What changed in this filing

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Item 2. Management’s Discussion and Analysis

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The following MD&A is intended to assist the reader in understanding Amgen’s business.

MD&A is provided as a supplement to and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022, and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023.

MD&A is provided as a supplement to and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2023.

Our results of operations discussed in MD&A are presented in conformity with GAAP.

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Risk Factors in Part II herein and in Part I, Item 1A.

Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022, and in Part II, Item 1A.

Risk Factors of our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023.

Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023.

We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made.

We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements.

Reference is made in particular to forward-looking statements regarding product sales, regulatory activities, clinical trial results, reimbursement, expenses, EPS, liquidity and capital resources, trends, planned dividends, stock repurchases, collaborations and effects of pandemics.

Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Amgen is a biotechnology company committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics.

A biotechnology pioneer since 1980, Amgen has grown to be one of the world’s leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.

Our principal products are Prolia, ENBREL, XGEVA, Otezla, Repatha, Nplate, KYPROLIS, Aranesp and EVENITY.

We also market a number of other products, including Vectibix, BLINCYTO, MVASI, Neulasta, AMJEVITA/AMGEVITA, TEZSPIRE, Parsabiv, Aimovig, LUMAKRAS/LUMYKRAS, EPOGEN, KANJINTI and TAVNEOS.

Macroeconomic challenges

(including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) discovers, develops, manufactures and delivers innovative medicines to fight some of the world’s toughest diseases.

Amgen focuses on areas of high unmet medical need and leverages its expertise to strive for solutions that dramatically improve people’s lives, while also reducing the social and economic burden of disease.

We helped launch the biotechnology industry more than 40 years ago and have grown to be one of the world’s leading independent biotechnology companies.

Our robust pipeline includes potential first-in-class medicines at all stages of development.

Our principal products are Prolia, ENBREL, XGEVA, Repatha, TEPEZZA, Otezla, KYPROLIS, Aranesp, EVENITY, Nplate, Vectibix, BLINCYTO, KRYSTEXXA and TEZSPIRE.

We also market a number of other products, including but not limited to MVASI, AMJEVITA/AMGEVITA, Neulasta, Parsabiv, RAVICTI, LUMAKRAS/LUMYKRAS, UPLIZNA, Aimovig, TAVNEOS, PROCYSBI and EPOGEN.

Macroeconomic and other challenges

Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, as well as rising healthcare costs continue to pose challenges to our business.

Further, ongoing geopolitical conflicts continue to create additional uncertainty in global macroeconomic conditions.

As a result of public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, including net price declines.

Additionally, with public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, resulting in net price declines.

Moreover, legislation enacted to reduce healthcare expenditures, including provisions of the IRA, have affected, and are likely to continue to affect, our business.

See our Quarterly Report on Form 10-Q for the period ended March 31, 2023, Part II, Item 1A.

Risk Factors— Global economic conditions may negatively affect us and may magnify certain risks that affect our business .

Significant developments

Following is a summary of selected significant developments affecting our business that occurred since the filing of our Quarterly Report on Form 10-Q for the period ended June 30, 2023.

For additional developments or for a more comprehensive discussion of certain developments discussed below, see our Annual Report on Form 10-K for the year ended December 31, 2022, and our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023.

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.

See Part II, Item 1A.

Risk Factors— Our efforts to collaborate with or acquire other companies, products, or technology, and to integrate the operations of companies or to support the products or technology we have acquired, may not be successful, and may result in unanticipated costs, delays or failures to realize the benefits of the transactions , of this Quarterly Report.

Products/Pipeline

On October 20, 2023, we announced results from the global Phase 2 DeLLphi-301 study, evaluating tarlatamab, an investigational delta-like ligand 3 (DLL3) targeting BiTE ® (bispecific T-cell engager) molecule, in patients with advanced stage small cell lung cancer (SCLC) who had failed two or more prior lines of treatment.

With a median follow-up of 10.6 months, an intention-to-treat analysis that included 100 patients at the selected 10 mg dose, tarlatamab demonstrated an objective response rate (ORR;

primary endpoint) of 40%.

For key secondary endpoints, median progression-free survival (mPFS) was 4.9 months and median overall survival (mOS) was 14.3 months.

There were no new safety signals observed compared to the Phase 1 study.

LUMAKRAS/LUMYKRAS

On October 5, 2023, the FDA convened an Oncologic Drugs Advisory Committee (ODAC) to discuss whether the LUMAKRAS CodeBreaK 200 study could be considered an adequate and well-controlled trial as part of the FDA’s evaluation of whether this data supports the conversion of LUMAKRAS’ accelerated approval for the treatment of non-small cell lung cancer (NSCLC) to a full approval.

Upon review, a majority of the ODAC committee members voted that the CodeBreaK 200 primary endpoint (progression-free survival (PFS) per the blinded independent central review) could not be reliably interpreted.

Regulatory review by the FDA is currently ongoing, and while we cannot speculate on the actions of the FDA and subsequent impact to LUMAKRAS, we will continue to work closely with the FDA on the full approval pathway for this important medicine.

Finally, wholesale and end-user buying patterns can affect our product sales.

These buying patterns can cause fluctuations in quarterly product sales but have generally not been significant to date when comparing full-year product performance to the prior year.

See Part II, Item 1A.

Risk Factors— Our current products and products in development cannot be sold without regulatory approval , of this Quarterly Report.

On October 22, 2023, we announced data from the global Phase 3 CodeBreaK 300 trial evaluating two doses of LUMAKRAS/LUMYKRAS (960 mg or 240 mg) in combination with Vectibix.

Both doses demonstrated a statistically significant superiority in PFS over the investigator’s choice of therapy in patients with chemorefractory G12C-mutated metastatic colorectal cancer (mCRC).

After a median follow-up of 7.8 months, the median PFS was 5.6 months and 3.9 months with LUMAKRAS/LUMYKRAS 960 mg plus Vectibix and LUMAKRAS/LUMYKRAS 240 mg plus Vectibix, respectively, versus 2.2 months with investigator’s choice of therapy (trifluridine and tipiracil, or regorafenib).

Patients at both dose regimens of LUMAKRAS/LUMYKRAS plus Vectibix experienced a longer duration of treatment than those treated with investigator’s choice therapy.

Risk Factors, of this Quarterly Report on Form 10-Q.

Significant developments

Following is a summary of selected significant developments affecting our business that occurred since the filing of our Annual Report on Form 10-K for the year ended December 31, 2023.

For additional developments, see our Annual Report on Form 10-K for the year ended December 31, 2023.

Obesity Program Update

On May 2, 2024, the Company provided an update on the interim analysis of the maridebart cafraglutide (MariTide) Phase 2 study in adults with overweight or obesity, with or without type 2 diabetes mellitus.

The Company reported that the interim analysis of this ongoing Phase 2 study is complete and it is actively planning and expects to initiate a broad Phase 3 program, including obesity, obesity related conditions, and diabetes.

The Company also announced its plans to initiate an additional, dedicated Phase 2 trial investigating MariTide for the treatment of diabetes in patients with and without obesity.

As part of this announcement, the Company also indicated that it is not planning to pursue further development of AMG 786, a small molecule obesity program.

Selected financial information

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Product sales

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Operating income $ 991 $ 1,921 (48) %

Net income $ 1,730 $ 2,143 (19) % $ 5,950 $ 4,936 21 %

Diluted EPS $ 3.22 $ 3.98 (19) % $ 11.06 $ 9.11 21 %

Net (loss) income $ (113) $ 2,841 *

Diluted (loss) earnings per share $ (0.21) $ 5.28 *

Diluted shares 536 538 0 %

* Change in excess of 100%

In the following discussion of changes in product sales, any reference to unit demand growth or decline refers to changes in purchases of our products by healthcare providers (such as physicians or their clinics), dialysis centers, hospitals and pharmacies.

In addition, any reference to increases or decreases in inventory refers to changes in inventory held by wholesaler customers and end users (such as pharmacies) as may be noted.

Total product sales increased for the three months ended September 30, 2023, driven by volume growth for certain brands, including Repatha, Nplate, TEZSPIRE, EVENITY, BLINCYTO and Prolia, partially offset by declines in net selling prices of certain other products, including Neulasta, MVASI and Repatha, and unfavorable changes to estimated sales deductions, including for ENBREL, Neulasta, Otezla and LUMAKRAS/LUMYKRAS.

Total product sales increased for the nine months ended September 30, 2023, primarily driven by volume growth for certain brands, including Repatha, TEZSPIRE, EVENITY, Nplate, Prolia and BLINCYTO, partially offset by declines in net selling prices of certain other products, including Neulasta, MVASI, KANJINTI, Otezla, ENBREL and Repatha, unfavorable changes to estimated sales deductions, including for ENBREL, Prolia and LUMAKRAS/LUMYKRAS, and unfavorable changes to foreign currency exchange rates.

For the remainder of 2023, we expect that net selling price will continue to decline year-over-year at a portfolio level, driven by increased competition.

As a result of uncertain macroeconomic conditions and geopolitical conflicts, we expect continued volatility around foreign currency exchange rates.

The impact of unfavorable changes to foreign currency exchange rates will be partially offset by corresponding decreases in our international operating expenses.

While not designed to completely address foreign currency changes, our hedging activities also seek to offset, in part, such effects on our net income by hedging our net foreign currency exposure, primarily with respect to product sales denominated in euros.

Our product sales were affected by reduced demand as a result of the COVID-19 pandemic, and the cumulative decrease in diagnoses over the course of the pandemic suppressed the volume of new patients starting treatment, which continues to impact the business.

Given the unpredictable nature of the pandemic, there could be future intermittent disruptions in physician–patient interactions.

In addition, other disruptions, including uncertain macroeconomic conditions, changes in the healthcare ecosystem and geopolitical conflicts, have the potential to introduce variability into product sales.

For example, actions by governments and other entities to curb high inflation, provisions of the IRA and growth in numbers of Medicaid enrollees and uninsured individuals may have a negative impact on product sales.

See Part II, Item 1A.

Total product sales increased 22% for the three months ended March 31, 2024, primarily driven by 25% volume growth.

volume grew 29% and ROW volume grew 17%.

Product sales from acquired Horizon products contributed $914 million to product sales, and volume growth from our other brands, including Repatha, TEZSPIRE, EVENITY, Prolia and BLINCYTO, was 9%.

Net selling price remained relatively unchanged for the three months ended March 31, 2024, compared to the prior period.

For the remainder of 2024, we expect product sales growth from acquired Horizon products and volume growth from our other brands to be partially offset by net selling price declines on a year-over-year basis at a portfolio level.

Uncertain macroeconomic conditions, changes in the healthcare ecosystem and geopolitical conflicts have the potential to introduce variability into product sales.

Furthermore, product sales continue to be impacted by actions from governments and other entities to curb high inflation, provisions of the IRA and growth in numbers of Medicaid enrollees and uninsured individuals.

See Part I, Item 1A.

Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2023, and Part II, Item 1A.

Risk Factors, of this Quarterly Report.

Other revenues decreased for the three and nine months ended September 30, 2023, due to lower revenue from our COVID-19 manufacturing collaboration.

Operating expenses increased for the three months ended September 30, 2023, driven by a net impairment charge resulting from the termination of AMG 340, higher profit share expenses and changes in our product mix.

See Note 9, Goodwill and other intangible assets, and Note 12, Fair value measurement, to the condensed consolidated financial statements.

Operating expenses increased for the nine months ended September 30, 2023, primarily driven by a net impairment charge resulting from the termination of AMG 340, changes in our product mix, higher profit share expenses, higher amortization expense from acquisition-related assets and expenses related to our restructuring plan initiated in the first quarter of 2023, partially offset by our loss on the divestiture of Gensenta in the prior period.

See Note 2, Restructuring;

Note 3, Acquisitions and divestitures;

Note 9, Goodwill and other intangible assets;

and Note 12, Fair value measurement, to the condensed consolidated financial statements.

Other revenues increased for the three months ended March 31, 2024, primarily driven by higher corporate partner revenue from a licensed product.

Operating expenses increased for the three months ended March 31, 2024, driven by higher amortization and acquisition-related expenses incurred as a result of the Horizon acquisition, higher SG&A and R&D expenses, including expenses related to Horizon-acquired products and programs, and higher profit share and royalty expense.

Results of operations

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Prolia $ 999 $ 927 8 %

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XGEVA 561 536 5 %

Otezla 567 627 (10) % 1,559 1,672 (7) %

Repatha 517 388 33 %

Nplate 419 288 45 % 1,091 838 30 %

Otezla 394 392 1 %

KYPROLIS 376 358 5 %

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EVENITY 342 254 35 %

Nplate 317 362 (12) %

Vectibix 247 233 6 %

BLINCYTO 244 194 26 %

KRYSTEXXA (1)

Other products (3)

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Total product sales $ 7,118 $ 5,846 22 %

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

N/A = not applicable

(1) TEPEZZA and KRYSTEXXA were acquired from the acquisition of Horizon on October 6, 2023, and include product sales in the periods after the acquisition date.

(2) TEZSPIRE is marketed by our collaborator AstraZeneca outside the United States.

(3) Consists of product sales of our non-principal products.

Future sales of our products will depend in part on the factors discussed below and in the following sections of this report:

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and (iii) Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of operations—Product sales, as well as in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2023 and June 30, 2023:

(i) Part I, Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of operations—Product sales;

and (ii) Part II, Item 1A.

Risk Factors.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of operations—Product sales.

Total Prolia sales by geographic region were as follows (dollar amounts in millions):

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Prolia — U.S.

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Total Prolia $ 999 $ 927 8 %

The increase in global Prolia sales for the three and nine months ended September 30, 2023, was primarily driven by volume growth and higher net selling price.

For a discussion of litigation related to Prolia, see Part I—Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended June 30, 2023;

The increase in global Prolia sales for the three months ended March 31, 2024 was primarily driven by volume growth.

For a discussion of litigation related to Prolia, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023;

and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

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ENBREL — U.S.

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Total ENBREL $ 567 $ 579 (2) %

The decrease in ENBREL sales for the three months ended September 30, 2023, was primarily driven by unfavorable changes to estimated sales deductions.

The decrease in ENBREL sales for the nine months ended September 30, 2023, was driven by lower inventory, unfavorable changes to estimated sales deductions and lower net selling price.

For the remainder of 2023, we expect improved coverage will lead to growth in new patients and declining net selling price.

The decrease in ENBREL sales for the three months ended March 31, 2024 was driven by lower volume, partially offset by higher inventory levels.

ENBREL typically has lower sales in the first quarter relative to subsequent quarters of the year due to the impact of benefit plan changes, insurance reverifications and increased co-pay expenses as U.S.

patients work through deductibles.

Moving forward, we expect modest volume growth offset by declining net selling price.

Total XGEVA sales by geographic region were as follows (dollar amounts in millions):

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$ 366 $ 384 (5) %

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Total XGEVA $ 561 $ 536 5 %

The increase in global XGEVA sales for the three months ended September 30, 2023, was driven by higher net selling price.

The increase in global XGEVA sales for the nine months ended September 30, 2023, was driven by higher net selling price, partially offset by unfavorable changes to estimated sales deductions.

For a discussion of litigation related to XGEVA, see Part I—Note 14, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended June 30, 2023;

The increase in global XGEVA sales for the three months ended March 31, 2024 was primarily driven by volume growth outside the United States and higher net selling price, partially offset by lower volume in the United States.

For a discussion of litigation related to XGEVA, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023;

and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

Total Otezla sales by geographic region were as follows (dollar amounts in millions):

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Otezla — U.S.

$ 462 $ 529 (13) % $ 1,251 $ 1,366 (8) %

Otezla — ROW 105 98 7 % 308 306 1 %

Total Otezla $ 567 $ 627 (10) % $ 1,559 $ 1,672 (7) %

The decrease in global Otezla sales for the three months ended September 30, 2023, was driven by lower net selling price, unfavorable changes to estimated sales deductions and lower inventory, partially offset by volume growth.

The decrease in global Otezla sales for the nine months ended September 30, 2023, was driven by lower net selling price and inventory, partially offset by volume growth.

For the remainder of 2023, we expect demand to be affected by free drug programs from newly launched competition.

For a discussion of litigation related to Otezla, see Part IV—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 Part I—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.

Total Repatha sales by geographic region were as follows (dollar amounts in millions):

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Repatha — U.S.

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Total Repatha $ 517 $ 388 33 %

The increase in global Repatha sales for the three and nine months ended September 30, 2023, was driven by volume growth, partially offset by lower net selling price.

For a discussion of ongoing litigation related to Repatha, see Part IV—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;

Part I—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;

and Note 14, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

Total Nplate sales by geographic region were as follows (dollar amounts in millions):

The increase in global Repatha sales for the three months ended March 31, 2024 was driven by volume growth of 44%, partially offset by lower net selling price of 13%.

For a discussion of ongoing litigation related to Repatha, see Part IV—Note 20, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2023, and Note 13, Contingencies and commitments, to the condensed consolidated financial statements in this Quarterly Report.

Total TEPEZZA sales by geographic region were as follows (dollar amounts in millions):

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Nplate — U.S.

2024 2023 Change

TEPEZZA — U.S.

$ 419 $ — N/A

TEPEZZA — ROW 5 — N/A

Total TEPEZZA $ 424 $ — N/A

N/A = not applicable

TEPEZZA was acquired on October 6, 2023 from our Horizon acquisition and generated $424 million in product sales for the three months ended March 31, 2024.

As TEPEZZA was acquired on October 6, 2023, there were no recorded product sales for the comparative prior period.

Total Otezla sales by geographic region were as follows (dollar amounts in millions):

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Otezla — U.S.

$ 293 $ 294 0 %

Nplate — ROW 97 126 (23) % 347 364 (5) %

Total Nplate $ 419 $ 288 45 % $ 1,091 $ 838 30 %

The increase in global Nplate sales for the three and nine months ended September 30, 2023, was driven by volume growth resulting from U.S.

government orders of $142 million and $224 million, respectively.

Otezla — ROW 101 98 3 %

Total Otezla $ 394 $ 392 1 %

Global Otezla sales for the three months ended March 31, 2024 increased 1%.

Otezla typically has lower sales in the first quarter relative to subsequent quarters of the year due to the impact of benefit plan changes, insurance reverifications and increased co-pay expenses as U.S.

patients work through deductibles.

Total KYPROLIS sales by geographic region were as follows (dollar amounts in millions):

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KYPROLIS — U.S.

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Total KYPROLIS $ 376 $ 358 5 %

The increase in global KYPROLIS sales for the three and nine months ended September 30, 2023, was primarily driven by volume growth.

The increase in global KYPROLIS sales for the three months ended March 31, 2024 was primarily driven by volume growth outside the United States.

Total Aranesp sales by geographic region were as follows (dollar amounts in millions):

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Aranesp — U.S.

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Total Aranesp $ 349 $ 355 (2) %

The decrease in global Aranesp sales for the three months ended September 30, 2023, was driven by lower volume and net selling price and unfavorable changes to foreign currency exchange rates.

The decrease in global Aranesp sales for the nine months ended September 30, 2023, was driven by unfavorable changes to foreign currency exchange rates and lower net selling price, partially offset by volume growth.

Aranesp sales for the three and nine months ended September 30, 2023, decreased due to lower unit demand as a result of independent and medium-sized dialysis organizations transitioning from Aranesp to EPOGEN.

We expect Aranesp to continue to face competition from EPOGEN and its biosimilars, which will impact volume and net selling price in the future.

The decrease in global Aranesp sales for the three months ended March 31, 2024 was driven by unfavorable changes to estimated sales deductions of 3%, partially offset by volume growth outside the United States.

Aranesp sales were impacted by independent and medium-sized dialysis organizations transitioning from Aranesp to EPOGEN.

Total EVENITY sales by geographic region were as follows (dollar amounts in millions):

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EVENITY — U.S.

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Total EVENITY $ 342 $ 254 35 %

The increase in global EVENITY sales for the three and nine months ended September 30, 2023, was driven by volume growth.

Other products

Other product sales by geographic region were as follows (dollar amounts in millions):

The increase in global EVENITY sales for the three months ended March 31, 2024 was primarily driven by volume growth.

Total Nplate sales by geographic region were as follows (dollar amounts in millions):

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Nplate — U.S.

$ 190 $ 246 (23) %

Nplate — ROW 127 116 9 %

Total Nplate $ 317 $ 362 (12) %

The decrease in global Nplate sales for the three months ended March 31, 2024 was primarily driven by lower volume in comparison to the first quarter of 2023, which included a U.S.

government order of $82 million.

Excluding the U.S.

government order from this comparison, global Nplate sales grew 13% for the three months ended March 31, 2024, primarily driven by

volume growth.

Total Vectibix sales by geographic region were as follows (dollar amounts in millions):

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Vectibix — U.S.

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Vectibix — ROW 127 122 4 %

Total Vectibix $ 247 $ 233 6 %

The increase in global Vectibix sales for the three months ended March 31, 2024 was driven by higher net selling price and volume growth, partially offset by unfavorable changes to foreign currency exchange rates.

Total BLINCYTO sales by geographic region were as follows (dollar amounts in millions):

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BLINCYTO — U.S.

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BLINCYTO — ROW 91 68 34 %

140 139 1 % 384 468 (18) %

Total BLINCYTO $ 244 $ 194 26 %

The increase in global BLINCYTO sales for the three months ended March 31, 2024 was driven by volume growth resulting from broad prescribing across academic and community segments for patients with B-cell precursor acute lymphoblastic leukemia.

Total KRYSTEXXA sales by geographic region were as follows (dollar amounts in millions):

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KRYSTEXXA — U.S.

$ 235 $ — N/A

KRYSTEXXA — ROW

Total KRYSTEXXA

$ 235 $ — N/A

N/A = not applicable

KRYSTEXXA was acquired on October 6, 2023 from our Horizon acquisition and generated $235 million in product sales for the three months ended March 31, 2024.

As KRYSTEXXA was acquired on October 6, 2023, there were no recorded product sales for the comparative prior period.

Total TEZSPIRE sales by geographic region were as follows (dollar amounts in millions):

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TEZSPIRE — U.S.

$ 173 $ 96 80 %

Neulasta — U.S.

The increase in TEZSPIRE sales for the three months ended March 31, 2024 was primarily driven by volume growth.

Other products

Other product sales by geographic region were as follows (dollar amounts in millions):

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$ 105 $ 121 (13) %

Neulasta — ROW 32 42 (24) % 107 133 (20) %

AMJEVITA — U.S.

23 — NM 93 — NM

AMGEVITA — ROW

129 117 10 % 373 341 9 %

TEZSPIRE — U.S.

Neulasta — U.S.

87 211 (59) %

Neulasta — ROW 31 38 (18) %

Parsabiv — U.S.

59 61 (3) % 171 189 (10) %

Parsabiv — ROW 40 33 21 %

Aimovig — U.S.

88 103 (15) % 230 289 (20) %

Aimovig — ROW 6 4 50 % 15 11 36 %

RAVICTI — U.S.

RAVICTI — ROW (1)

LUMAKRAS — U.S.

48 61 (21) % 146 160 (9) %

LUMYKRAS — ROW

4 14 (71) % 57 54 6 %

EPOGEN — U.S.

50 136 (63) % 171 392 (56) %

KANJINTI — U.S.

7 58 (88) % 78 207 (62) %

KANJINTI — ROW

13 14 (7) % 39 46 (15) %

UPLIZNA — U.S.

UPLIZNA — ROW (1)

Aimovig — U.S.

Aimovig — ROW 5 5 — %

TAVNEOS — U.S.

32 — NM 84 — NM

TAVNEOS — ROW 5 — NM 6 — NM

136 105 30 % 412 284 45 %

TAVNEOS — ROW 6 — N/A

PROCYSBI — U.S.

PROCYSBI — ROW (1)

EPOGEN — U.S.

Other — ROW (2)

31 61 (49) % 122 195 (37) %

Total other products $ 1,373 $ 1,172 17 %

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Total other products $ 1,373 $ 1,172 17 %

NM = not meaningful

* Change in excess of 100%

(1) Consists of AVSOLA, Corlanor, RIABNI, NEUPOGEN, IMLYGIC, Sensipar/Mimpara and BEKEMV as well as sales in prior periods of our divested Bergamo and Gensenta subsidiaries.

N/A = not applicable

(1) RAVICTI, UPLIZNA and PROCYSBI were acquired from our Horizon acquisition on October 6, 2023, and include product sales in the periods after the acquisition date.

(2) Consists of product sales from (i) KANJINTI, RIABNI, Corlanor, NEUPOGEN, AVSOLA, IMLYGIC, Sensipar/Mimpara, BEKEMV and WEZLANA/WEZENLA;

and (ii) ACTIMMUNE, RAYOS, BUPHENYL, PENNSAID, QUINSAIR and DUEXIS in the periods after our Horizon acquisition on October 6, 2023.

Operating expenses

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Three months ended

September 30, Nine months ended

September 30,

2023 2022 Change 2023 2022 Change

2024 2023 Change

Operating expenses:

10 unchanged sentences

Total operating expenses $ 6,456 $ 4,184 54 %

* Change in excess of 100%

Cost of sales

Cost of sales increased to 26.2% and 26.7% of total revenues for the three and nine months ended September 30, 2023, respectively, primarily driven by higher profit share expenses, higher amortization expense from acquisition-related assets and changes in our product mix, partially offset by the impact of the Puerto Rico tax law change.

The 2022 Puerto Rico tax law change replaced an excise tax with an income tax beginning in 2023.

Cost of sales increased to 43.0% of total revenues for the three months ended March 31, 2024, driven by higher amortization expense from Horizon acquisition-related assets and, to a lesser extent, higher profit share and royalty expense.

This increase was partially offset by the impact of the 2022 Puerto Rico tax law change, which replaced an excise tax with an income tax beginning in 2023.

See Note 4, Income taxes, to the condensed consolidated financial statements.

Research and development

The decrease in R&D expense for the three months ended September 30, 2023, was driven by lower spend in research and early pipeline, partially offset by higher spend in later-stage clinical programs and marketed products.

The increase in R&D expense for the nine months ended September 30, 2023, was driven by higher spend in later-stage clinical programs and marketed products, partially offset by lower spend in research and early pipeline.

The increase in R&D expense for the three months ended March 31, 2024, was driven by higher spend in later-stage clinical programs and marketed product support, including Horizon-acquired programs.

Selling, general and administrative

The increase in SG&A expense for the three and nine months ended September 30, 2023, was primarily driven by higher general and administrative expenses, including acquisition-related expenses, partially offset by lower spend for marketed products.

Other operating expenses for the three and nine months ended September 30, 2023, consisted of a net impairment charge resulting from the termination of AMG 340 and expenses related to our restructuring plan initiated in the first quarter of 2023.

See Note 2, Restructuring;

Note 9, Goodwill and other intangible assets;

and Note 12, Fair value measurement, to the condensed consolidated financial statements.

Other operating expenses for the three months ended September 30, 2022, consisted primarily of an impairment charge associated with an intangible asset acquired in a business combination.

Other operating expenses for the nine months ended September 30, 2022, consisted primarily of our loss on the divestiture of Gensenta.

See Note 3, Acquisitions and divestitures, to the condensed consolidated financial statements.

The increase in SG&A expense for the three months ended March 31, 2024, was primarily driven by commercial expenses related to Horizon-acquired products, general and administrative expenses and acquisition-related expenses.

Other operating expenses for the three months ended March 31, 2024, consisted primarily of a net impairment charge associated with an IPR&D asset and changes in the fair values of contingent consideration liabilities, both related to our Teneobio, Inc.

acquisition from 2021.

Other operating expenses for the three months ended March 31, 2023, consisted of expenses related to our restructuring plan initiated in the first quarter of 2023.

Nonoperating expense/income and income taxes

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Three months ended

September 30, Nine months ended

September 30,

2023 2022 2023 2022

Interest expense, net $ (824) $ (543)

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

Other (expense) income, net $ (235) $ 2,064

Provision for income taxes $ 45 $ 601

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Interest expense, net

The increase in Interest expense, net, for the three and nine months ended September 30, 2023, was primarily due to higher overall debt outstanding and higher interest rates on the debt.

Other income (expense), net

During the first quarter of 2023, we changed the method of accounting for our investment in BeiGene from the equity method to recording the investment at fair value, with changes in fair value recognized in earnings.

The increase in Interest expense, net, for the three months ended March 31, 2024, was primarily due to higher average debt outstanding and higher weighted-average fixed and variable interest rates on the debt.

Other (expense) income, net

The change in Other (expense) income, net, for the three months ended March 31, 2024, was primarily due to unrealized losses on our strategic equity investments, primarily BeiGene and Neumora, compared with unrealized gains on these investments in the prior period.

Prior period gains were principally composed of amounts recognized on our BeiGene investment as a result of a change from the equity method of accounting for this investment to recording the investment at fair value, with changes in fair value recognized in earnings.

See Note 6, Investments, to the condensed consolidated financial statements.

The increase in Other income (expense), net, for the three and nine months ended September 30, 2023, was primarily due to the net gain recognized in the current year period on our investment in BeiGene and the increase in interest income due to the higher cash balance and higher interest rates.

The increase in our effective tax rate for the three months ended September 30, 2023, was primarily due to the Puerto Rico 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, to the condensed consolidated financial statements.

The increase in our effective tax rate for the nine months ended September 30, 2023, was primarily due to the Puerto Rico 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 Administration and Congress continue to discuss changes to existing tax law that could substantially increase the taxes we pay to the U.S.

Further, the OECD recently reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries.

Some individual jurisdictions, including the United Kingdom and some EU member countries, have begun to implement the global minimum tax agreement with effective dates as early as January 1, 2024.

If enacted, either by all OECD participants or unilaterally by individual countries, this agreement could result in a tax increase that could affect our U.S.

and foreign tax liabilities.

Treasury released final foreign tax credit regulations in December 2021 that eliminated U.S.

creditability of the Puerto Rico excise tax beginning in 2023.

In response, on June 30, 2022, the U.S.

territory of Puerto Rico enacted Act 52-2022, which provides for an alternative income tax rate on industrial development income that the U.S.

Treasury confirmed will be creditable under federal law.

As part of this new law, eligible businesses will be subject to incremental income and withholding taxes in lieu of payment of the Puerto Rico excise tax.

In order to qualify for the alternative income tax, our current tax grant with the Puerto Rico government was amended in December 2022.

We qualified for this alternative income tax beginning on January 1, 2023, and our tax expense increased.

The decrease in our effective tax rate for the three months ended March 31, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business, amortization of Horizon acquired assets and the first quarter 2024 unrealized loss on BeiGene investment.

See Note 6, Investments —BeiGene, Ltd., to the condensed consolidated financial statements.

As previously reported, the OECD reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries.

Effective January 1, 2024, selected individual countries, including the United Kingdom and EU member countries, have enacted the global minimum tax agreement.

Our legal entities in the countries that have enacted the agreement, along with their direct and indirect subsidiaries, are now subject to a 15% minimum tax rate on adjusted financial statement income.

Other countries, including the United States and the U.S.

territory of Puerto Rico, have not yet enacted the OECD agreement, and implementation remains highly uncertain.

The continued enactment of the agreement, either by all OECD participants or unilaterally by individual countries, could result in tax increases or double taxation in the United States or foreign jurisdictions.

As of January 1, 2023, 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.

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 under the U.S.

Treasury final foreign tax credit regulations.

See Note 4, Income taxes, to the condensed consolidated financial statements.

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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.

The trial is currently scheduled to begin on 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.

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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.

We are no longer subject to U.S.

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

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, and Note 5, Income taxes, to the condensed consolidated financial statements in this filing for further discussion.

See our Annual Report on Form 10-K for the year ended December 31, 2023, Part I, Item 1A, Risk Factors— We could be subject to additional tax liabilities, including from an adverse outcome in our ongoing tax dispute with the IRS and other tax examinations, enactment of the OECD minimum corporate tax rate agreement and the adoption and interpretation of new tax legislation, and we anticipate additional tax liabilities from certain provisions of the 2017 Tax Act that will go into effect in 2026;

such tax liabilities could adversely affect our profitability and results of operations, and Note 4, Income taxes, to the condensed consolidated financial statements in this filing for further discussion.

Financial condition, liquidity and capital resources

Selected financial data were as follows (in millions):

September 30, 2023 December 31, 2022

Cash, cash equivalents and marketable securities $ 34,741 $ 9,305

March 31, 2024 December 31, 2023

Cash and cash equivalents $ 9,708 $ 10,944

Total assets $ 92,980 $ 97,154

2 unchanged sentences

Stockholders’ equity $ 5,022 $ 6,232

Cash, cash equivalents and marketable securities

Our balance of cash, cash equivalents and marketable securities was $34.7 billion as of September 30, 2023, the majority of which was used for the acquisition of Horizon.

See Note 3, Acquisitions and divestitures, to the condensed consolidated financial statements.

Cash and cash equivalents

Our balance of cash and cash equivalents was $9.7 billion as of March 31, 2024.

The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk.

2 unchanged sentences

Consistent with the objective to optimize our capital structure, we deploy our accumulated cash balances in a strategic manner and consider a number of alternatives, including investments in innovation both internally and externally (including investments that expand our portfolio of products in areas of therapeutic interest), capital expenditures, repayment of debt, payment of dividends and stock repurchases.

We intend to continue to invest in our business while returning capital to stockholders through the payment of cash dividends and stock repurchases, thereby reflecting our confidence in the future cash flows of our business and our desire to optimize our cost of capital.

The timing and amount of future dividends and stock repurchases will vary based on a number of factors, including future capital requirements for strategic transactions, availability of financing on acceptable terms, debt

service requirements, our credit rating, changes in applicable tax laws or corporate laws, changes in our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements.

In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, our stock price and blackout periods, during which we are restricted from repurchasing stock.

We intend to continue investing in our business while reducing our debt and returning capital to stockholders through the payment of cash dividends and stock repurchases.

This reflects our desire to optimize our cost of capital and our confidence in the future cash flows of our business.

The timing and amount of future dividends and stock repurchases will vary based on a number of factors, including future capital requirements for strategic transactions, debt levels and debt service requirements, our credit rating, availability of financing on acceptable terms, changes to applicable tax laws or corporate laws, changes to our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements.

In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, stock price and blackout periods, during which we are restricted from repurchasing stock.

The manner of stock repurchases may include block purchases, tender offers, ASRs and market transactions.

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, and was an increase of 10% over the quarterly cash dividends paid each quarter in 2022.

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

During the nine months ended September 30, 2023, we did not repurchase any of our common stock.

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

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of September 30, 2023 and December 31, 2022.

Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our continuing profitability and strong financial position.

We believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, our plans to pay dividends and repurchase stock, and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities.

In December 2023, our Board of Directors declared a quarterly cash dividend of $2.25 per share of common stock for the first quarter of 2024, an increase of 6% for this period, which was paid in March 2024.

In March 2024, our Board of Directors declared a quarterly cash dividend of $2.25 per share of common stock to be paid in June 2024.

During the three months ended March 31, 2024, we did not repurchase any of our common stock.

As of March 31, 2024, $7.0 billion of authorization remained available under our stock repurchase program.

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of March 31, 2024 and December 31, 2023.

Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our strong financial position.

We opportunistically repurchase our debt when market conditions are favorable.

During the three months ended March 31, 2024 and 2023, we spent $410 million and $420 million to extinguish principal amounts of debt of $544 million and $539 million, respectively.

We believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, as well as our plans to reduce debt, pay dividends and repurchase stock, and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities.

We anticipate that our liquidity needs can be met through a variety of sources, including cash provided by operating activities, sales of marketable securities, borrowings through commercial paper and/or syndicated credit facilities and access to other domestic and foreign debt markets and equity markets.

See our Quarterly Report on 10-Q for the period ended March 31, 2023, Part II, Item 1A.

See our Annual Report on Form 10-K for the year ended December 31, 2023, Part I, Item 1A.

Risk Factors— Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Financing arrangements

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, in connection with the acquisition of Horizon, we issued $24.0 billion of debt composed of eight series of notes.

In connection with the issue of these notes, we elected to terminate all remaining commitments under the bridge credit agreement we entered into in December 2022.

In October 2023, in connection with the completion of the acquisition of Horizon, we borrowed $4.0 billion under a term loan credit agreement that we entered into in December 2022.

This borrowing has 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.

See Note 10, Financing arrangements, to the condensed consolidated financial statements.

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

Certain of our financing arrangements contain nonfinancial covenants.

In addition, our revolving credit agreement includes a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (consolidated earnings before interest, taxes, depreciation and amortization) to (ii) consolidated interest expense, each as defined and described in the credit agreement.

We were in compliance with all applicable covenants under these arrangements as of September 30, 2023.

In addition, our revolving credit agreement and term loan credit agreement include a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (consolidated earnings before interest, taxes, depreciation and amortization) to (ii) Consolidated Interest Expense, each as defined and described in the respective agreements.

We were in compliance with all applicable covenants under these arrangements as of March 31, 2024.

Our summarized cash flow activity was as follows (in millions):

Nine months ended

September 30,

Three months ended

Net cash provided by operating activities $ 689 $ 1,064

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

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

Net cash (used in) provided by investing activities $ (217) $ 1,358

Net cash (used in) provided by financing activities $ (1,708) $ 21,509

Cash provided by operating activities has been and is expected to continue to be our primary recurring source of funds.

Cash provided by operating activities during the nine months ended September 30, 2023, increased due to timing of payments to tax authorities, partially offset by lower net income after adjustments for noncash items.

Cash provided by investing activities during the nine months ended September 30, 2023, was primarily due to net cash inflows from sales and maturities of marketable securities of $1.7 billion, partially offset by capital expenditures of $863 million, including construction costs of new plants in North Carolina and Ohio.

Cash used in investing activities during the nine months ended September 30, 2022, was primarily due to net cash outflows related to marketable securities activity of $1.9 billion and capital expenditures of $596 million.

We currently estimate 2023 spending on capital projects to be approximately $950 million.

Cash provided by financing activities during the nine months ended September 30, 2023, was primarily due to proceeds from the issuance of debt of $23.8 billion, partially offset by the payment of dividends of $3.4 billion as well as the repayment and extinguishment of debt of $2.0 billion.

Cash used in financing activities during the nine months ended September 30, 2022, was primarily due to payments to repurchase our common stock of $6.4 billion, including amounts paid under the ASR agreements, the payment of dividends of $3.2 billion and the extinguishment of debt of $297 million, partially offset by proceeds from the issuance of debt of $6.9 billion.

Cash provided by operating activities during the three months ended March 31, 2024, decreased compared with the prior year period due to higher payments to the IRS related to an advance deposit of $800 million, partially offset by timing of working capital items.

Cash used in investing activities during the three months ended March 31, 2024, was primarily due to capital expenditures of $230 million, including construction costs of new plants in North Carolina and Ohio.

Cash provided by investing activities during the three months ended March 31, 2023, was primarily due to net cash inflows related to marketable securities activity of $1.7 billion, partially offset by capital expenditures of $344 million.

We currently estimate 2024 spending on capital projects to be approximately $1.1 billion.

Cash used in financing activities during the three months ended March 31, 2024, was primarily due to the payment of dividends of $1.2 billion and the extinguishment of debt of $410 million.

Cash provided by financing activities during the three months ended March 31, 2023, was primarily due to proceeds from the issuance of debt of $23.8 billion, partially offset by the payment of dividends of $1.1 billion as well as the repayment and extinguishment of debt of $1.1 billion.

See Note 9, Financing arrangements, and Note 10, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis