What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-23 compared with 2023-02-22 · 462 added, 594 removed, 1121 unchanged (49% of the section changed)

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Consolidated Statements of Income

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Government and commercial rebates

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To test management’s estimation methodology for determining the payer mix, our audit procedures included, among others, analytically evaluating management’s estimates, evaluating evidence contrary to the estimated amounts, performing a sensitivity analysis on the rates used in the estimates and performing a comparison of actual payments related to amounts accrued during the current and prior years.

Valuation of in-process research and development intangible asset

Description of the Matter During 2022, the Company recognized a $2.7 billion impairment charge related to its in-process research and development (IPR&D) intangible asset related to Trodelvy for treatment of patients with hormone receptor-positive, human epidermal growth factor receptor 2-negative (HR+/HER2-) breast cancer.

At December 31, 2022, this intangible asset had a remaining carrying value of $6.1 billion.

As discussed in Note 1, intangible assets with indefinite useful lives related to IPR&D projects acquired in a business combination are measured at their respective fair values as of the acquisition date and are considered indefinite-lived until the completion or abandonment of the associated R&D efforts.

The Company tests indefinite-lived intangible assets for impairment on an annual basis and in between annual tests if they become aware of any events or changes that would indicate the fair values of the assets are below their carrying amounts.

An impairment charge is recognized to the degree the carrying value exceeds the fair value.

As discussed in Note 8, the Company estimated the fair value of the IPR&D intangible asset related to Trodelvy for patients with HR+/HER2- breast cancer in connection with both an interim impairment assessment as of March 31, 2022, and an annual impairment assessment as of October 1, 2022.

Auditing the fair values of this IPR&D intangible asset was complex due to the significant judgment required in estimating the fair values.

In particular, the fair value estimates required the use of a valuation methodology that was sensitive to significant assumptions (e.g., discount rate, probability of technical and regulatory success, addressable patient population, treatment duration and projected market share), which were affected by expected future market or economic conditions.

How We Addressed the Matter in Our Audit We evaluated and tested the design and operating effectiveness of the Company’s internal controls over the determination of the estimated fair value of the IPR&D intangible asset related to Trodelvy for patients with HR+/HER2- breast cancer for both the interim and annual impairment assessments.

For example, we tested controls over management's review of the valuation methodology and the significant assumptions used to develop the fair value estimates.

We also tested management's controls to validate that the data used in the fair value estimates were complete and accurate.

To test the estimated fair value of this asset at both the interim and annual assessment dates, our audit procedures, among others, included evaluating the Company's use of an appropriate valuation methodology with assistance from a valuation specialist, evaluating sensitivity analyses to determine which assumptions had the greatest impact on the fair value determination, and testing the completeness and accuracy of the underlying data.

Our audit procedures over the most significant assumptions included comparing the assumptions to current industry, market and economic trends, to historical results of the Company's business and other guideline companies within the same industry and to other relevant factors.

For example, we evaluated the probability of technical and regulatory success by considering the phase of development of the clinical projects and the Company's history of obtaining regulatory approval.

In addition, we evaluated the expected addressable patient populations by comparing the Company’s estimates to external industry forecasts.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 1988.

San Jose, California

San Mateo, California

February 23, 2024

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Cash and cash equivalents $ 6,085 $ 5,412

$ 5,412 $ 5,338

Short-term marketable debt securities 1,179 973

Accounts receivable, net 4,660 4,777

Inventories 1,787 1,507

Prepaid and other current assets 2,374 1,774

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Total Gilead stockholders’ equity 22,833 21,240

21,240 21,069

Noncontrolling interest ( 84 ) ( 31 )

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Acquired in-process research and development expenses 1,155 944 939

In-process research and development impairment 2,700 — —

In-process research and development impairments 50 2,700 —

Selling, general and administrative expenses 6,090 5,673 5,246

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GILEAD SCIENCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended December 31,

(in millions) 2023 2022 2021

Net income $ 4,566 $ 6,201 $ 89

Other comprehensive income (loss):

Net foreign currency translation loss ( 11 ) ( 38 ) ( 2 )

$ 5,613 $ 4,566 $ 6,201

Other comprehensive income (loss), net:

Net foreign currency translation gain (loss) 60 ( 11 ) ( 38 )

Available-for-sale debt securities:

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Cash flow hedges:

Net unrealized gain (loss), net of tax impact of $ 20 , $ 18 and $( 15 ), respectively

Net unrealized (loss) gain, net of tax impact of $( 2 ), $ 20 and $ 18 , respectively

( 12 ) 130 129

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Net change ( 62 ) ( 41 ) 187

Other comprehensive income (loss) ( 81 ) 143 ( 145 )

Comprehensive income (loss) 4,485 6,344 ( 56 )

Comprehensive loss attributable to noncontrolling interest 26 24 34

Comprehensive income (loss) attributable to Gilead $ 4,511 $ 6,368 $ ( 22 )

Other comprehensive income (loss), net 26 ( 81 ) 143

Comprehensive income, net 5,639 4,485 6,344

Comprehensive loss attributable to noncontrolling interest, net 52 26 24

Comprehensive income attributable to Gilead, net $ 5,691 $ 4,511 $ 6,368

See accompanying notes.

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Stockholders’

Capital Accumulated

Comprehensive

Income (Loss)

Capital Accumulated Other Comprehensive Income (Loss) Retained

Shares Amount

Balance as of December 31, 2020 1,254 $ 1 $ 3,880 $ ( 60 ) $ 14,381 $ 19 $ 18,221

Cumulative effect from the adoption of new accounting standard — — — — ( 7 ) — ( 7 )

Change in noncontrolling interest — — — — — ( 72 ) ( 72 )

Net income (loss) — — — — 6,225 ( 24 ) 6,201

Other comprehensive income (loss), net of tax — — 1 ( 145 ) ( 1 ) — ( 145 )

Other comprehensive income, net — — — 143 — — 143

Issuances under employee stock purchase plan 2 — 111 — — — 111

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Stock-based compensation — — 640 — — — 640

Repurchases of common stock ( 25 ) — ( 70 ) — ( 1,658 ) — ( 1,728 )

Repurchases of common stock under repurchase programs ($ 66.58 average price per share)

( 8 ) — ( 28 ) — ( 518 ) — ( 546 )

Repurchases of common stock for employee tax withholding under equity incentive plans and other ( 3 ) — — — ( 146 ) — ( 146 )

Dividends declared ($ 2.84 per share)

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Net income (loss) — — — — 4,592 ( 26 ) 4,566

Other comprehensive income, net of tax — — — 143 — — 143

Other comprehensive loss, net — — — ( 81 ) — — ( 81 )

Issuances under employee stock purchase plan 2 — 103 — — — 103

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Stock-based compensation — — 640 — — — 640

Repurchases of common stock ( 11 ) — ( 28 ) — ( 664 ) — ( 692 )

Repurchases of common stock under repurchase programs ($ 73.77 average price per share)

( 19 ) — ( 65 ) — ( 1,331 ) — ( 1,396 )

Repurchases of common stock for employee tax withholding under equity incentive plans and other ( 3 ) — — ( 173 ) ( 173 )

Dividends declared ($ 2.92 per share)

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Net income (loss) — — — — 5,665 ( 52 ) 5,613

Other comprehensive loss, net of tax — — — ( 81 ) — — ( 81 )

Other comprehensive income, net — — — 26 — — 26

Issuances under employee stock purchase plan 2 — 129 — — — 129

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Stock-based compensation — — 767 — — — 767

Repurchases of common stock ( 22 ) — ( 65 ) — ( 1,504 ) — ( 1,569 )

Repurchases of common stock under repurchase programs ($ 79.52 average price per share)

( 13 ) — ( 45 ) — ( 955 ) — ( 1,000 )

Repurchases of common stock for employee tax withholding under equity incentive plans and other ( 4 ) — — — ( 279 ) — ( 279 )

Dividends declared ($ 3.00 per share)

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Accounts payable ( 347 ) 226 ( 118 )

Income taxes payable ( 568 ) ( 364 ) ( 778 )

Accrued liabilities ( 775 ) 689 640

Income tax assets and liabilities, net ( 1,768 ) ( 364 ) ( 361 )

Accrued and other liabilities 458 ( 775 ) 689

Net cash provided by operating activities 8,006 9,072 11,384

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Proceeds from issuances of common stock 232 309 169

Repurchases of common stock ( 1,396 ) ( 546 ) ( 1,583 )

Repurchases of common stock under repurchase programs ( 1,000 ) ( 1,396 ) ( 546 )

Repayments of debt and other obligations ( 2,250 ) ( 1,500 ) ( 4,750 )

Payment of dividends ( 3,709 ) ( 3,605 ) ( 3,449 )

Payments of dividends ( 3,809 ) ( 3,709 ) ( 3,605 )

Other ( 279 ) ( 173 ) ( 145 )

Net cash provided by (used in) financing activities ( 6,469 ) ( 8,877 ) 770

Net cash used in financing activities ( 5,125 ) ( 6,469 ) ( 8,877 )

Effect of exchange rate changes on cash and cash equivalents 57 ( 63 ) ( 35 )

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Gilead Sciences, Inc.

(“Gilead,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people.

We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis and cancer.

(including its consolidated subsidiaries, referred to as “Gilead,” the “company,” “we,” “our” or “us”) is a biopharmaceutical company that has pursued and achieved breakthroughs in medicine for more than three decades, with the goal of creating a healthier world for all people.

We are committed to advancing innovative medicines to prevent and treat life-threatening diseases, including HIV, viral hepatitis, coronavirus disease 2019 (“COVID-19”) and cancer.

We operate in more than 35 countries worldwide, with headquarters in Foster City, California.

Our portfolio of marketed products includes AmBisome ® , Atripla ® , Biktarvy ® , Cayston ® , Complera ® , Descovy ® , Descovy for PrEP ® , Emtriva ® , Epclusa ® , Eviplera ® , Genvoya ® , Harvoni ® , Hepcludex ® , Hepsera ® , Jyseleca ® , Letairis ® , Odefsey ® , Ranexa ® , Sovaldi ® , Stribild ® , Sunlenca ® , Tecartus ® , Trodelvy ® , Truvada ® , Truvada for PrEP ® , Tybost ® , Veklury ® , Vemlidy ® , Viread ® , Vosevi ® , Yescarta ® and Zydelig ® .

Our portfolio of marketed products includes AmBisome ® , Atripla ® , Biktarvy ® , Cayston ® , Complera ® , Descovy ® , Descovy for PrEP ® , Emtriva ® , Epclusa ® , Eviplera ® , Genvoya ® , Harvoni ® , Hepcludex ® , Hepsera ® , Jyseleca ® , Letairis ® , Odefsey ® , Sovaldi ® , Stribild ® , Sunlenca ® , Tecartus ® , Trodelvy ® , Truvada ® , Truvada for PrEP ® , Tybost ® , Veklury ® , Vemlidy ® , Viread ® , Vosevi ® , Yescarta ® and Zydelig ® .

The approval status of Hepcludex and Jyseleca vary worldwide, and Hepcludex and Jyseleca are not approved in the U.S.

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In addition, we sell and distribute certain products through our corporate partners under collaborative agreements.

Revenues for a summary of disaggregated revenues by product and geographic region.

We have one operating segment which primarily focuses on the discovery, development and commercialization of innovative medicines in areas of unmet medical need.

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Managing and allocating resources on an entity-wide basis enables our CODM to assess the overall level of resources available and how to best deploy these resources across functions and research and development (“R&D”) projects based on unmet medical need, scientific data, probability of technical and regulatory successful development, market potential and other considerations, and, as necessary, reallocate resources among our internal R&D portfolio and external opportunities to best support the long-term growth of our business.

Revenues for a summary of disaggregated revenues by product and geographic region.

Summary of Significant Accounting Policies

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The accompanying Consolidated Financial Statements have been prepared in accordance with U.S.

generally accepted accounting principles and include the accounts of Gilead, our wholly-owned subsidiaries and certain variable interest entities (“VIEs”) for which we are the primary beneficiary.

generally accepted accounting principles and include the accounts of Gilead, our wholly-owned subsidiaries and any variable interest entities (“VIEs”) for which we are the primary beneficiary.

All intercompany transactions have been eliminated.

For consolidated entities where we own or are exposed to less than 100% of the economics, we record net income or loss attributable to noncontrolling interests in our Consolidated Statements of Income equal to the percentage of the economic or ownership interest retained in such entities by the respective noncontrolling parties.

For any consolidated entities where we own or are exposed to less than 100% of the economics, we record net income or loss attributable to noncontrolling interests in our Consolidated Statements of Income equal to the attributable economic or ownership interest retained in such entities by the respective noncontrolling parties.

When we obtain a variable interest in another entity, we assess at the inception of the relationship and upon occurrence of certain significant events whether the entity is a VIE and, if so, whether we are the primary beneficiary of the VIE based on our power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

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Actual results may differ significantly from these estimates.

Beginning in the first quarter of 2023, we reclassified changes in income taxes prepaid and receivable from Prepaid expenses and other to combine them with changes in income taxes payable as Income tax assets and liabilities, net within Operating Activities on our Consolidated Statements of Cash Flows.

We believe this presentation assists users of the financial statements to better understand cash flow movements.

Prior periods have been revised to reflect this change, resulting in a reclassification of $ 204 million and $ 3 million from Prepaid expenses and other for the years ended December 31, 2022 and 2021, respectively.

Certain amounts and percentages herein may not sum or recalculate due to rounding.

Beginning in the second quarter of 2022, expenses related to development milestones and other collaboration payments made prior to regulatory approval of a developed product were reclassified from Research and development expenses to Acquired in-process research and development expenses on our Consolidated Statements of Income.

Concurrently, we reclassified the cash payments related to these expenses from Other to Acquisitions, including in-process research and development, net of cash acquired within Investing Activities in the Consolidated Statements of Cash Flows.

We believe this presentation assists users of the financial statements to better understand the total costs incurred to acquire in-process research and development (“IPR&D”) projects.

Prior periods have been revised to reflect this classification, resulting in a reduction of previously-reported Research and development expenses of $ 762 million and $ 112 million for the years ended December 31, 2021 and 2020, respectively.

Revenue Recognition

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We recognize revenue from product sales when control of the product transfers to the customer, which is generally upon shipment or delivery, or in certain cases, upon the corresponding sales by our customer to a third party.

Revenues are recognized net of estimated rebates and chargebacks, cash discounts for prompt payment, distributor fees, sales return provisions and other related deductions.

Revenues are recognized net of estimated rebates and chargebacks, patient co-pay assistance, prompt pay discounts, distributor fees, sales return provisions and other related deductions.

These deductions to product sales are referred to as gross-to-net deductions and are estimated and recorded in the period in which the related product sales occur.

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Rebates that are payable to third party payers and healthcare providers are recorded in Accrued rebates on our Consolidated Balance Sheets.

Patient Co-Pay Assistance

Co-pay assistance represents financial assistance to qualified patients, assisting them with prescription drug co-payments required by insurance.

Our accrual for copay is based on an estimate of claims and the cost per claim that we expect to receive associated with inventory that exists in the distribution channel at period end.

Cash Discounts

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Research and Development Expenses

Research and development expenses are recorded when incurred and consist primarily of clinical studies performed by contract research organizations (“CROs”), materials and supplies, expense reimbursements to the collaboration partners, personnel costs including salaries, benefits and stock-based compensation expense, and overhead allocations consisting of various support and infrastructure costs.

Research and development expenses are recorded when incurred and consist primarily of personnel costs including salaries, benefits and stock-based compensation expense, infrastructure, materials and supplies and other support costs, research and clinical studies performed by contract research organizations (“CROs”) and our collaboration partners and other outside services.

From time to time, we enter into development and collaboration agreements in which we share expenses with a collaborative partner.

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Acquired In-Process Research and Development Expenses

Acquired in-process research and development expenses are recorded when incurred and reflect costs of externally-developed IPR&D projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront and milestone payments related to various collaborations and the costs of rights to IPR&D projects.

Acquired in-process research and development expenses are recorded when incurred and reflect costs of externally-developed in-process research and development (“IPR&D”) projects, acquired directly in a transaction other than a business combination, that do not have an alternative future use, including upfront and milestone payments related to various collaborations and the costs of rights to IPR&D projects.

Selling, General and Administrative Expenses

Selling, general and administrative expenses are recorded when incurred and consist primarily of personnel costs, facilities and overhead costs, outside marketing, advertising and legal expenses, and other general and administrative costs related to sales and marketing, finance, human resources, legal and other administrative activities.

Selling, general and administrative expenses are recorded when incurred and consist primarily of personnel costs, facilities and overhead costs, and sales, marketing and advertising expenses, as well as other general and administrative costs related to finance, human resources, legal and other administrative activities.

Advertising expenses within Selling, general and administrative expenses, including promotional expenses, are recorded when incurred and were $ 826 million, $ 778 million and $ 735 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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Marketable Debt Securities

All of our marketable debt securities are classified as available-for-sale and carried at estimated fair values.

All of our marketable debt securities are classified as available-for-sale and recorded at estimated fair values.

We determine the appropriate classification of our marketable debt securities at the time of purchase and reevaluate such designation at each balance sheet date.

Unrealized gains and losses on available-for-sale debt securities are reported in Accumulated other comprehensive income on our Consolidated Balance Sheets until realized, at which point they are reclassified into Other income (expense), net on our Consolidated Statements of Income.

Interest, amortization of purchase premiums and discounts, and expected credit losses, if any, are also recorded in Other income (expense), net on our Consolidated Statements of Income.

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

We regularly review our investments for declines in fair value below their amortized cost basis to determine whether the impairment is due to credit-related factors or noncredit-related factors.

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The portion of the unrealized loss related to factors other than credit losses is recognized in Accumulated other comprehensive income.

Interest and amortization of purchase premiums and discounts are also recorded in Other income (expense), net on our Consolidated Statements of Income.

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

Accounts Receivable

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We have elected to account for the tax on Global Intangible Low-Taxed Income, enacted as part of the Tax Cuts and Jobs Act, as a component of tax expense in the period in which the tax is incurred.

Stock Repurchases

We use the par value method of accounting for our stock repurchases made under repurchase programs.

Under the par value method, we record the par value of the shares repurchased to Common stock and the historical issuance cost over par value of the shares repurchased to Additional paid-in capital.

The excess of the cost of the shares repurchased over these two amounts is then recorded to Retained earnings .

Foreign Currency Translation and Transactions

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Our Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques and significant management judgment or estimation.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2023-07 “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.” ASU 2023-07 requires incremental annual and quarterly disclosures about segment measures of profit or loss as well as significant segment expenditures.

It also requires public entities with a single reportable segment to provide all segment disclosures required by the amendments in the update and all existing segment disclosures in Topic 280.

This guidance will be applied retrospectively, and we plan to adopt it beginning with our 2024 annual report to be filed in early 2025 and all quarterly and annual reports thereafter.

As we have a single reportable segment, we expect the adoption of this standard to result in increased disclosures in our Notes to Consolidated Financial Statements.

In December 2023, FASB issued ASU No.

2023-09 “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” ASU 2023-09 requires incremental annual disclosures around income tax rate reconciliations, income taxes paid and other related disclosures.

This guidance requires prospective application and permits retrospective application to prior periods presented.

We plan to adopt it beginning with our 2025 annual report to be filed in early 2026.

We expect the adoption of this standard to result in increased disclosures in our Notes to Consolidated Financial Statements.

Disaggregation of Revenues

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(in millions) U.S.

Europe Other International Total U.S.

Europe Other International Total

International Total U.S.

International Total

Product sales:

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Total HIV 14,848 2,102 1,226 18,175 13,820 2,219 1,155 17,194 12,828 2,366 1,121 16,315

Veklury 1,575 702 1,628 3,905 3,640 1,095 830 5,565 2,026 607 178 2,811

Hepatitis C virus (“HCV”)

Tecartus 245 110 15 370 221 75 3 299 136 40 — 176

Yescarta 811 547 140 1,498 747 355 57 1,160 406 253 36 695

Total Cell Therapy 1,055 658 156 1,869 968 430 60 1,459 542 293 36 871

Trodelvy 777 217 68 1,063 525 143 12 680 370 10 — 380

Total Oncology 1,833 875 224 2,932 1,494 573 73 2,139 912 303 36 1,251

Liver Disease

Chronic hepatitis C virus (“HCV”)

Sofosbuvir (3)

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Total HCV 1,002 378 386 1,767 1,005 413 392 1,810 1,018 421 442 1,881

Hepatitis B virus (“HBV”) / Hepatitis Delta virus (“HDV”)

Chronic hepatitis B virus (“HBV”) / Chronic hepatitis delta virus (“HDV”)

Vemlidy 410 38 414 862 429 35 379 842 384 34 396 814

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Total HBV/HDV 418 133 466 1,017 435 112 441 988 397 104 468 969

Tecartus 221 75 3 299 136 40 — 176 34 10 — 44

Yescarta 747 355 57 1,160 406 253 36 695 362 191 10 563

Total cell therapy 968 430 60 1,459 542 293 36 871 396 201 10 607

Trodelvy 525 143 12 680 370 10 — 380 49 — — 49

Total Liver Disease 1,421 511 852 2,784 1,440 525 833 2,798 1,415 525 910 2,850

Veklury 972 408 805 2,184 1,575 702 1,628 3,905 3,640 1,095 830 5,565

AmBisome 43 260 189 492 57 258 182 497 39 274 227 540

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(as a percentage of total revenues) 2023 2022 2021

AmerisourceBergen Corporation 18 % 23 % 27 %

Cardinal Health, Inc.

26 % 25 % 22 %

Cencora, Inc.

(formerly known as AmerisourceBergen Corporation) 19 % 18 % 23 %

McKesson Corporation 21 % 20 % 20 %

Revenues Recognized from Performance Obligations Satisfied in Prior Periods

The following table summarizes revenues recognized from performance obligations satisfied in prior periods:

Revenues Recognized from Performance Obligations Satisfied in Prior Years

The following table summarizes revenues recognized from performance obligations satisfied in prior years:

Year Ended December 31,

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Contract Balances

Our contract assets, which consist of unbilled amounts primarily from arrangements where the licensing of intellectual property is the only or predominant performance obligation, totaled $ 171 million and $ 174 million as of December 31, 2022 and 2021, respectively.

Contract liabilities, which generally result from receipt of advance payment before our performance under the contract, were $ 102 million and $ 79 million as of December 31, 2022 and 2021, respectively.

The following table summarizes our contract balances:

(in millions) 2023 2022

Contract assets (1)

Contract liabilities (2)

________________________________

(1) Consists of unbilled amounts primarily from arrangements where the licensing of intellectual property is the only or predominant performance obligation.

(2) Generally results from receipt of advance payment before our performance under the contract.

FAIR VALUE MEASUREMENTS

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Money market funds 4,465 — — 4,465 3,831 — — 3,831

Equity investment in Galapagos NV (“Galapagos”) (1)

736 — — 736 931 — — 931

Equity investment in Arcus Biosciences, Inc.

(“Arcus”) (1)

Publicly traded equity securities (1)

1,458 — — 1,458 1,197 — — 1,197

Other publicly traded equity securities 175 — — 175 331 — — 331

Deferred compensation plan 284 — — 284 220 — — 220

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_______________________________

(1) See Note 10.

(1) Publicly traded equity securities include investments in Galapagos NV (“Galapagos”) of $ 686 million and Arcellx, Inc.

(“Arcellx”) of $ 373 million as of December 31, 2023, which are subject to contractual sale restrictions until August 2024 and June 2025, respectively.

Collaborations and Other Arrangements for additional information.

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Foreign Currency Derivative Contracts

Substantially all of our foreign currency derivative contracts have maturities within an 18 -month time horizon and all are with counterparties that have a minimum credit rating of A- or equivalent by S&P Global Ratings, Moody’s Investors Service, Inc.

Our foreign currency derivative contracts have maturities of 18 months or less and all are with counterparties that have a minimum credit rating of A- or equivalent by S&P Global Ratings, Moody’s Investors Service, Inc.

or Fitch Ratings, Inc.

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

These inputs include foreign currency exchange rates, Secured Overnight Financing Rate and swap rates.

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

These inputs include foreign currency exchange rates, Secured Overnight Financing Rate (“SOFR”) and swap rates.

These inputs, where applicable, are observable at commonly quoted intervals.

Senior Unsecured Notes

The total estimated fair values of our senior unsecured notes, determined using Level 2 inputs based on their quoted market values, were approximately $ 21.9 billion and $ 28.6 billion as of December 31, 2022 and 2021, respectively, and the carrying values were $ 24.1 billion and $ 25.6 billion as of December 31, 2022 and 2021, respectively.

The following table summarizes the total estimated fair value and carrying value of our senior unsecured notes, determined using Level 2 inputs based on their quoted market values:

(in millions) 2023 2022

Fair value $ 22,567 $ 21,872

Carrying value $ 23,834 $ 24,088

Level 3 Inputs

Contingent Consideration

In connection with our first quarter 2021 acquisition of MYR, we recorded a liability for contingent consideration, which is revalued each reporting period until the related contingency is resolved.

The contingent consideration was estimated using probability-weighted scenarios for U.S.

Food and Drug Administration (“FDA”) approval of Hepcludex.

The following table summarizes the change in fair value of our contingent consideration:

Contingent Consideration Liability

In connection with our first quarter 2021 acquisition of MYR, we are subject to a potential contingent consideration payment of up to € 300 million, subject to customary adjustments, which is revalued each reporting period using probability-weighted scenarios for U.S.

Food and Drug Administration (“FDA”) approval of Hepcludex until the related contingency is resolved.

The following table summarizes the change in fair value of our contingent consideration liability:

Year Ended December 31,

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Beginning balance $ 275 $ 317

Additions — 341

Changes in valuation assumptions (1)

Effect of foreign exchange remeasurement (2)

( 60 ) ( 21 )

Effect of foreign exchange remeasurement (2)

Ending balance (3)

________________________________

(1) Included in Research and development expenses on our Consolidated Statements of Income and primarily related to increasing discount rates and updated probability rate estimates.

(1) Included in Research and development expenses on our Consolidated Statements of Income.

The changes primarily related to changes in assumptions around probability and timing of regulatory approval.

(2) Included in Other income (expense), net on our Consolidated Statements of Income.

(3) Included in Other long-term obligations on our Consolidated Balance Sheets as of December 31, 2023 and 2022, respectively.

Liability Related to Future Royalties

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(“Immunomedics”), which is subsequently amortized using the effective interest method over the remaining estimated life.

The fair values of the liability related to future royalties were $ 1.1 billion and $ 1.3 billion as of December 31, 2022 and 2021, respectively, and the carrying value was $ 1.1 billion as of December 31, 2022 and 2021.

Debt and Credit Facilities for additional information.

The following table summarizes the fair value and carrying value of the liability related to future royalties:

(in millions) 2023 2022

Fair value $ 1,230 $ 1,090

Carrying value $ 1,153 $ 1,141

Nonrecurring Fair Value Measurements

During 2022, we recorded a partial impairment charge of $ 2.7 billion related to certain IPR&D assets.

Goodwill and Intangible Assets for additional information.

There were no indicators of impairment noted during 2021.

In 2023, we recorded a $ 51 million write-off of our finite-lived intangible asset related to filgotinib as discussed in Note 9.

Goodwill and Intangible Assets, as well as a $ 381 million write-off of manufacturing assets related to changes in our manufacturing strategy as discussed in Note 10.

Other Financial Information.

Both charges were recorded within Cost of goods sold on our Consolidated Statements of Income.

In 2023 and 2022, we recorded a partial impairment charge of $ 50 million and $ 2.7 billion, respectively, related to certain IPR&D assets as discussed in Note 9.

Goodwill and Intangible Assets.

Fair Value Level Transfers

19 unchanged sentences

government securities — 5 — 5 — 10

Certificates of deposit — — — — — —

Corporate debt securities ( 1 ) 333 ( 7 ) 546 ( 8 ) 878

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government securities — 31 — 3 — 34

Certificates of deposit — — — — — —

Corporate debt securities ( 17 ) 774 ( 8 ) 439 ( 26 ) 1,213

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Total $ ( 22 ) $ 1,204 $ ( 12 ) $ 705 $ ( 34 ) $ 1,908

No allowance for credit losses was recognized for investments with unrealized losses as of December 31, 2022, as we do not currently intend to sell, and it is not more likely than not that we will be required to sell, such investments before recovery of their amortized cost bases.

The unrealized losses were primarily driven by broader change in interest rates with no adverse conditions identified that would prevent the issuer from making scheduled principal and interest payments.

No allowance for credit losses was recognized for investments with unrealized losses as of December 31, 2023, as the unrealized losses were primarily driven by broader change in interest rates with no adverse conditions identified that would prevent the issuer from making scheduled principal and interest payments.

We do not currently intend to sell, and it is not more likely than not that we will be required to sell, such investments before recovery of their amortized cost bases.

The following table summarizes the classification of our available-for-sale debt securities in our Consolidated Balance Sheets:

(in millions) December 31, 2022 December 31, 2021

(in millions) 2023 2022

Cash and cash equivalents $ 83 $ 75

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Equity Securities

The following table summarizes the classification of our equity securities on our Consolidated Balance Sheets:

(in millions) 2023 2022

Equity securities measured at fair value:

The following table summarizes the classification of our equity securities measured at fair value on a recurring basis, on our Consolidated Balance Sheets:

(in millions) December 31, 2022 December 31, 2021

Cash and cash equivalents $ 4,465 $ 3,831

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Other long-term assets 656 943

Equity method investments and other equity investments without readily determinable fair values:

Other long-term assets $ 340 $ 423

Total $ 6,547 $ 5,671

________________________________

(1) Prepaid and other current assets and Other long-term assets include our equity method investments in Arcus and Galapagos, respectively, for which we elected and applied the fair value option as we believe it best reflects the underlying economics of these investments.

Our investment in Galapagos is classified in Other long-term assets due to certain lock-up provisions in our amended subscription agreement with them, which extend to August 2024.

Other Equity Securities

Equity method investments and other equity investments without readily determinable fair values were $ 423 million and $ 338 million as of December 31, 2022 and 2021, respectively, and were excluded from the table above.

These amounts were included in Other long-term assets on our Consolidated Balance Sheets.

For our equity method investments in Galapagos and Arcus Biosciences, Inc.

(“Arcus”), we elected and applied the fair value option as we believe it best reflects the underlying economics of these investments.

Our investment in Galapagos is subject to certain lock-up provisions until August 2024 and was classified in Prepaid and other current assets and Other long-term assets as of December 31, 2023 and 2022 at $ 686 million and $ 736 million, respectively.

Our investment in Arcus was classified in Prepaid and other current assets as of December 31, 2023 and 2022 at $ 283 million and $ 286 million, respectively.

Unrealized Gains and Losses

Net unrealized losses recognized on equity securities were $ 657 million, $ 610 million and $ 1.7 billion for the years ended December 31, 2022, 2021 and 2020, respectively, and were included in Other income (expense), net on our Consolidated Statements of Income.

The following table summarizes net unrealized gains and losses on equity securities still held as of the respective balance sheet dates, included in Other income (expense), net on our Consolidated Statements of Income:

Year Ended December 31,

(in millions) 2023 2022 2021

Net unrealized losses on equity securities still held $ 60 $ 684 $ 647

Related Party Transaction

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The Foundation is a related party as certain of our officers also serve as directors of the Foundation.

The donation expense of $ 85 million and $ 212 million was recorded within Selling, general and administrative expenses on our Consolidated Statements of Income during the for the years ended December 31, 2022 and 2021, respectively.

The donation expense of $ 85 million and $ 212 million was recorded within Selling, general and administrative expenses on our Consolidated Statements of Income during the years ended December 31, 2022 and 2021, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

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The derivative instruments we use to hedge our exposures for forecasted product sales are designated as cash flow hedges and have maturities of 18 months or less.

As of December 31, 2022 and 2021, we held foreign currency exchange contracts with outstanding notional amounts of $ 3.0 billion and $ 2.9 billion, respectively.

We held foreign currency exchange contracts with outstanding notional amounts of $ 2.5 billion and $ 3.0 billion as of December 31, 2023 and 2022, respectively.

While all our derivative contracts allow us the right to offset assets and liabilities, we have presented amounts in our Consolidated Balance Sheets on a gross basis.

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Derivatives designated as hedges:

Gain (loss) recognized in Accumulated other comprehensive income

Net (loss) gain recognized in Accumulated other comprehensive income (loss)

$ ( 14 ) $ 150 $ 147

Gain (loss) reclassified from Accumulated other comprehensive income to Product sales

Net gain (loss) reclassified from Accumulated other comprehensive income (loss) into Product sales

$ 58 $ 196 $ ( 67 )

Derivatives not designated as hedges:

Gain (loss) recognized in Other income (expense), net

Net gain recognized in Other income (expense), net

$ 57 $ 67 $ 21

The majority of gains and losses related to the hedged forecasted transactions reported in Accumulated other comprehensive income as of December 31, 2022 are expected to be reclassified to Product sales within 12 months.

The majority of gains and losses related to the hedged forecasted transactions reported in Accumulated other comprehensive income (loss) as of December 31, 2023 are expected to be reclassified to Product sales within 12 months.

There were no discontinuances of cash flow hedges for the years presented.

The cash flow effects of our derivative contracts for the years ended December 31, 2023, 2022 and 2021 were included within Net cash provided by operating activities on our Consolidated Statements of Cash Flows.

In February 2024, we entered into a definitive agreement to acquire all of the outstanding common stock of CymaBay Therapeutics, Inc.

(“CymaBay”) and its lead product candidate, seladelpar, which is an investigational treatment for primary biliary cholangitis, for approximately $ 4.3 billion.

Under the terms of the merger agreement, a wholly-owned subsidiary of Gilead will promptly commence a tender offer to acquire all of the outstanding shares of CymaBay’s common stock at a price of $ 32.50 per share in cash.

Following successful completion of the tender offer, Gilead will acquire all remaining shares not tendered in the offer through a second step merger at the same price as in the tender offer.

Consummation of the tender offer is subject to a minimum tender of at least a majority of then-outstanding CymaBay shares, the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act and other customary conditions.

Gilead plans to pay all cash consideration for the transaction.

The tender offer is not subject to a financing condition.

Upon closing, CymaBay will become a wholly-owned subsidiary.

CymaBay’s lead program, seladelpar, is an investigational, oral, selective peroxisome proliferator-activated receptor delta agonist, shown to regulate critical metabolic and liver disease pathways.

Based on data evaluating the efficacy and tolerability profile of seladelpar in more than 500 participants across Phase 2 and Phase 3 studies, a new drug application for seladelpar was submitted to FDA in December 2023.

In May 2023, we closed an agreement to acquire XinThera, Inc.

(“XinThera”), a privately held biotechnology company focused on small molecule drugs to treat cancer and immunologic diseases, for approximately $ 200 million in cash consideration, net of cash acquired.

As a result, XinThera became our wholly-owned subsidiary.

We accounted for the transaction as an asset acquisition and recorded a $ 170 million charge to Acquired in-process research and development expenses on our Consolidated Statements of Income in 2023.

The remaining purchase price relates to various other assets acquired and liabilities assumed.

Under the agreement, the former shareholders of XinThera are eligible to receive performance-based development and regulatory milestone payments of up to approximately $ 760 million, with $ 50 million of that having been paid and charged primarily to Acquired in-process research and development expenses in 2023.

In February 2023, we closed an agreement to acquire Tmunity Therapeutics, Inc.

(“Tmunity”), a clinical-stage, private biotechnology company focused on next-generation CAR T-therapies and technologies.

Under the terms of the agreement, we acquired all outstanding shares of Tmunity other than those already owned by Gilead for approximately $ 300 million in cash consideration.

As a result, Tmunity became our wholly-owned subsidiary.

We accounted for the transaction as an asset acquisition and recorded a $ 244 million charge to Acquired in-process research and development expenses on our Consolidated Statements of Income in 2023.

The remaining purchase price relates to various other assets acquired and liabilities assumed, consisting primarily of deferred tax assets.

Under the agreement, the former shareholders of Tmunity and the University of Pennsylvania are eligible to receive a mix of up to approximately $ 1.0 billion in potential future payments upon achievement of certain development, regulatory and sales-based milestones, as well as royalty payments on sales, with $ 25 million of that having been charged to Acquired in-process research and development expenses in 2023 and paid in January 2024.

On September 20, 2022, we acquired all of the outstanding share capital of MiroBio Ltd.

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As a result, MiroBio became our wholly-owned subsidiary.

We accounted for the transaction as an asset acquisition and recorded a $ 389 million charge to Acquired in-process research and development expenses on our Consolidated Statements of Income during 2022.

We accounted for the transaction as an asset acquisition and recorded a $ 389 million charge to Acquired in-process research and development expenses on our Consolidated Statements of Income in 2022.

The remaining purchase price relates to various other assets acquired and liabilities assumed.

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The fair value of this contingent liability, estimated using probability-weighted scenarios for FDA approval, was $ 341 million as of the acquisition date.

As of December 31, 2021, the fair value of the liability was $ 317 million and was included in Other current liabilities on our Consolidated Balance Sheets.

As of December 31, 2022, the fair value of the liability was $ 275 million and was included in Other long-term obligations.

Fair Value Measurements for additional information.

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Goodwill and Intangible Assets for additional information.

In the fourth quarter of 2020, we completed the acquisition of Immunomedics, a company focused on the development of antibody-drug conjugate technology, for cash consideration of $ 20.6 billion.

Upon closing, Immunomedics became a wholly-owned subsidiary of Gilead.

The acquisition was financed with the majority of the proceeds from the September 2020 senior unsecured notes offering, an additional $ 1.0 billion borrowing under a new senior unsecured term loan facility and cash on hand.

In 2021, we repaid the borrowing under the senior unsecured term loan facility.

We recorded share-based compensation expense of $ 289 million related to the cash settlement of the accelerated share-based compensation expense attributable to the post-combination period, which was primarily recorded in Selling, general and administrative expenses and Research and development expenses on our Consolidated Statements of Income for the year ended December 31, 2020.

We also recorded other acquisition-related expenses of $ 39 million, primarily representing closing costs and related fees, in Selling, general and administrative expenses on our Consolidated Statements of Income for the year ended December 31, 2020.

The acquisition of Immunomedics was accounted for as a business combination using the acquisition method of accounting.

The following table summarizes fair values of assets acquired and liabilities assumed as of the acquisition date:

(in millions) Amount

Cash and cash equivalents $ 726

Inventories 946

Intangible assets:

Finite-lived intangible asset 4,600

Acquired IPR&D 15,760

Outlicense contract 175

Deferred tax liabilities ( 4,565 )

Liability related to future royalties ( 1,100 )

Other assets (and liabilities), net 64

Total identifiable net assets 16,606

Goodwill 3,991

Total consideration transferred $ 20,597

The fair value step-up adjustment of $ 881 million, included in inventories of $ 946 million as of the acquisition date, was primarily determined by the estimated selling price of finished inventory less the cost to complete the manufacturing process and selling effort.

The step-up adjustment was recorded in Cost of goods sold on our Consolidated Statements of Income as the inventory was sold to customers and in Research and development expenses on our Consolidated Statements of Income for inventory used for clinical purposes.

Intangible Assets

The finite-lived intangible asset of $ 4.6 billion represents the estimated fair value of Trodelvy for metastatic triple-negative breast cancer (“TNBC”) as of the acquisition date.

The fair value was determined by applying the income approach using unobservable inputs to estimate probability-weighted net cash flows attributable to Trodelvy for metastatic TNBC and a discount rate of 7.0 %.

The discount rate used represents the estimated rate that market participants would use to value this intangible asset.

This intangible asset is being amortized over an estimated useful life of 12 years.

Acquired IPR&D assets consist of Trodelvy for hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) breast cancer, Trodelvy for non-small cell lung cancer and Trodelvy for urothelial cancer (“UC”).

The estimated aggregate fair value of $ 15.8 billion as of the acquisition date was determined by applying the income approach using unobservable inputs (Level 3 under the fair value measurement and disclosure guidance) to estimate probability-weighted net cash flows attributable to these assets and a discount rate of 7.0 %.

The discount rate used represents the estimated rate that market participants would use to value these intangible assets.

Trodelvy for UC was granted accelerated approval by FDA in April 2021 and $ 1.0 billion was reclassified to finite-lived intangibles from IPR&D.

Trodelvy for HR+/HER2- breast cancer was partially impaired in the first quarter of 2022, but was subsequently granted approval by FDA in February 2023 and $ 6.1 billion will be reclassified to finite-lived intangibles from IPR&D in the first quarter of 2023.

Goodwill and Intangible Assets for additional information.

We also recorded an intangible asset related to a license and supply agreement with Everest Medicines (“Everest”), which was entered into by Immunomedics prior to the acquisition.

Under the agreement, Everest was granted an exclusive license to develop and commercialize Trodelvy in certain territories in Asia and make certain sales milestones and royalty payments to us.

The acquisition date fair value of $ 175 million was determined by estimating the probability-weighted net cash flows attributable to the outlicense and a discount rate of 7.0 %.

The discount rate represents the estimated rate that market participants would use to value this intangible asset.

This intangible asset was being amortized over an estimated useful life of 15 years on a straight-line basis up until we reacquired the rights from Everest in the fourth quarter of 2022.

Collaborations and Other Arrangements for additional information.

Deferred Income Taxes

The net deferred tax liability was based upon the difference between the estimated financial statement basis and tax basis of net assets acquired and an estimate for the final pre-acquisition net operating losses of Immunomedics.

Liability Related to Future Royalties

We assumed a liability related to a funding arrangement, which was originally entered into by Immunomedics and RPI Finance Trust (“RPI”), prior to our acquisition of Immunomedics.

Under the funding agreement, RPI has the right to receive certain royalty amounts, subject to certain reductions, based on the net sales of Trodelvy for each calendar quarter during the term of the agreement through approximately 2036.

The acquisition date fair value of the liability was estimated as $ 1.1 billion, which was primarily determined based on current estimates of future royalty payments to RPI over the life of the arrangement using the real options method and an effective annual interest rate of 2.5 %.

The inputs used for valuation of this liability are unobservable and are considered Level 3 under the fair value measurement and disclosure guidance.

The liability related to future royalties was categorized as debt and primarily included in Long-term debt, net on our Consolidated Balance Sheets.

Fair Value Measurements and 11.

Debt and Credit Facilities for additional information.

The excess of the consideration transferred over the fair values of assets acquired and liabilities assumed of $ 4.0 billion was recorded as goodwill, which primarily reflects the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized.

Goodwill recognized for Immunomedics is no t expected to be deductible for income tax purposes.

Forty Seven, Inc.

(“Forty Seven”)

In the second quarter of 2020, we completed the acquisition of Forty Seven, a clinical-stage immuno-oncology company focused on developing therapies targeting cancer immune evasion pathways and specific cell targeting approaches, for total consideration of $ 4.7 billion, net of acquired cash.

Upon closing, Forty Seven became a wholly-owned subsidiary of Gilead.

We accounted for the transaction as an asset acquisition since the lead asset, magrolimab, represented substantially all the fair value of the gross assets acquired.

During the year ended December 31, 2020, we recorded a $ 4.5 billion charge representing an acquired IPR&D asset with no alternative future use in Acquired in-process research and development expenses, and stock-based compensation expense of $ 144 million primarily in Research and development expenses on our Consolidated Statements of Income.

PROPERTY, PLANT AND EQUIPMENT

The following table summarizes our Property, plant and equipment, net:

(in millions) 2022 2021

Land and land improvements $ 562 $ 404

Buildings and improvements (including leasehold improvements) 4,390 3,794

Laboratory and manufacturing equipment 1,110 952

Office, computer equipment and other (1)

Construction in progress 719 1,057

Subtotal 7,661 7,014

accumulated depreciation and amortization 2,186 1,893

Total $ 5,475 $ 5,121

________________________________

(1) Includes $ 104 million and $ 131 million of unamortized capitalized software costs as of December 31, 2022 and 2021, respectively.

The net book value of our property, plant and equipment in the U.S.

was $ 4.5 billion and $ 4.1 billion as of December 31, 2022 and 2021, respectively.

The corresponding amount in international locations was $ 973 million and $ 963 million as of December 31, 2022 and 2021, respectively.

All individual international locations accounted for less than 10% of the total balances.

GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the carrying amount of Goodwill:

(in millions) 2022 2021

Beginning balance

$ 8,332 $ 8,108

Goodwill resulting from acquisitions — 226

Measurement period adjustments ( 18 ) ( 2 )

Ending balance $ 8,314 $ 8,332

In 2022, goodwill decreased by $ 18 million as a result of finalizing the amount of acquired net operating losses of MYR, which resulted in a decrease to the net deferred tax liability acquired.

As of December 31, 2022, there were no accumulated goodwill impairment losses.

Intangible Assets

The following table summarizes our Intangible assets, net:

December 31, 2022 December 31, 2021

(in millions) Gross

Amount Accumulated

Amortization Foreign Currency Translation Adjustment Net Carrying Amount Gross

Amount Accumulated

Amortization Foreign Currency Translation Adjustment Net Carrying Amount

Finite-lived assets:

Intangible asset – sofosbuvir $ 10,720 $ ( 6,350 ) $ — $ 4,370 $ 10,720 $ ( 5,651 ) $ — $ 5,069

Intangible asset – axicabtagene ciloleucel

7,110 ( 1,908 ) — 5,202 7,110 ( 1,501 ) — 5,609

Intangible asset – Trodelvy 5,630 ( 973 ) — 4,657 5,630 ( 507 ) — 5,123

Intangible asset – Hepcludex

845 ( 158 ) — 687 845 ( 72 ) — 773

Other 1,489 ( 733 ) 1 758 1,610 ( 650 ) 1 961

Total finite-lived assets 25,794 ( 10,121 ) 1 15,674 25,915 ( 8,381 ) 1 17,535

Indefinite-lived assets – IPR&D (1)

13,220 — — 13,220 15,920 — — 15,920

Total intangible assets $ 39,014 $ ( 10,121 ) $ 1 $ 28,894 $ 41,835 $ ( 8,381 ) $ 1 $ 33,455

_______________________________

(1) In February 2023, FDA granted approval of Trodelvy for use in adult patients with unresectable locally advanced or metastatic HR+/HER2- breast cancer who have received endocrine-based therapy and at least two additional systemic therapies in the metastatic setting.

Accordingly, the related IPR&D intangible asset of $ 6.1 billion will be reclassified to finite-lived assets in the first quarter of 2023.

Amortization Expense

Aggregate amortization expense related to finite-lived intangible assets was $ 1.8 billion, $ 1.7 billion and $ 1.2 billion for the years ended December 31, 2022, 2021 and 2020, respectively, and is primarily included in Cost of goods sold on our Consolidated Statements of Income.

The following table summarizes the estimated future amortization expense associated with our finite-lived intangible assets as of December 31, 2022:

(in millions) Amount

Thereafter 6,824

Total $ 15,674

Impairment Assessments

No indicators of impairment were noted for the years ended December 31, 2022, 2021 and 2020, except as described under “2022 IPR&D Impairment” below.

The weighted-average discount rates used in our quantitative assessments for IPR&D intangible assets during those years, other than for the assessment described below, were 7.5 %, 6.5 % and 8.0 %, respectively.

2022 IPR&D Impairment

In connection with our acquisition of Immunomedics in 2020, we allocated a portion of the purchase price to acquired IPR&D intangible assets.

Approximately $ 8.8 billion was assigned to IPR&D intangible assets related to Trodelvy for treatment of patients with HR+/HER2- breast cancer.

In March 2022, we received data from the Phase 3 TROPiCS-02 study evaluating Trodelvy in patients with HR+/HER2- metastatic breast cancer who have received prior endocrine therapy, cyclin-dependent kinase 4/6 inhibitors and two to four lines of chemotherapy (“third-line plus patients”).

Based on our evaluation of the study results, and in connection with the preparation of the financial statements for the first quarter, we updated our estimate of the fair value of our HR+/HER2- IPR&D intangible asset to $ 6.1 billion as of March 31, 2022.

Our estimate of fair value used a probability-weighted income approach that discounts expected future cash flows to the present value, which requires the use of Level 3 fair value measurements and inputs, including estimated revenues, costs, and probability of technical and regulatory success.

The expected cash flows included cash flows from HR+/HER2- metastatic breast cancer for third-line plus patients and patients in earlier lines of therapy which are the subject of separate clinical studies.

Our revised discounted cash flows were lower primarily due to a delay in launch timing for third-line plus patients which caused a decrease in our market share assumptions based on the expected competitive environment.

As of March 2022, there were no changes in our plans or assumptions related to our estimated cash flows for patients in the earlier lines of therapy.

We used a discount rate of 6.75 % which is based on the estimated weighted-average cost of capital for companies with profiles similar to ours and represents the rate that market participants would use to value the intangible assets.

We determined the revised estimated fair value was below the carrying value of the asset and, as a result, we recognized a partial impairment charge of $ 2.7 billion in In-process research and development impairment on our Consolidated Statements of Income during the three months ended March 31, 2022.

OTHER FINANCIAL INFORMATION

Accounts receivable, net

The following table summarizes our Accounts receivable, net:

(in millions) 2022 2021

Accounts receivable $ 5,464 $ 5,278

allowances for chargebacks 549 671

allowances for cash discounts and other 83 67

allowances for credit losses 55 47

Accounts receivable, net $ 4,777 $ 4,493

The majority of our trade accounts receivable arises from product sales in the U.S.

The following table summarizes our Inventories:

(in millions) 2022 2021

Raw materials $ 1,177 $ 1,112

Work in process 577 590

Finished goods 1,066 1,032

Total $ 2,820 $ 2,734

Inventories $ 1,507 $ 1,618

Other long-term assets (1)

Total $ 2,820 $ 2,734

_______________________________

(1) Amounts primarily consist of raw materials.

Total inventories as of December 31, 2021 included $ 294 million of fair value adjustments resulting from the Immunomedics acquisition.

There were no fair value adjustments in total inventories as of December 31, 2022.

Other current liabilities

The following table summarizes the components of Other current liabilities:

(in millions) 2022 2021

Compensation and employee benefits $ 1,018 $ 927

Income taxes payable 959 539

Allowance for sales returns 422 499

Accrual for settlement related to bictegravir litigation (1)

Other accrued liabilities 2,182 2,930

Other current liabilities $ 4,580 $ 6,145

_______________________________

(1) See Note 13.

Commitments and Contingencies for additional information.

COLLABORATIONS AND OTHER ARRANGEMENTS

We enter into licensing and strategic collaborations and other similar arrangements with third parties for the development and commercialization of certain products and product candidates.

We enter into licensing and strategic collaborations and other similar arrangements with third parties for the research, development and commercialization of certain products and product candidates.

These arrangements may involve two or more parties who are active participants in the operating activities of the collaboration and are exposed to significant risks and rewards depending on the commercial success of the activities.

These arrangements may include non-refundable upfront payments, expense reimbursements or payments by us for options to acquire certain rights, contingent obligations by us for potential development and regulatory milestone payments and/or sales-based milestone payments, royalty payments, revenue or profit-sharing arrangements, cost-sharing arrangements and equity investments.

Under the financial terms of these arrangements, we may be required to make payments upon achievement of various developmental, regulatory and commercial milestones, which could be significant.

Future milestone payments, if any, will be reflected in our Consolidated Statements of Income when the corresponding events become probable.

In connection with the regulatory approvals, milestone payments made will be capitalized as intangible assets and will be amortized to Cost of goods sold through the terms of these collaboration arrangements.

In addition, we may be required to pay significant royalties on future sales if products related to these arrangements are commercialized.

The payment of these amounts, however, is contingent upon the occurrence of various future events, which have a high degree of uncertainty.

The financial terms of these arrangements may include non-refundable upfront payments, expense reimbursements or payments by us for options to acquire certain rights, contingent obligations by us for potential development and regulatory milestone payments and/or sales-based milestone payments, royalty payments, revenue or profit-sharing arrangements, cost-sharing arrangements and equity investments.

Development milestone payments are recorded in our Consolidated Statements of Income as incurred, which is generally when the corresponding events become probable.

Regulatory milestone payments are capitalized as intangible assets and amortized to Cost of goods sold over the term of the respective collaboration arrangement.

Certain payments are contingent upon the occurrence of various future events that have a high degree of uncertainty.

In January 2023, we closed an agreement to enter into a global strategic collaboration with Arcellx, a public company, to co-develop and co-commercialize Arcellx’s lead late-stage product candidate, CART-ddBCMA, for the treatment of patients with relapsed or refractory multiple myeloma, and potential future next-generation autologous and non-autologous products.

In December 2023, we expanded the scope of the collaboration to include lymphomas and exercised our option to negotiate a license for Arcellx’s ARC-SparX program, ACLX-001, in multiple myeloma.

In conjunction with these collaboration agreements, we recorded a combined $ 313 million charge to Acquired in-process research and development expenses on our Consolidated Statements of Income in 2023, primarily related to upfront payments, as well as a combined equity investment of $ 299 million.

Our equity investment is subject to lock-up provisions until June 2025 and is included in Other long-term assets on our Consolidated Balance Sheets as of December 31, 2023.

The companies will share development, clinical trial and commercialization costs for CART-ddBCMA and will jointly commercialize the product and split U.S.

profits 50 / 50 .

Outside the U.S., we will commercialize the product and Arcellx will receive royalties on sales.

Arcellx is eligible to receive performance-based development and regulatory milestone payments of up to $ 1.5 billion related to CART-ddBCMA, a potential future next-generation autologous product and a potential future non-autologous product, with further commercial milestone payments, profit split payments on co-promoted products and royalties on at least a portion of worldwide net sales, depending on whether Arcellx opts in to co-promote the future products.

If additional future products are developed, Arcellx would be eligible to receive additional milestone payments, profit split payments on co-promoted products and royalties on at least a portion of worldwide net sales, depending on whether Arcellx opts in to co-promote these additional future products as well.

In April 2022, we entered into a strategic research collaboration agreement (the “Dragonfly Collaboration Agreement”) with Dragonfly Therapeutics, Inc.

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Upon the closing of the Dragonfly Collaboration Agreement, we made a $ 300 million upfront payment to Dragonfly, and we made an additional $ 15 million payment related to a target selection in connection with an August 2022 amendment to the agreement, which were recorded in Acquired in-process research and development expenses on our Consolidated Statements of Income during the year ended December 31, 2022.

These payments were classified as Acquisitions, including in-process research and development, net of cash acquired in Investing Activities on our Consolidated Statements of Cash Flows for the year ended December 31, 2022.

In addition, Dragonfly is eligible to receive performance-based development and regulatory milestone payments of up to $ 630 million related to the DF7001 program with further commercial milestone payments and royalties on worldwide net sales if successful.

If we exercise our options on additional NK cell engager programs, Dragonfly would be eligible to receive opt-in payments and performance-based development, regulatory and commercial milestone payments and royalties on worldwide net sales on these optioned programs as well.

Merck & Co, Inc.

On March 13, 2021, we entered into a license and collaboration agreement with Merck Sharp & Dohme Corp., a subsidiary of Merck to jointly develop and commercialize long-acting investigational treatments in HIV that combine Gilead’s investigational capsid inhibitor, lenacapavir, and Merck’s investigational nucleoside reverse transcriptase translocation inhibitor, islatravir.

In July 2023, we mutually agreed to terminate the DF7001 program.

On March 13, 2021, we entered into a license and collaboration agreement with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.

(“Merck”) to jointly develop and commercialize long-acting investigational treatments in HIV that combine Gilead’s investigational capsid inhibitor, lenacapavir, and Merck’s investigational nucleoside reverse transcriptase translocation inhibitor, islatravir, with other formulations potentially added to the collaboration as mutually agreed.

The collaboration is initially focused on long-acting oral and injectable formulations.

Under the terms of the agreement, Gilead and Merck share global development and commercialization costs at 60 % and 40 %, respectively, across the oral and injectable formulation programs.

Under the terms of the agreement, as amended, Gilead and Merck will mostly share global development and commercialization costs at 60 % and 40 %, respectively, across the oral and injectable formulation programs.

For long-acting oral products, if approved, Gilead would lead commercialization in the U.S., and Merck would lead commercialization in the European Union (“EU”) and rest of the world.

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Upon exercise of an option, the companies will split development costs and revenues, unless the non-exercising company decides to opt out, in which case the non-exercising company will be paid a royalty.

In December 2021, Merck announced the decision of the parties to stop all dosing of participants in the Phase 2 clinical study evaluating an oral-weekly combination treatment regimen of lenacapavir and islatravir following the decision of FDA to place clinical holds on the Investigational New Drug applications for certain formulations of islatravir.

In September 2022, Merck announced that the study would resume under an amended protocol with a lower dose of islatravir.

On May 27, 2020, we entered into a transaction with Arcus, a publicly traded oncology-focused biopharmaceutical company, which included entry into an option, license and collaboration agreement (the “Collaboration Agreement”) and a common stock purchase agreement and an investor rights agreement (together, and as subsequently amended the “Stock Purchase Agreements”).

In accordance with the terms of the Collaboration Agreement and Stock Purchase Agreements, which closed on July 13, 2020, we made an upfront payment of $ 175 million and acquired approximately 6.0 million shares of Arcus common stock for approximately $ 200 million.

Of the total $ 391 million initial cash payments, including transactional costs, made under the agreements, we recorded $ 135 million as an equity investment which was calculated based on Arcus’ closing stock price on the closing date of the transaction.

The remaining $ 256 million was attributed to (i) the acquired license and option rights of $ 175 million representing IPR&D assets with no alternative future use, (ii) $ 65 million of an issuance premium for the equity purchase and (iii) $ 16 million of direct transactional costs.

These amounts were expensed as Acquired in-process research and development expenses during the year ended December 31, 2020 on our Consolidated Statements of Income.

Under the Stock Purchase Agreements, we have the right to purchase from Arcus additional shares up to a maximum of 35 % of the outstanding voting stock of Arcus over a five-year period ending in the third quarter of 2025.

We are also subject to a three-year standstill ending in the second quarter of 2023, restricting certain other activity on our part.

On May 29, 2020, in a separate secondary equity offering, we acquired 2.2 million shares of common stock of Arcus for approximately $ 61 million.

In the first quarter of 2021, we also acquired approximately 5.7 million additional shares of Arcus common stock for $ 220 million.

As a result, we currently own a total of 13.8 million shares of Arcus, which represented approximately 19.5 % of the issued and outstanding voting stock of Arcus immediately following the closing of the first quarter 2021 transaction.

Pursuant to the Collaboration Agreement, Gilead had the right to opt in to all current and future clinical-stage product candidates for up to ten years following the closing of the transaction.

On May 27, 2020, we entered into a transaction with Arcus, a publicly traded oncology-focused biopharmaceutical company, which included entry into an option, license and collaboration agreement (the “Collaboration Agreement”), with Gilead having the right to opt in to all current and future clinical-stage product candidates for up to ten years following the closing of the transaction, and a common stock purchase agreement and an investor rights agreement (together, and as subsequently amended the “Stock Purchase Agreements”).

In November 2021, we exercised our options to three of Arcus’ clinical stage programs and amended the Collaboration Agreement.

The option exercise and amendment transaction closed in December 2021, triggering collaboration opt-in payments of $ 725 million and waiving the $ 100 million option continuation payment which would have been due to Arcus in the third quarter of 2022.

The net option charge of $ 625 million is included within Acquired in-process research and development expenses on our Consolidated Statements of Income for the year ended December 31, 2021.

The net option charge of $ 625 million was included within Acquired in-process research and development expenses on our Consolidated Statements of Income for the year ended December 31, 2021.

The collaboration opt-in payments of $ 725 million were recorded in Other current liabilities on our Consolidated Balance Sheets as of December 31, 2021 and paid to Arcus in January 2022.

Our payments to Arcus were included within Net cash used in investing activities on our Consolidated Statements of Cash Flows in the first quarter of 2022.

In May 2023, we again amended the Collaboration Agreement to initiate research programs against up to four targets jointly selected by the parties that are applicable to inflammatory diseases.

As part of the amendment, we paid a $ 35 million upfront fee, which was charged to Acquired in-process research and development expenses on our Consolidated Statements of Income.

Gilead may exercise an option to license each program at two separate, prespecified time points.

If Gilead exercises its option at the earlier time point for the first two target programs, Arcus would be eligible to receive up to $ 420 million in future option and milestone payments and tiered royalties for each optioned program.

For any other option exercise by Gilead for the four target programs, the parties would have rights to co-develop and share global development costs and to co-commercialize and share profits in the U.S.

for optioned programs.

Under the amended Collaboration Agreement, the companies co-develop and share the global costs related to these clinical programs.

We recorded $ 187 million of such costs in Research and development expenses on our Consolidated Statements of Income for the year ended December 31, 2022.

We recorded $ 189 million and $ 187 million of such costs in Research and development expenses on our Consolidated Statements of Income for the years ended December 31, 2023 and 2022, respectively.

If the optioned molecules achieve regulatory approval, the companies will co-commercialize and equally share profits in the U.S.

Gilead will hold exclusive commercialization rights outside the U.S., subject to any rights of Arcus’s existing collaboration partners, and will pay to Arcus tiered royalties as a percentage of net sales ranging from the mid teens to low twenties.

Under the Collaboration Agreement, we may also pay an additional $ 100 million at our option on each of the fourth, sixth and eighth anniversaries of the agreement, unless terminated early, to maintain the rights to opt in to future Arcus programs for the duration of the contact term.

On June 19, 2020, we entered into a transaction with Pionyr, a privately held company pursuing novel biology in the field of immuno-oncology, which included entry into two separate merger agreements, one contemplating the initial acquisition of a 49.9 % equity interest in Pionyr, and the other providing us the exclusive option, subject to certain terms and conditions, to acquire the remaining outstanding capital stock of Pionyr (together, the “Pionyr Merger and Option Agreements”) and a R&D service agreement.

On July 13, 2020, we closed the transaction and made cash payments of $ 269 million.

We account for our investment in Pionyr using the equity method of accounting because our equity interest provides us with the ability to exercise significant influence over Pionyr.

Our investment in Pionyr, consisting of the transaction price noted above and transaction costs, exceeded our pro-rata portion of Pionyr's net assets at transaction closing.

We determined that the resulting basis difference primarily relates to Pionyr’s IPR&D which has no alternative future use and that Pionyr is not a business as defined in accounting standards.

As a result, we immediately recorded a charge for this basis difference of $ 215 million in Acquired in-process research and development expenses on our Consolidated Statements of Income during the year ended December 31, 2020.

The carrying value of our equity method investment in Pionyr was zero as of December 31, 2022 and 2021.

The estimated fair value of our exclusive option to acquire the remaining outstanding capital stock of Pionyr is approximately $ 70 million based on a probability-weighted option pricing model using unobservable inputs, which are considered Level 3 under the fair value measurement and disclosure guidance.

The estimated amount is recorded in Other long-term assets on our Consolidated Balance Sheets.

We may choose to exercise our exclusive option to purchase the remaining equity interest from Pionyr’s current shareholders for a $ 315 million option exercise fee and up to $ 1.2 billion in potential future milestone payments upon achievement of certain development and regulatory milestones.

Such option to purchase will expire following the earliest occurrence of specified events, including the delivery of data following completion of certain Phase 1b trials by Pionyr.

Under the R&D service agreement, we made an initial cash funding of $ 80 million and recorded a charge in Acquired in-process research and development expenses on our Consolidated Statements of Income during the year ended December 31, 2020.

In addition, we committed to provide additional payments of up to $ 115 million to Pionyr upon achievement of certain development milestones.

We accrued $ 70 million in milestone payments, related to the initiation of two Phase 1 studies, with a charge to Acquired in-process research and development expenses on our Consolidated Statements of Income during the year ended December 31, 2020, and the payment was made in the first quarter of 2021.

On July 17, 2020, we entered into a transaction with Tizona, a privately held company developing cancer immunotherapies, which included entry into two separate merger agreements, one contemplating the initial acquisition of a 49.9 % equity interest in Tizona, and the other providing us the exclusive option, subject to certain terms and conditions, to acquire the remaining outstanding capital stock of Tizona (together, the “Tizona Merger and Option Agreements”) and a development agreement.

On August 25, 2020, we closed the transaction with Tizona and made cash payments of $ 302 million to Tizona’s shareholders in accordance with the terms of the Tizona Merger and Option Agreements.

Under the amended Collaboration Agreement, we may also pay an additional $ 100 million at our option on each of the fourth, sixth and eighth anniversaries of the agreement, unless terminated early, to maintain the rights to opt in to future Arcus programs for the duration of the contact term.

We were also subject to a three-year standstill, restricting certain other activity on our part, which expired in the second quarter of 2023.

We have made various purchases of shares since the original closing of the agreement and, following our latest purchase in the second quarter of 2023, we owned a total of 14.8 million shares, which represented approximately 19.9 % of the issued and outstanding voting stock of Arcus at that time.

As of December 31, 2023, we had two designees on Arcus’ board of directors.

In January 2024, we announced an amendment to the Collaboration Agreement with Arcus and made an additional equity investment in Arcus for $ 320 million, increasing our ownership to 33 %.

Under the amended Collaboration Agreement, we agreed to pay the $ 100 million fourth anniversary option continuation fee in 2024.

We also increased our number of designees on Arcus’ board of directors to three.

In June 2020, we entered into a transaction with Pionyr Immuotherapeutics (“Pionyr”), a privately held company pursuing novel biology in the field of immuno-oncology, which included entry into two separate agreements, one related to the initial acquisition of a 49.9 % equity interest in Pionyr, and the other providing us the exclusive option, subject to certain terms and conditions, to acquire the remaining outstanding capital stock of Pionyr (the “Pionyr Merger and Option Agreements”) and a R&D service agreement.

In March 2023, we terminated the R&D service agreement, waived our exclusive option to acquire Pionyr and certain other rights under the Pionyr Merger and Option Agreements and recorded a $ 70 million charge to Other income (expense), net on our Consolidated Statements of Income, writing off the full value of the option that had previously been recorded in Other long-term assets on our Consolidated Balance Sheets.

We previously accounted for our investment in Pionyr using the equity method of accounting because our equity interest provided us with the ability to exercise significant influence over Pionyr.

The carrying value of our equity method investment in Pionyr was zero as of December 31, 2022.

In August 2023, Pionyr was acquired by Ikena Oncology, Inc.

(“Ikena”), a publicly traded company, and our equity interest was converted to shares of Ikena stock.

In July 2020, we entered into a transaction with Tizona Therapeutics, Inc.

(“Tizona”), a privately held company developing cancer immunotherapies, which included entry into two separate agreements, one related to the initial acquisition of a 49.9 % equity interest in Tizona, and the other providing us the exclusive option, subject to certain terms and conditions, to acquire the remaining outstanding capital stock of Tizona (the “Tizona Merger and Option Agreements”) and a development agreement.

In September 2023, we terminated the development agreement, waived our exclusive option to acquire Tizona and certain other rights under the Tizona Merger and Option Agreements and recorded a $ 41 million charge to Other income (expense), net on our Consolidated Statements of Income, writing off the full value of the option that had previously been recorded in Other long-term assets on our Consolidated Balance Sheets.

We account for our investment in Tizona using the equity method of accounting because our equity interest provides us with the ability to exercise significant influence over Tizona.

Our investment in Tizona, consisting of the transaction price noted above and transaction costs, exceeded our pro-rata portion of Tizona’s net assets at transaction closing.

We determined that the resulting basis difference primarily relates to Tizona’s IPR&D with no alternative future use and that Tizona is not a business as defined in accounting standards.

As a result, during the year ended December 31, 2020, we immediately recorded a charge for this basis difference of $ 272 million in Acquired in-process research and development expenses on our Consolidated Statements of Income.

The carrying value of our equity method investment in Tizona was zero as of December 31, 2023 and 2022.

The estimated fair value of our exclusive option to acquire the remaining outstanding capital stock of Tizona is approximately $ 41 million based on a probability-weighted option pricing model using unobservable inputs, which are considered Level 3 under the fair value measurement and disclosure guidance.

The estimated amount is recorded in Other long-term assets on our Consolidated Balance Sheets.

We may choose to exercise our exclusive option to purchase the remaining equity interest from Tizona’s current shareholders for a $ 100 million option exercise fee and up to $ 1.2 billion in potential future milestone payments upon achievement of certain development and regulatory milestones.

Such option to purchase will expire following the earliest occurrence of specified events, including the delivery of data following completion of certain Phase 1b trials by Tizona.

Under the development agreement, we committed to provide funding to Tizona of $ 115 million, which was recorded in Acquired in-process research and development expenses on our Consolidated Statements of Income during the year ended December 31, 2020.

Tango Therapeutics, Inc.

On August 17, 2020, we entered into a transaction with Tango, a privately held company pursuing innovative targeted immune evasion therapies for patients with cancer through its proprietary, CRISPR-enabled functional genomics target discovery platform, which included entry into an amended and restated research collaboration and license agreement and a stock purchase agreement (together, the “Tango Collaboration and Stock Purchase Agreements”).

Upon entering into this transaction, we made an upfront payment of $ 125 million and a $ 20 million equity investment in Tango.

During the year ended December 31, 2020, we recorded the $ 125 million upfront expense in Acquired in-process research and development expenses on our Consolidated Statements of Income.

In the third quarter of 2021, we made an additional $ 13 million equity investment.

Tango became a publicly traded company in 2021, and accordingly our equity investment has since been recorded in Prepaid and other current assets on our Consolidated Balance Sheets at fair market value.

Under the Tango Collaboration and Stock Purchase Agreements, Gilead has the right to option up to 15 programs over the seven-year collaboration for up to $ 410 million per program in opt-in, extension and milestone payments.

For the products that Tango opts to co-develop and co-promote, the parties will equally split profits and losses, as well as development costs in the U.S.

For products that Tango does not opt to co-develop and co-promote, we will pay Tango up to low double-digit tiered royalties on net sales.

We will provide Tango milestone payments and royalties on sales outside of the U.S.

Jounce Therapeutics, Inc.

On September 1, 2020, we entered into a transaction with Jounce, a publicly traded company developing novel cancer immunotherapies, which included entry into license, registration rights and stock purchase agreements (together, “Jounce License and Stock Purchase Agreement”).

In October 2020, we closed this transaction and made a total payment of $ 120 million.

We recorded $ 64 million upfront expense in Acquired in-process research and development expenses on our Consolidated Statements of Income and $ 56 million as an equity investment in Other long-term assets on our Consolidated Balance Sheets, representing approximately 14 % of the issued and outstanding voting stock of Jounce immediately following the transaction, which was calculated based on Jounce’s closing stock price on the closing date of the transaction.

In December 2022, we amended our existing license agreement with Jounce enabling us to buy out the remaining contingent payments potentially due under the license agreement for $ 67 million, which was expensed to Acquired in-process research and development expenses on our Consolidated Statements of Income and was paid in 2022.

Going forward, we will be solely responsible for all further research, development and commercialization of the immunotherapy specified in the license agreement.

Filgotinib Collaboration

In 2016, we closed a license and collaboration agreement with Galapagos, a clinical-stage biotechnology company based in Belgium, for the development and commercialization of filgotinib, a JAK1-selective inhibitor being evaluated for inflammatory disease indications (the “filgotinib agreement”).

Under the terms of the filgotinib agreement, as amended in 2019 (the “2019 Agreement”), we obtained an exclusive, worldwide, royalty-bearing, sublicensable license for filgotinib and products containing filgotinib.

In December 2020, Gilead and Galapagos amended their agreement to allow Galapagos to assume development, manufacturing, commercialization and certain other rights for filgotinib in Europe.

In connection with the amendments to the 2019 Agreement, Gilead agreed to irrevocably pay Galapagos € 160 million (or approximately $ 190 million ) .

Of this total amount, Gilead paid € 35 million (or approximately $ 43 million) in January 2021, an additional € 75 million (or approximately $ 88 million) in April 2021, and € 50 million (or approximately $ 60 million) in 2022.

We accrued the full amount of this liability with a charge to Research and development expenses on our Consolidated Statements of Income for the year ended December 31, 2020.

In addition, Galapagos will no longer be eligible to receive any future milestone payments relating to filgotinib in Europe.

In October 2023, we amended a previous agreement with Galapagos, a clinical-stage biotechnology company based in Belgium, related to the development and commercialization of filgotinib, a JAK1-selective inhibitor being evaluated for inflammatory disease indications, to terminate the global development cost-sharing arrangement and Galapagos’ obligation to pay tiered royalties to us on net sales in Europe.

As a result, we wrote off the remaining $ 51 million balance of our related finite-lived intangible asset as discussed in Note 9.

Goodwill and Intangible Assets.

We had also previously paid Galapagos € 160 million (or approximately $ 190 million) related to an agreement to terminate Galapagos’ right to receive any future milestone payments relating to filgotinib in Europe, with the full amount being expensed in 2020 and € 110 million (or approximately $ 130 million) paid in 2021 and € 50 million (or approximately $ 60 million) paid in 2022.

Global Collaboration

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Complera/Eviplera and Odefsey

In 2009, we entered into a license and collaboration agreement with Janssen, formerly Tibotec Pharmaceuticals, to develop and commercialize a fixed-dose combination of our Truvada and Janssen’s non-nucleoside reverse transcriptase inhibitor, rilpivirine, This combination was approved in the U.S.

In 2009, we entered into a license and collaboration agreement with Janssen to develop and commercialize a fixed-dose combination of our Truvada and Janssen’s non-nucleoside reverse transcriptase inhibitor, rilpivirine.

This combination was approved in the U.S.

and EU in 2011, and is sold under the brand name Complera in the U.S.

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Janssen may also terminate the entire agreement without cause.

Japan Tobacco, Inc.

Japan Tobacco

In 2005, Japan Tobacco granted us exclusive rights to develop and commercialize elvitegravir, a novel HIV integrase inhibitor, in all countries of the world, excluding Japan, where Japan Tobacco retained such rights.

In 2005, Japan Tobacco, Inc.

(“Japan Tobacco”) granted us exclusive rights to develop and commercialize elvitegravir, a novel HIV integrase inhibitor, in all countries of the world, excluding Japan, where Japan Tobacco retained such rights.

Effective December 2018, we entered into an agreement with Japan Tobacco to acquire the rights to market and distribute certain products in our HIV portfolio in Japan and to expand our rights to develop and commercialize elvitegravir to include Japan.

10 unchanged sentences

We may also terminate the entire agreement without cause.

In April 2019, Everest and Immunomedics entered into an agreement granting Everest an exclusive license to develop and commercialize Trodelvy in Greater China, South Korea, Singapore, Indonesia, Philippines, Vietnam, Thailand, Malaysia and Mongolia (the “Territories”).

In April 2019, Everest Medicines (“Everest”) and Immunomedics entered into an agreement granting Everest an exclusive license to develop and commercialize Trodelvy in Greater China, South Korea, Singapore, Indonesia, Philippines, Vietnam, Thailand, Malaysia and Mongolia (the “Territories”).

Gilead subsequently acquired Immunomedics in October 2020 and assumed the Everest license and supply agreement, which provided for certain sales milestones and royalties payments to be made to Gilead and was recorded as a $ 175 million finite-lived asset as part of the purchase accounting.

In the fourth quarter of 2022, we reacquired all development and commercialization rights for Trodelvy from Everest and terminated the previous agreement.

Under the terms of the new agreement, Gilead will make $ 280 million in upfront termination payments to Everest, of which $ 84 million was made in 2022, with the remaining amounts included in Other current liabilities on our Consolidated Balance Sheets as of December 31, 2022.

Under the terms of the new agreement, Gilead made $ 280 million in upfront termination payments to Everest, of which $ 84 million was made in 2022 and $ 196 million was made in 2023.

In addition, Everest is eligible to receive up to $ 175 million in potential additional payments upon achievement of certain regulatory and commercial milestones.

We accounted for the new agreement as a contract termination, which includes the reacquisition of commercial rights and the settlement of our pre-existing relationship with Everest.

As a result, we recorded an expense of $ 406 million in Selling, general and administrative expenses on our Consolidated Statements of Income, which primarily represents the upfront costs and write-off of the remaining value of the pre-existing asset related to the prior agreement.

In addition, we recorded an acquired finite-lived asset with a fair value of $ 50 million for the commercial rights reacquired for products approved in the Territories.

Other Collaboration Arrangements That Are Not Individually Significant

During 2022, 2021 and 2020, we entered into several collaborations, equity investments and licensing arrangements as well as other similar arrangements that we do not consider to be individually material.

We recorded upfront collaboration expenses related to these arrangements of $ 86 million, $ 177 million and $ 129 million for the years ended December 31, 2022, 2021 and 2020, respectively, within Acquired in-process research and development expenses on our Consolidated Statements of Income.

As a result, we recorded an expense of $ 406 million in Selling, general and administrative expenses on our Consolidated Statements of Income during the year ended December 31, 2022, which primarily represents the upfront costs and write-off of the remaining value of the pre-existing asset related to the prior agreement.

Simultaneously, we recorded an acquired finite-lived asset with a fair value of $ 50 million for the commercial rights reacquired for products approved in the Territories.

In December 2023, we entered into an arrangement with funds managed by Abingworth LLP (“Abingworth”) under which we will receive up to $ 210 million to co-fund our development costs for Trodelvy for non-small cell lung cancer in 2023 through 2026.

As there is substantive transfer of risk to the financial partner, the development funding is recognized by us as an obligation to perform contractual services.

In 2023, we received $ 50 million from Abingworth.

We are recognizing the funding as a reduction of Research and development expenses using an attribution model over the period of the related expenses.

If successful, upon regulatory approval in the U.S.

for the specified indication, Abingworth will be eligible to receive an approval-based fixed milestone payment of up to $ 84 million and royalties based on the applicable net sales.

PROPERTY, PLANT AND EQUIPMENT

The following table summarizes our Property, plant and equipment, net by asset type:

(in millions) 2023 2022

Land and land improvements $ 561 $ 562

Buildings and improvements (including leasehold improvements) 4,328 4,390

Laboratory and manufacturing equipment 1,147 1,110

Office, computer equipment and other 1,069 880

Construction in progress 661 719

Subtotal 7,766 7,661

accumulated depreciation 2,449 2,186

Total $ 5,317 $ 5,475

In 2023, we wrote off $ 381 million of property, plant and equipment related to changes in our manufacturing strategy.

The write-offs related primarily to buildings, improvements and related equipment that were determined to be fully impaired based on the difference between fair value and the carrying amount as a result of our decision to no longer utilize the facilities.

The following table summarizes our Property, plant and equipment, net by geography:

(in millions) 2023 2022

$ 4,691 4,501

International (1)

Total $ 5,317 $ 5,475

________________________________

(1) All individual international locations accounted for less than 10% of the total balances.

GOODWILL AND INTANGIBLE ASSETS

The following table summarizes the changes in the carrying amount of Goodwill:

(in millions) 2023 2022

Beginning balance

$ 8,314 $ 8,332

Measurement period adjustments (1)

Ending balance $ 8,314 $ 8,314

________________________________

(1) In 2022, goodwill decreased by $ 18 million as a result of finalizing the amount of acquired net operating losses of MYR, which resulted in a decrease to the net deferred tax liability acquired.

Impairment Losses

As of December 31, 2023, there were no accumulated goodwill impairment losses.

Intangible Assets

The following table summarizes our Intangible assets, net:

December 31, 2023 December 31, 2022

(in millions) Gross

Amount Accumulated

Amortization Foreign Currency Translation Adjustment Net Carrying Amount Gross

Amount Accumulated

Amortization Foreign Currency Translation Adjustment Net Carrying Amount

Finite-lived assets:

Intangible asset – sofosbuvir $ 10,720 $ ( 7,050 ) $ — $ 3,670 $ 10,720 $ ( 6,350 ) $ — $ 4,370

Intangible asset – axicabtagene ciloleucel

7,110 ( 2,314 ) — 4,796 7,110 ( 1,908 ) — 5,202

Intangible asset – Trodelvy (1)

11,730 ( 2,002 ) — 9,728 5,630 ( 973 ) — 4,657

Intangible asset – Hepcludex

845 ( 243 ) — 602 845 ( 158 ) — 687

1,414 ( 827 ) 1 588 1,489 ( 733 ) 1 758

Total finite-lived assets 31,819 ( 12,436 ) 1 19,384 25,794 ( 10,121 ) 1 15,674

Indefinite-lived assets – IPR&D (1)(3)

7,070 — — 7,070 13,220 — — 13,220

Total intangible assets $ 38,889 $ ( 12,436 ) $ 1 $ 26,454 $ 39,014 $ ( 10,121 ) $ 1 $ 28,894

_______________________________

Accordingly, the related IPR&D intangible asset of $ 6.1 billion was reclassified to finite-lived assets in the first quarter of 2023.

(2) In the fourth quarter of 2023, in connection with our agreement to terminate our right to receive royalties from Galapagos related to net sales of filgotinib in Europe, we wrote-off the remaining $ 51 million balance of our related intangible asset.

Collaborations and Other Arrangements for additional information.

(3) In the fourth quarter of 2023, due to a change in anticipated timing of FDA approval, we recognized a $ 50 million partial impairment of our bulevirtide IPR&D intangible asset in In-process research and development impairments on our Consolidated Statements of Income.

The remaining IPR&D intangible asset balance as of December 31, 2023 was comprised of $ 5.9 billion for non-small cell lung cancer (“NSCLC”) indications of Trodelvy and $ 1.1 billion for bulveritide.

Amortization Expense

Aggregate amortization expense related to finite-lived intangible assets was $ 2.3 billion, $ 1.8 billion and $ 1.7 billion for the years ended December 31, 2023, 2022 and 2021, respectively, primarily included in Cost of goods sold on our Consolidated Statements of Income.

The following table summarizes the estimated future amortization expense associated with our finite-lived intangible assets as of December 31, 2023:

(in millions) Amount

Thereafter 7,571

Total $ 19,384

Impairment Assessments

No indicators of impairment were noted for the years ended December 31, 2023, 2022 and 2021, except as described in the “Intangible Assets” table above and under “2022 IPR&D Impairment” below.

In January 2024, we announced that our Phase 3 EVOKE-01 study of Trodelvy evaluating sacituzumab govitecan-hziy (SG) did not meet its primary endpoint of overall survival (OS) in previously treated NSCLC.

We believe that this new information represents an indicator of potential impairment in the first quarter of 2024 and, as a result, the fair value of the indefinite-lived IPR&D intangible asset related to Trodelvy may be below its carrying value.

We expect to complete an interim impairment assessment of the related IPR&D intangible asset during the first quarter of 2024.

To the extent that the estimated fair value is less than the carrying value of the asset, we will be required to record an impairment charge on our Consolidated Statements of Income during the three months ended March 31, 2024.

Any such impairment charge, which we are unable to reasonably estimate at this time, could have a material impact on our consolidated results of operations.

2022 IPR&D Impairment

In connection with our acquisition of Immunomedics in 2020, we allocated a portion of the purchase price to acquired IPR&D intangible assets.

Approximately $ 8.8 billion was assigned to IPR&D intangible assets related to Trodelvy for treatment of patients with hormone receptor-positive, human epidermal growth factor receptor 2-negative (“HR+/HER2-”) breast cancer.

As of March 2022, there were no changes in our plans or assumptions related to our estimated cash flows for patients in the earlier lines of therapy.

We determined the revised estimated fair value was below the carrying value of the asset and, as a result, we recognized a partial impairment charge of $ 2.7 billion in In-process research and development impairments on our Consolidated Statements of Income during the three months ended March 31, 2022.

OTHER FINANCIAL INFORMATION

Accounts Receivable, Net

The following table summarizes our Accounts receivable, net:

(in millions) 2023 2022

Accounts receivable $ 5,495 $ 5,464

allowances for chargebacks 679 549

allowances for cash discounts and other 101 83

allowances for credit losses 56 55

Accounts receivable, net $ 4,660 $ 4,777

The majority of our trade accounts receivable arises from product sales in the U.S.

The following table summarizes our Inventories:

(in millions) 2023 2022

Raw materials $ 1,246 $ 1,177

Work in process 847 577

Finished goods 1,272 1,066

Total $ 3,366 $ 2,820

Inventories $ 1,787 $ 1,507

Other long-term assets (1)

Total $ 3,366 $ 2,820

_______________________________

(1) Amounts primarily consist of raw materials.

Other Current Liabilities

The following table summarizes the components of Other current liabilities :

(in millions) 2023 2022

Compensation and employee benefits $ 1,201 $ 1,018

Income taxes payable 1,208 959

Allowance for sales returns 387 422

Other 2,334 2,182

Other current liabilities $ 5,130 $ 4,580

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in Accumulated other comprehensive income (loss) by component, net of tax:

(in millions) Foreign Currency Translation Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax Total

Balance as of December 31, 2020 $ 51 $ 2 $ ( 113 ) $ ( 60 )

Net unrealized (loss) gain ( 38 ) ( 6 ) 129 85

Reclassifications to net income — — 58 58

Other comprehensive (loss) income, net ( 38 ) ( 6 ) 187 143

Balance as of December 31, 2021 $ 13 $ ( 4 ) $ 74 $ 83

Net unrealized (loss) gain $ ( 11 ) $ ( 30 ) $ 130 $ 88

Reclassifications to net income — 1 ( 171 ) ( 170 )

Other comprehensive loss, net ( 11 ) ( 29 ) ( 41 ) ( 81 )

Balance as of December 31, 2022 $ 2 $ ( 33 ) $ 33 $ 2

Net unrealized gain (loss) $ 60 $ 26 $ ( 12 ) $ 75

Reclassifications to net income — 2 ( 51 ) ( 49 )

Other comprehensive income (loss), net 60 28 ( 62 ) 26

Balance as of December 31, 2023 $ 62 $ ( 5 ) $ ( 29 ) $ 28

Restructuring

During 2023, we incurred restructuring charges totaling $ 527 million primarily due to changes in our manufacturing strategy which included a decision to no longer utilize certain facilities.

As a result of this decision, we determined that the related assets were fully impaired based on the difference between fair value and the carrying amount.

The total charges consisted of write-offs of manufacturing assets of $ 381 million, write-offs of inventory of $ 89 million and other costs of $ 57 million.

As a result, we recorded a $ 479 million charge to Cost of goods sold, a $ 20 million charge to Research and development expenses and a $ 28 million charge to Selling, general and administrative expenses on our Consolidated Statements of Income.

DEBT AND CREDIT FACILITIES

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Type of Borrowing Issue Date Maturity Date Interest Rate December 31, 2023 December 31, 2022

Senior Unsecured September 2016 March 2022 1.95 % $ — $ 500

Senior Unsecured September 2016 September 2023 2.50 % $ — $ 749

Senior Unsecured September 2020 September 2023 0.75 % — 1,498

Senior Unsecured September 2020 September 2023 0.75 % 1,498 1,496

Senior Unsecured March 2014 April 2024 3.70 % 1,750 1,748

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Senior Unsecured September 2020 October 2030 1.65 % 994 993

Senior Unsecured September 2023 October 2033 5.25 % 992 —

Senior Unsecured September 2015 September 2035 4.60 % 993 993

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Senior Unsecured September 2020 October 2050 2.80 % 1,478 1,477

Senior Unsecured September 2023 October 2053 5.55 % 988 —

Total senior unsecured notes 23,834 24,088

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Senior Unsecured Notes

In February 2022, we repaid $ 500 million of senior unsecured notes prior to the March 2022 maturity by exercising a par call option.

Additionally, in July 2022, we repaid $ 1.0 billion of senior unsecured notes prior to the September 2022 maturity by exercising a par call option.

No new debt was issued in 2022.

Our senior unsecured fixed rate notes may be redeemed at our option at a redemption price equal to the greater of (i) 100 % of the principal amount of the notes to be redeemed and (ii) the sum, as determined by an independent investment banker, of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis at the Treasury Rate, plus a make-whole premium, which are defined in the terms of the notes.

The senior unsecured fixed rate notes also have a par call feature, exercisable at our option, to redeem the notes at par in whole, or in part, on dates ranging from two to six months prior to maturity.

In September 2023, we issued $ 2.0 billion aggregate principal amount of senior unsecured notes in a registered offering consisting of $ 1.0 billion principal amount of 5.25 % senior unsecured notes due October 2033 and $ 1.0 billion principal amount of 5.55 % senior unsecured notes due October 2053.

Additionally, in September 2023, we repaid at maturity $ 2.25 billion of principal balance related to our senior unsecured notes due September 2023.

Our senior unsecured notes may be redeemed at our option at a redemption price equal to the greater of (i) 100 % of the principal amount of the notes to be redeemed and (ii) the sum, as determined by an independent investment banker, of the present values of the remaining scheduled payments of principal and interest on the notes to be redeemed (exclusive of interest accrued to the date of redemption) discounted to the redemption date on a semiannual basis at the Treasury Rate, plus a make-whole premium, which are defined in the terms of the notes.

The senior unsecured notes also have a par call feature, exercisable at our option, to redeem the notes at par in whole, or in part, on dates ranging from two to six months prior to maturity.

In each case, accrued and unpaid interest is also required to be redeemed to the date of redemption.

The $ 1.5 billion of 0.75 % senior unsecured notes due September 2023 also have a different call feature, exercisable at our option, to redeem the notes at par, in whole or in part, at any time until maturity.

In the event of a change in control and a downgrade in the rating of our senior unsecured notes below investment grade by Moody’s Investors Service, Inc.

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The impact from changes in estimates will be recognized in the liability and the related interest expense prospectively.

The liability related to future royalties was primarily included in Long-term debt, net on our Consolidated Balance Sheets.

Revolving Credit Facilities

In June 2020, we entered into a new $ 2.5 billion five-year revolving credit facility maturing in June 2025 (the “2020 Revolving Credit Facility”).

In June 2020, we entered into a $ 2.5 billion five-year revolving credit facility maturing in June 2025 (the “2020 Revolving Credit Facility”).

The 2020 Revolving Credit Facility can be used for working capital requirements and for general corporate purposes, including, without limitation, acquisitions.

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As of December 31, 2023, we were in compliance with all covenants.

Loans under the 2020 Revolving Credit Facility bear interest at either (i) the Term Secured Overnight Financing Rate (“SOFR”) plus the Applicable Percentage, or (ii) the Base Rate plus the Applicable Percentage, each as defined in the 2020 Revolving Credit Facility agreement.

Loans under the 2020 Revolving Credit Facility bear interest at either (i) the Term SOFR plus the Applicable Percentage, or (ii) the Base Rate plus the Applicable Percentage, each as defined in the 2020 Revolving Credit Facility agreement.

We may terminate or reduce the commitments, and may prepay any loans under the credit facility in whole or in part at any time without premium or penalty.

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Total $ 24,000

Interest Expense

Interest expense on our debt and credit facilities related to the contractual coupon rates and amortization of the debt discount and issuance costs was $ 940 million in 2022 and $ 1.0 billion in 2021 and 2020.

Our operating leases consist primarily of properties and equipment for our administrative, manufacturing and R&D activities.

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As of December 31, 2023 and 2022, we did not have material finance leases.

Operating lease expense, including variable costs and short-term leases, was $ 162 million, $ 156 million and $ 171 million in 2022, 2021 and 2020, respectively.

Operating lease expense, including variable costs and short-term leases, was $ 165 million, $ 162 million and $ 156 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The following table summarizes balance sheet and other information related to our operating leases:

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Lease liabilities – current

Other accrued liabilities $ 111 $ 101

Other current liabilities $ 125 $ 111

Lease liabilities – noncurrent

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Right-of-use assets obtained in exchange for lease liabilities (1)

_______________________________

(1) These represent noncash activities and were therefore not included on our Consolidated Statements of Cash Flows.

The following table summarizes a maturity analysis of our operating lease liabilities showing the aggregate lease payments as of December 31, 2023:

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Unless otherwise noted, the outcome of these matters either is not expected to be material or is not possible to determine such that we cannot reasonably estimate the maximum potential exposure or the range of possible loss.

We did no t have any material accruals for the matters described below as of December 31, 2022.

As of December 31, 2021, we recorded an accrual of $ 1.25 billion in Accrued and other current liabilities on our Consolidated Balance Sheets for the previously disclosed legal settlement related to the bictegravir litigation, which we paid in February 2022.

Litigation Related to Sofosbuvir

In 2012, we acquired Pharmasset, Inc.

Through the acquisition, we acquired sofosbuvir, a nucleotide analog that acts to inhibit the replication of HCV.

In 2013, we received approval from FDA for sofosbuvir, sold under the brand name Sovaldi.

Sofosbuvir is also included in all of our marketed HCV products.

We have received a number of litigation claims regarding sofosbuvir.

While we have carefully considered these claims both prior to and following the acquisition and believe they are without merit, we cannot predict the ultimate outcome of such claims or range of loss.

We are aware of patents and patent applications owned by third parties that have been or may in the future be alleged by such parties to cover the use of our HCV products.

If third parties obtain valid and enforceable patents, and successfully prove infringement of those patents by our HCV products, we could be required to pay significant monetary damages.

We cannot predict the ultimate outcome of intellectual property claims related to our HCV products.

We have spent, and will continue to spend, significant resources defending against these claims.

Litigation with the University of Minnesota

The University of Minnesota (the “University”) has obtained U.S.

8,815,830 (the “’830 patent”), which purports to broadly cover nucleosides with antiviral and anticancer activity.

In 2016, the University filed a lawsuit against us in the U.S.

District Court for the District of Minnesota, alleging that the commercialization of sofosbuvir-containing products infringes the ’830 patent.

We believe the ’830 patent is invalid and will not be infringed by the continued commercialization of sofosbuvir.

In 2017, the court granted our motion to transfer the case to California.

We have also filed petitions for inter partes review with the U.S.

Patent and Trademark Office Patent Trial and Appeal Board (“PTAB”) alleging that all asserted claims are invalid for anticipation and obviousness.

The PTAB instituted one of these petitions and a merits hearing was held in February 2021.

In 2018, the U.S.

District Court for the Northern District of California stayed the litigation until after the PTAB concluded the inter partes review that it had initiated.

In May 2021, the PTAB issued a written decision finding the asserted claims of the University’s patent invalid.

In July 2021, the University appealed this decision, and oral arguments before the Court of Appeals for the Federal Circuit were held in January 2023.

The litigation in the U.S.

District Court will remain stayed through the appeal proceedings.

Litigation with NuCana plc.

NuCana has obtained European Patent No.

2,955,190 (the “EP ’190 patent”) that allegedly covers sofosbuvir.

In opposition proceedings before the European Patent Office (“EPO”) held in February 2021, the EPO Opposition Division upheld the validity of the EP ’190 patent in amended form.

The EPO has now scheduled the appeal hearing for March 2023.

We continue to believe that the amended EP ’190 patent claims are invalid.

Subsequent to the EPO opposition decision, we initiated proceedings to invalidate the U.K.

counterparts of the EP ’190 patent and a related patent, European Patent No.

3,904,365 (the EP ‘365 patent) in the High Court of England & Wales.

NuCana has also filed counterclaims against us in the High Court of England & Wales alleging patent infringement of the U.K.

counterparts and seeking damages and other relief.

case was heard in January and early February 2023.

In April 2021, NuCana also filed a lawsuit against us in Germany at the Landgericht Düsseldorf alleging patent infringement of the German counterpart of the EP ’190 patent and seeking damages and injunctive relief.

In April 2022, we filed an action for grant of a compulsory license before the Federal Patent Court in Germany.

In July 2022, the Düsseldorf court determined that NuCana’s German counterpart of the EP ’190 patent is infringed and granted an injunction.

In August 2022, Gilead filed a notice of appeal regarding the Düsseldorf court’s decision, and a hearing is scheduled for August 2023.

Litigation Related to Axicabtagene Ciloleucel

In October 2017, Juno Therapeutics, Inc.

and Sloan Kettering Cancer Center (collectively, “Juno”) filed a lawsuit against us in the U.S.

District Court for the Central District of California, alleging that the commercialization of axicabtagene ciloleucel, sold commercially as Yescarta, infringes U.S.

7,446,190 (the “’190 patent”).

A jury trial was held on the ’190 patent, and in December 2019, the jury found that the asserted claims of the ’190 patent were valid, and that we willfully infringed the asserted claims of the ’190 patent.

The jury also awarded Juno damages in amounts of $ 585 million in an upfront payment and a 27.6 % running royalty from October 2017 through the date of the jury’s verdict.

The parties filed post-trial motions in the first quarter of 2020, and the trial judge entered a judgment in April 2020.

The trial judge affirmed the jury’s verdict, enhanced the past damages by 50 % and maintained the royalties on future Yescarta sales at 27.6 %.

In April 2020, we filed an appeal seeking to reverse the judgment or obtain a new trial due to errors made by the trial judge, and in July 2021, the appeals court heard oral arguments.

In August 2021, the Court of Appeals for the Federal Circuit (the “CAFC”) reversed the jury verdict, finding the asserted claims of Juno’s patent invalid.

In October 2021, Juno filed a petition for rehearing with the CAFC.

In January 2022, the CAFC denied Juno’s petition for rehearing.

In June 2022, Juno filed a petition for certiorari seeking a review by the Supreme Court.

The Supreme Court rejected Juno’s petition in January 2023, making the CAFC judgment final.

We recorded an expense of $ 525 million in 2023 in Selling, general and administrative expenses on our Consolidated Statements of Income for settlements with certain plaintiffs in the HIV antitrust litigation, which we paid in the second half of 2023.

We did no t have any material accruals for the matters described below as of December 31, 2023 and December 31, 2022.

Litigation Relating to Pre-Exposure Prophylaxis

In August 2019, we filed petitions requesting inter partes review of U.S.

9,044,509, 9,579,333, 9,937,191 and 10,335,423 (collectively, “HHS Patents”) by PTAB.

9,044,509, 9,579,333, 9,937,191 and 10,335,423 (collectively, “HHS Patents”) by the Patent Trial and Appeal Board (“PTAB”).

The HHS Patents are assigned to the U.S.

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In February 2020, PTAB declined to institute our petitions for inter partes review of the HHS Patents.

In April 2020, we filed a breach of contract lawsuit against the U.S.

In April 2020, we filed a lawsuit against the U.S.

federal government in the U.S.

Court of Federal Claims, alleging violations of three material transfer agreements (“MTAs”) related to the research underlying the HHS Patents and two clinical trial agreements (“CTAs”) by the U.S.

Court of Federal Claims (“CFC”), alleging breach of three material transfer agreements (“MTAs”) related to the research underlying the HHS Patents and two clinical trial agreements (“CTAs”) by the U.S.

Centers for Disease Control and Prevention related to PrEP research.

A trial for the bifurcated portion of the lawsuit in the CFC was held in June 2022, and in November 2022, the CFC determined that the government breached the MTAs.

In January 2024, the CFC found the government liable for breach of both CTAs.

In May 2023, the District Court held a trial regarding the government’s patent infringement claims, and the jury rendered a full defense verdict in favor of Gilead, finding that the asserted claims of the HHS Patents are invalid and the HHS patents are not infringed.

The government has filed post-trial motions, and we expect the District Court to issue a decision on those motions during the first quarter of 2024.

Although we cannot predict with certainty the ultimate outcome of each of these litigation matters, we believe that the U.S.

federal government breached the MTAs and CTA, that Truvada and Descovy do not infringe the HHS Patents and that the HHS Patents are invalid over prior art descriptions of Truvada’s use for PrEP and post-exposure prophylaxis as well because physicians and patients were using the claimed methods years before HHS filed the applications for the patents.

A trial for the bifurcated portion of the lawsuit in the Court of Federal Claims was held in June 2022, and in November 2022, the Court determined that the government breached the three MTAs.

The Court also made findings of fact relating to the CTAs but declined to issue a decision on breach of the CTAs until after trial in the Delaware District Court.

A trial date for the lawsuit in the Delaware District Court has been set for May 2023.

A separate trial at the Court of Federal Claims to determine the damages Gilead is owed based on the government’s breach has yet to be set.

federal government breached its contracts with Gilead, that Truvada and Descovy do not infringe the HHS Patents and that the HHS Patents are invalid over prior art descriptions of Truvada’s use for PrEP and post-exposure prophylaxis because physicians and patients were using the claimed methods years before HHS filed the applications for the patents.

A separate trial at the CFC to determine the damages Gilead is owed based on the government’s breach has yet to be scheduled.

Litigation with Generic Manufacturers

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(“Lupin”) indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of Symtuza, a product commercialized by Janssen and for which Gilead shares in revenues.

In November 2021, we, along with Janssen Products, L.P.

and Janssen (“Janssen”), filed a patent infringement lawsuit against Lupin as co-plaintiffs in the U.S.

In November 2021, we, along with Janssen and Janssen Products, L.P., filed a patent infringement lawsuit against Lupin as co-plaintiffs in the U.S.

District Court of Delaware.

We separately filed an additional lawsuit against Lupin asserting infringement of two additional patents in the same court.

This second case has been stayed.

Trial has been scheduled for October 2023.

In September 2022, we received a letter from Apotex Inc.

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(“Apotex”) stating that they have submitted an ANDA for a generic version of Symtuza.

In October 2022, we, along with Janssen, filed a patent infringement lawsuit against Apotex as co-plaintiffs in the U.S.

In October 2022, we, along with Janssen and Janssen Products, L.P., filed a patent infringement lawsuit against Apotex as co-plaintiffs in the U.S.

District Court of Delaware.

We separately filed an additional lawsuit against Apotex asserting infringement of two additional patents in the same court.

The cases against Lupin and Apotex have been consolidated into a single trial scheduled for May 2024.

Starting in March 2022, we received letters from Lupin, Laurus Labs (“Laurus”) and Cipla Ltd.

(“Cipla”), indicating that they have submitted ANDAs to FDA requesting permission to market and manufacture generic versions of Biktarvy.

Lupin, Laurus, and Cipla have challenged the validity of three of the five patents listed in the Orange Book as associated with Biktarvy.

(“Cipla”), indicating that they have submitted ANDAs to FDA requesting permission to market and manufacture generic versions of the adult dosage strength of Biktarvy.

Lupin, Laurus, and Cipla have challenged the validity of four of the six patents listed in the Orange Book as associated with Biktarvy.

We filed a lawsuit against Lupin, Laurus and Cipla in May 2022 in the U.S.

District Court of Delaware, and intend to enforce and defend our intellectual property.

Trial has been scheduled for December 2024.

European Patent Claims

In 2015, several parties filed oppositions in the EPO requesting revocation of one of our granted European patents covering sofosbuvir that expires in 2028.

In 2016, the EPO upheld the validity of certain claims of our sofosbuvir patent.

We have appealed this decision, seeking to restore all of the original claims, and several of the original opposing parties have also appealed, requesting full revocation.

The appeal hearing was held in November 2022, but a final decision regarding the validity of the claims has not yet been announced.

In 2017, several parties filed oppositions in the EPO requesting revocation of our granted European patent relating to sofosbuvir that expires in 2024.

The EPO conducted an oral hearing for this opposition in 2018 and upheld the claims.

The original opposing parties have appealed, requesting full revocation.

The hearing for the appeal has been scheduled for September 2023.

In 2017, several parties filed oppositions in the EPO requesting revocation of our granted European patent relating to TAF hemifumarate that expires in 2032.

In 2019, the EPO upheld the validity of the claims of our TAF hemifumarate patent.

Three parties have appealed this decision.

The hearing for the appeal has been scheduled for March 2023.

The appeal process may take several years for all EPO opposition proceedings.

While we are confident in the strength of our patents, we cannot predict the ultimate outcome of these oppositions.

If we are unsuccessful in defending these oppositions, some or all of our patent claims may be narrowed or revoked and the patent protection for sofosbuvir and TAF hemifumarate in the EU could be substantially shortened or eliminated entirely.

If our patents are revoked, and no other European patents are granted covering these compounds, our exclusivity may be based entirely on regulatory exclusivity granted by EMA.

If we lose patent protection for any of these compounds, our revenues and results of operations could be negatively impacted for the years including and succeeding the year in which such exclusivity is lost.

Trial has been scheduled for October 2025.

Additionally, in November 2023, we received a letter from Cipla indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of the pediatric dosage strength of Biktarvy.

Cipla challenged the validity of two of the patents listed in the Orange Book as associated with Biktarvy.

We filed a separate lawsuit against Cipla in December 2023 in the U.S.

District Court of Delaware.

In June 2023, we received a letter from Apotex indicating that it has submitted an ANDA to FDA requesting permission to market and manufacture a generic version of Genvoya.

In July 2023, we filed a patent infringement lawsuit against Apotex in the U.S.

District Court of Delaware, and intend to enforce and defend our intellectual property.

This case has been consolidated with the Symtuza matters discussed above, and a trial has been scheduled for June 2024.

Antitrust and Consumer Protection

We, along with Bristol-Myers Squibb Company (“BMS”) and Johnson & Johnson, Inc., have been named as defendants in class action lawsuits filed in 2019 and 2020 related to various drugs used to treat HIV, including drugs used in combination antiretroviral therapy.

We, along with Bristol-Myers Squibb Company (“BMS”), Johnson & Johnson, Inc.

(“Johnson & Johnson”), and Teva Pharmaceutical Industries Ltd.

(“Teva”) have been named as defendants in class action lawsuits filed in 2019 and 2020 related to various drugs used to treat HIV, including drugs used in combination antiretroviral therapy.

Plaintiffs allege that we (and the other defendants) engaged in various conduct to restrain competition in violation of federal and state antitrust laws and state consumer protection laws.

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Plaintiffs seek damages, permanent injunctive relief and other relief.

In the second half of 2021 and first half of 2022, several plaintiffs filed separate lawsuits effectively opting out of the class action cases, asserting claims that are substantively the same as the putative classes.

In the second half of 2021 and first half of 2022, several plaintiffs consisting of retail pharmacies, individual health plans and United Healthcare, filed separate lawsuits effectively opting out of the class action cases, asserting claims that are substantively the same as the classes.

These cases have been coordinated with the class actions.

Trial has been set for May 2023.

In March 2023, the District Court granted our motion to hold separate trials as to (i) the allegations against us and Teva seeking monetary damages relating to Truvada and Atripla (“Phase I”) and (ii) the allegations against us and, in part, Johnson & Johnson, seeking monetary damages and injunctive relief relating to Complera (“Phase II”).

In May 2023, we settled claims with the direct purchaser class and the retailer opt-out plaintiffs for $ 525 million, which we paid in the second half of 2023.

The settlement agreements are not an admission of liability or fault by us, and are subject to a number of other conditions including, with respect to the preliminary settlement agreement between us and the direct purchaser class, court approval.

In June 2023, the jury returned a complete verdict in Gilead’s favor on the remaining plaintiffs’ Phase I allegations.

In November 2023, the court denied plaintiffs’ motion to set aside the verdict.

Plaintiffs have indicated they intend to appeal the jury verdict.

Trial on the Phase II claims has not yet been scheduled.

Plaintiffs and the Phase I defendants have requested that the court stay Phase II pending any appeal of Phase I.

While we intend to vigorously defend against the Phase II claims, we cannot predict the ultimate outcome.

If plaintiffs are successful in their Phase II claims, we could be required to pay monetary damages or could be subject to permanent injunctive relief in favor of plaintiffs.

In January 2022, we, along with BMS and Janssen Products, L.P., were named as defendants in a lawsuit filed in the Superior Court of the State of California, County of San Mateo, by Aetna, Inc.

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The Aetna plaintiffs seek damages, permanent injunctive relief and other relief.

In September 2023, we filed a motion for judgment on the pleadings to preclude Aetna from re-litigating claims that were dismissed at summary judgment in the above class action cases.

The motion remains pending.

In September 2020, we, along with generic manufacturers Cipla and Cipla USA Inc.

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Jacksonville Trust claims that the 2014 settlement agreement between us and the Cipla Defendants, which settled a patent dispute relating to patents covering our Emtriva, Truvada and Atripla products and permitted generic entry prior to patent expiry, violates certain federal and state antitrust and consumer protection laws.

The Plaintiff seeks damages, permanent injunctive relief and other relief.

In February 2021, we, along with BMS and Teva Pharmaceutical Industries Ltd., were named as defendants in a lawsuit filed in the First Judicial District Court for the State of New Mexico, County of Santa Fe by the New Mexico Attorney General.

Plaintiffs sought damages, permanent injunctive relief and other relief.

In January 2024, we settled plaintiffs’ claim for a de minimis fee.

In February 2021, we, along with BMS and Teva, were named as defendants in a lawsuit filed in the First Judicial District Court for the State of New Mexico, County of Santa Fe by the New Mexico Attorney General.

The New Mexico Attorney General alleges that we (and the other defendants) restrained competition in violation of New Mexico antitrust and consumer protection laws.

The New Mexico Attorney General seeks damages, permanent injunctive relief and other relief.

While we believe these cases are without merit, we cannot predict the ultimate outcome.

If plaintiffs are successful in their claims, we could be required to pay significant monetary damages or could be subject to permanent injunctive relief awarded in favor of plaintiffs.

We moved to dismiss the case based on lack of personal jurisdiction and, in July 2023, the New Mexico Supreme Court remanded the case back to the trial court for limited jurisdictional discovery.

We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcome.

If plaintiffs are successful in their claims, we could be required to pay significant monetary damages or could be subject to permanent injunctive relief awarded in favor of plaintiffs, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Product Liability

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Plaintiffs allege that Viread, Truvada, Atripla, Complera and/or Stribild caused them to experience kidney, bone and/or tooth injuries.

The lawsuits, which are pending in state or federal court in California, Delaware, Florida, Missouri and New York, involve more than 26,000 plaintiffs.

The lawsuits, which are pending in state or federal court in California and Missouri, involve more than 25,000 active plaintiffs.

Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss.

The first bellwether trial in California state court was scheduled to begin in October 2022, but is currently stayed while the California First District Court of Appeal considers the merits of plaintiffs’ theories of liability.

The first bellwether trial in California federal court is scheduled to begin in January 2024.

We intend to vigorously defend ourselves in these actions.

While we believe these cases are without merit, we cannot predict the ultimate outcome.

If plaintiffs are successful in their claims, we could be required to pay significant monetary damages.

The first bellwether trial in California state court was scheduled to begin in October 2022, but is currently stayed pending the conclusion of appellate proceedings in the California First District Court of Appeal and California Supreme Court.

The first bellwether trial in California federal court is scheduled to begin in November 2024.

We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcome.

If plaintiffs are successful in their claims, we could be required to pay significant monetary damages, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Government Investigation

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The lawsuit alleges that certain of Gilead’s HCV sales and marketing activities violated the federal False Claims Act and various state false claims acts.

The relator seeks all available relief under these statutes.

The lawsuit seeks all available relief under these statutes.

Health Choice Advocates, LLC (“Health Choice”) filed a qui tam lawsuit against Gilead in April 2020 in New Jersey state court.

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Health Choice filed another qui tam lawsuit against Gilead in May 2020 making similar allegations in Texas state court.

Following the Texas Attorney General’s Office’s decision not to intervene in the suit, Health Choice served us with their original complaint in October 2020.

The lawsuit alleges that Gilead violated the Texas Medicare Fraud Prevention Act (“TMFPA”) through our clinical educator programs for Sovaldi and Harvoni and our HCV and HIV patient access programs.

The lawsuit seeks all available relief under the TMFPA.

In September 2021, the Texas Court of Appeals for the Sixth Court Appeals District granted our request to stay the Texas litigation pending final judgment in the Eastern District of Pennsylvania lawsuit filed in March 2017, as discussed above.

We intend to vigorously defend ourselves in these actions.

While we believe these cases are without merit, we cannot predict the ultimate outcomes.

If any of these plaintiffs are successful in their claims, we could be required to pay significant monetary damages.

Securities Litigation

Immunomedics and several of its former officers and directors have been named as defendants in putative class actions filed in 2018 and 2019, which were consolidated in September 2019.

Plaintiffs filed a consolidated complaint in November 2019 and an amended complaint in July 2021.

Plaintiffs allege that Immunomedics and the individual defendants violated the federal securities laws in connection with Immunomedics’ Biologics License Application for Trodelvy, and seek certification of a class of shareholders, damages and other relief.

The consolidated lawsuit is pending in the U.S.

District Court for the District of New Jersey.

In June 2022, plaintiffs filed their Motion for Class Certification, and Immunomedics submitted its Opposition in July 2022.

The parties have agreed to settle this litigation.

A motion seeking preliminary approval of the settlement was granted in February 2023.

The court has not yet entered a final order approving the settlement.

The lawsuit alleged that Gilead violated the Texas Medicare Fraud Prevention Act (“TMFPA”) through our clinical educator programs for Sovaldi and Harvoni and our HCV and HIV patient access programs.

The lawsuit sought all available relief under the TMFPA.

Health Choice voluntarily dismissed the case without prejudice in August 2023, and commenced a new action in October 2023, asserting largely identical allegations and claims.

In the newly filed action, the Texas Attorney General has intervened as a plaintiff.

We intend to vigorously defend ourselves in these actions, however, we cannot predict the ultimate outcomes.

If any of these plaintiffs are successful in their claims, we could be required to pay significant monetary damages, which may result in a material, adverse effect on our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable.

Other Matters

We are a party to various legal actions that arose in the ordinary course of our business.

We do not believe that these other legal actions will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

STOCKHOLDERS’ EQUITY

Stock Repurchase Programs

In the first quarter of 2020, our Board of Directors authorized a $ 5.0 billion stock repurchase program (“2020 Program”).

Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions.

The $ 12.0 billion stock repurchase program authorized by our Board of Directors in the first quarter of 2016 was completed in the fourth quarter of 2022.

We started repurchases under the 2020 Program in December 2022.

As of December 31, 2022, the remaining authorized repurchase amount under the 2020 Program was $ 4.9 billion.

The following table summarizes our stock repurchases through open market transactions under these programs:

Year Ended December 31,

(in millions, except per share amounts) 2022 2021 2020

Shares repurchased and retired 19 8 22

Amount $ 1,396 $ 546 $ 1,583

Average price per share $ 73.77 $ 66.58 $ 70.64

In addition to repurchases from the stock repurchase programs, we repurchased shares of common stock withheld by us from employee restricted stock awards to satisfy our applicable tax withholding obligations.

These shares are excluded from the table above.

We use the par value method of accounting for our stock repurchases.

Under the par value method, common stock is first charged with the par value of the shares involved.

The excess of the cost of shares acquired over the par value is allocated to Additional paid-in capital based on an estimated average sales price per issued share with the excess amounts charged to Retained earnings.

The following table summarizes cash dividends declared on our common stock:

(in millions, except per share amounts) Dividend Per Share Amount Dividend Per Share Amount

First quarter $ 0.73 $ 932 $ 0.71 $ 906

Second quarter 0.73 932 0.71 903

Third quarter 0.73 933 0.71 905

Fourth quarter 0.73 928 0.71 904

Total $ 2.92 $ 3,725 $ 2.84 $ 3,618

Our RSUs and PSUs have dividend equivalent rights entitling holders to dividend equivalents to be paid upon vesting for each share of the underlying unit.

On February 2, 2023, we announced that our Board of Directors declared a quarterly cash dividend increase of 2.7 % from $ 0.73 to $ 0.75 per share of our common stock, with a payment date of March 30, 2023 to all stockholders of record as of the close of business on March 15, 2023.

Future dividends are subject to declaration by our Board of Directors.

Preferred Stock

We have 5 million shares of authorized preferred stock issuable in series.

Our Board is authorized to determine the designation, powers, preferences and rights of any such series.

There was no preferred stock outstanding as of December 31, 2022 and 2021.

Accumulated Other Comprehensive Income

The following table summarizes the changes in Accumulated other comprehensive income by component, net of tax:

(in millions) Foreign Currency Translation Unrealized Gains and Losses on Available-for-Sale Debt Securities, Net of Tax Unrealized Gains and Losses on Cash Flow Hedges, Net of Tax Total

Balance as of December 31, 2019 $ 53 $ 1 $ 31 $ 85

Net unrealized gain (loss) ( 2 ) 43 ( 103 ) ( 62 )

Reclassifications to net income — ( 42 ) ( 41 ) ( 83 )

Net current period other comprehensive income (loss) ( 2 ) 1 ( 144 ) ( 145 )

Balance as of December 31, 2020 $ 51 $ 2 $ ( 113 ) $ ( 60 )

Net unrealized gain (loss) ( 38 ) ( 6 ) 129 85

Reclassifications to net income — — 58 58

Net current period other comprehensive income (loss) ( 38 ) ( 6 ) 187 143

Balance as of December 31, 2021 $ 13 $ ( 4 ) $ 74 $ 83

Net unrealized gain (loss) $ ( 11 ) $ ( 30 ) $ 130 $ 88

Reclassifications to net income — 1 ( 171 ) ( 170 )

Net current period other comprehensive income (loss) ( 11 ) ( 29 ) ( 41 ) ( 81 )

Balance as of December 31, 2022 $ 2 $ ( 33 ) $ 33 $ 2

We do not believe that it is probable or reasonably possible that these other legal actions will have a material adverse impact on our consolidated financial position, results of operations or cash flows.

EMPLOYEE BENEFITS

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2004 Equity Incentive Plan (as amended, the “2004 Plan”).

As part of our acquisition of Forty Seven in 2020, we assumed the Forty Seven, Inc.

As part of the Forty Seven, Inc.

acquisition in 2020, we assumed the Forty Seven, Inc.

2018 Equity Incentive Plan, which we subsequently amended and restated as the Gilead Sciences, Inc.

2018 Equity Incentive Plan (as amended and restated, the “2018 Plan”).

As part of the Immunomedics acquisition, we assumed the Immunomedics Amended and Restated 2014 Long-Term Incentive Plan, which we subsequently merged into the 2004 Plan.

As part of the Immunomedics acquisition in 2020, we assumed the Immunomedics Amended and Restated 2014 Long-Term Incentive Plan, which we subsequently merged into the 2004 Plan.

In May 2022, our stockholders approved and we adopted the Gilead Sciences, Inc.

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RSUs generally vest over three or four years from the date of grant.

RSUs have dividend equivalent rights entitling holders to dividend equivalents to be paid upon vesting for each share of the underlying unit.

We grant PSUs that vest upon the achievement of specified market or performance goals, which could include achieving a total shareholder return compared to a pre-determined peer group or achieving revenue targets.

The actual number of common shares ultimately issued is calculated by multiplying the number of PSUs by a payout percentage ranging from 0 % to 200 %, and these awards generally vest only when a committee (or subcommittee) of our Board has determined that the specified market and performance goals have been achieved.

PSUs have dividend equivalent rights entitling holders to dividend equivalents to be paid upon vesting for each share of the underlying unit.

Stock Options

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Stock-Based Compensation Expense

The following tables summarize total stock-based compensation expense included on our Consolidated Statements of Income as broken down by award type and by expense type:

The following tables summarize total stock-based compensation expense included on our Consolidated Statements of Income, classified by award type and expense type:

Year Ended December 31,

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________________________________

(1) Accelerated post-acquisition stock-based compensation expense of $ 8 million related to the MiroBio acquisition in 2022, and $ 289 million and $ 144 million related to the acquisitions of Immunomedics and Forty Seven, respectively, in 2020.

(1) Accelerated post-acquisition stock-based compensation expenses of $ 19 million and $ 10 million related to the 2023 XinThera and Tmunity acquisitions, respectively, and $ 8 million related to the 2022 MiroBio acquisition.

Year Ended December 31,

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$ 849 $ 554 $ 463

As of December 31, 2022, there was $ 948 million of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of 2.3 years.

As of December 31, 2023, there was $ 1 billion of unrecognized compensation cost related to unvested RSUs, which is expected to be recognized over a weighted-average period of 2.2 years.

The following tables summarize our PSU activity:

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Granted 2.1 $ 79.53

Exercised ( 1.5 ) $ 64.72

Forfeited ( 0.5 ) $ 66.91

Expired ( 0.2 ) $ 92.76

Exercised ( 3.5 ) $ 61.11

Outstanding as of December 31, 2023 14.3 $ 69.38 6.10 $ 177

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Year Ended December 31,

(in millions) 2022 2021 2020

2023 2022 2021

Expected volatility 26 % 27 % 29 %

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In certain foreign subsidiaries, we maintain defined benefit plans as required by local regulatory requirements.

Our total matching contribution expense under the Gilead Sciences 401k Plan and other defined benefit plans was $ 176 million, $ 166 million and $ 144 million during 2022, 2021 and 2020, respectively.

Our total matching contribution expense under the Gilead Sciences 401k Plan and other defined benefit plans was $ 208 million, $ 176 million and $ 166 million for the years ended December 31, 2023, 2022 and 2021, respectively.

We maintain a deferred compensation plan under which our directors and key employees may defer compensation.

Amounts deferred by participants are deposited into a rabbi trust.

The total assets and liabilities associated with the deferred compensation plan were $ 220 million and $ 261 million as of December 31, 2022 and 2021, respectively.

The total assets and liabilities associated with the deferred compensation plan were both approximately $ 284 million and $ 220 million as of December 31, 2023 and 2022, respectively .

EARNINGS PER SHARE

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Diluted earnings per share attributable to Gilead 4.50 3.64 4.93

Potential shares of common stock excluded from the computation of Diluted earnings per share attributable to Gilead because their effect would have been antidilutive were 12 million, 15 million and 13 million during 2022, 2021 and 2020, respectively.

Potential shares of common stock excluded from the computation of Diluted earnings per share attributable to Gilead because their effect would have been antidilutive were 4 million, 12 million and 15 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Income before income taxes consists of the following:

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Foreign-derived intangible income deduction ( 2.1 ) % ( 3.8 ) % ( 1.6 ) %

Settlement of tax examinations ( 0.2 ) % ( 0.7 ) % ( 10.2 ) %

Tax examinations ( 4.7 ) % ( 0.2 ) % ( 0.7 ) %

Acquired IPR&D & related charges 1.3 % 1.4 % — %

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Equity investments 221 196

Liability related to sale of future royalties 278 274

Liability related to future royalties 296 278

Capitalized R&D expenditures 1,623 784

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Net deferred tax assets (liabilities) $ ( 392 ) $ ( 1,432 )

The valuation allowance increased from $ 520 million as of December 31, 2021 to $ 599 million as of December 31, 2022, primarily due to unrealized losses on our equity investments which are subject to a full valuation allowance, and increased from $ 398 million as of December 31, 2020 to $ 520 million as of December 31, 2021, primarily due to California research and development tax credits.

The valuation allowance increased by $ 64 million and $ 79 million for the years ended December 31, 2023 and December 31, 2022, respectively, primarily due to unrealized losses on our equity investments which are subject to a full valuation allowance.

As of December 31, 2023, we had U.S.

federal net operating loss and tax credit carryforwards of approximately $ 199 million and $ 7 million, respectively, which will start to expire in 2023, if not utilized.

In addition, we had state net operating loss and tax credit carryforwards of approximately $ 2.7 billion and $ 879 million, respectively, which will start to expire in 2024 and 2023, respectively, if not utilized.

federal net operating loss and tax credit carryforwards of approximately $ 388 million and $ 12 million, respectively, which will start to expire in 2025 and 2024, respectively, if not utilized.

In addition, we had state net operating loss and tax credit carryforwards of approximately $ 2.7 billion and $ 1.0 billion, respectively, which will start to expire in 2024, if not utilized.

Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership change limitations provided in the Internal Revenue Code of 1986, as amended, and similar state provisions.

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Our income tax returns are subject to audit by federal, state and foreign tax authorities.

We are currently under examination by the Internal Revenue Service and Irish tax authorities for our 2016 to 2018 tax years.

We are currently under examination by the Internal Revenue Service for our 2016 to 2018 tax years.

There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions.

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Of the total unrecognized tax benefits, $ 929 million and $ 946 million as of December 31, 2023 and 2022, respectively, if recognized, would reduce our effective tax rate in the period of recognition.

Interest and penalties related to unrecognized tax benefits included income tax benefit of $ 3 million, income tax expense of $ 41 million and income tax benefit of $ 82 million on our Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020 respectively.

Interest and penalties related to unrecognized tax benefits included income tax benefit of $ 35 million, income tax benefit of $ 3 million, and income tax expense of $ 41 million on our Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021, respectively.

Accrued interest and penalties related to unrecognized tax benefits were $ 180 million and $ 215 million as of December 31, 2023 and 2022, respectively.

As of December 31, 2022, we do not believe that it is reasonably possible that our unrecognized tax benefits will significantly change in the next 12 months.

We believe that it is reasonably possible that our unrecognized tax benefits may further decrease by approximately $ 400 million in the next 12 months due to potential resolutions with a tax authority.

The following is a rollforward of our total gross unrecognized tax benefits:

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SUBSEQUENT EVENTS

In January 2023, we closed an agreement to enter into a global strategic collaboration with Arcellx, Inc.

(“Arcellx”) to co-develop and co-commercialize Arcellx’s lead late-stage product candidate, CART-ddBCMA, for the treatment of patients with relapsed or refractory multiple myeloma.

Under the terms of the agreement, Arcellx will receive an upfront cash payment of $ 225 million and $ 100 million equity investment as well as other potential contingent payments.

The companies will share development, clinical trial, and commercialization costs for CART-ddBCMA and will jointly commercialize the product and split U.S.

profits 50 / 50 .

Outside the U.S., we will commercialize the product and Arcellx will receive royalties on sales.

In February 2023, we closed an agreement to acquire Tmunity Therapeutics (“Tmunity”), a clinical-stage, private biotech company focused on next-generation CAR T-therapies and technologies.

Under the terms of the agreement, we acquired all outstanding shares of Tmunity other than those already owned by Gilead for approximately $ 300 million in cash consideration.

We have evaluated subsequent events and determined that, in addition to those already disclosed elsewhere in the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, the following events or transactions met the definition of a subsequent event for purposes of recognition or disclosure:

In February 2024, we announced that our Board of Directors declared a quarterly cash dividend increase of 2.7 % from $ 0.75 to $ 0.77 per share of our common stock, with a payment date of March 28, 2024 to all stockholders of record as of the close of business on March 15, 2024.

Future dividends are subject to declaration by our Board of Directors.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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/ s/ Ernst & Young LLP

San Jose, California

San Mateo, California

February 23, 2024

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-K

Item 8. Financial Statements and Supplementary Data