What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2024-10-31 compared with 2024-08-07 · 267 added, 194 removed, 667 unchanged (41% of the section changed)

3 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

11 unchanged sentences

Interest expense, net ( 776 ) ( 759 ) ( 2,408 ) ( 2,054 )

Other (expense) income, net ( 307 ) ( 318 ) ( 542 ) 1,746

Other income, net 1,830 685 1,288 2,431

Income before income taxes 3,101 1,947 3,827 7,003

4 unchanged sentences

Diluted $ 5.22 $ 3.22 $ 6.40 $ 11.06

Shares used in calculation of earnings per share:

Weighted-average shares used in calculation of earnings per share:

Basic 537 535 537 535

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

Net income $ 2,830 $ 1,730 $ 3,463 $ 5,950

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

Foreign currency translation ( 15 ) 11 ( 39 ) 39

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

Foreign currency translation adjustments

71 ( 44 ) 32 ( 5 )

Cash flow hedges ( 253 ) 181 ( 76 ) 73

Other 1 17 ( 3 ) 37

Other comprehensive income (loss), net of reclassification adjustments and taxes 35 ( 12 ) 134 ( 49 )

Other comprehensive (loss) income, net of reclassification adjustments and taxes ( 181 ) 154 ( 47 ) 105

Comprehensive income $ 2,649 $ 1,884 $ 3,416 $ 6,055

2 unchanged sentences

(In millions, except per-share data)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Current assets:

19 unchanged sentences

Other noncurrent liabilities 2,199 2,326

Contingencies and commitments

Contingencies and commitments (see Note 13)

Stockholders’ equity:

20 unchanged sentences

— — ( 1,208 ) — ( 1,208 )

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

Issuance of common stock in connection with equity award programs

1.0 34 — — 34

6 unchanged sentences

Other comprehensive income, net of taxes — — — 35 35

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

Issuance of common stock in connection with equity award programs

0.8 65 — — 65

4 unchanged sentences

537.2 33,204 ( 27,124 ) ( 155 ) 5,925

Net income — — 2,830 — 2,830

Other comprehensive loss, net of taxes — — — ( 181 ) ( 181 )

Dividends declared on common stock ($ 2.25 per share)

— — ( 1,236 ) — ( 1,236 )

Issuance of common stock in connection with equity award programs

0.3 67 — — 67

Stock-based compensation expense — 136 — — 136

Tax impact related to employee stock-based compensation expense

— ( 14 ) — — ( 14 )

Balance as of September 30, 2024

537.5 $ 33,393 $ ( 25,530 ) $ ( 336 ) $ 7,527

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

9 unchanged sentences

— — ( 1,138 ) — ( 1,138 )

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

Issuance of common stock in connection with equity award programs

0.3 11 — — 11

6 unchanged sentences

Other comprehensive loss, net of taxes — — — ( 12 ) ( 12 )

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

Issuance of common stock in connection with equity award programs

0.6 16 — — 16

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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 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

See accompanying notes.

1 unchanged sentence

(In millions)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

Net income $ 3,463 $ 5,950

Noncash adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, amortization and other 4,195 2,691

2 unchanged sentences

Adjustments for equity method investments ( 11 ) ( 17 )

Losses (gains) on equity securities 916 ( 1,169 )

Gains on equity securities

( 717 ) ( 1,304 )

Other items, net 1 579

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2024

September 30, 2024

Summary of significant accounting policies

(including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology pioneer that discovers, develops, manufactures and delivers innovative human therapeutics.

(including its consolidated subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology pioneer that discovers, develops, manufactures and delivers innovative human therapeutics.

We operate in one business segment:

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Basis of presentation

The financial information for the three and six months ended June 30, 2024 and 2023, 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 interim unaudited financial information for the three and nine months ended September 30, 2024 and 2023, has been prepared in accordance with GAAP and includes all adjustments (consisting of only normal, recurring adjustments unless otherwise indicated) that Amgen considers necessary for a fair presentation, in all material respects, 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, 2023, 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, 2024.

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 $ 10.1 billion and $ 9.8 billion as of June 30, 2024 and December 31, 2023, respectively.

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization, of $ 10.3 billion and $ 9.8 billion as of September 30, 2024 and December 31, 2023, respectively.

Recent accounting pronouncements

In November 2023, the Financial Accounting Standards Board (FASB) issued a new accounting standard that improves reportable segment disclosure requirements.

The new standard requires enhanced disclosures about a public company’s significant segment expenses and more timely and detailed segment information reporting throughout the fiscal period, including for companies with a single reportable segment.

The standard is effective for public business entities for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024, and early adoption is permitted.

We are currently evaluating the impact of this new standard on our related disclosures.

In December 2023, the FASB issued a new accounting standard that improves income tax disclosure requirements.

The new standard requires more detailed information on several income tax disclosures, such as income taxes paid and the income tax rate reconciliation table.

The standard is effective for public business entities for annual periods beginning after December 15, 2024, and early adoption is permitted.

We are currently evaluating the impact of this new standard on our related disclosures.

In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, to improve income tax disclosure requirements by requiring more detailed information on several income tax disclosures, such as enhancing disclosure of income taxes paid and requiring disaggregation of the effective income tax rate reconciliation.

The standard is effective for public business entities for annual periods beginning after December 15, 2024.

Early adoption is permitted, and entities may apply the standard prospectively or may elect retrospective application.

We are currently evaluating the impact of adopting this new standard on our related disclosures.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improving Reportable Segment Disclosures, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses and additional interim segment reporting disclosures, including for companies with a single reportable segment.

The standard is effective for public business entities for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

Early adoption is permitted, and the standard requires retrospective application to all prior

periods presented.

We expect the adoption of this new standard to result in incremental disclosures to the notes to our financial statements.

Acquisition of Horizon Therapeutics plc

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

On October 6, 2023, Amgen completed its acquisition of Horizon by acquiring all of the outstanding shares of Horizon for $ 116.50 per share in cash, representing a total consideration 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.

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

Measurement period adjustments during the six months ended June 30, 2024, included changes to the purchase price allocation, resulting in a net decrease of approximately $ 1 million to goodwill.

The measurement period adjustments resulted primarily from adjustments to acquired assets and liabilities, including sales reserve and allowances as well as right-of-use assets and liabilities 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, 2024, 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):

During the nine months ended September 30, 2024, the purchase price allocation of the acquisition was completed and measurement period adjustments were finalized, which included changes to the purchase price allocation that resulted in a net increase of approximately $ 25 million to goodwill.

The measurement period adjustments resulted primarily from adjustments to acquired assets and liabilities, including 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, 2024, 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 $ 681

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Other assets and liabilities, net ( 273 )

Total assets acquired, net $ 27,833

Total assets acquired, net of liabilities assumed

The $ 27.8 billion total consideration for this transaction consisted of (i) cash consideration transferred to common shareholders of $ 26.7 billion;

(ii) cash consideration transferred to vested and outstanding options, outstanding restricted stock unit (RSU) awards, and outstanding performance share unit (PSU) awards of $ 523 million;

(iii) fair value of Amgen replacement awards (based on conversion of outstanding employee RSU awards) of $ 180 million representing non-cash consideration;

and (iv) a portion of Horizon’s debt, settled by Amgen on the closing date, of $ 382 million.

Amgen issued 1.7 million replacement equity awards with the original vesting conditions, and fair value was determined based on acquisition date fair value based on the conversion calculation.

(ii) cash consideration transferred to vested and outstanding stock options, outstanding restricted stock unit (RSU) awards and outstanding performance stock unit (PSU) awards of $ 523 million;

(iii) the fair value of Amgen replacement awards (based on conversion of outstanding employee RSU awards) of $ 180 million representing noncash consideration;

and (iv) a portion of Horizon’s debt, settled by Amgen on the acquisition closing date, of $ 382 million.

Amgen issued 1.7 million replacement equity awards with the original vesting conditions, the fair value of which was determined based on the acquisition date fair value based on the conversion calculation.

The estimated fair values of $ 20.7 billion for the developed-product-technology rights and IPR&D intangible assets were determined using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets.

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The inventory fair value adjustment is being amortized using a weighted-average inventory turnover, which we estimate to approximate 27 months from the acquisition date.

A deferred tax liability of $ 2.5 billion was recognized on the temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired, as well as associated deferred tax asset for anticipatory foreign tax credits of $ 834 million.

A deferred tax liability of $ 2.5 billion was recognized on the temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired, as well as an associated deferred tax asset for anticipatory foreign tax credits of $ 795 million.

The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $ 3.1 billion was recorded as goodwill, which is not deductible for tax purposes.

The goodwill value represents expected synergies from the marketed products acquired and other benefits.

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 tax-related items as we obtain additional information during the measurement period of up to one year from the acquisition date.

Supplemental Pro Forma Financial Information

The following table presents the unaudited supplemental pro forma results of a hypothetical combined Amgen and Horizon entity for the three and six months ended June 30, 2023, as if the acquisition of Horizon had occurred on January 1, 2022 (in millions):

Three months ended

June 30, 2023 Six months ended

June 30, 2023

Total revenue $ 7,933 $ 14,874

The following table presents the unaudited supplemental pro forma results of a hypothetical combined Amgen and Horizon entity for the three and nine months ended September 30, 2023, as if the acquisition of Horizon had occurred on January 1, 2022 (in millions):

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

Total revenues

$ 7,854 $ 22,728

Net income $ 902 $ 3,518

1 unchanged sentence

In order to reflect the occurrence of the acquisition on January 1, 2022, the unaudited supplemental pro forma financial information includes adjustments to reflect the following:

(i) incremental amortization expense based on the current preliminary fair values of the identifiable intangible assets and inventory step-up;

(i) incremental amortization expense based on the fair values of the identifiable intangible assets and inventory step-up;

(ii) the additional interest expense associated with the issuance of debt to finance the acquisition;

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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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482 6 488 — — —

KYPROLIS 240 137 377 234 112 346

EVENITY 289 110 399 214 93 307

Aranesp 91 257 348 123 242 365

KYPROLIS 238 140 378 231 118 349

Nplate 345 111 456 322 97 419

Aranesp 105 232 337 107 216 323

KRYSTEXXA (1)

310 — 310 — — —

Vectibix 133 137 270 118 130 248

BLINCYTO 237 90 327 147 73 220

Vectibix 132 150 282 116 136 252

269 — 269 161 — 161

5 unchanged sentences

Total revenues $ 8,503 $ 6,903

Six months ended June 30,

Nine months ended September 30,

ROW Total U.S.

5 unchanged sentences

1,379 12 1,391 — — —

KYPROLIS 474 279 753 468 236 704

EVENITY 806 326 1,132 570 272 842

Aranesp 191 506 697 238 482 720

KYPROLIS 712 419 1,131 699 354 1,053

Nplate 749 370 1,119 744 347 1,091

Aranesp 296 738 1,034 345 698 1,043

KRYSTEXXA (1)

839 — 839 — — —

Vectibix 253 264 517 229 252 481

BLINCYTO 555 280 835 418 202 620

Vectibix 385 414 799 345 388 733

676 — 676 390 — 390

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

(4) Hedging gains and losses, which are included in product sales, were not material for the three and six months ended June 30, 2024 and 2023.

The effective tax rates for the three and six months ended June 30, 2024, were 6.0 % and 12.8 %, respectively, compared with 14.6 % and 16.5 %, respectively, for the corresponding periods in the prior year.

The decrease in our effective tax rate for the three months ended June 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets).

The decrease in our effective tax rate for the six months ended June 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets) and the year-to-date 2024 unrealized losses on our equity investments.

(4) Hedging gains and losses, which are included in product sales, were not material for the three and nine months ended September 30, 2024 and 2023.

The effective tax rates for the three and nine months ended September 30, 2024, were 8.7 % and 9.5 %, respectively, compared with 11.1 % and 15.0 %, respectively, for the corresponding periods in the prior year.

The decrease in our effective tax rate for the three months ended September 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets), partially offset by the quarter-to-date unrealized gains on our strategic equity investments (primarily BeiGene).

See Note 6, Investments —BeiGene, Ltd.

and Neumora Therapeutics, Inc.

The effective tax rates differ from the federal statutory rate primarily due to impacts of the jurisdictional mix of income and expenses.

The decrease in our effective tax rate for the nine months ended September 30, 2024, was primarily due to the earnings mix as a result of the inclusion of the Horizon business (including the amortization of Horizon acquired assets).

The effective tax rates differ from the federal statutory rate primarily due to the impact of the jurisdictional mix of income and expenses.

Substantially all of the benefit to our effective tax rate from foreign earnings results from locations where the Company has significant manufacturing operations, including Singapore, Ireland and Puerto Rico, a territory of the United States that is treated as a foreign jurisdiction for U.S.

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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.

During the three and six months ended June 30, 2024, the gross amounts of our UTBs increased by $ 40 million and $ 80 million, respectively, as a result of tax positions taken during the current year.

Substantially all of the UTBs as of June 30, 2024, if recognized, would affect our effective tax rate.

During the three and nine months ended September 30, 2024, the gross amounts of our UTBs increased by $ 40 million and $ 120 million, respectively, as a result of tax positions taken during the current year.

Substantially all of the UTBs as of September 30, 2024, 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,

2024 2023 2024 2023

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Diluted EPS $ 5.22 $ 3.22 $ 6.40 $ 11.06

For the three and six months ended June 30, 2024 and 2023, 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, 2024 and 2023, 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, 2024 Amortized

Types of securities as of September 30, 2024 Amortized

Treasury bills $ 996 $ — $ — $ 996

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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, 2024 December 31, 2023

Condensed Consolidated Balance Sheets locations September 30, 2024 December 31, 2023

Cash and cash equivalents $ 8,576 $ 10,404

Total interest-bearing securities $ 8,576 $ 10,404

Cash and cash equivalents in the above table excludes bank account cash of $ 489 million and $ 540 million as of June 30, 2024 and December 31, 2023, respectively.

All interest-bearing securities as of June 30, 2024 and December 31, 2023, mature in one year or less.

For the three and six months ended June 30, 2024 and 2023, realized gains and losses on interest-bearing securities were not material.

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

Cash and cash equivalents in the above table excludes bank account cash of $ 435 million and $ 540 million as of September 30, 2024 and December 31, 2023, respectively.

All interest-bearing securities as of September 30, 2024 and December 31, 2023, mature in one year or less.

For the three and nine months ended September 30, 2024 and 2023, realized gains and losses on interest-bearing securities were not material.

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

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

3 unchanged sentences

BeiGene, Ltd.

Our ownership interest in BeiGene was approximately 18 % as of both June 30, 2024 and December 31, 2023, and the fair values of our investment were $ 2.7 billion and $ 3.4 billion, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

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.

Our ownership interest in BeiGene was approximately 18 % as of both September 30, 2024 and December 31, 2023, and the fair values of our investment were $ 4.3 billion and $ 3.4 billion, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

See Note 11, Fair value measurement.

During the three months ended June 30, 2024 and 2023, we recognized unrealized losses of $ 260 million and $ 705 million, respectively, recorded in Other (expense) income, net, in our Condensed Consolidated Statements of Income.

During the six months ended June 30, 2024 and 2023, we recognized unrealized losses of $ 714 million and unrealized gains of $ 1.2 billion, respectively, recorded in Other (expense) income, net, in our Condensed Consolidated Statements of Income.

During the three months ended September 30, 2024 and 2023, we recognized unrealized gains of $ 1.6 billion and $ 30 million, respectively, recorded in Other income, net, in our Condensed Consolidated Statements of Income.

During the nine months ended September 30, 2024 and 2023, we recognized unrealized gains of $ 836 million and $ 1.2 billion, respectively, recorded in Other income, net, in our Condensed Consolidated Statements of Income.

Subject to certain exceptions or otherwise agreed to by BeiGene, while Amgen holds at least 5.0 % of BeiGene’s outstanding common stock, (A) we may only sell our BeiGene equity investment via:

1 unchanged sentence

Other equity securities

Excluding our equity investments in BeiGene (discussed above) and Neumora (discussed below), we held investments in other equity securities with readily determinable fair values (publicly traded securities) of $ 419 million and $ 494 million as of June 30, 2024 and December 31, 2023, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three months ended June 30, 2024 and 2023, net unrealized losses and gains on these publicly traded securities were a net loss of $ 50 million and net gain of $ 3 million, respectively.

During the six months ended June 30, 2024 and 2023, net unrealized gains and losses on these publicly traded securities were not material.

Net realized gains and losses on sales of publicly traded securities for the three and six months ended June 30, 2024 and 2023 were not material.

We held investments of $ 330 million and $ 309 million in equity securities without readily determinable fair values as of June 30, 2024 and December 31, 2023, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and six months ended June 30, 2024 and 2023, upward and downward adjustments on these securities were not material.

Excluding our equity investments in BeiGene (discussed above) and Neumora (discussed below), we held investments in other equity securities with readily determinable fair values (publicly traded securities) of $ 336 million and $ 494 million as of September 30, 2024 and December 31, 2023, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2024 and 2023, net unrealized gains and losses on these publicly traded securities were not material.

Additionally, net realized gains and losses on sales of publicly traded securities for the three and nine months ended September 30, 2024 and 2023, were not material.

We held investments of $ 318 million and $ 309 million in equity securities without readily determinable fair values as of September 30, 2024 and December 31, 2023, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three and nine months ended September 30, 2024 and 2023, upward and downward adjustments on these securities were not material.

Adjustments were based on observable price transactions.

Net realized gains and losses on sales of securities without readily determinable fair values for the three and six months ended June 30, 2024 and 2023, were not material.

Net realized gains and losses on sales of securities without readily determinable fair values for the three and nine months ended September 30, 2024 and 2023, were not material.

Equity method investments

Neumora Therapeutics, Inc.

As of June 30, 2024 and December 31, 2023, our ownership interests in Neumora were approximately 22.2 % and 23.2 %, respectively, and the fair values of our investment were $ 348 million and $ 603 million, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

During the three months ended June 30, 2024 and 2023, we recognized unrealized losses and gains of $ 138 million loss and $ 28 million gain, respectively, and during the six months ended June 30, 2024 and 2023, we recognized unrealized losses of $ 255 million and $ 19 million, respectively.

As of September 30, 2024 and December 31, 2023, our ownership interests in Neumora were approximately 22.1 % and 23.2 %, respectively, and the fair values of our investment were $ 467 million and $ 603 million, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

Although our equity investment 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 (expense) income, net, in our Condensed Consolidated Statements of Income each reporting period.

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

See Note 11, Fair value measurement.

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

During the three months ended September 30, 2024 and 2023, we recognized unrealized gains of $ 119 million and $ 153 million, respectively, and during the nine months ended September 30, 2024 and 2023, we recognized $ 136 million of unrealized losses and $ 134 million of unrealized gains, respectively.

We are contractually restricted from selling more than 5.0 % of Neumora’s outstanding common stock in any rolling 12-month period for as long as we hold at least 10.0 % of their outstanding common stock, subject to certain exceptions or otherwise agreed to by Neumora.

Limited partnerships

We held limited partnership investments of $ 290 million and $ 251 million as of June 30, 2024 and December 31, 2023, respectively, which are included in Other noncurrent assets in the Condensed Consolidated Balance Sheets.

We held limited partnership investments of $ 272 million and $ 251 million as of September 30, 2024 and December 31, 2023, 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, 2024, unfunded additional commitments to be made for these investments during the next several years amounted to $ 153 million.

For the three and six months ended June 30, 2024 and 2023, net unrealized gains and losses from our limited partnership investments were not material.

As of September 30, 2024, unfunded additional commitments to be made for these investments during the next several years amounted to $ 139 million.

For the three and nine months ended September 30, 2024 and 2023, net unrealized gains and losses from our limited partnership investments were not material.

Inventories consisted of the following (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

Raw materials $ 788 $ 993

4 unchanged sentences

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

Six months ended

June 30, 2024

Beginning balance $ 18,629

Balance at January 1, 2024

Adjustments to goodwill resulting from acquisitions (1)

Currency translation adjustment ( 12 )

Ending balance $ 18,616

(1) For the six months ended June 30, 2024, adjustments to goodwill consisted of measurement period adjustments related to our Horizon acquisition.

Foreign currency translation adjustments

Balance at September 30, 2024

(1) For the nine months ended September 30, 2024, adjustments to goodwill consisted of measurement period adjustments related to our Horizon acquisition.

See Note 2, Acquisitions.

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

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

amounts Accumulated

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Marketing-related rights primarily consists of rights related to the sale and distribution of marketed products.

R&D technology rights pertains to technologies used in R&D that have alternative future uses.

R&D technology rights pertain to technologies used in R&D that have alternative future uses.

IPR&D consists of R&D projects acquired in a business combination that are not complete at the time of acquisition due to remaining technological risks and/or lack of receipt of required regulatory approvals.

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, 2024 and 2023, we recognized amortization associated with our finite-lived intangible assets of $ 1.2 billion and $ 693 million, respectively.

During the six months ended June 30, 2024 and 2023, we recognized amortization associated with our finite-lived intangible assets of $ 2.4 billion and $ 1.4 billion, respectively.

During the three months ended September 30, 2024 and 2023, we recognized amortization associated with our finite-lived intangible assets of $ 1.2 billion and $ 693 million, respectively.

During the nine months ended September 30, 2024 and 2023, we recognized amortization associated with our finite-lived intangible assets of $ 3.6 billion and $ 2.1 billion, respectively.

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

As of June 30, 2024, the total estimated amortization of our finite-lived intangible assets for the remaining six months ending December 31, 2024, and the years ending December 31, 2025, 2026, 2027, 2028 and 2029, are $ 2.4 billion, $ 4.5 billion, $ 3.9 billion, $ 3.9 billion, $ 2.9 billion and $ 2.2 billion, respectively.

As of September 30, 2024, the total estimated amortization of our finite-lived intangible assets for the remaining three months ending December 31, 2024, and the years ending December 31, 2025, 2026, 2027, 2028 and 2029, are $ 1.2 billion, $ 4.5 billion, $ 3.9 billion, $ 3.9 billion, $ 2.9 billion and $ 2.2 billion, respectively.

Financing arrangements

Our borrowings consisted of the following (in millions):

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

3.625 % notes due 2024 ( 3.625 % 2024 Notes)

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4.40 % notes due 2062 ( 4.40 % 2062 Notes)

June 30, 2024 December 31, 2023

September 30, 2024 December 31, 2023

5.75 % notes due 2063 ( 5.75 % 2063 Notes)

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Total long-term debt $ 56,854 $ 63,170

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

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

The Term loans have an interest rate of three-month SOFR plus 1.225 %.

Debt repayments

During the three months ended June 30, 2024, we repaid the $ 1.4 billion aggregate principal amount of the 3.625 % 2024 Notes.

During the nine months ended September 30, 2024, we repaid the $ 2.0 billion aggregate principal amount on the Term loan due April 2025, $ 200 million aggregate principal amount of the Term loan due October 2026 and the $ 1.4 billion aggregate principal amount of the 3.625 % 2024 Notes.

Debt extinguishment

During the three months ended March 31, 2024, we repurchased portions of the 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 $ 410 million, which resulted in the recognition of a $ 133 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, 2024, we repurchased an aggregate principal amount of our debt of $ 875 million, including portions of the 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 $ 659 million, which resulted in the recognition of a $ 215 million gain on extinguishment of debt recorded in Other income, net, in the Condensed Consolidated Statements of Income.

Interest rate swap contracts

See Note 12, Derivative instruments, for a discussion of interest rate swap contracts related to certain of our notes.

Stockholders’ equity

Stock repurchase program

During the six months ended June 30, 2024 and 2023, we did not repurchase shares under our stock repurchase program.

As of June 30, 2024, $ 7.0 billion of authorization remained available under our stock repurchase program.

In March 2024 and December 2023, our Board of Directors declared quarterly cash dividends of $ 2.25 per share, which were paid in June 2024 and March 2024, respectively.

In August 2024, our Board of Directors declared a quarterly cash dividend of $ 2.25 per share that will be paid in September 2024.

During the nine months ended September 30, 2024 and 2023, we did not repurchase shares under our stock repurchase program.

As of September 30, 2024, $ 7.0 billion of authorization remained available under our stock repurchase program.

In August 2024, March 2024 and December 2023, our Board of Directors declared quarterly cash dividends of $ 2.25 per share, which were paid in September 2024, June 2024 and March 2024, respectively.

In October 2024, our Board of Directors declared a quarterly cash dividend of $ 2.25 per share that will be paid in December 2024.

Accumulated other comprehensive income (loss)

The components of AOCI were as follows (in millions):

translation Cash flow

translation adjustments

hedges Other AOCI

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Unrealized gains — 178 — 178

Reclassification adjustments to income — ( 20 ) — ( 20 )

Reclassification adjustments into earnings

— ( 20 ) — ( 20 )

Other — — ( 3 ) ( 3 )

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Unrealized gains — 117 — 117

Reclassification adjustments to income — ( 52 ) — ( 52 )

Reclassification adjustments into earnings

— ( 52 ) — ( 52 )

Other — — ( 1 ) ( 1 )

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( 337 ) 155 27 ( 155 )

Foreign currency translation adjustments 71 — — 71

Unrealized losses — ( 158 ) — ( 158 )

Reclassification adjustments into earnings

— ( 166 ) — ( 166 )

Other — — 1 1

Income taxes — 71 — 71

Balance as of September 30, 2024

$ ( 266 ) $ ( 98 ) $ 28 $ ( 336 )

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 2024 2023 Condensed Consolidated

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Foreign currency contract gains $ 45 $ 33 Product sales

Cross-currency swap contract (losses) gains ( 3 ) 51 Other (expense) income, net

Cross-currency swap contract gains (losses) 121 ( 86 ) Other income, net

166 ( 53 ) Income before income taxes

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$ 130 $ ( 42 ) Net income

Six months ended June 30,

Nine months ended September 30,

Components of AOCI 2024 2023 Condensed Consolidated

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Foreign currency contract gains $ 151 $ 121 Product sales

Cross-currency swap contract (losses) gains ( 34 ) 29 Other (expense) income, net

Cross-currency swap contract gains (losses) 87 ( 57 ) Other income, net

238 64 Income before income taxes

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Fair value measurement

To estimate the fair value of our financial assets and liabilities, we use valuation approaches within a hierarchy that maximize the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available.

To estimate the fair value of our financial assets and liabilities, we use valuation approaches within a hierarchy that maximize the use of observable inputs and minimize the use of unobservable inputs by requiring that observable inputs be used when available.

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

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(Level 2) Significant

Fair value measurement as of June 30, 2024, using:

Fair value measurement as of September 30, 2024, using:

Available-for-sale securities:

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Foreign currency forward contracts — 99 — 99

Cross-currency swap contracts — 4 — 4

Interest rate swap contracts — 9 — 9

Total assets $ 12,494 $ 1,251 $ — $ 13,745

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Foreign currency forward contracts — 145 — 145

Cross-currency swap contracts — — — —

Interest rate swap contracts — — — —

Total assets $ 14,780 $ 283 $ — $ 15,063

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Interest-bearing and equity securities

The fair values of our money market mutual funds and equity investments in publicly traded securities, including our equity investments in BeiGene and Neumora, as of June 30, 2024 and December 31, 2023, are based on quoted market prices in active markets, with no valuation adjustment.

The fair values of our money market mutual funds and equity investments in publicly traded securities, including our equity investments in BeiGene and Neumora, as of September 30, 2024 and December 31, 2023, are based on quoted market prices in active markets, with no valuation adjustment.

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

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2024 2023 2024 2023

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Ending balance $ 112 $ 98 $ 112 $ 98

As of June 30, 2024 and December 31, 2023, our contingent consideration obligations are primarily the result of our acquisition of Teneobio, Inc.

As of September 30, 2024 and December 31, 2023, our contingent consideration obligations are primarily the result of our acquisition of Teneobio, Inc.

in October 2021, which obligates us to pay the former shareholders payments upon achieving separate development and regulatory milestones with regard to various R&D programs.

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The fair values of cash equivalents are approximated at their carrying values due to the short-term nature of such financial instruments.

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

As of June 30, 2024 and December 31, 2023, the aggregate fair values of our borrowings were $ 59.3 billion and $ 59.2 billion, respectively, and the carrying values were $ 62.6 billion and $ 64.6 billion, respectively.

During the six months ended June 30, 2024 and 2023, 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.

We estimate the fair values of our fixed-rate notes by using Level 2 inputs.

As of September 30, 2024 and December 31, 2023, the aggregate fair values of our fixed-rate notes were $ 58.0 billion and $ 59.2 billion, respectively, and the carrying values of this debt were $ 58.6 billion and $ 60.6 billion, respectively.

The estimate of the fair values of our Term loans is approximated as the carrying values as of September 30, 2024 and December 31, 2023 as these debt instruments bear interest at floating rates.

During the nine months ended September 30, 2024 and 2023, there were no transfers of assets or liabilities between fair value measurement levels, and there were no material remeasurements to the fair values of assets and liabilities that are not measured at fair value on a recurring basis.

Derivative instruments

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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 both June 30, 2024 and December 31, 2023, we had outstanding foreign currency forward contracts with aggregate notional amounts of $ 6.6 billion.

As of September 30, 2024 and December 31, 2023, we had outstanding foreign currency forward contracts with aggregate notional amounts of $ 7.1 billion and $ 6.6 billion, respectively.

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

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dollars for the notional amounts at the inception of the contracts;

and based on these notional amounts, we exchange interest payments at fixed rates over the lives of the contracts by paying U.S.

and based on these notional amounts, we exchange interest payments at fixed rates over the terms of the contracts by paying U.S.

dollars and receiving euros and pounds sterling.

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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, 2024, 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, 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, 2024, were as follows (notional amounts in millions):

Foreign currency U.S.

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Treasury rate between the time we enter into these contracts and the time the related debt is issued.

Ga ins 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, 2024, 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):

Amounts recognized in connection with forward interest rate contracts during the nine months ended September 30, 2024, and amounts expected to be recognized during the subsequent 12 months are not material.

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

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

Derivatives in cash flow hedging relationships 2024 2023 2024 2023

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Forward interest rate contracts — — — ( 31 )

Total unrealized gains (losses) $ 117 $ 50 $ 295 $ ( 21 )

Total unrealized (losses) gains $ ( 158 ) $ 176 $ 137 $ 155

Fair value hedges

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

As of June 30, 2024 and December 31, 2023, we had interest rate swap contracts with aggregate notional amounts of $ 5.3 billion and $ 6.7 billion, respectively, that hedge certain portions of our long-term debt issuances.

The reduction in aggregate notional amount of these contracts during the six months ended June 30, 2024, was due to the termination of swaps that occurred in connection with the repayment of the 3.625 % 2024 Notes (see Note 9, Financing arrangements).

As of both September 30, 2024 and December 31, 2023, we had interest rate swap contracts with aggregate notional amounts of $ 6.7 billion, that hedge certain portions of our long-term debt issuances.

During the nine months ended September 30, 2024, interest rate swaps with an aggregate notional amount of $ 1.4 billion matured in connection with the repayment of the 3.625 % 2024 Notes.

In addition, we entered into new interest rate swaps with respect to the 5.25 % 2033 Notes for an aggregate notional amount of $ 1.4 billion at an interest rate of SOFR plus 1.8 %.

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.

If a hedging relationship involving an interest rate swap contract is terminated, the gain or loss realized on contract termination is recorded as an adjustment to the carrying value of the debt and amortized into Interest expense, net, over the remaining life of the previously hedged debt.

The hedged liabilities and related cumulative-basis adjustments for fair value hedges of those liabilities were recorded in the Condensed Consolidated Balance Sheets as follows (in millions):

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

Condensed Consolidated Balance Sheets locations June 30, 2024 December 31, 2023 June 30, 2024 December 31, 2023

Condensed Consolidated Balance Sheets locations September 30, 2024 December 31, 2023 September 30, 2024 December 31, 2023

Current portion of long-term debt $ 1,039 $ 1,441 $ 39 $ 41

Long-term debt $ 5,307 $ 4,788 $ ( 231 ) $ ( 355 )

(1) Current portion of long-term debt includes $ 60 million and $ 69 million of carrying value with discontinued hedging relationships as of June 30, 2024 and December 31, 2023, respectively.

Long-term debt includes $ 259 million and $ 288 million of carrying value with discontinued hedging relationships as of June 30, 2024 and December 31, 2023, respectively.

(2) Current portion of long-term debt includes $ 60 million and $ 69 million of hedging adjustments on discontinued hedging relationships as of June 30, 2024 and December 31, 2023, respectively.

Long-term debt includes $ 159 million and $ 188 million of hedging adjustments on discontinued hedging relationships as of June 30, 2024 and December 31, 2023, respectively.

(1) Current portion of long-term debt includes $ 58 million and $ 69 million of carrying value with discontinued hedging relationships as of September 30, 2024 and December 31, 2023, respectively.

Long-term debt includes $ 245 million and $ 288 million of carrying value with discontinued hedging relationships as of September 30, 2024 and December 31, 2023, respectively.

(2) Current portion of long-term debt includes $ 58 million and $ 69 million of hedging adjustments on discontinued hedging relationships as of September 30, 2024 and December 31, 2023, respectively.

Long-term debt includes $ 145 million and $ 188 million of hedging adjustments on discontinued hedging relationships as of September 30, 2024 and December 31, 2023, 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, 2024 Six months ended June 30, 2024

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

Three months ended September 30, 2024 Nine months ended September 30, 2024

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

Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income

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The effects of cash flow and fair value hedging:

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

Gains on cash flow hedging relationships reclassified out of AOCI:

Foreign currency forward contracts $ 45 $ — $ — $ 151 $ — $ —

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Derivatives designated as hedging instruments $ — $ — $ 168 $ — $ — $ 176

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

Total amounts recorded in income and (expense) line items presented in the Condensed Consolidated Statements of Income

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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 $ — $ —

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

(1) Gains on hedged items do not exactly offset losses on the related designated hedging instruments due to amortization of the cumulative amounts of fair value hedging adjustments included in the carrying amount of the hedged debt for discontinued hedging relationships and the recognition of gains on terminated hedges when the corresponding hedged item was paid down in the period.

(1) Gains (losses) on hedged items do not exactly offset losses (gains) on the related designated hedging instruments due to amortization of the cumulative amounts of fair value hedging adjustments included in the carrying amount of the hedged debt for discontinued hedging relationships and the recognition of gains on terminated hedges when the corresponding hedged item was paid down in the period.

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

As of June 30, 2024, we expected to reclassify $ 119 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, 2024, amounts expected to be recognized into earnings during the subsequent 12 months on our foreign currency and cross-currency swap contracts are not material.

Derivatives not designated as hedges

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

As of June 30, 2024 and December 31, 2023, the total notional amounts of these foreign currency forward contracts were $ 145 million and $ 457 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, 2024 and 2023.

As of September 30, 2024 and December 31, 2023, the total notional amounts of these foreign currency forward contracts were $ 82 million and $ 457 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, 2024 and 2023.

Fair values of derivatives

1 unchanged sentence

Derivative assets Derivative liabilities

June 30, 2024 Condensed Consolidated

September 30, 2024 Condensed Consolidated

Balance Sheets locations Fair values Condensed Consolidated

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Interest rate swap contracts Other current assets/ Other noncurrent assets 9 Accrued liabilities/ Other noncurrent liabilities

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

Total derivatives designated as hedging instruments

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

Forward interest rate contracts Other current assets/ Other noncurrent assets

— Accrued liabilities/ Other noncurrent liabilities

Total derivatives designated as hedging instruments

1 unchanged sentence

For additional information, see Note 11, Fair value measurement.

Our derivative contracts that were in liability positions as of June 30, 2024, 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, 2024, contain certain credit-risk-related contingent provisions that would be triggered if (i) we were to undergo a change-in-control and (ii) our or the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that is below investment grade or a materially weaker creditworthiness after the change-in-control.

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

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in 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 in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2024.

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024.

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

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in 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 in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2024, in which we could incur a liability, our opponents seek an award of a not-yet-quantified amount of damages or an amount that is not material.

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024, 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.

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in 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 in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Report on Form 10-Q for the period ended March 31, 2024, in which we could incur a liability, have progressed sufficiently through discovery and/or the development of important factual information and legal issues to enable us to estimate a range of possible loss, if any, or such amounts are not material.

and in Note 13, Contingencies and commitments, to the condensed consolidated financial statements in our Quarterly Reports on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024, 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.

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Patent Disputes in the International Region

On May 13, 2024, the Regional Court of Dusseldorf stayed the hearing on Sanofi Biotechnology SAS’ infringement action pending the outcome of Amgen’s Nullity Action against the European Patent No.

2,756,004 before the German Federal Patent Court.

On October 17, 2024 in Sanofi-Aventis Deutschland GmbH (Sanofi-Aventis) and Regeneron Pharmaceuticals, Inc.’s (Regeneron) actions seeking damages arising from the provisional enforcement of an injunction against PRALUENT ® , the Munich Regional Court scheduled a hearing for February 26, 2025.

Unified Patent Court of the European Union

On July 16, 2024, the Central Division of the Unified Patent Court in Munich (UPC) rendered its decision on Sanofi-Aventis Deutschland GmbH’s action seeking revocation of Amgen’s European Patent 3,666,797 (the EP’797 Patent).

In its decision, the Court concluded that the patent claims are invalid and revoked the patent.

Subsequently, on July 29, 2024, the Local Division of the UPC stayed Amgen’s action against Sanofi-Aventis Deutschland GmbH, et al.

alleging that the importation, marketing, sale and use of PRALUENT ® infringes the EP’797 Patent.

Amgen filed a Statement of Appeal on September 13, 2024, asking the Court of Appeals to the Unified Patent Court (UPC) to set aside the decision of the UPC Central Division revoking Amgen’s European Patent No.

3,666,797 (EP ‘797).

On September 25, 2024, Sanofi Biotechnologies SAS and Regeneron filed a brief seeking to expand the ongoing UPC action, alleging that Amgen’s Repatha infringes a newly-issued patent, European Patent No.

4,252,857, seeking an injunction against the marketing, use, or importation of Repatha in 18 countries (Austria, Belgium, Bulgaria, Denmark, Estonia, Finland, France, Germany, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, Slovenia and Sweden) and damages for past infringement.

European Patent Office

The European Patent Office (EPO) Opposition Division will hear argument on Sanofi-Aventis and Regeneron’s opposition against Amgen’s EP ‘797 from March 31 to April 4, 2025.

In Amgen’s opposition before the EPO against Regeneron’s European Patent No.

3,536,712, the Opposition Division will hear argument on March 11 and 12, 2025.

On September 16, 2024, Amgen filed an appeal brief with the Japanese Intellectual Property High Court, seeking to overturn the Japanese Patent Office’s decision to reject Amgen’s amended patent claims following a remand of the case to the Japanese Patent Office from the Japanese Intellectual Property High Court.

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

Celltrion Inc., et al.

On May 28, 2024, Amgen Inc.

Samsung Bioepis Co.

On August 12, 2024, Amgen Inc.

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

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

and Celltrion USA, Inc.

(collectively, Celltrion) based on the submission to the FDA of a Biologics License Application (BLA) seeking approval to market and sell a biosimilar version of Amgen’s Prolia and XGEVA products.

District Court for the District of New Jersey (New Jersey District Court) against Samsung Bioepis Co.

(Bioepis) and Samsung Biologics Co., Ltd., (Biologics, and collectively with Bioepis, Samsung) based on the submission to the FDA of a Biologics License Application (BLA) seeking approval to market and sell a biosimilar version of Amgen’s Prolia and XGEVA products.

The complaint asserts infringement of the following 34 patents:

and 11,946,085 (collectively, the Asserted Patents).

Amgen seeks a judgment from the New Jersey District Court that Celltrion has 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 Celltrion’s proposed denosumab biosimilar before expiration of each of the Asserted Patents found infringed.

Amgen seeks a judgment from the New Jersey District Court that Samsung has 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 Samsung’s proposed denosumab biosimilar before expiration of each of the Asserted Patents found infringed.

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

ABP 938 (aflibercept) Patent Litigation

On June 7, 2024, Regeneron Pharmaceuticals, Inc.

(Regeneron) filed a motion for a preliminary injunction to prohibit Amgen from engaging in the manufacture, use, offer for sell or sale within the United States, or importation into the United States, of ABP 938 until resolution of this lawsuit or the entry of a permanent injunction, whichever comes first.

Regeneron’s motion focuses on U.S.

11,084,865, a formulation patent.

On July 3, 2024, Amgen filed its opposition to Regeneron’s motion.

On July 24, 2024, Regeneron filed its reply brief.

Oral argument on Regeneron’s motion has been scheduled by the U.S.

District Court for the Northern District of West Virginia for August 13, 2024.

Antitrust Class Action

Bioepis filed its Answer and Counterclaims in response to the Complaint on October 1, 2024.

Biologic’s response to the Complaint is due on October 28, 2024.

Fresenius Kabi USA, LLC et al.

On October 4, 2024, Amgen Inc.

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

District Court for the Northern District of Illinois (Northern Illinois District Court) against Fresenius Kabi USA, LLC, Fresenius SwissBiosim GmbH, Fresenius Kabi Deutschland, GmbH, and Fresenius Kabi Austria GmbH (collectively, Fresenius) based on the submission to the FDA of a BLA seeking approval to market and sell a biosimilar version of Amgen’s Prolia and XGEVA products.

The complaint asserts infringement of the following 33 patents:

and 12,084,686 (collectively, the Asserted Patents).

Amgen seeks a judgment from the Northern Illinois District Court that Fresenius has 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 Fresenius’s proposed denosumab biosimilar before expiration of each of the Asserted Patents found infringed.

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

PAVBLU ™ (formerly ABP 938 (aflibercept-ayyh)) Patent Litigation

On September 23, 2024, the U.S.

District Court for the Northern District of West Virginia denied Regeneron’s motion for a preliminary injunction, and Regeneron filed a notice of appeal, a motion to expedite the appeal, and an emergency motion for an injunction pending resolution of the appeal and for an administrative stay with the U.S.

Court of Appeals for the Federal Circuit (the Federal Circuit Court).

On September 25, 2024, the Federal Circuit Court issued an order temporarily enjoining the launch of PAVBLU on an administrative basis while it considered Regeneron’s motion for an injunction pending appeal.

On October 22, 2024, the Federal Circuit Court denied Regeneron’s motion for an injunction pending appeal and lifted the temporary injunction that was entered on September 25, 2024.

Amgen’s response brief to the appeal is due on November 4, 2024, Regeneron’s reply brief is due on November 13, 2024 and oral arguments for the appeal will be scheduled for January 2025.

Antitrust Class Actions

Sensipar Antitrust Class Actions

On May 14, 2024, the putative class of direct purchasers of Sensipar (Sensipar Plaintiffs) appealed the claims that were dismissed with prejudice by the U.S.

District Court for the District of Delaware.

Court of Appeals for the Third Circuit has set a schedule for the Sensipar Plaintiffs to file their opening brief by September 9, 2024.

Amgen has until October 9, 2024 to file its response and the Sensipar Plaintiffs must file their reply by November 7, 2024.

On September 13, 2024, the putative class of direct purchasers of Sensipar (Sensipar Plaintiffs) filed their opening brief in its appeal of the dismissal of its claims by the U.S.

District Court for the District of Delaware (Delaware District Court).

Amgen has obtained an extension until November 14, 2024 to file its opposing brief.

The Sensipar Plaintiffs’ reply is due December 5, 2024.

Regeneron Pharmaceuticals, Inc.

Antitrust Action

On May 22, 2024, Amgen filed a motion for summary judgment.

The trial before the Delaware District Court that had been set to begin on November 12, 2024 was taken off calendar.

A new date for the trial has not yet been set.

The Delaware District Court set a hearing on November 20, 2024 to hear Amgen’s motion for summary judgment and the parties’ motions to exclude expert testimony.

CareFirst of Maryland Antitrust Class Action

On August 6, 2024, CareFirst of Maryland, Inc., Group Hospitalization and Medical Services, Inc., and CareFirst BlueChoice, Inc.

(collectively, CareFirst), filed a class action antitrust lawsuit against Amgen Inc., Amgen Manufacturing, Limited (corrected to Amgen Manufacturing Limited LLC in CareFirst’s amended complaint on October 11, 2024), and Immunex Corporation in the U.S.

District Court for the Eastern District of Virginia, alleging federal and state antitrust claims and state consumer protection claims.

The plaintiffs allege that, in 2004, Amgen entered into an anticompetitive agreement with certain F.

Hoffman-La Roche AG entities (Roche) and other parties that provided Amgen with rights to Roche’s patents in a manner that enabled Amgen to allegedly unlawfully extend the life of patents applicable to ENBREL and, thereby, delay biosimilar entry.

Amgen’s response to the complaint is due on November 4, 2024.

Tax Litigation and Related Matters

2 unchanged sentences

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

Securities Class Action Litigation

On July 18, 2024, the U.S.

District Court for the Southern District of New York held a hearing on Amgen’s motion to dismiss.

Securities Class Action Litigation (Roofers Local No.

149 Pension Fund)

On September 30, 2024, the U.S.

District Court for the Southern District of New York denied Amgen’s motion to dismiss.

Amgen's response to the complaint is due on November 20, 2024.

Shareholder Derivative Litigation (Hamilton)

On October 16, 2024, David Hamilton filed a derivative action captioned David Hamilton v.

Bradway, et al., No.

2024-1063 (Del.

16, 2024), purportedly on behalf of Amgen, against Amgen, Robert Bradway, Peter Griffith and Amgen’s Board members during the relevant time period.

The action was filed in the Delaware Chancery Court.

The complaint in this matter alleges claims for breach of fiduciary duty and unjust enrichment.

The factual allegations that form the basis for these claims are fundamentally the same as those asserted by the Roofers Local No.

149 Pension Fund on March 13, 2023 (alleging 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).

ChemoCentryx, Inc.

Securities Matters

On May 24, 2024, the United States Court of Appeals for the Ninth Circuit denied ChemoCentryx’s petition to appeal the class certification order.

Trial is scheduled to begin on September 22, 2025.

While the U.S.

District Court for the Northern District of California (Northern District Court of California) has not yet set a deadline by which members of the class must opt out, on May 2, 2024, RA Capital Healthcare Fund, LP filed two similar securities cases, in the California Superior Court in Ventura County and in the Northern District Court of California, against ChemoCentryx and its former Chief Executive Officer, Dr.

Thomas Schall.

On July 2, 2024, the state court stayed the case pending an order on summary judgment in the federal class action.

On September 10, 2024, the U.S.

District Court for the Northern District of California granted an administrative motion to extend certain case schedule deadlines, including setting the expert discovery cutoff to December 20, 2024 and setting the deadlines for summary judgment motions on April 4, 2025, summary judgment oppositions on April 25, 2025, and summary judgment replies on May 9, 2025.

Trial is set for September 2025.

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