impacted the Company.

No new accounting pronouncements were issued or adopted for the nine months ended September 30, 2023, that materially impacted the Company.

Restructuring

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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 rationalization of our geographic footprint.

We now expect that we will incur $ 250 million to $ 350 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 and other related costs resulting from rationalization of our geographic footprint.

The following tables summarize recorded charges related to the restructuring plan by type of activity and the locations recognized within the Condensed Consolidated Statements of Income (in millions):

Three months ended June 30, 2023

Three months ended September 30, 2023

Separation costs Asset impairments and other charges Total

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Research and development — — —

Selling, general and administrative — 13 13

Other 16 1 17

Total $ 16 $ 15 $ 31

Six months ended June 30, 2023

Nine months ended September 30, 2023

Separation costs Asset impairments and other charges Total

1 unchanged sentence

Research and development — 17 17

Selling, general and administrative — 13 13

Other 182 4 186

Total $ 182 $ 70 $ 252

As of June 30, 2023, total restructuring liability decreased to $ 82 million primarily due to payments related to separation costs.

As of September 30, 2023, total restructuring liability decreased to $ 54 million primarily due to payments related to separation costs.

The total restructuring liability was included in Accrued liabilities in the Condensed Consolidated Balance Sheets.

Acquisitions and divestitures

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.

In May 2023, the FTC filed a complaint in the U.S.

District Court for the Northern District of Illinois seeking a temporary restraining order and preliminary injunction enjoining our proposed acquisition of Horizon.

See Note 14, Contingencies and commitments.

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

Acquisition of Horizon Therapeutics plc

On October 6, 2023, Amgen completed its acquisition of Horizon for $ 116.50 per share in cash, representing a transaction equity value of approximately $ 27.8 billion.

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

The acquisition aligns with Amgen’s core strategy of delivering innovative medicines that make a significant difference for patients suffering from serious diseases and strengthens Amgen’s leading inflammation portfolio by adding first-in-class, early-in-lifecycle medicines such as TEPEZZA ® (teprotumumab-trbw), KRYSTEXXA ® (pegloticase) and UPLIZNA ® (inebilizumab-cdon), which treat rare inflammatory diseases.

The accounting impact of this acquisition and the results of operations for Horizon will be included in our consolidated financial statements beginning in the fourth quarter of 2023.

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

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

See Note 10, Financing arrangements.

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On October 20, 2022, we acquired all of 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).

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 antineutrophil cytoplasmic autoantibody-associated vasculitis (ANCA-associated vasculitis).

TAVNEOS is commercialized by us in the United States;

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

Measurement period adjustments during the six months ended June 30, 2023, included changes in 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 six months ended June 30, 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):

Measurement period adjustments during the nine months ended September 30, 2023, included changes in the purchase price allocation and total consideration, resulting in a net decrease of approximately $ 18 million to goodwill.

The measurement period adjustments resulted primarily from valuation inputs pertaining to the TAVNEOS intangible assets, adjustments to vendor payables and deferred tax attributes 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 nine months ended September 30, 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 final 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

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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.

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Revenues were as follows (in millions):

Three months ended June 30,

Three months ended September 30,

ROW Total U.S.

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Repatha 183 223 406 142 167 309

Aranesp 123 242 365 132 225 357

KYPROLIS 234 112 346 213 104 317

Nplate 322 97 419 162 126 288

KYPROLIS 231 118 349 217 101 318

Aranesp 107 216 323 128 230 358

EVENITY 214 93 307 136 65 201

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Total revenues $ 6,903 $ 6,652

Six months ended June 30,

Nine months ended September 30,

ROW Total U.S.

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Repatha 592 626 1,218 461 502 963

Aranesp 238 482 720 269 446 715

KYPROLIS 468 236 704 409 195 604

Nplate 744 347 1,091 474 364 838

KYPROLIS 699 354 1,053 626 296 922

Aranesp 345 698 1,043 397 676 1,073

EVENITY 570 272 842 376 186 562

5 unchanged sentences

Total revenues $ 19,994 $ 19,484

(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 and six months ended June 30, 2023 and 2022.

The effective tax rates for the three and six months ended June 30, 2023, were 14.6 % and 16.5 %, respectively, compared with 14.0 % and 12.9 %, respectively, for the corresponding periods in the prior year.

The increase in our effective tax rate for the three months ended June 30, 2023, was primarily due to the new Puerto Rico income tax beginning in 2023, partially offset by the current period change in the fair value of our equity investments and net favorable items.

The increase in our effective tax rate for the six months ended June 30, 2023, was primarily due to the new Puerto Rico income tax beginning in 2023, current year change in the fair value of our equity investments and an increase in interest expense on tax reserves, partially offset by net favorable items.

(1) Consists of product sales of our non-principal products as well as sales in prior periods of our divested Bergamo and Gensenta subsidiaries.

(2) Hedging gains and losses, which are included in product sales, were not material for the three and nine months ended September 30, 2023 and 2022.

The effective tax rates for the three and nine months ended September 30, 2023, were 11.1 % and 15.0 %, respectively, compared with 10.4 % and 11.8 %, respectively, for the corresponding periods in the prior year.

The increase in our effective tax rate for the three months ended September 30, 2023, was primarily due to the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023, partially offset by a prior year nondeductible loss from the divestiture of Gensenta and net earnings mix including the tax benefit from a net impairment charge related to AMG 340.

See Note 9, Goodwill and other intangible assets.

The increase in our effective tax rate for the nine months ended September 30, 2023, was primarily due to the 2022 Puerto Rico tax law change that replaced the excise tax with an income tax beginning in 2023 and net change in earnings mix, partially offset by a prior year nondeductible loss from the divestiture of Gensenta.

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

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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.

As of January 1, 2023, we qualify for and are subject to 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.

We accounted for the 2022 excise tax that was capitalized in Inventories as an expense in Cost of sales when the related products were sold in 2023, and a foreign tax credit was not 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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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 and six months ended June 30, 2023, the gross amounts of our UTBs increased by $ 50 million and $ 110 million, respectively, as a result of tax positions taken during the current year.

Substantially all of the UTBs as of June 30, 2023, if recognized, would affect our effective tax rate.

During the three and nine months ended September 30, 2023, the gross amounts of our UTBs increased by $ 50 million and $ 160 million, respectively, as a result of tax positions taken during the current year.

Substantially all of the UTBs as of September 30, 2023, if recognized, would affect our effective tax rate.

Earnings per share

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

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Diluted EPS $ 3.22 $ 3.98 $ 11.06 $ 9.11

For the three and six months ended June 30, 2023 and 2022, the number of antidilutive employee stock-based awards excluded from the computation of diluted EPS was not significant.

For the three and nine months ended September 30, 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 June 30, 2023 Amortized

Types of securities as of September 30, 2023 Amortized

Treasury bills $ — $ — $ — $ —

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

Condensed Consolidated Balance Sheets locations June 30, 2023 December 31, 2022

Condensed Consolidated Balance Sheets locations September 30, 2023 December 31, 2022

Cash and cash equivalents $ 34,208 $ 2,659

1 unchanged sentence

Total interest-bearing securities $ 34,208 $ 4,335

Cash and cash equivalents in the above table excludes bank account cash of $ 630 million and $ 4,970 million as of June 30, 2023 and December 31, 2022, respectively.

Cash and cash equivalents as of June 30, 2023 was $ 34.2 billion, of which $ 27.8 billion is anticipated to be used for the proposed acquisition of Horizon.

Cash and cash equivalents in the above table excludes bank account cash of $ 533 million and $ 4,970 million as of September 30, 2023 and December 31, 2022, respectively.

Cash and cash equivalents as of September 30, 2023, was $ 34.7 billion, a majority of which was used to acquire Horizon in October 2023.

See Note 3, Acquisitions and divestitures.

All interest-bearing securities as of June 30, 2023 and December 31, 2022, mature in one year or less.

For the three and six months ended June 30, 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 (expense) income, net, in the Condensed Consolidated Statements of Income.

All interest-bearing securities as of September 30, 2023 and December 31, 2022, mature in one year or less.

For the three and nine months ended September 30, 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.

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

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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 (expense) income, net.

See Note 12, Fair value measurement.

During the three and six months ended June 30, 2023, we recognized an unrealized loss of $ 705 million and an unrealized gain of $ 1.2 billion, respectively, recorded in Other (expense) income, net, in our Condensed Consolidated Statements of Income.

As of June 30, 2023, the carrying and fair value of our investment in BeiGene was $ 3.4 billion and was included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2023, we recognized unrealized gains of $ 30 million and $ 1.2 billion, respectively, recorded in Other income (expense), net, in our Condensed Consolidated Statements of Income.

As of September 30, 2023, the carrying and fair value of our investment in BeiGene was $ 3.4 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 and six months ended June 30, 2022, under the equity method of accounting, our carrying value in BeiGene was adjusted by our share of BeiGene’s net losses of $ 80 million and $ 188 million, respectively, and amortization of the basis difference of $ 48 million and $ 95 million, respectively, recorded in Other (expense) income, net, in our Condensed Consolidated Statements of Income.

During the three and nine months ended September 30, 2022, under the equity method of accounting, our carrying value in BeiGene was adjusted by our share of BeiGene’s net losses of $ 104 million and $ 292 million, respectively, and amortization of the basis difference of $ 48 million and $ 143 million, respectively, recorded in Other income (expense), net, in our Condensed Consolidated Statements of Income.

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 $ 397 million and $ 480 million as of June 30, 2023 and December 31, 2022, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three months ended June 30, 2023 and 2022, net unrealized gains and losses on these publicly traded securities were a gain of $ 3 million and a loss of $ 106 million, respectively.

During the six months ended June 30, 2023 and 2022, net unrealized gains and losses on these publicly traded securities were a net gain of $ 8 million and a net loss of $ 276 million, respectively.

Realized gains and losses on sales of publicly traded securities for the three and six months ended June 30, 2023 and 2022, were not material.

We held investments of $ 291 million and $ 233 million in equity securities without readily determinable fair values as of June 30, 2023 and December 31, 2022, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and six months ended June 30, 2023 and 2022, upward and downward adjustments on these securities were not material.

Excluding our equity investments in BeiGene and Neumora (discussed below), we held investments in other equity securities with readily determinable fair values (publicly traded securities) of $ 344 million and $ 480 million as of September 30, 2023 and December 31, 2022, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three months ended September 30, 2023 and 2022, net unrealized losses and gains on these publicly traded securities were a net loss of $ 49 million and a net gain of $ 17 million, respectively.

During the nine months ended September 30, 2023 and 2022, net unrealized losses on these publicly traded securities were $ 41 million and $ 259 million, respectively.

Realized gains and losses on sales of publicly traded securities for the three and nine months ended September 30, 2023 and 2022, were not material.

We held investments of $ 293 million and $ 233 million in equity securities without readily determinable fair values as of September 30, 2023 and December 31, 2022, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2023, upward and downward adjustments on these securities were not material.

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 not material.

Adjustments were based on observable price transactions.

1 unchanged sentence

Neumora Therapeutics, Inc.

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

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

Under the fair value option, changes in the fair value of the investment are recognized through earnings in Other (expense) income, net, in our Condensed Consolidated Statements of Income each reporting period.

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

During the three months ended September 30, 2023, we made an additional $ 30 million equity investment in Neumora in connection with their initial public stock offering, and consequently, our investment now has a readily determinable fair value.

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

Under the fair value option, changes in the fair value of the investment are recognized through earnings in Other income (expense), net, in our Condensed Consolidated Statements of Income each reporting period.

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

As of June 30, 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 $ 316 million and $ 335 million, respectively.

During the three months ended June 30, 2023 and 2022, we recognized a gain of $ 28 million and a loss of $ 39 million, respectively, and during the six months ended June 30, 2023 and 2022, we recognized losses of $ 19 million and $ 89 million, respectively.

As of September 30, 2023 and December 31, 2022, our ownership interests in Neumora were approximately 23.2 % and 24.9 %, respectively, and the fair values of our investment were $ 499 million and $ 335 million, respectively.

During the three months ended September 30, 2023 and 2022, we recognized gains of $ 153 million and $ 240 million, respectively, and during the nine months ended September 30, 2023 and 2022, we recognized gains of $ 134 million and $ 152 million, respectively.

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

Limited partnerships

We held limited partnership investments of $ 226 million and $ 249 million as of June 30, 2023 and December 31, 2022, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

We held limited partnership investments of $ 238 million and $ 249 million as of September 30, 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 June 30, 2023, unfunded additional commitments to be made for these investments during the next several years amounted to $ 157 million.

For the three months ended June 30, 2023 and 2022, net unrealized losses from our limited partnership investments were $ 29 million and $ 60 million, respectively.

For the six months ended June 30, 2023 and 2022, net unrealized losses from our limited partnership investments were $ 9 million and $ 220 million, respectively.

As of September 30, 2023, unfunded additional commitments to be made for these investments during the next several years amounted to $ 138 million.

For the three months ended September 30, 2023 and 2022, net unrealized gains and losses from our limited partnership investments were an unrealized gain of $ 14 million and an unrealized loss of $ 62 million, respectively.

For the nine months ended September 30, 2023 and 2022, net unrealized gains and losses from our limited partnership investments were an unrealized gain of $ 5 million and an unrealized loss of $ 282 million, respectively.

Inventories consisted of the following (in millions):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Raw materials $ 849 $ 828

4 unchanged sentences

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

Six months ended

June 30, 2023

Nine months ended

September 30, 2023

Beginning balance $ 15,529

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

June 30, 2023 December 31, 2022

September 30, 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 June 30, 2023 and 2022, we recognized amortization associated with our finite-lived intangible assets of $ 693 million and $ 629 million, respectively.

During the six months ended June 30, 2023 and 2022, we recognized amortization associated with our finite-lived intangible assets of $ 1.4 billion and $ 1.3 billion, respectively.

During the three months ended September 30, 2023, the development of AMG 340 acquired in connection with our Teneobio acquisition was terminated, resulting in an impairment charge of $ 783 million, which was recognized in Other operating expenses in the Condensed Consolidated Statements of Income and included in Other items, net, in the Condensed Consolidated Statements of Cash Flows.

See Note 12, Fair value measurement, for the impact on the related contingent consideration liability.

During the three months ended September 30, 2023 and 2022, we recognized amortization associated with our finite-lived intangible assets of $ 693 million and $ 628 million, respectively.

During the nine months ended September 30, 2023 and 2022, we recognized amortization associated with our finite-lived intangible assets of $ 2.1 billion and $ 1.9 billion, respectively.

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

The total estimated amortization of our finite-lived intangible assets for the remaining six months ending December 31, 2023, and the years ending December 31, 2024, 2025, 2026, 2027 and 2028, are $ 1.4 billion, $ 2.7 billion, $ 2.5 billion, $ 2.1 billion, $ 2.1 billion and $ 1.1 billion, respectively.

As of September 30, 2023, the total estimated amortization of our finite-lived intangible assets for the remaining three months ending December 31, 2023, and the years ending December 31, 2024, 2025, 2026, 2027 and 2028, are $ 0.7 billion, $ 2.7 billion, $ 2.5 billion, $ 2.1 billion, $ 2.1 billion and $ 1.1 billion, respectively.

Financing arrangements

Our borrowings consisted of the following (in millions):

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

43 unchanged sentences

4.40 % notes due 2062 ( 4.40 % 2062 Notes)

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

5.75 % notes due 2063 ( 5.75 % 2063 Notes)

7 unchanged sentences

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):

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

Principal Amount

8 unchanged sentences

Total $ 24,000

If 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.

In the event of a change-in-control triggering event, as defined by 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.

2 unchanged sentences

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.

In December 2022, in connection with the 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 (expense) income, 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 June 30, 2023 and December 31, 2022.

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 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 September 30, 2023 and December 31, 2022.

In October 2023, in connection with the completion of the acquisition of Horizon, we borrowed $ 4.0 billion under the term loan credit agreement with an interest rate of three-month SOFR plus 1.225 %, of which $ 2.0 billion is due in April 2025 and $ 2.0 billion is due in October 2026.

Debt extinguishment

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 (expense) income, net, in the Condensed Consolidated Statements of Income.

During the nine months ended September 30, 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 $ 550 million, which resulted in the recognition of a $ 182 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.

During the nine months ended September 30, 2023, we repaid $ 750 million aggregate principal amount of the 2.25 % 2023 Notes as well as 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

15 unchanged sentences

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 June 30, 2023 and December 31, 2022, no amounts were outstanding under this facility.

As of September 30, 2023 and December 31, 2022, no amounts were outstanding under this facility.

Stockholders’ equity

4 unchanged sentences

Second quarter — — — —

Third quarter — — 1.5 900

Total stock repurchases — $ — 26.1 $ 6,310

As of June 30, 2023, $ 7.0 billion of authorization remained available under our stock repurchase program.

In March 2023 and December 2022, our Board of Directors declared quarterly cash dividends of $ 2.13 per share, which were paid in June 2023 and March 2023, respectively.

In August 2023, our Board of Directors declared a quarterly cash dividend of $ 2.13 per share that will be paid in September 2023.

As of September 30, 2023, $ 7.0 billion of authorization remained available under our stock repurchase program.

In August 2023, March 2023 and December 2022, our Board of Directors declared quarterly cash dividends of $ 2.13 per share, which were paid in September 2023, June 2023 and March 2023, respectively.

In October 2023, our Board of Directors declared a quarterly cash dividend of $ 2.13 per share that will be paid in December 2023.

Accumulated other comprehensive income (loss)

17 unchanged sentences

( 309 ) 20 9 ( 280 )

Foreign currency translation adjustments ( 44 ) — — ( 44 )

Unrealized gains — 177 — 177

Reclassification adjustments to income — 53 — 53

Other — — 17 17

Income taxes — ( 49 ) — ( 49 )

Balance as of September 30, 2023

$ ( 353 ) $ 201 $ 26 $ ( 126 )

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

Three months ended June 30,

Three months ended September 30,

Components of AOCI 2023 2022 Condensed Consolidated

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Foreign currency contract gains $ 33 $ 69 Product sales

Cross-currency swap contract gains (losses) 51 ( 185 ) Other (expense) income, net

Cross-currency swap contract losses ( 86 ) ( 198 ) Other income (expense), net

( 53 ) ( 129 ) Income before income taxes

1 unchanged sentence

$ ( 42 ) $ ( 101 ) Net income

Six months ended June 30,

Nine months ended September 30,

Components of AOCI 2023 2022 Condensed Consolidated

2 unchanged sentences

Foreign currency contract gains $ 121 $ 149 Product sales

Cross-currency swap contract gains (losses) 29 ( 263 ) Other (expense) income, net

Cross-currency swap contract losses ( 57 ) ( 461 ) Other income (expense), net

64 ( 312 ) Income before income taxes

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(Level 2) Significant

Fair value measurement as of June 30, 2023, using:

Fair value measurement as of September 30, 2023, using:

Available-for-sale securities:

3 unchanged sentences

Equity securities 4,250 — — 4,250

3,775 — 316 4,091

Foreign currency forward contracts — 347 — 347

30 unchanged sentences

The fair values of our U.S.

Treasury securities, money market mutual funds and equity investments in publicly traded securities, including our equity investment in BeiGene as of June 30, 2023, 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 investments in BeiGene and Neumora, as of September 30, 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 values of equity securities without readily determinable fair values are initially valued at the transaction prices 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.

Previously, the fair value of our equity investment in Neumora did not have a readily determinable fair value and was initially valued at the acquisition 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.

During the three months ended September 30, 2023, Neumora became a publicly traded company, and its equity securities now have a readily determinable fair value.

Accordingly, the fair value inputs of our equity investment in Neumora changed from using Level 3 inputs as of December 31, 2022, to using a Level 1 input as of September 30, 2023.

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.

As of December 31, 2022, the fair value and carrying value were $ 4.2 billion and $ 2.2 billion, respectively, with the fair value estimated by using a Level 1 input.

See Note 7, Investments— BeiGene, Ltd.

3 unchanged sentences

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

Starting in the third quarter of 2023, terms under our existing derivative contracts will reference the SOFR benchmark consistent with the ISDA protocol.

Starting in the third quarter of 2023, terms under our existing derivative contracts reference the SOFR benchmark consistent with the ISDA protocol.

See Note 13, Derivative instruments.

8 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

3 unchanged sentences

Ending balance $ 98 $ 302 $ 98 $ 302

As of June 30, 2023 and December 31, 2022, our contingent consideration obligations are primarily the result of our acquisition of Teneobio, in October 2021, which obligates us to pay the former shareholders up to $ 1.6 billion upon achieving separate development and regulatory milestones with regard to various R&D programs.

As of September 30, 2023 and December 31, 2022, our contingent consideration obligations are primarily the result of our acquisition of Teneobio in October 2021, which obligated 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.

During the three months ended September 30, 2023, the development of AMG 340 was terminated, resulting in a decrease of the related contingent consideration liability.

The remeasurement of this liability of $ 147 million was recognized in Other operating expenses in the Condensed Consolidated Statements of Income and included in Other items, net, in the Condensed Consolidated Statements of Cash Flows.

See Note 9, Goodwill and other intangible assets, for the impact on the related IPR&D asset.

The remaining contingent consideration liability as of September 30, 2023, primarily relates to potential development and regulatory milestones for R&D programs acquired via the Teneobio acquisition that we continue to pursue.

Summary of the fair values of other financial instruments

2 unchanged sentences

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

As of June 30, 2023 and December 31, 2022, the aggregate fair values of our borrowings were $ 59.1 billion and $ 35.0 billion, respectively, and the carrying values were $ 61.5 billion and $ 38.9 billion, respectively.

During the six months ended June 30, 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.

As of September 30, 2023 and December 31, 2022, the aggregate fair values of our borrowings were $ 56.4 billion and $ 35.0 billion, respectively, and the carrying values were $ 60.5 billion and $ 38.9 billion, respectively.

During the nine months ended September 30, 2023 and 2022, there were no transfers of assets or liabilities between fair value measurement levels, and except with respect to the impairment of AMG 340 discussed in Note 9, Goodwill and other intangible assets, 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

9 unchanged sentences

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 June 30, 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.

As of September 30, 2023 and December 31, 2022, we had outstanding foreign currency forward contracts with aggregate notional amounts of $ 6.3 billion and $ 6.0 billion, respectively.

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

9 unchanged sentences

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

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

The notional amounts and interest rates of our cross-currency swaps as of June 30, 2023, were as follows (notional amounts in millions):

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

The notional amounts and interest rates of our cross-currency swaps as of September 30, 2023, were as follows (notional amounts in millions):

Foreign currency U.S.

1 unchanged sentence

2.00 % 2026 euro Notes

€ 750 2.0 % $ 833 3.9 %

5.50 % 2026 pound sterling Notes

£ 475 5.5 % $ 747 6.0 %

4.00 % 2029 pound sterling Notes

£ 700 4.0 % $ 1,111 4.6 %

During the three months ended March 31, 2023, our 0.41 % 2023 Swiss franc Bonds matured, and the related cross-currency swaps were settled.

In connection with the anticipated issuance of long-term fixed-rate debt, we occasionally enter into forward interest rate contracts in order to hedge the variability in cash flows due to changes in the applicable U.S.

1 unchanged sentence

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 contracts during the six months ended June 30, 2023, and amounts expected to be recognized during the subsequent 12 months are not material.

Amounts recognized in connection with forward interest rate contracts during the nine months ended September 30, 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

June 30, Six months ended

September 30, Nine months ended

September 30,

Derivatives in cash flow hedging relationships 2023 2022 2023 2022

2 unchanged sentences

Forward interest rate contracts — — ( 31 ) —

Total unrealized gains (losses) $ 50 $ 67 $ ( 21 ) $ 123

Total unrealized gains $ 176 $ 45 $ 155 $ 168

Fair value hedges

1 unchanged sentence

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

As of both June 30, 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.

As of both September 30, 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.

3 unchanged sentences

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

Condensed Consolidated Balance Sheets locations June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

Condensed Consolidated Balance Sheets locations September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

Current portion of long-term debt $ 1,426 $ 82 $ 27 $ 82

Long-term debt $ 4,621 $ 6,017 $ ( 521 ) $ ( 519 )

(1) Current portion of long-term debt includes $ 80 million and $ 82 million of carrying value with discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

Long-term debt includes $ 318 million and $ 357 million of carrying value with discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

(2) Current portion of long-term debt includes $ 80 million and $ 82 million of hedging adjustments on discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

Long-term debt includes $ 218 million and $ 257 million of hedging adjustments on discontinued hedging relationships as of June 30, 2023 and December 31, 2022, respectively.

(1) Current portion of long-term debt includes $ 75 million and $ 82 million of carrying value with discontinued hedging relationships as of September 30, 2023 and December 31, 2022, respectively.

Long-term debt includes $ 303 million and $ 357 million of carrying value with discontinued hedging relationships as of September 30, 2023 and December 31, 2022, respectively.

(2) Current portion of long-term debt includes $ 75 million and $ 82 million of hedging adjustments on discontinued hedging relationships as of September 30, 2023 and December 31, 2022, respectively.

Long-term debt includes $ 203 million and $ 257 million of hedging adjustments on discontinued hedging relationships as of September 30, 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 June 30, 2023 Six months ended June 30, 2023

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

Three months ended September 30, 2023 Nine months ended September 30, 2023

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

Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income $ 6,548 $ 685 $ ( 759 ) $ 19,077 $ 2,431 $ ( 2,054 )

The effects of cash flow and fair value hedging:

Gains on cash flow hedging relationships reclassified out of AOCI:

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

Foreign currency forward contracts $ 33 $ — $ — $ 121 $ — $ —

4 unchanged sentences

Derivatives designated as hedging instruments $ — $ — $ ( 37 ) $ — $ — $ 5

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

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

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

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

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

9 unchanged sentences

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

As of June 30, 2023, we expected to reclassify $ 108 million of net gains on our foreign currency and cross-currency swap contracts out of AOCI and into earnings during the next 12 months.

As of September 30, 2023, we expected to reclassify $ 200 million of net gains on our foreign currency and cross-currency swap contracts out of AOCI and into earnings during the next 12 months.

Derivatives not designated as hedges

1 unchanged sentence

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

As of June 30, 2023 and December 31, 2022, the total notional amounts of these foreign currency forward contracts were $ 557 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 and six months ended June 30, 2023 and 2022.

As of September 30, 2023 and December 31, 2022, the total notional amounts of these foreign currency forward contracts were $ 521 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 and nine months ended September 30, 2023 and 2022.

Fair values of derivatives

1 unchanged sentence

Derivative assets Derivative liabilities

June 30, 2023 Condensed Consolidated

September 30, 2023 Condensed Consolidated

Balance Sheets locations Fair values Condensed Consolidated

20 unchanged sentences

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

Our derivative contracts that were in liability positions as of June 30, 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.

Our derivative contracts that were in liability positions as of September 30, 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.

9 unchanged sentences

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;

and in Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2023.

and in Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023.

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

3 unchanged sentences

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;

and in Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2023, 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 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023, in which we could incur a liability, our opponents seek an award of a not-yet-quantified amount of damages or an amount that is not material.

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

1 unchanged sentence

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;

and in Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2023, in which we could incur a liability, have progressed sufficiently through discovery and/or the development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material.

and in Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023, 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.

1 unchanged sentence

Repatha Patent Litigation

Amgen Inc., et al.

Sanofi, et al.

On May 18, 2023, the U.S.

Supreme Court entered final judgment affirming the lower court’s decision invalidating claims 19 and 29 of U.S.

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

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

Patent Disputes in the International Region

On June 1, 2023, Amgen filed an action before the Unitary Patent Court against Sanofi-Aventis Deutschland GmbH, Sanofi-Aventis Groupe S.A., Sanofi Winthrop Industrie S.A.

On December 6, 2023, oral proceedings will commence before the Technical Board of Appeal of the European Patent Office in the appeal from Amgen’s opposition to European Patent No.

In Amgen’s lawsuit before the Unitary Patent Court against Sanofi-Aventis Deutschland GmbH, Sanofi-Aventis Groupe S.A., Sanofi Winthrop Industrie S.A.

(collectively, Sanofi) and Regeneron Pharmaceuticals, Inc.

alleging that the importation, marketing, sale and use of PRALUENT ® infringes European Patent 3,666,797 (the EP’797 Patent) seeking an injunction and damages for past infringement.

On June 29, 2023, the Unitary Patent Court served us with an action filed by Sanofi before the Unitary Patent Court seeking revocation of Amgen’s EP’797 Patent.

On July 20, 2023, Amgen filed objections to the admissibility of Sanofi’s revocation action before the Unitary Patent Court’s Central Division and Local Divisions on the grounds that Amgen’s infringement action was filed prior to Sanofi’s revocation action.

On November 14, 2023, the Regional Court of Dusseldorf is scheduled to hear argument on Sanofi Biotechnology SAS’ lawsuit alleging that our marketing of Repatha infringes European Patent 2,756,004.

The Munich Regional Court scheduled a hearing for February 28, 2024 on Sanofi’s action against Amgen in which Sanofi seeks damages arising from the provisional enforcement of an injunction against PRALUENT ® that was lifted after an October 29, 2020 ruling by the Technical Board of Appeal that broader claims in Amgen’s European Patent 2,215,125 encompassing PRALUENT ® were invalid.

(Regeneron), on August 25, 2023, the Central Division of the Unitary Patent Court in Germany rejected Amgen’s objections to the admissibility of Sanofi’s revocation action against Amgen’s European Patent No.

Accordingly, Amgen filed its Statement of Defense on September 12, 2023.

On September 15, 2023, the Japanese Supreme Court declined to hear Amgen’s appeal from the decision of the Japanese High Court finding Amgen’s patent claims invalid for lacking adequate support.

The case will be remanded to the Japan Patent Office for further proceedings.

In Amgen’s lawsuit for patent infringement damages against Sanofi K.K., on September 27, 2023, the Tokyo District Court found Amgen’s patent claims invalid and dismissed Amgen’s lawsuit for damages.

Prolia/XGEVA Biologics Price Competition and Innovation Act (BPCIA) Litigation

Sandoz Inc., et al.

On May 1, 2023, Amgen Inc.

and Amgen Manufacturing Limited filed a lawsuit in the U.S.

District Court for the District of New Jersey (New Jersey District Court) against Sandoz Inc., Sandoz GmbH, Lek Pharmaceuticals d.d., Novartis Pharmaceutical Productions d.o.o., and Novartis AG (collectively, Defendants) based on the submission to the FDA of a Biologics License Application seeking approval to market and sell a biosimilar version of Amgen’s Prolia and XGEVA products.

The complaint asserts infringement of the following 21 patents, which are listed in the FDA’s Purple Book for Amgen’s Prolia and XGEVA products:

and 11,434,514 (collectively, the Asserted Patents).

Amgen seeks a judgment from the New Jersey District Court that Defendants have infringed or will infringe one or more claims of each of the Asserted Patents and based on that judgment, a permanent injunction prohibiting the commercial manufacture, use, offer to sell, or sale within the United States or importation into the United States of Defendants’ proposed denosumab biosimilar before expiration of each of the Asserted Patents found to infringe.

Amgen also seeks monetary remedies for any past acts of infringement.

On June 16, 2023, Amgen filed an amended and supplemental complaint to include additional information regarding the completion of the BPCIA information exchange after the filing of the original complaint.

responded to the amended and supplemental complaint on July 7, 2023, denying infringement and asserting counterclaims seeking a declaratory judgment that asserted patents are invalid and/or unenforceable.

On July 21, 2023, the New Jersey District Court granted Amgen’s request for a briefing schedule to present and hear a motion to be filed by Amgen on or before September 1, 2023 seeking a preliminary injunction to prohibit patent infringement by Sandoz’s denosumab product until the court is able to reach judgment on the merits of Amgen’s lawsuit.

On August 2, 2023, the New Jersey District Court scheduled a preliminary injunction hearing that will commence on October 30, 2023.

ABP 654 (ustekinumab) Patent Litigation

Janssen Biotech, Inc.

On May 22, 2023, pursuant to a confidential settlement agreement, the parties filed a joint stipulation of dismissal with prejudice of the U.S.

On May 23, 2023, the U.S.

District Court for the District of Delaware (Delaware District Court) issued an order dismissing the U.S.

litigation with prejudice.

Janssen Biotech Inc.

Amgen Technology (Ireland) Unlimited Company

On May 22, 2023, pursuant to a confidential settlement agreement, the parties requested that the Irish proceedings be struck out and on the same day the Irish High Court issued an order striking out the proceedings and vacating all previous orders in those proceedings.

Antitrust Class Action

On August 23, 2023, the U.S.

District Court for the District of New Jersey (New Jersey District Court) entered a stipulation and order dismissing without prejudice Sandoz GmbH, Lek Pharmaceuticals d.d., Novartis Pharmaceutical Productions d.o.o.

and Novartis AG (collectively “Foreign Defendants”) from the action.

Pursuant to the stipulation entered by the New Jersey District Court, the Foreign Defendants agreed to be bound by any judgment order or decision in the matter (including appeals) as if the Foreign Defendants were named as defendants and parties to the judgment order or decision.

(Sandoz) is now the sole named defendant in the action.

On October 30, 2023, the New Jersey District Court commenced a hearing on Amgen’s motion for a preliminary injunction to prohibit Sandoz from engaging in the commercial manufacture, use, offer for sell or sale within the United States, or importation into the United States of its proposed denosumab biosimilar until judgment is entered after trial on the merits.

Antitrust Actions

Sensipar Antitrust Class Actions

On June 26, 2023, the U.S.

Court of Appeals for the Third Circuit entered an order granting defendants’ (including Amgen’s) petition for interlocutory appeal and denying plaintiffs’ cross-petition.

The questions certified are whether (1) the statute for interlocutory decisions authorizes a district court judge to certify for interlocutory appeal an order issued in the same case by a predecessor district court judge;

and (2) the settlement of a patent infringement claim that involves the forgiveness of damages associated with that patent’s alleged infringement, on its own or combined with an acceleration clause, constitutes a reverse payment.

On July 3, 2023, Amgen and Teva Pharmaceuticals USA, Inc.

filed a notice of appeal.

On October 17, 2023, Amgen submitted its initial brief in its appeal before the U.S.

Court of Appeals for the Third Circuit.

Regeneron Pharmaceuticals, Inc.

Antitrust Action

The Delaware District Court scheduled the trial to begin on November 12, 2024.

Tax Litigation

On August 28, 2023, Regeneron filed its amended complaint, and on September 20, 2023, Amgen filed a counterclaim, alleging Regeneron’s own anticompetitive conduct with respect to formulary position for Regeneron’s drug, PRALUENT ® , at CVS.

Tax Litigation and Related Matters

& Subsidiaries v.

1 unchanged sentence

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 August 31, 2023, plaintiff filed an amended complaint.

Amgen’s motion to dismiss is due November 6, 2023.

Shareholder Derivative Litigation

On August 2, 2023, Leon Martin filed a derivative action, purportedly on behalf of Amgen, against Amgen, Robert Bradway, Peter Griffith and Amgen’s independent board members.

The action was filed in the U.S.

District Court for the Southern District of New York as related to the pending federal securities class action filed by Roofers Local No.

149 Pension Fund on March 13, 2023 (the Roofers securities class action).

The complaint in this matter alleges claims for violations of the Securities Exchange Act of 1934, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unjust enrichment and waste of corporate assets.

The factual allegations that form the basis for these claims are essentially the same as the allegations asserted in the Roofers securities class action regarding purportedly false and misleading statements and omissions made from July 29, 2020 through April 27, 2022 relating to Amgen’s tax liabilities, business and finances, and the adequacy and maintenance of its internal controls.

FTC Litigation re the Proposed Horizon Therapeutics plc Acquisition

On May 16, 2023, the FTC filed a complaint and motion for preliminary injunction in the U.S.

District Court for the Northern District of Illinois (Northern Illinois District Court) seeking to enjoin Amgen’s proposed acquisition of Horizon.

The FTC alleges that the deal would allow Amgen to leverage its portfolio of blockbuster drugs someday to entrench the monopoly positions of Horizon medications used to treat two serious conditions, thyroid eye disease and chronic refractory gout, if competitors eventually come to market.

The preliminary injunction hearing in the case is set to begin on September 11, 2023.

On June 1, 2023, Amgen, Horizon and the FTC submitted a stipulated proposed temporary restraining order (TRO) to the Northern Illinois District Court providing that Horizon and Amgen would not close the acquisition until the earlier of October 31, 2023 or the second business day after the Northern Illinois District Court rules on the FTC’s request for a preliminary injunction.

On June 2, 2023, the Northern Illinois District Court issued an order granting the stipulated TRO.

Amgen and Horizon filed their answer to the complaint on June 9, 2023.

On June 22, 2023, an amended complaint was filed adding six states to the lawsuit, and on June 29, 2023, Amgen filed an answer and counterclaims to the amended complaint.

On June 22, 2023, the FTC filed an administrative complaint before the FTC’s administrative judge, and on July 7, 2023 Amgen and Horizon filed an answer to the administrative complaint.

The Transaction Agreement provides that Amgen will be required to pay Horizon a termination fee of $ 974.4 million if the Transaction Agreement is terminated under certain circumstances in which there was a failure to obtain regulatory approvals by December 12, 2023, as described in Amgen’s Form 8-K filed December 12, 2022, and in the Transaction Agreement filed therewith.

One of those circumstances would likely arise if the above-described preliminary injunction hearing is not decided favorably to Amgen and Horizon.

On October 2, 2023, the U.S.

District Court for the Southern District of New York granted a stay of the matter pending an outcome on the motion to dismiss in the federal securities class action filed by plaintiff.

ChemoCentryx, Inc.

Securities Class Action Litigation

The due date for our subsidiary ChemoCentryx to file its opposition to class certification is November 22, 2023.

FTC Litigation re the Horizon Therapeutics plc Acquisition

On September 1, 2023, the FTC, the six state plaintiffs and Amgen announced that they entered into a consent agreement that resolved the matter, and both the federal litigation and the FTC administrative case were dismissed.

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