UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20212022
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to _______
Commission File Number 001-01136
___________________________
BRISTOL-MYERS SQUIBB COMPANY
(Exact name of registrant as specified in its charter)
___________________________
| | | | | | | | |
| Delaware | | 22-0790350 |
(State or other jurisdiction of
incorporation or organization) | | (I.R.S Employer Identification No.) |
430 E. 29th Street, 14FL, New York, NY 10016
(Address of principal executive offices) (Zip Code)
(212) 546-4000546-4200
(Registrant’s telephone number, including area code)
___________________________
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Common Stock, $0.10 Par Value | BMY | New York Stock Exchange |
| 1.000% Notes due 2025 | BMY25 | New York Stock Exchange |
| 1.750% Notes due 2035 | BMY35 | New York Stock Exchange |
| Celgene Contingent Value Rights | CELG RT | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to the filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Large accelerated filer ☒ | | Accelerated filer ☐ | | Non-accelerated filer ☐ | | Smaller reporting company ☐ | | Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
APPLICABLE ONLY TO CORPORATE ISSUERS:
At June 30, 2021,July 15, 2022, there were 2,222,113,5532,135,255,158 shares outstanding of the Registrant’s $0.10 par value common stock.
BRISTOL-MYERS SQUIBB COMPANY
INDEX TO FORM 10-Q
June 30, 20212022
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| PART I—FINANCIAL INFORMATION | |
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| PART II—OTHER INFORMATION | |
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* Indicates brand names of products which are trademarks not owned by BMS. Specific trademark ownership information is included in the Exhibit Index at the end of this Quarterly Report on Form 10-Q.
PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
Dollars in Millions, Except Per Share DataData(UNAUDITED)
(UNAUDITED)
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| EARNINGS | EARNINGS | 2021 | | 2020 | | 2021 | | 2020 | EARNINGS | 2022 | | 2021 | | 2022 | | 2021 |
| Net product sales | Net product sales | $ | 11,405 | | | $ | 9,817 | | | $ | 22,203 | | | $ | 20,358 | | Net product sales | $ | 11,485 | | | $ | 11,405 | | | $ | 22,793 | | | $ | 22,203 | |
| Alliance and other revenues | Alliance and other revenues | 298 | | | 312 | | | 573 | | | 552 | | Alliance and other revenues | 402 | | | 298 | | | 742 | | | 573 | |
| Total Revenues | Total Revenues | 11,703 | | | 10,129 | | | 22,776 | | | 20,910 | | Total Revenues | 11,887 | | | 11,703 | | | 23,535 | | | 22,776 | |
| Cost of products sold(a) | Cost of products sold(a) | 2,452 | | | 2,699 | | | 5,293 | | | 6,361 | | Cost of products sold(a) | 2,720 | | | 2,452 | | | 5,191 | | | 5,293 | |
| Marketing, selling and administrative | Marketing, selling and administrative | 1,882 | | | 1,628 | | | 3,548 | | | 3,234 | | Marketing, selling and administrative | 1,787 | | | 1,882 | | | 3,618 | | | 3,548 | |
| Research and development | Research and development | 3,271 | | | 2,522 | | | 5,496 | | | 4,894 | | Research and development | 2,321 | | | 2,478 | | | 4,581 | | | 4,697 | |
| Acquired IPRD | | Acquired IPRD | 400 | | | 793 | | | 733 | | | 799 | |
| Amortization of acquired intangible assets | Amortization of acquired intangible assets | 2,547 | | | 2,389 | | | 5,060 | | | 4,671 | | Amortization of acquired intangible assets | 2,417 | | | 2,547 | | | 4,834 | | | 5,060 | |
| Other (income)/expense, net | Other (income)/expense, net | (2) | | | (736) | | | (704) | | | 427 | | Other (income)/expense, net | 284 | | | (2) | | | 933 | | | (704) | |
| Total Expenses | Total Expenses | 10,150 | | | 8,502 | | | 18,693 | | | 19,587 | | Total Expenses | 9,929 | | | 10,150 | | | 19,890 | | | 18,693 | |
| | Earnings Before Income Taxes | Earnings Before Income Taxes | 1,553 | | | 1,627 | | | 4,083 | | | 1,323 | | Earnings Before Income Taxes | 1,958 | | | 1,553 | | | 3,645 | | | 4,083 | |
| Provision for Income Taxes | Provision for Income Taxes | 492 | | | 1,707 | | | 993 | | | 2,169 | | Provision for Income Taxes | 529 | | | 492 | | | 933 | | | 993 | |
| Net Earnings/(Loss) | 1,061 | | | (80) | | | 3,090 | | | (846) | | |
| Net Earnings | | Net Earnings | 1,429 | | | 1,061 | | | 2,712 | | | 3,090 | |
| Noncontrolling Interest | Noncontrolling Interest | 6 | | | 5 | | | 14 | | | 14 | | Noncontrolling Interest | 8 | | | 6 | | | 13 | | | 14 | |
| Net Earnings/(Loss) Attributable to BMS | $ | 1,055 | | | $ | (85) | | | $ | 3,076 | | | $ | (860) | | |
| Net Earnings Attributable to BMS | | Net Earnings Attributable to BMS | $ | 1,421 | | | $ | 1,055 | | | $ | 2,699 | | | $ | 3,076 | |
| | Earnings/(Loss) per Common Share | | |
| Earnings per Common Share | | Earnings per Common Share | |
| Basic | Basic | $ | 0.47 | | | $ | (0.04) | | | $ | 1.38 | | | $ | (0.38) | | Basic | $ | 0.67 | | | $ | 0.47 | | | $ | 1.26 | | | $ | 1.38 | |
| Diluted | Diluted | 0.47 | | | (0.04) | | | 1.36 | | | (0.38) | | Diluted | 0.66 | | | 0.47 | | | 1.25 | | | 1.36 | |
(a) Excludes amortization of acquired intangible assets.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)INCOME
Dollars in Millions
(UNAUDITED)
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| COMPREHENSIVE INCOME/(LOSS) | 2021 | | 2020 | | 2021 | | 2020 |
| Net Earnings/(Loss) | $ | 1,061 | | | $ | (80) | | | $ | 3,090 | | | $ | (846) | |
| Other Comprehensive Income/(Loss), net of taxes and reclassifications to earnings: |
| Derivatives qualifying as cash flow hedges | 6 | | | (59) | | | 286 | | | 11 | |
| Pension and postretirement benefits | 15 | | | (7) | | | 38 | | | 9 | |
| Available-for-sale debt securities | (2) | | | 8 | | | (4) | | | 9 | |
| Foreign currency translation | 7 | | | 51 | | | 1 | | | (65) | |
| Total Other Comprehensive Income/(Loss) | 26 | | | (7) | | | 321 | | | (36) | |
| | | | | | | |
| Comprehensive Income/(Loss) | 1,087 | | | (87) | | | 3,411 | | | (882) | |
| Comprehensive Income Attributable to Noncontrolling Interest | 6 | | | 5 | | | 14 | | | 14 | |
| Comprehensive Income/(Loss) Attributable to BMS | $ | 1,081 | | | $ | (92) | | | $ | 3,397 | | | $ | (896) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| COMPREHENSIVE INCOME | 2022 | | 2021 | | 2022 | | 2021 |
| Net Earnings | $ | 1,429 | | | $ | 1,061 | | | $ | 2,712 | | | $ | 3,090 | |
| Other Comprehensive Income, net of taxes and reclassifications to earnings: |
| Derivatives qualifying as cash flow hedges | 301 | | | 6 | | | 332 | | | 286 | |
| Pension and postretirement benefits | 25 | | | 15 | | | 46 | | | 38 | |
| Marketable debt securities | (1) | | | (2) | | | (2) | | | (4) | |
| Foreign currency translation | (88) | | | 7 | | | (100) | | | 1 | |
| Total Other Comprehensive Income | 237 | | | 26 | | | 276 | | | 321 | |
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| Comprehensive Income | 1,666 | | | 1,087 | | | 2,988 | | | 3,411 | |
| Comprehensive Income Attributable to Noncontrolling Interest | 8 | | | 6 | | | 13 | | | 14 | |
| Comprehensive Income Attributable to BMS | $ | 1,658 | | | $ | 1,081 | | | $ | 2,975 | | | $ | 3,397 | |
The accompanying notes are an integral part of these consolidated financial statements.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED BALANCE SHEETS
Dollars in Millions
(UNAUDITED)
| | ASSETS | ASSETS | June 30,
2021 | | December 31,
2020 | ASSETS | June 30,
2022 | | December 31,
2021 |
| Current Assets: | Current Assets: | | | | Current Assets: | | | |
| Cash and cash equivalents | Cash and cash equivalents | $ | 11,024 | | | $ | 14,546 | | Cash and cash equivalents | $ | 10,750 | | | $ | 13,979 | |
| Marketable debt securities | Marketable debt securities | 1,946 | | | 1,285 | | Marketable debt securities | 2,478 | | | 2,987 | |
| Receivables | Receivables | 9,017 | | | 8,501 | | Receivables | 9,054 | | | 9,369 | |
| Inventories | Inventories | 2,137 | | | 2,074 | | Inventories | 2,142 | | | 2,095 | |
| Other current assets | Other current assets | 5,037 | | | 3,786 | | Other current assets | 5,762 | | | 4,832 | |
| Total Current Assets | Total Current Assets | 29,161 | | | 30,192 | | Total Current Assets | 30,186 | | | 33,262 | |
| Property, plant and equipment | Property, plant and equipment | 5,795 | | | 5,886 | | Property, plant and equipment | 5,970 | | | 6,049 | |
| Goodwill | Goodwill | 20,529 | | | 20,547 | | Goodwill | 20,446 | | | 20,502 | |
| Other intangible assets | Other intangible assets | 48,065 | | | 53,243 | | Other intangible assets | 37,690 | | | 42,527 | |
| Deferred income taxes | Deferred income taxes | 650 | | | 1,161 | | Deferred income taxes | 1,337 | | | 1,439 | |
| Marketable debt securities | 143 | | | 433 | | |
| | Other non-current assets | Other non-current assets | 6,454 | | | 7,019 | | Other non-current assets | 4,728 | | | 5,535 | |
| Total Assets | Total Assets | $ | 110,797 | | | $ | 118,481 | | Total Assets | $ | 100,357 | | | $ | 109,314 | |
| | LIABILITIES | LIABILITIES | | LIABILITIES | |
| Current Liabilities: | Current Liabilities: | | Current Liabilities: | |
| Short-term debt obligations | Short-term debt obligations | $ | 2,655 | | | $ | 2,340 | | Short-term debt obligations | $ | 4,953 | | | $ | 4,948 | |
| Accounts payable | Accounts payable | 3,609 | | | 2,713 | | Accounts payable | 2,882 | | | 2,949 | |
| Other current liabilities | Other current liabilities | 12,727 | | | 14,027 | | Other current liabilities | 13,080 | | | 13,971 | |
| Total Current Liabilities | Total Current Liabilities | 18,991 | | | 19,080 | | Total Current Liabilities | 20,915 | | | 21,868 | |
| Deferred income taxes | Deferred income taxes | 4,931 | | | 5,407 | | Deferred income taxes | 3,034 | | | 4,501 | |
| Long-term debt | Long-term debt | 42,503 | | | 48,336 | | Long-term debt | 37,107 | | | 39,605 | |
| Other non-current liabilities | Other non-current liabilities | 7,498 | | | 7,776 | | Other non-current liabilities | 6,640 | | | 7,334 | |
| Total Liabilities | Total Liabilities | 73,923 | | | 80,599 | | Total Liabilities | 67,696 | | | 73,308 | |
| | Commitments and contingencies | Commitments and contingencies | | Commitments and contingencies | |
| | EQUITY | EQUITY | | EQUITY | |
| Bristol-Myers Squibb Company Shareholders’ Equity: | Bristol-Myers Squibb Company Shareholders’ Equity: | | Bristol-Myers Squibb Company Shareholders’ Equity: | |
| Preferred stock | Preferred stock | 0 | | | 0 | | Preferred stock | — | | | — | |
| Common stock | Common stock | 292 | | | 292 | | Common stock | 292 | | | 292 | |
| Capital in excess of par value of stock | Capital in excess of par value of stock | 44,064 | | | 44,325 | | Capital in excess of par value of stock | 44,375 | | | 44,361 | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | (1,518) | | | (1,839) | | Accumulated other comprehensive loss | (992) | | | (1,268) | |
| Retained earnings | Retained earnings | 22,168 | | | 21,281 | | Retained earnings | 24,217 | | | 23,820 | |
| Less cost of treasury stock | Less cost of treasury stock | (28,198) | | | (26,237) | | Less cost of treasury stock | (35,292) | | | (31,259) | |
| Total Bristol-Myers Squibb Company Shareholders’ Equity | Total Bristol-Myers Squibb Company Shareholders’ Equity | 36,808 | | | 37,822 | | Total Bristol-Myers Squibb Company Shareholders’ Equity | 32,600 | | | 35,946 | |
| Noncontrolling interest | Noncontrolling interest | 66 | | | 60 | | Noncontrolling interest | 61 | | | 60 | |
| Total Equity | Total Equity | 36,874 | | | 37,882 | | Total Equity | 32,661 | | | 36,006 | |
| Total Liabilities and Equity | Total Liabilities and Equity | $ | 110,797 | | | $ | 118,481 | | Total Liabilities and Equity | $ | 100,357 | | | $ | 109,314 | |
The accompanying notes are an integral part of these consolidated financial statements.
BRISTOL-MYERS SQUIBB COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in Millions
(UNAUDITED)
| | | | Six Months Ended June 30, | | Six Months Ended June 30, |
| | | 2021 | | 2020 | | 2022 | | 2021 |
| Cash Flows From Operating Activities: | Cash Flows From Operating Activities: | | | | Cash Flows From Operating Activities: | | | |
| Net earnings/(loss) | $ | 3,090 | | | $ | (846) | | |
| Adjustments to reconcile net earnings/(loss) to net cash provided by operating activities: | | |
| Net earnings | | Net earnings | $ | 2,712 | | | $ | 3,090 | |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | | Adjustments to reconcile net earnings to net cash provided by operating activities: | |
| Depreciation and amortization, net | Depreciation and amortization, net | 5,380 | | | 5,035 | | Depreciation and amortization, net | 5,167 | | | 5,380 | |
| Deferred income taxes | Deferred income taxes | (95) | | | 1,365 | | Deferred income taxes | (1,469) | | | (95) | |
| Stock-based compensation | Stock-based compensation | 308 | | | 423 | | Stock-based compensation | 223 | | | 308 | |
| Impairment charges | Impairment charges | 579 | | | 116 | | Impairment charges | 83 | | | 579 | |
| Pension settlements and amortization | 25 | | | 22 | | |
| | Divestiture gains and royalties | Divestiture gains and royalties | (302) | | | (295) | | Divestiture gains and royalties | (612) | | | (302) | |
| Asset acquisition charges | 801 | | | 361 | | |
| Equity investment gains | (749) | | | (480) | | |
| Acquired IPRD | | Acquired IPRD | 733 | | | 799 | |
| Equity investment losses/(gains) | | Equity investment losses/(gains) | 952 | | | (749) | |
| Contingent consideration fair value adjustments | Contingent consideration fair value adjustments | (510) | | | 391 | | Contingent consideration fair value adjustments | 1 | | | (510) | |
| Other adjustments | Other adjustments | 204 | | | (91) | | Other adjustments | 218 | | | 235 | |
| Changes in operating assets and liabilities: | Changes in operating assets and liabilities: | | Changes in operating assets and liabilities: | |
| Receivables | Receivables | (626) | | | (197) | | Receivables | 117 | | | (626) | |
| Inventories | Inventories | 111 | | | 2,090 | | Inventories | (12) | | | 111 | |
| Accounts payable | Accounts payable | 158 | | | 480 | | Accounts payable | 4 | | | 158 | |
| Rebates and discounts | | Rebates and discounts | (410) | | | (6) | |
| Income taxes payable | Income taxes payable | (795) | | | 185 | | Income taxes payable | (370) | | | (795) | |
| Other | Other | (695) | | | (129) | | Other | (1,264) | | | (693) | |
| Net Cash Provided by Operating Activities | Net Cash Provided by Operating Activities | 6,884 | | | 8,430 | | Net Cash Provided by Operating Activities | 6,073 | | | 6,884 | |
| Cash Flows From Investing Activities: | Cash Flows From Investing Activities: | | | | Cash Flows From Investing Activities: | | | |
| Sale and maturities of marketable debt securities | Sale and maturities of marketable debt securities | 1,968 | | | 3,537 | | Sale and maturities of marketable debt securities | 3,788 | | | 1,968 | |
| Purchase of marketable debt securities | Purchase of marketable debt securities | (2,343) | | | (1,957) | | Purchase of marketable debt securities | (3,292) | | | (2,343) | |
| Proceeds from sales of equity investment securities | Proceeds from sales of equity investment securities | 814 | | | 12 | | Proceeds from sales of equity investment securities | 150 | | | 814 | |
| Capital expenditures | Capital expenditures | (383) | | | (317) | | Capital expenditures | (525) | | | (383) | |
| Divestiture and other proceeds | Divestiture and other proceeds | 382 | | | 336 | | Divestiture and other proceeds | 594 | | | 382 | |
| Acquisition and other payments, net of cash acquired | Acquisition and other payments, net of cash acquired | (401) | | | (445) | | Acquisition and other payments, net of cash acquired | (909) | | | (401) | |
| Net Cash Provided by Investing Activities | 37 | | | 1,166 | | |
| Net Cash (Used in)/Provided by Investing Activities | | Net Cash (Used in)/Provided by Investing Activities | (194) | | | 37 | |
| Cash Flows From Financing Activities: | Cash Flows From Financing Activities: | | | | Cash Flows From Financing Activities: | | | |
| Short-term debt obligations, net | Short-term debt obligations, net | (185) | | | (22) | | Short-term debt obligations, net | 130 | | | (185) | |
| | Issuance of long-term debt | | Issuance of long-term debt | 5,926 | | | — | |
| Repayment of long-term debt | Repayment of long-term debt | (5,522) | | | 0 | | Repayment of long-term debt | (8,646) | | | (5,522) | |
| Repurchase of common stock | Repurchase of common stock | (3,011) | | | (81) | | Repurchase of common stock | (5,000) | | | (3,011) | |
| Dividends | Dividends | (2,207) | | | (2,038) | | Dividends | (2,335) | | | (2,207) | |
| Other | Other | 448 | | | 94 | | Other | 752 | | | 448 | |
| Net Cash Used in Financing Activities | Net Cash Used in Financing Activities | (10,477) | | | (2,047) | | Net Cash Used in Financing Activities | (9,173) | | | (10,477) | |
| Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash | Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash | (20) | | | (7) | | Effect of Exchange Rates on Cash, Cash Equivalents and Restricted Cash | (62) | | | (20) | |
| (Decrease)/Increase in Cash, Cash Equivalents and Restricted Cash | (3,576) | | | 7,542 | | |
| Decrease in Cash, Cash Equivalents and Restricted Cash | | Decrease in Cash, Cash Equivalents and Restricted Cash | (3,356) | | | (3,576) | |
| Cash, Cash Equivalents and Restricted Cash at Beginning of Period | Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 14,973 | | | 12,820 | | Cash, Cash Equivalents and Restricted Cash at Beginning of Period | 14,316 | | | 14,973 | |
| Cash, Cash Equivalents and Restricted Cash at End of Period | Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 11,397 | | | $ | 20,362 | | Cash, Cash Equivalents and Restricted Cash at End of Period | $ | 10,960 | | | $ | 11,397 | |
The accompanying notes are an integral part of these consolidated financial statements.
Note 1. BASIS OF PRESENTATION AND RECENTLY ISSUED ACCOUNTING STANDARDS
Basis of Consolidation
Bristol-Myers Squibb Company (“BMS” or “the Company”) prepared these unaudited consolidated financial statements following the requirements of the SEC and U.S. GAAP for interim reporting. Under those rules, certain footnotes and other financial information that are normally required for annual financial statements can be condensed or omitted. The Company is responsible for the consolidated financial statements included in this Quarterly Report on Form 10-Q, which include all adjustments necessary for a fair presentation of the financial position at June 30, 20212022 and December 31, 2020,2021, the results of operations for the three and six months ended June 30, 20212022 and 2020,2021, and cash flows for the six months ended June 30, 20212022 and 2020.2021. All intercompany balances and transactions have been eliminated. These financial statements and the related notes should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 20202021 included in the 20202021 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.
Business Segment Information
BMS operates in a single segment engaged in the discovery, development, licensing, manufacturing, marketing, distribution and sale of innovative medicines that help patients prevail over serious diseases. A global research and development organization and supply chain organization are responsible for the discovery, development, manufacturing and supply of products. Regional commercial organizations market, distribute and sell the products. The business is also supported by global corporate staff functions. Consistent with BMS’s operational structure, the Chief Executive Officer (“CEO”), as the chief operating decision maker, manages and allocates resources at the global corporate level. Managing and allocating resources at the global corporate level enables the CEO to assess both the overall level of resources available and how to best deploy these resources across functions, therapeutic areas, regional commercial organizations and research and development projects in line with our overarching long-term corporate-wide strategic goals, rather than on a product or franchise basis. The determination of a single segment is consistent with the financial information regularly reviewed by the CEO for purposes of evaluating performance, allocating resources, setting incentive compensation targets, and planning and forecasting future periods. For further information on product and regional revenue, see “—Note 2. Revenue.”Revenue”.
Use of Estimates and Judgments
Revenues, expenses, assets and liabilities can vary during each quarter of the year. Accordingly, the results and trends in these unaudited consolidated financial statements may not be indicative of full year operating results. The preparation of financial statements requires the use of management estimates, judgments and assumptions. The most significant assumptions are estimates used in determining accounting for business combinations;acquisitions; impairments of intangible assets; charge-backs, cash discounts, sales rebaterebates, returns and return accruals;other adjustments; legal contingencies; and income taxes. Actual results may differ from estimates.
Reclassifications
Certain reclassifications were made to conform the prior period consolidated financial statements to the current period presentation. Cash payments resulting from licensing arrangements, including upfrontUpfront and contingent milestonesmilestone charges in connection with asset acquisitions or licensing of third-party intellectual property rights previously includedpresented in Research and development are now presented in Acquired IPRD in the consolidated statements of earnings. Additionally, Rebates and discounts previously presented in Other changes in operating activitiesassets and liabilities in the consolidated statements of cash flows are now presented in investing activities. The adjustment resulted in an increase to net cash provided by operating activities and net cash used in investing activities of $267 million in the six months ended June 30, 2020. Proceeds received from the sale of equity investment securities previously presented in Divestiture and other proceeds in the consolidated statements of cash flows is now presented separately in Proceeds from sales of equity investment securities. These reclassifications did not have an impact on net assets or net earnings.Rebates and discounts.
Recently AdoptedIssued Accounting Standards Not Yet Adopted
Business Combinations
In December 2019,October 2021, the FASB issued amended guidance on the accounting for contract assets and reporting of income taxes.contract liabilities from contracts with customers in a business combination. The guidance is intended to simplify the accounting for income taxes by removing exceptionsaddress inconsistency related to certain intraperiod tax allocationsrecognition of an acquired contract liability and deferred tax liabilities; clarifyingpayment terms and their effect on subsequent revenue recognized. At the acquisition date, an entity should account for the related revenue contracts in accordance with existing revenue recognition guidance primarily related to evaluatinggenerally by assessing how the step-up tax basis for goodwillacquiree applied recognition and measurement in a business combination; and reflecting enacted changes in tax laws or rates in the annual effective tax rate. BMS adopted the newtheir financial statements. The amended guidance is effective January 1, 2021. The amended guidance did not have2023 on a material impact on BMS’s results of operations.prospective basis. Early adoption is permitted.
Fair Value Measurements
In June 2022, the FASB issued amended guidance on measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The guidance clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The guidance also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendment requires the following disclosures for equity securities subject to contractual sale restrictions: the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet; the nature and remaining duration of the restriction(s); and the circumstances that could cause a lapse in the restriction(s). The amended guidance is effective January 1, 2024 on a prospective basis. Early adoption is permitted.
Note 2. REVENUE
The following table summarizes the disaggregation of revenue by nature:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 |
| Net product sales | $ | 11,405 | | | $ | 9,817 | | | $ | 22,203 | | | $ | 20,358 | |
| Alliance revenues | 159 | | | 163 | | | 301 | | | 268 | |
| Other revenues | 139 | | | 149 | | | 272 | | | 284 | |
| Total Revenues | $ | 11,703 | | | $ | 10,129 | | | $ | 22,776 | | | $ | 20,910 | |
Products are sold principally to wholesalers, distributors, specialty pharmacies, and to a lesser extent, directly to retailers, hospitals, clinics and government agencies. Customer orders are generally fulfilled within a few days of receipt resulting in minimal order backlog. Contractual performance obligations are usually limited to transfer of control of the product to the customer. The transfer occurs either upon shipment, upon receipt of the product after considering when the customer obtains legal title to the product, or upon infusion for cell therapies and when BMS obtains a right of payment. At these points, customers are able to direct the use of and obtain substantially all of the remaining benefits of the product. | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Net product sales | $ | 11,485 | | | $ | 11,405 | | | $ | 22,793 | | | $ | 22,203 | |
| Alliance revenues | 199 | | | 159 | | | 387 | | | 301 | |
| Other revenues | 203 | | | 139 | | | 355 | | | 272 | |
| Total Revenues | $ | 11,887 | | | $ | 11,703 | | | $ | 23,535 | | | $ | 22,776 | |
The following table summarizes GTN adjustments:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Gross product sales | Gross product sales | $ | 16,782 | | | $ | 13,788 | | | $ | 32,341 | | | $ | 28,474 | | Gross product sales | $ | 17,299 | | | $ | 16,782 | | | $ | 33,949 | | | $ | 32,341 | |
GTN adjustments(a) | GTN adjustments(a) | | GTN adjustments(a) | |
| Charge-backs and cash discounts | Charge-backs and cash discounts | (1,720) | | | (1,292) | | | (3,306) | | | (2,632) | | Charge-backs and cash discounts | (1,750) | | | (1,720) | | | (3,513) | | | (3,306) | |
| Medicaid and Medicare rebates | Medicaid and Medicare rebates | (2,139) | | | (1,482) | | | (3,857) | | | (2,980) | | Medicaid and Medicare rebates | (2,624) | | | (2,139) | | | (4,708) | | | (3,857) | |
| Other rebates, returns, discounts and adjustments | Other rebates, returns, discounts and adjustments | (1,518) | | | (1,197) | | | (2,975) | | | (2,504) | | Other rebates, returns, discounts and adjustments | (1,440) | | | (1,518) | | | (2,935) | | | (2,975) | |
| Total GTN adjustments | Total GTN adjustments | (5,377) | | | (3,971) | | | (10,138) | | | (8,116) | | Total GTN adjustments | (5,814) | | | (5,377) | | | (11,156) | | | (10,138) | |
| Net product sales | Net product sales | $ | 11,405 | | | $ | 9,817 | | | $ | 22,203 | | | $ | 20,358 | | Net product sales | $ | 11,485 | | | $ | 11,405 | | | $ | 22,793 | | | $ | 22,203 | |
(a) Includes adjustments for provisions for product sales made in prior periods resulting from changes in estimates of $123 million and $197 million for the three and six months ended June 30, 2022, and $85 million and $302 million for the three and six months ended June 30, 2021, and $44 million and $116 million for the three and six months ended June 30, 2020, respectively.
The following table summarizes the disaggregation of revenue by product and region:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Prioritized Brands | | | | | | | | |
| Revlimid | $ | 3,202 | | | $ | 2,884 | | | $ | 6,146 | | | $ | 5,799 | | |
| In-Line Products | | In-Line Products | | | | | | | |
| Eliquis | Eliquis | 2,792 | | | 2,163 | | | 5,678 | | | 4,804 | | Eliquis | $ | 3,235 | | | $ | 2,792 | | | 6,446 | | | 5,678 | |
| Opdivo | Opdivo | 1,910 | | | 1,653 | | | 3,630 | | | 3,419 | | Opdivo | 2,063 | | | 1,910 | | | 3,986 | | | 3,630 | |
| Pomalyst/Imnovid | | Pomalyst/Imnovid | 908 | | | 854 | | | 1,734 | | | 1,627 | |
| Orencia | Orencia | 814 | | | 750 | | | 1,572 | | | 1,464 | | Orencia | 876 | | | 814 | | | 1,668 | | | 1,572 | |
| Pomalyst/Imnovid | 854 | | | 745 | | | 1,627 | | | 1,458 | | |
| Sprycel | Sprycel | 541 | | | 511 | | | 1,011 | | | 1,032 | | Sprycel | 544 | | | 541 | | | 1,027 | | | 1,011 | |
| Yervoy | Yervoy | 510 | | | 369 | | | 966 | | | 765 | | Yervoy | 525 | | | 510 | | | 1,040 | | | 966 | |
| Abraxane | 296 | | | 308 | | | 610 | | | 608 | | |
| Empliciti | Empliciti | 86 | | | 97 | | | 171 | | | 194 | | Empliciti | 77 | | | 86 | | | 152 | | | 171 | |
| Mature and other products | | Mature and other products | 435 | | | 473 | | | 897 | | | 979 | |
| New Product Portfolio | | New Product Portfolio | |
| Reblozyl | Reblozyl | 128 | | | 55 | | | 240 | | | 63 | | Reblozyl | 172 | | | 128 | | | 328 | | | 240 | |
| Abecma | | Abecma | 89 | | | 24 | | | 156 | | | 24 | |
| Zeposia | | Zeposia | 66 | | | 28 | | | 102 | | | 46 | |
| Breyanzi | | Breyanzi | 39 | | | 17 | | | 83 | | | 17 | |
| Inrebic | Inrebic | 16 | | | 15 | | | 32 | | | 27 | | Inrebic | 23 | | | 16 | | | 41 | | | 32 | |
| Onureg | Onureg | 12 | | | 0 | | | 27 | | | 0 | | Onureg | 32 | | | 12 | | | 55 | | | 27 | |
| Zeposia | 28 | | | 1 | | | 46 | | | 1 | | |
| Breyanzi | 17 | | | 0 | | | 17 | | | 0 | | |
| Abecma | 24 | | | 0 | | | 24 | | | 0 | | |
| | Established Brands | | |
| Vidaza | 45 | | | 126 | | | 99 | | | 284 | | |
| Baraclude | 109 | | | 121 | | | 222 | | | 243 | | |
| Other Brands | 319 | | | 331 | | | 658 | | | 749 | | |
| Opdualag | | Opdualag | 58 | | | — | | | 64 | | | — | |
| Camzyos | | Camzyos | 3 | | | — | | | 3 | | | — | |
Recent LOE Products(a) | | Recent LOE Products(a) | |
| Revlimid | | Revlimid | 2,501 | | | 3,202 | | | $ | 5,298 | | | $ | 6,146 | |
| Abraxane | | Abraxane | 241 | | | 296 | | | 455 | | | 610 | |
| Total Revenues | Total Revenues | $ | 11,703 | | | $ | 10,129 | | | $ | 22,776 | | | $ | 20,910 | | Total Revenues | $ | 11,887 | | | $ | 11,703 | | | $ | 23,535 | | | $ | 22,776 | |
| | United States | United States | $ | 7,388 | | | $ | 6,487 | | | $ | 14,398 | | | $ | 13,253 | | United States | $ | 8,268 | | | $ | 7,388 | | | $ | 15,962 | | | $ | 14,398 | |
| Europe | 2,689 | | | 2,136 | | | 5,242 | | | 4,703 | | |
| Rest of the World | 1,435 | | | 1,334 | | | 2,781 | | | 2,669 | | |
| International | | International | 3,427 | | | 4,124 | | | 7,154 | | | 8,023 | |
| Other(a)(b) | Other(a)(b) | 191 | | | 172 | | | 355 | | | 285 | | Other(a)(b) | 192 | | | 191 | | | 419 | | | 355 | |
| Total Revenues | Total Revenues | $ | 11,703 | | | $ | 10,129 | | | $ | 22,776 | | | $ | 20,910 | | Total Revenues | $ | 11,887 | | | $ | 11,703 | | | $ | 23,535 | | | $ | 22,776 | |
(a) Recent LOE Products includes products with significant decline in revenue from the prior reporting period as a result of a loss of exclusivity.
(b) Other revenues include royalties and alliance-related revenues for products not sold by BMS’s regional commercial organizations.
Revenue recognized from performance obligations satisfied in prior periods was $184 million and $331 million for the three and six months ended June 30, 2022 and $146 million and $430 million for the three and six months ended June 30, 2021, and $98 million and $228 million for the three and six months ended June 30, 2020, respectively, consisting primarily of revised estimates for GTN adjustments related to prior period sales and royalties for out-licensing arrangements. Contract assets were not material at June 30, 2021 and December 31, 2020.
Note 3. ALLIANCES
BMS enters into collaboration arrangements with third parties for the development and commercialization of certain products. Although each of these arrangements is unique in nature, both parties are active participants in the operating activities of the collaboration and exposed to significant risks and rewards depending on the commercial success of the activities. BMS may either in-license intellectual property owned by the other party or out-license its intellectual property to the other party. These arrangements also typically include research, development, manufacturing, and/or commercial activities and can cover a single investigational compound or commercial product or multiple compounds and/or products in various life cycle stages. The rights and obligations of the parties can be global or limited to geographic regions. BMS refers to these collaborations as alliances and its partners as alliance partners.
Selected financial information pertaining to alliances was as follows, including net product sales when BMS is the principal in the third-party customer sale for products subject to the alliance. Expenses summarized below do not include all amounts attributed to the activities for the products in the alliance, but only the payments between the alliance partners or the related amortization if the payments were deferred or capitalized.
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Revenues from alliances: | Revenues from alliances: | | | | | | | | Revenues from alliances: | | | | | | | |
| Net product sales | Net product sales | $ | 2,805 | | | $ | 2,201 | | | $ | 5,687 | | | $ | 4,924 | | Net product sales | $ | 3,273 | | | $ | 2,805 | | | $ | 6,512 | | | $ | 5,687 | |
| Alliance revenues | Alliance revenues | 159 | | | 163 | | | 301 | | | 268 | | Alliance revenues | 199 | | | 159 | | | 387 | | | 301 | |
| Total Revenues | Total Revenues | $ | 2,964 | | | $ | 2,364 | | | $ | 5,988 | | | $ | 5,192 | | Total Revenues | $ | 3,472 | | | $ | 2,964 | | | $ | 6,899 | | | $ | 5,988 | |
| | Payments to/(from) alliance partners: | Payments to/(from) alliance partners: | | Payments to/(from) alliance partners: | |
| Cost of products sold | Cost of products sold | $ | 1,346 | | | $ | 1,050 | | | $ | 2,743 | | | $ | 2,356 | | Cost of products sold | $ | 1,572 | | | $ | 1,346 | | | $ | 3,128 | | | $ | 2,743 | |
| Marketing, selling and administrative | Marketing, selling and administrative | (48) | | | (38) | | | (97) | | | (78) | | Marketing, selling and administrative | (53) | | | (48) | | | (107) | | | (97) | |
| Research and development | Research and development | 736 | | | 233 | | | 743 | | | 279 | | Research and development | 12 | | | 6 | | | 34 | | | 7 | |
| Acquired IPRD | | Acquired IPRD | 100 | | | 730 | | | 100 | | | 736 | |
| Other (income)/expense, net | Other (income)/expense, net | (14) | | | (16) | | | (19) | | | (31) | | Other (income)/expense, net | (11) | | | (14) | | | (23) | | | (19) | |
| | | | | | | | | | | |
| Dollars in Millions | June 30,
2021 | | December 31,
2020 |
| Selected Alliance Balance Sheet information: | | | |
| Receivables – from alliance partners | $ | 349 | | | $ | 343 | |
| Accounts payable – to alliance partners | 2,032 | | | 1,093 | |
Deferred income from alliances(a) | 349 | | | 366 | |
| | | | | | | | | | | |
| Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Selected Alliance Balance Sheet information: | | | |
| Receivables – from alliance partners | $ | 325 | | | $ | 320 | |
| Accounts payable – to alliance partners | 1,509 | | | 1,229 | |
Deferred income – from alliances(a) | 321 | | | 330 | |
(a) Includes unamortized upfront and milestone payments.
Specific information pertaining to significant alliances including theirThe nature, and purpose; thepurpose, significant rights and obligations of the parties;parties and specific accounting policy elections for each of the Company's significant alliances are discussed in the 20202021 Form 10-K. Significant developments and updates related to alliances during the six months ended June 30, 2022, and 2021 are set forth below.
BridgeBio
In May 2022, BMS and BridgeBio commenced a collaboration to develop and commercialize BBP-398, a SHP2 inhibitor, in oncology. The transaction included an upfront payment of $90 million, which was expensed to Acquired IPRD during the three months ended June 30, 2022. BridgeBio is eligible to receive contingent development, regulatory and sales-based milestones up to $815 million, as well as royalties on global net sales, excluding certain markets. BridgeBio is responsible for funding and completing ongoing BBP-398 Phase I monotherapy and combination therapy trials. BMS will lead and fund all other development and commercial activities. BridgeBio has an option to co-develop BBP-398 and receive higher royalties in the U.S.
Nektar
In April 2022, BMS and Nektar announced that the companies have jointly decided to end the global clinical development program for bempegaldesleukin in combination with Opdivo based on results from pre-planned analyses of two late-stage clinical studies in RCC and bladder cancer. These studies and all other ongoing studies in the program will be discontinued.
Eisai
In the second quarter of 2021, BMS and Eisai commenced an exclusive global strategic collaboration for the co-development and co-commercialization of MORAb-202, a selective folate receptor alpha antibody-drug conjugate being investigated in endometrial, ovarian, lung and breast cancers. MORAb-202 is currently in Phase I/II clinical trials for solid tumors.
BMS and Eisai will jointly develop and commercialize MORAb-202 in the U.S., Canada, Europe, Russia, Japan, China and certain other countries in the Asia-Pacific region (the “collaboration territory”). Eisai will beis responsible for the global manufacturing and supply. Profits, research and development and commercialization costs are shared in the collaboration territories. BMS will beis responsible for development and commercialization outside of the collaboration territory and will pay a royalty on those sales.
A $650 million upfrontup-front collaboration fee was included in Research and development expenseexpensed to Acquired IPRD in the second quarter of 2021 and paid in the third quarter of 2021. BMS is also obligated to pay up to $2.5 billion upon the achievement of contingent development, regulatory and sales-based milestones.
Note 4. ACQUISITIONS, DIVESTITURES, LICENSING AND OTHER ARRANGEMENTS
Acquisitions
Turning Point
In June 2022, BMS entered into a definitive merger agreement to acquire Turning Point, a clinical-stage precision oncology company with a pipeline of investigational medicines designed to target the common mutations and alterations that drive cancer growth. The acquisition will provide BMS rights to Turning Point's lead asset, repotrectinib, and several other clinical and pre-clinical stage assets. Repotrectinib is in a registrational Phase II study in adults and a Phase I/II study in pediatric patients, and is a potential best-in-class tyrosine kinase inhibitor targeting the ROS1 and NTRK oncogenic drivers in NSCLC and other advanced solid tumors.
BMS commenced a tender offer in June 2022, which was extended through August 15, 2022, to acquire all of the issued and outstanding shares of Turning Point's common stock for $76.00 per share in an all-cash transaction for a total consideration of $4.1 billion, including cash settlements of equity stock awards. The transaction is subject to the satisfaction of the tender of a majority of the outstanding shares of Turning Point’s common stock, as well as other customary closing conditions and regulatory approvals, including the expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The transaction is expected to close during the third quarter of 2022.
Divestitures
The following table summarizes the financial impact of divestitures including royalties, which are included in Other (income)/expense, net. Revenue and pretax earnings related to all divestitures were not material in all periods presented (excluding divestiture gains or losses).
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| Net Proceeds(a) | | Divestiture (Gains)/Losses | | Royalty Income |
| Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
| Diabetes Business | $ | 132 | | | $ | 127 | | | $ | 0 | | | $ | 0 | | | $ | (152) | | | $ | (129) | |
Erbitux* Business | 6 | | | 3 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Manufacturing Operations | 23 | | | 10 | | | 0 | | | 0 | | | 0 | | | 0 | |
| | | | | | | | | | | |
| Mature Brands and Other | 41 | | | 1 | | | (11) | | | 9 | | | 0 | | | (1) | |
| Total | $ | 202 | | | $ | 141 | | | $ | (11) | | | $ | 9 | | | $ | (152) | | | $ | (130) | |
9 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, |
| Net Proceeds(a) | | Divestiture Gains | | Royalty Income |
| Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
| Diabetes Business | $ | 185 | | | $ | 132 | | | $ | — | | | $ | — | | | $ | (220) | | | $ | (152) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Mature Products and Other | 3 | | | 70 | | | — | | | (11) | | | (1) | | | — | |
| Total | $ | 188 | | | $ | 202 | | | $ | — | | | $ | (11) | | | $ | (221) | | | $ | (152) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, |
| Net Proceeds(a) | | Divestiture (Gains)/Losses | | Royalty Income |
| Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | | 2021 | | 2020 |
| Diabetes Business | $ | 296 | | | $ | 280 | | | $ | 0 | | | $ | 0 | | | $ | (286) | | | $ | (256) | |
Erbitux* Business | 6 | | | 7 | | | 0 | | | 0 | | | 0 | | | 0 | |
| Manufacturing Operations | 23 | | | 10 | | | 0 | | | (1) | | | 0 | | | 0 | |
Plavix* and Avapro*/Avalide* | 5 | | | 7 | | | 0 | | | (12) | | | 0 | | | 0 | |
| Mature Brands and Other | 52 | | | 32 | | | (11) | | | 6 | | | (1) | | | (32) | |
| Total | $ | 382 | | | $ | 336 | | | $ | (11) | | | $ | (7) | | | $ | (287) | | | $ | (288) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| Net Proceeds(a) | | Divestiture Gains | | Royalty Income |
| Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 | | 2022 | | 2021 |
| Diabetes Business | $ | 357 | | | $ | 296 | | | $ | — | | | $ | — | | | $ | (390) | | | $ | (286) | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| Mature Products and Other | 228 | | | 86 | | | (211) | | | (11) | | | (2) | | | (1) | |
| Total | $ | 585 | | | $ | 382 | | | $ | (211) | | | $ | (11) | | | $ | (392) | | | $ | (287) | |
(a) Includes royalties received subsequent to the related sale of the asset or business.
Mature Products and Other
Manufacturing Operations
In May 2022, BMS agreed to sell its manufacturing facility in Syracuse, New York to LOTTE Corporation for approximately $170 million. The transaction is expected to close by the end of 2022, subject to certain regulatory approvals and other closing conditions and will be accounted for as a sale of a business. The business was accounted for as held-for-sale and its assets were reduced to the estimated relative fair value resulting in $43 million impairment charge recorded to Cost of products sold during the three months ended June 30, 2022. Assets and liabilities of $155 million and $6 million were reclassified to held-for-sale as of June 30, 2022, and included within Other current assets and Other current liabilities, respectively.
Other
During the first quarter of 2022, product rights to several mature products were sold to Cheplapharm, resulting in cash proceeds of $221 million and a divestiture gain of $211 million.
Licensing and Other Arrangements
The following table summarizes the financial impact of Keytruda* royalties, TecentriqTecentriq** royalties, up-frontupfront licensing fees and milestones for products that have not obtained commercial approval, which are included in Other (income)/expense, net.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 |
Keytruda* royalties | $ | (204) | | | $ | (155) | | | $ | (396) | | | $ | (316) | |
Tecentriq* royalties | (23) | | | 0 | | | (45) | | | 0 | |
| Up-front licensing fees | 0 | | | 0 | | | 0 | | | (30) | |
| Contingent milestone income | (2) | | | (5) | | | (2) | | | (46) | |
| Amortization of deferred income | (15) | | | (15) | | | (30) | | | (30) | |
| Other royalties | (9) | | | (6) | | | (12) | | | (11) | |
| Total | $ | (253) | | | $ | (181) | | | $ | (485) | | | $ | (433) | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
Keytruda* royalties | $ | (243) | | | $ | (204) | | | $ | (464) | | | $ | (396) | |
Tecentriq* royalties | (19) | | | (23) | | | (44) | | | (45) | |
| | | | | | | |
| Contingent milestone income | (5) | | | (2) | | | (46) | | | (2) | |
| Amortization of deferred income | (11) | | | (15) | | | (23) | | | (30) | |
| Other royalties | (9) | | | (9) | | | (16) | | | (12) | |
| Total | $ | (287) | | | $ | (253) | | | $ | (593) | | | $ | (485) | |
AgenusIn-license Arrangements
In July 2021,Immatics
During the first quarter of 2022, BMS obtained a global exclusive license to Agenus’ proprietary AGEN1777Immatics’ TCR bispecific antibody program that blocks TIGIT and an additional target. AGEN1777IMA401 program. IMA401 is being studied in oncology and isa Clinical Trial Application has been approved by the German federal regulatory authority. The trial commenced in preclinical development.May 2022. BMS and Immatics collaborate on the development and BMS will be responsible for the development and any subsequent commercialization of AGEN1777IMA401 and its related products worldwide, including strategic decisions, regulatory responsibilities, funding and manufacturing. BMS paid a $200Immatics has the option to co-fund U.S. development in exchange for enhanced U.S. royalty payments and/or to co-promote IMA401 in the U.S. The transaction included an upfront payment of $150 million upfront licensing feewhich was expensed to Agenus andAcquired IPRD in the first quarter of 2022. Immatics is obligatedeligible to pay up to $1.4 billion upon achievement ofreceive contingent development, regulatory and sales-based milestones of up to $770 million as well as royalties on global net sales.
Dragonfly
During the first quarter of 2022, a Phase I development milestone for interlukin-12 (“IL-12”) was achieved resulting in a $175 million payment to Dragonfly and an Acquired IPRD charge. The parties also amended the terms of three future milestones by requiring the achievement of certain criteria by specified dates unless BMS notifies Dragonfly that it will discontinue development of IL-12. These milestones continue to be considered substantive and contingent because the decision to proceed will be based on an assessment of clinical data prior to the specified dates.
Other
Royalty Extinguishment
In April 2022, BMS amended the terms of a license arrangement and paid a third party $295 million to extinguish a future royalty obligation related to mavacamten, prior to its FDA approval in April 2022, resulting in an Acquired IPRD charge during the three months ended June 30, 2022.
Note 5. OTHER (INCOME)/EXPENSE, NET
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Interest expense | Interest expense | $ | 330 | | | $ | 357 | | | $ | 683 | | | $ | 719 | | Interest expense | $ | 313 | | | $ | 330 | | | $ | 639 | | | $ | 683 | |
| Royalties and licensing income | | Royalties and licensing income | (508) | | | (405) | | | (985) | | | (772) | |
| Equity investment losses/(gains) | | Equity investment losses/(gains) | 308 | | | (148) | | | 952 | | | (749) | |
| Integration expenses | | Integration expenses | 124 | | | 152 | | | 229 | | | 293 | |
| Contingent consideration | Contingent consideration | 0 | | | (165) | | | (510) | | | 391 | | Contingent consideration | — | | | — | | | 1 | | | (510) | |
| Royalties and licensing income | (405) | | | (311) | | | (772) | | | (721) | | |
| Equity investment gains | (148) | | | (818) | | | (749) | | | (480) | | |
| Integration expenses | 152 | | | 166 | | | 293 | | | 340 | | |
| (Gain)/Loss on debt redemption | | (Gain)/Loss on debt redemption | (9) | | | — | | | 266 | | | 281 | |
| Provision for restructuring | Provision for restructuring | 78 | | | 115 | | | 123 | | | 275 | | Provision for restructuring | 20 | | | 78 | | | 43 | | | 123 | |
| Litigation and other settlements | Litigation and other settlements | 44 | | | (1) | | | 36 | | | 31 | | Litigation and other settlements | 25 | | | 44 | | | (12) | | | 36 | |
| Transition and other service fees | (22) | | | (50) | | | (37) | | | (111) | | |
| | Investment income | Investment income | (12) | | | (25) | | | (21) | | | (86) | | Investment income | (27) | | | (12) | | | (37) | | | (21) | |
| Reversion excise tax | 0 | | | 0 | | | 0 | | | 76 | | |
| Divestiture (gains)/losses | (11) | | | 9 | | | (11) | | | (7) | | |
| Intangible asset impairment | 0 | | | 21 | | | 0 | | | 21 | | |
| | Loss on debt redemption | 0 | | | 0 | | | 281 | | | 0 | | |
| Divestiture gains | | Divestiture gains | — | | | (11) | | | (211) | | | (11) | |
| | | Other | Other | (8) | | | (34) | | | (20) | | | (21) | | Other | 38 | | | (30) | | | 48 | | | (57) | |
| Other (income)/expense, net | Other (income)/expense, net | $ | (2) | | | $ | (736) | | | $ | (704) | | | $ | 427 | | Other (income)/expense, net | $ | 284 | | | $ | (2) | | | $ | 933 | | | $ | (704) | |
Note 6. RESTRUCTURING
Celgene Acquisition Plan
In 2019, a restructuring and integration plan was implemented as an initiative to realize sustainable run rate synergies resulting from cost savings and avoidance from the Celgene acquisition which isthat are currently expected to be approximately $3.0 billion. The synergies are expected to be realized in Cost of products sold (10%(5%), Marketing, selling and administrative expenses (55%(65%) and Research and development expenses (35%(30%). Charges of approximately $3.0$3.3 billion are expected to be incurred. The majority of the charges are expected to be incurred through 2022. Cumulative charges of approximately $2.3$2.9 billion have been recognized to date including integration planning and execution expenses, employee termination benefit costs and accelerated stock-based compensation, contract termination costs and other shutdown costs associated with site exits. Cash outlays in connection with these actions are expected to be approximately $2.5$3.0 billion. Employee workforce reductions were approximately 240140 and 900240 for the six months ended June 30, 20212022 and 2020,2021, respectively.
MyoKardia Acquisition Plan
In 2020, a restructuring and integration plan was initiated to realize expected cost synergies resulting from cost savings and avoidance from the MyoKardia acquisition. Charges of approximately $150 million are expected to be incurred through 2022, and consist of integration planning and execution expenses, employee termination benefit costs and other costs. Cumulative charges of approximately $95$122 million have been recognized for these actions.actions to date.
Company Transformation
In 2016, a restructuring plan was announced to evolve and streamline BMS’s operating model. Cumulative charges of approximately $1.5 billion were recognized for these actions since the announcement. Actions under the plan were completed as of December 31, 2020.
The following provides the charges related to restructuring initiatives by type of cost:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Celgene Acquisition Plan | Celgene Acquisition Plan | $ | 200 | | | $ | 317 | | | $ | 373 | | | $ | 641 | | Celgene Acquisition Plan | $ | 146 | | | $ | 200 | | | $ | 273 | | | $ | 373 | |
| MyoKardia Acquisition Plan | MyoKardia Acquisition Plan | 19 | | | 0 | | | 56 | | | 0 | | MyoKardia Acquisition Plan | 2 | | | 19 | | | 5 | | | 56 | |
| Company Transformation | 0 | | | 23 | | | 0 | | | 105 | | |
| | Total charges | Total charges | $ | 219 | | | $ | 340 | | | $ | 429 | | | $ | 746 | | Total charges | $ | 148 | | | $ | 219 | | | $ | 278 | | | $ | 429 | |
| | Employee termination costs | Employee termination costs | $ | 75 | | | $ | 107 | | | $ | 119 | | | $ | 256 | | Employee termination costs | $ | 19 | | | $ | 75 | | | $ | 41 | | | $ | 119 | |
| Other termination costs | Other termination costs | 3 | | | 8 | | | 4 | | | 19 | | Other termination costs | 1 | | | 3 | | | 2 | | | 4 | |
| Provision for restructuring | Provision for restructuring | 78 | | | 115 | | | 123 | | | 275 | | Provision for restructuring | 20 | | | 78 | | | 43 | | | 123 | |
| Integration expenses | Integration expenses | 152 | | | 166 | | | 293 | | | 340 | | Integration expenses | 124 | | | 152 | | | 229 | | | 293 | |
| Accelerated depreciation | Accelerated depreciation | 0 | | | 11 | | | 0 | | | 41 | | Accelerated depreciation | 4 | | | — | | | 6 | | | — | |
| Asset impairments | Asset impairments | 0 | | | 39 | | | 24 | | | 81 | | Asset impairments | — | | | — | | | — | | | 24 | |
| Other shutdown costs, net | Other shutdown costs, net | (11) | | | 9 | | | (11) | | | 9 | | Other shutdown costs, net | — | | | (11) | | | — | | | (11) | |
| Total charges | Total charges | $ | 219 | | | $ | 340 | | | $ | 429 | | | $ | 746 | | Total charges | $ | 148 | | | $ | 219 | | | $ | 278 | | | $ | 429 | |
| | Cost of products sold | Cost of products sold | $ | 0 | | | $ | 11 | | | $ | 24 | | | $ | 27 | | Cost of products sold | $ | — | | | $ | — | | | $ | — | | | $ | 24 | |
| Marketing, selling and administrative | Marketing, selling and administrative | 0 | | | 1 | | | 0 | | | 1 | | Marketing, selling and administrative | 4 | | | — | | | 6 | | | — | |
| Research and development | 0 | | | 39 | | | 0 | | | 95 | | |
| | Other (income)/expense, net | Other (income)/expense, net | 219 | | | 289 | | | 405 | | | 623 | | Other (income)/expense, net | 144 | | | 219 | | | 272 | | | 405 | |
| Total charges | Total charges | $ | 219 | | | $ | 340 | | | $ | 429 | | | $ | 746 | | Total charges | $ | 148 | | | $ | 219 | | | $ | 278 | | | $ | 429 | |
The following summarizes the charges and spending related to restructuring plan activities:
| | | Six Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 |
| Liability at December 31 | Liability at December 31 | $ | 148 | | | $ | 100 | | Liability at December 31 | $ | 101 | | | $ | 148 | |
Provision for restructuring(a) | Provision for restructuring(a) | 114 | | | 228 | | Provision for restructuring(a) | 43 | | | 114 | |
| Foreign currency translation and other | Foreign currency translation and other | (2) | | | 1 | | Foreign currency translation and other | (6) | | | (2) | |
| Payments | Payments | (134) | | | (188) | | Payments | (67) | | | (134) | |
| Liability at June 30 | Liability at June 30 | $ | 126 | | | $ | 141 | | Liability at June 30 | $ | 71 | | | $ | 126 | |
(a) Includes a reduction of the liability resulting from changes in estimates of $8 million for both the six months ended June 30, 2022 and $62021. Excludes $9 million for the six months ended June 30, 2021 and 2020, respectively. Excludes $9 million and $47 million for the six months ended June 30, 2021 and 2020, respectively, of accelerated stock-based compensation relating to the Celgene Acquisition Plan.
Note 7. INCOME TAXES
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Earnings Before Income Taxes | Earnings Before Income Taxes | $ | 1,553 | | | $ | 1,627 | | | $ | 4,083 | | | $ | 1,323 | | Earnings Before Income Taxes | $ | 1,958 | | | $ | 1,553 | | | $ | 3,645 | | | $ | 4,083 | |
| Provision for Income Taxes | Provision for Income Taxes | 492 | | | 1,707 | | | 993 | | | 2,169 | | Provision for Income Taxes | 529 | | | 492 | | | 933 | | | 993 | |
| Effective Tax Rate | Effective Tax Rate | 31.7 | % | | 104.9 | % | | 24.3 | % | | 163.9 | % | Effective Tax Rate | 27.0 | % | | 31.7 | % | | 25.6 | % | | 24.3 | % |
Income taxes in interim periods are determined based on the estimated annual effective tax rates and the tax impact of discrete items that are reflected immediately. The effective tax rates in 20212022 and 20202021 were impacted by low jurisdictional tax rates attributed to the unwinding of inventory fair value adjustments and intangible asset amortization, and contingent value rights fair value adjustments that arewere not taxable or deductible. The three andin the six months ended June 30, 2020 includes an $853 million deferred tax charge resulting from an internal transfer of certain intangible assets to the U.S. and an additional $255 million GILTI tax charge upon finalization of the Otezla* divestiture tax consequences with tax authorities.2021. Additional changes to the effective tax rate may occur in future periods due to various reasons, including changes to the estimated pretax earnings mix and tax reserves and revised interpretations or changes to the relevant tax code.
It is reasonably possible that the amount of unrecognized tax benefits at June 30, 20212022 could decrease in the range of approximately $430$455 million to $480$505 million in the next twelve months as a result of the settlement of certain tax audits and other events. The expected change in unrecognized tax benefits may result in the payment of additional taxes, adjustment of certain deferred taxes and/or recognition of tax benefits.
BMS is currently under examination by a number of tax authorities, which have proposed or are considering proposing material adjustments to tax positions for issues such as transfer pricing, certain tax credits and the deductibility of certain expenses. As previously disclosed, BMS received several notices of proposed adjustments from the IRS related to transfer pricing and other tax positions for the 2008 to 2012 tax years. BMS disagrees with the IRS’s positions and continues to work cooperatively with the IRS to resolve these open tax audits. It is reasonably possible that new issues will be raised by tax authorities that may increase unrecognized tax benefits; however, an estimate of such increases cannot reasonably be made at this time. BMS believes that it has adequately provided for all open tax years by tax jurisdiction.
Note 8. EARNINGS/(LOSS)EARNINGS PER SHARE
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Amounts in Millions, Except Per Share Data | Amounts in Millions, Except Per Share Data | 2021 | | 2020 | | 2021 | | 2020 | Amounts in Millions, Except Per Share Data | 2022 | | 2021 | | 2022 | | 2021 |
| Net Earnings/(Loss) Attributable to BMS Used for Basic and Diluted EPS Calculation | $ | 1,055 | | | $ | (85) | | | $ | 3,076 | | | $ | (860) | | |
| Net Earnings Attributable to BMS Used for Basic and Diluted EPS Calculation | | Net Earnings Attributable to BMS Used for Basic and Diluted EPS Calculation | $ | 1,421 | | | $ | 1,055 | | | $ | 2,699 | | | $ | 3,076 | |
| | Weighted-Average Common Shares Outstanding – Basic | Weighted-Average Common Shares Outstanding – Basic | 2,227 | | | 2,263 | | | 2,232 | | | 2,261 | | Weighted-Average Common Shares Outstanding – Basic | 2,133 | | | 2,227 | | | 2,140 | | | 2,232 | |
| Incremental Shares Attributable to Share-Based Compensation Plans | Incremental Shares Attributable to Share-Based Compensation Plans | 25 | | | 0 | | | 26 | | | 0 | | Incremental Shares Attributable to Share-Based Compensation Plans | 16 | | | 25 | | | 17 | | | 26 | |
| Weighted-Average Common Shares Outstanding – Diluted | Weighted-Average Common Shares Outstanding – Diluted | 2,252 | | | 2,263 | | | 2,258 | | | 2,261 | | Weighted-Average Common Shares Outstanding – Diluted | 2,149 | | | 2,252 | | | 2,157 | | | 2,258 | |
| | Earnings/(Loss) per Common Share | | |
| Earnings per Common Share | | Earnings per Common Share | |
| Basic | Basic | $ | 0.47 | | | $ | (0.04) | | | $ | 1.38 | | | $ | (0.38) | | Basic | $ | 0.67 | | | $ | 0.47 | | | $ | 1.26 | | | $ | 1.38 | |
| Diluted | Diluted | 0.47 | | | (0.04) | | | 1.36 | | | (0.38) | | Diluted | 0.66 | | | 0.47 | | | 1.25 | | | 1.36 | |
The total number of potential shares of common stock excluded from the diluted earnings/(loss)earnings per common share computation because of the antidilutive impact was 9 millionnot material for both the three and six months ended June 30, 20212022 and 127 million for both the three and six months ended June 30, 2020.2021.
Note 9. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENTS
Financial assets and liabilities measured at fair value on a recurring basis are summarized below:
| | | June 30, 2021 | | December 31, 2020 | | June 30, 2022 | | December 31, 2021 |
| Dollars in Millions | Dollars in Millions | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 | Dollars in Millions | Level 1 | | Level 2 | | Level 3 | | Level 1 | | Level 2 | | Level 3 |
| Cash and cash equivalents - money market and other securities | Cash and cash equivalents - money market and other securities | $ | 0 | | | $ | 9,246 | | | $ | 0 | | | $ | 0 | | | $ | 12,361 | | | $ | 0 | | Cash and cash equivalents - money market and other securities | $ | — | | | $ | 7,708 | | | $ | — | | | $ | — | | | $ | 12,225 | | | $ | — | |
| Marketable debt securities: | Marketable debt securities: | | Marketable debt securities: | |
| Certificates of deposit | Certificates of deposit | 0 | | | 1,591 | | | 0 | | | 0 | | | 1,020 | | | 0 | | Certificates of deposit | — | | | 2,022 | | | — | | | — | | | 2,264 | | | — | |
| | Commercial paper | | Commercial paper | — | | | 316 | | | — | | | — | | | 320 | | | — | |
| Corporate debt securities | Corporate debt securities | 0 | | | 498 | | | 0 | | | 0 | | | 698 | | | 0 | | Corporate debt securities | — | | | 140 | | | — | | | — | | | 403 | | | — | |
| Derivative assets | Derivative assets | 0 | | | 131 | | | 19 | | | 0 | | | 42 | | | 27 | | Derivative assets | — | | | 609 | | | 8 | | | — | | | 206 | | | 12 | |
| Equity investments | Equity investments | 3,275 | | | 139 | | | 0 | | | 3,314 | | | 138 | | | 0 | | Equity investments | 497 | | | 556 | | | — | | | 1,910 | | | 109 | | | — | |
| Derivative liabilities | Derivative liabilities | 0 | | | 42 | | | 0 | | | 0 | | | 270 | | | 0 | | Derivative liabilities | — | | | 17 | | | — | | | — | | | 25 | | | — | |
| Contingent consideration liability: | Contingent consideration liability: | | Contingent consideration liability: | |
| Contingent value rights | Contingent value rights | 10 | | | 0 | | | 0 | | | 530 | | | 0 | | | 0 | | Contingent value rights | 6 | | | — | | | — | | | 8 | | | — | | | — | |
| Other acquisition related contingent consideration | Other acquisition related contingent consideration | 0 | | | 0 | | | 67 | | | 0 | | | 0 | | | 78 | | Other acquisition related contingent consideration | — | | | — | | | 33 | | | — | | | — | | | 35 | |
As further described in “Item 8. Financial Statements and Supplementary Data—Note 9. Financial Instruments and Fair Value Measurements” in the Company’s 20202021 Form 10-K, the Company’s fair value estimates use inputs that are either (1) quoted prices for identical assets or liabilities in active markets (Level 1 inputs); (2) observable prices for similar assets or liabilities in active markets or for identical or similar assets or liabilities in markets that are not active (Level 2 inputs); or (3) unobservable inputs (Level 3 inputs).
The fair value of equity investments is adjusted for characteristics specific to the security and is not adjusted for contractual sale restrictions. Equity investments subject to contractual sale restrictions were not material at June 30, 2022 and December 31, 2021. The restrictions will expire by April 2023.
Contingent consideration obligations are recorded at their estimated fair values and these obligations are revalued each reporting period until the related contingencies are resolved. The contingent value rights are adjusted to fair value using the traded price of the securities at the end of each reporting period. The fair value measurements for other contingent consideration liabilities are estimated using probability-weighted discounted cash flow approaches that are based on significant unobservable inputs related to product candidates acquired in business combinations and are reviewed quarterly. These inputs include, as applicable, estimated probabilities and timing of achieving specified development and regulatory milestones and the discount rate used to calculate the present value of estimated future payments. Significant changes which increase or decrease the probabilities of achieving the related development and regulatory events or shorten or lengthen the time required to achieve such events would result in corresponding increases or decreases in the fair values of these obligations. The fair value of other acquisition related contingent consideration as of June 30, 2021 was calculated using the following significant unobservable inputs:
| | | | | | | |
| Ranges (weighted average) utilized as of: |
Inputs | June 30, 2021 | | |
Discount rate | 0.3% to 1.3% (0.6%) | | |
Probability of payment | 0% to 80% (2.4%) | | |
Projected year of payment for development and regulatory milestones | 2022 to 2028 | | |
There were no transfers between levels 1, 2 and 3 during the six months ended June 30, 2021. The following table represents a roll-forward of the fair value of level 3 instruments:
| | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, 2021 | | Six Months Ended June 30, 2020 |
| Dollars in Millions | Asset | | Liability | | Asset | | Liability |
| Fair value as of January 1 | $ | 27 | | | $ | 78 | | | $ | — | | | $ | 106 | |
| | | | | | | |
| Changes in estimated fair value | (8) | | | 2 | | | — | | | (36) | |
| Payments | — | | | (12) | | | — | | | — | |
| Foreign exchange | — | | | (1) | | | — | | | 1 | |
| Fair value as of June 30 | $ | 19 | | | $ | 67 | | | $ | — | | | $ | 71 | |
Available-for-saleMarketable Debt Securities and Equity Investments
The following table summarizes available-for-salemarketable debt securities:
| | | June 30, 2021 | | December 31, 2020 | | June 30, 2022 | | December 31, 2021 |
| Dollars in Millions | Dollars in Millions | Amortized Cost | | Gross Unrealized | | | Amortized Cost | | Gross Unrealized | | Dollars in Millions | Amortized Cost | | Gross Unrealized | | | Amortized Cost | | Gross Unrealized | |
| Gains | | Losses | | Fair Value | | Gains | | Losses | | Fair Value | | Gains | | Losses | | Fair Value | | Gains | | Losses | | Fair Value |
| Certificates of deposit | Certificates of deposit | $ | 1,591 | | | $ | 0 | | | $ | 0 | | | $ | 1,591 | | | $ | 1,020 | | | $ | 0 | | | $ | 0 | | | $ | 1,020 | | Certificates of deposit | $ | 2,022 | | | $ | — | | | $ | — | | | $ | 2,022 | | | $ | 2,264 | | | $ | — | | | $ | — | | | $ | 2,264 | |
| | Commercial paper | | Commercial paper | 316 | | | — | | | — | | | 316 | | | 320 | | | — | | | — | | | 320 | |
| Corporate debt securities | Corporate debt securities | 490 | | | 8 | | | 0 | | | 498 | | | 684 | | | 14 | | | 0 | | | 698 | | Corporate debt securities | 140 | | | — | | | — | | | 140 | | | 401 | | | 2 | | | — | | | 403 | |
Total available-for-sale debt securities(a) | $ | 2,081 | | | $ | 8 | | | $ | 0 | | | $ | 2,089 | | | $ | 1,704 | | | $ | 14 | | | $ | 0 | | | $ | 1,718 | | |
Total marketable debt securities(a) | | Total marketable debt securities(a) | $ | 2,478 | | | $ | — | | | $ | — | | | $ | 2,478 | | | $ | 2,985 | | | $ | 2 | | | $ | — | | | $ | 2,987 | |
(a) All marketable debt securities mature within two yearsone year as of June 30, 20212022 and December 31, 2020.2021.
The following summarizes the carrying amount of equity investments:
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Equity investments with readily determinable fair values | Equity investments with readily determinable fair values | $ | 3,414 | | | $ | 3,452 | | Equity investments with readily determinable fair values | $ | 1,053 | | | $ | 2,019 | |
| Equity investments without readily determinable fair values | Equity investments without readily determinable fair values | 616 | | | 694 | | Equity investments without readily determinable fair values | 389 | | | 283 | |
| Equity method investments | Equity method investments | 638 | | | 549 | | Equity method investments | 569 | | | 666 | |
| Total equity investments | Total equity investments | $ | 4,668 | | | $ | 4,695 | | Total equity investments | $ | 2,011 | | | $ | 2,968 | |
The following summarizes the activity related to equity investments. Changes in fair value of equity investments are included in Other (income)/expense, net.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 |
Net gain/(loss) recognized on equity investments with readily determinable fair values(a) | $ | 11 | | | $ | 778 | | | $ | 448 | | | $ | 550 | |
| Realized gain/(loss) recognized on equity investments with readily determinable fair value sold | 1 | | | 0 | | | (2) | | | 0 | |
| | | | | | | |
| Upward adjustments on equity investments without readily determinable fair value | 99 | | | 55 | | | 130 | | | 130 | |
| Impairments and downward adjustments on equity investments without readily determinable fair value | 0 | | | (14) | | | (1) | | | (202) | |
| | | | | | | |
| Cumulative upward adjustments on equity investments without readily determinable fair value | | | | | 243 | | | |
| Cumulative impairments and downward adjustments on equity investments without readily determinable fair value | | | | | (142) | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
Equity investments with readily determined fair values(a) | | | | | | | |
| Net loss/(gain) recognized | $ | 254 | | | $ | 81 | | | $ | 852 | | | $ | (115) | |
| Net (gain)/loss recognized on investments sold | (16) | | | (1) | | | (16) | | | 2 | |
| Net unrealized loss/(gain) recognized on investments still held | 270 | | | 82 | | | 868 | | | (117) | |
| | | | | | | |
| Equity investments without readily determinable fair values | | | | | | | |
| Upward adjustments | — | | | (192) | | | (6) | | | (461) | |
| Impairments and downward adjustments | — | | | — | | | 2 | | | 1 | |
| Cumulative upward adjustments | | | | | (109) | | | |
| Cumulative impairments and downward adjustments | | | | | 52 | | | |
| | | | | | | |
| Equity in net (income)/loss of affiliates | 54 | | | (37) | | | 104 | | | (174) | |
(a) Net unrealized net gains on equity investments still held were $11 million and $353 million forCertain prior year amounts have been reclassified to conform to the three and six months ended June 30, 2021 and $778 million and $550 million for the three and six months ended June 30, 2020, respectively.current year's presentation.
Qualifying Hedges and Non-Qualifying Derivatives
Cash Flow Hedges — Foreign currency forward contracts are used to hedge certain forecasted intercompany inventory purchases and sales transactions and certain foreign currency transactions. The fair value for contracts designated as cash flow hedges areis temporarily reported in Accumulated other comprehensive loss and included in earnings when the hedged item affects earnings. The net gain or loss on foreign currency forward contracts is expected to be reclassified to net earnings (primarily included in Cost of products sold and Other (income)/expense, net) within the next 1224 months. The notional amount of outstanding foreign currency forward contracts was primarily attributed to the euro of $3.1$5.3 billion and Japanese yen of $1.1$1.3 billion at June 30, 2021.2022.
The earnings impact related to discontinued cash flow hedges and hedge ineffectiveness was not material during all periods presented. Cash flow hedge accounting is discontinued when the forecasted transaction is no longer probable of occurring within 60 days after the originally forecasted date or when the hedge is no longer effective. Assessments to determine whether derivatives designated as qualifying hedges are highly effective in offsetting changes in the cash flows of hedged items are performed at inception and on a quarterly basis. Foreign currency forward contracts not designated as hedging instruments are used to offset exposures in certain foreign currency denominated assets, liabilities and earnings. Changes in the fair value of these derivatives are recognized in earnings as they occur.
BMS may hedge a portion of its future foreign currency exposure by utilizing a strategy that involves both a purchased local currency put option and a written local currency call option that are accounted for as hedges of future sales denominated in that local currency. Specifically, BMS sells (or writes) a local currency call option and purchases a local currency put option with the same expiration dates and local currency notional amounts but with different strike prices. The premium collected from the sale of the call option is equal to the premium paid for the purchased put option, resulting in no net premium being paid. This combination of transactions is generally referred to as a “zero-cost collar.” The expiration dates and notional amounts correspond to the amount and timing of forecasted foreign currency sales. If the U.S. Dollar weakens relative to the currency of the hedged anticipated sales, the purchased put option value reduces to zero and BMS benefits from the increase in the U.S. Dollar equivalent value of our anticipated foreign currency cash flows; however, this benefit would be capped at the strike level of the written call, which forms the upper end of the collar.
Net Investment Hedges — Non-U.S. Dollardollar borrowings of €950 million ($1.1 billion)992 million) at June 30, 20212022 are designated as net investment hedges to hedge euro currency exposures of the net investment in certain foreign affiliates and are recognized in long-term debt. The effective portion of foreign exchange gain on the remeasurement of euro debt was included in the foreign currency translation component of Accumulated other comprehensive loss with the related offset in long-term debt.
Cross-currency interest rate swap contracts of $400$686 million at June 30, 20212022 are designated to hedge Japanese yen currency exposure of BMS’s net investment in its Japan subsidiaries. Contract fair value changes are recorded in the foreign currency translation component of Other Comprehensive Income/(Loss)Accumulated other comprehensive loss with a related offset in Other non-current assets or Other non-current liabilities.
Fair Value Hedges — Fixed to floating interest rate swap contracts are designated as fair value hedges and used as an interest rate risk management strategy to create an appropriate balance of fixed and floating rate debt. The contracts and underlying debt for the hedged benchmark risk are recorded at fair value. The effective interest rate for the contracts is one-month LIBOR (0.10%(1.79% as of June 30, 2021)2022) plus an interest rate spread of 4.6%. Gains or losses resulting from changes in fair value of the underlying debt attributable to the hedged benchmark interest rate risk are recorded in interest expense with an associated offset to the carrying value of debt. Since the specific terms and notional amount of the swap are intended to align with the debt being hedged, all changes in fair value of the swap are recorded in interest expense with an associated offset to the derivative asset or liability on the consolidated balance sheet. As a result, there was no net impact in earnings. If the underlying swap is terminated prior to maturity, then the fair value adjustment to the underlying debt is amortized as a reduction to interest expense over the remaining term of the debt.
In the first quarter of 2022, treasury lock contracts were entered into with a total notional value of $3.0 billion and $2.3 billion to hedge interest rate risk and cash payment associated with long-term debt, respectively. The treasury lock contracts were terminated upon issuance and redemption of long-term debt. These contracts were not designated for hedge accounting and the contract settlements were not material.
The following table summarizes the fair value of outstanding derivatives:
| | | | June 30, 2021 | | December 31, 2020 | | June 30, 2022 | | December 31, 2021 |
| | Asset(a) | | Liability(b) | | Asset(a) | | Liability(b) | | Asset(a) | | Liability(b) | | Asset(a) | | Liability(b) |
| Dollars in Millions | Dollars in Millions | Notional | | Fair Value | | Notional | | Fair Value | | Notional | | Fair Value | | Notional | | Fair Value | Dollars in Millions | Notional | | Fair Value | | Notional | | Fair Value | | Notional | | Fair Value | | Notional | | Fair Value |
| Derivatives designated as hedging instruments: | Derivatives designated as hedging instruments: | | | | | | | | | | | | | | | Derivatives designated as hedging instruments: | | | | | | | | | | | | | | |
| Interest rate swap contracts | Interest rate swap contracts | $ | 255 | | | $ | 16 | | | $ | 0 | | | $ | 0 | | | $ | 255 | | | $ | 24 | | | $ | 0 | | | $ | 0 | | Interest rate swap contracts | $ | — | | | $ | — | | | $ | 255 | | | $ | (9) | | | $ | 255 | | | $ | 10 | | | $ | — | | | $ | — | |
| Cross-currency interest rate swap contracts | Cross-currency interest rate swap contracts | 400 | | | 16 | | | 0 | | | 0 | | | 0 | | | 0 | | | 400 | | | (10) | | Cross-currency interest rate swap contracts | 686 | | | 77 | | | — | | | — | | | 600 | | | 26 | | | — | | | — | |
| Foreign currency forward contracts | Foreign currency forward contracts | 3,776 | | | 90 | | | 1,445 | | | (36) | | | 231 | | | 1 | | | 5,813 | | | (259) | | Foreign currency forward contracts | 7,625 | | | 524 | | | 540 | | | (5) | | | 3,587 | | | 161 | | | 1,814 | | | (20) | |
| | Derivatives not designated as hedging instruments: | Derivatives not designated as hedging instruments: | | Derivatives not designated as hedging instruments: | |
| Foreign currency forward contracts | Foreign currency forward contracts | 932 | | | 9 | | | 531 | | | (6) | | | 1,104 | | | 17 | | | 336 | | | (1) | | Foreign currency forward contracts | 623 | | | 8 | | | 522 | | | (3) | | | 883 | | | 9 | | | 568 | | | (5) | |
| | Other | Other | 0 | | | 19 | | | 0 | | | 0 | | | 0 | | | 27 | | | 0 | | | 0 | | Other | — | | | 8 | | | — | | | — | | | — | | | 12 | | | — | | | — | |
(a) Included in Other current assets and Other non-current assets.
(b) Included in Other current liabilities and Other non-current liabilities.
The following table summarizes the financial statement classification and amount of (gain)/loss recognized on hedging instruments:
| | | Three Months Ended June 30, 2021 | | Six Months Ended June 30, 2021 | | Three Months Ended June 30, 2022 | | Six Months Ended June 30, 2022 |
| Dollars in Millions | Dollars in Millions | Cost of products sold | | Other (income)/expense, net | | Cost of products sold | | Other (income)/expense, net | Dollars in Millions | Cost of products sold | | Other (income)/expense, net | | Cost of products sold | | Other (income)/expense, net |
| Interest rate swap contracts | Interest rate swap contracts | $ | 0 | | | $ | (7) | | | $ | 0 | | | $ | (15) | | Interest rate swap contracts | $ | — | | | $ | (7) | | | $ | — | | | $ | (18) | |
| | Cross-currency interest rate swap contracts | Cross-currency interest rate swap contracts | 0 | | | (3) | | | 0 | | | (6) | | Cross-currency interest rate swap contracts | — | | | (4) | | | — | | | (8) | |
| Foreign currency forward contracts | Foreign currency forward contracts | 59 | | | 16 | | | 126 | | | (16) | | Foreign currency forward contracts | (131) | | | (18) | | | (213) | | | (75) | |
|
| | | Three Months Ended June 30, 2020 | | Six Months Ended June 30, 2020 | | Three Months Ended June 30, 2021 | | Six Months Ended June 30, 2021 |
| Dollars in Millions | Dollars in Millions | Cost of products sold | | Other (income)/expense, net | | Cost of products sold | | Other (income)/expense, net | Dollars in Millions | Cost of products sold | | Other (income)/expense, net | | Cost of products sold | | Other (income)/expense, net |
| Interest rate swap contracts | Interest rate swap contracts | $ | 0 | | | $ | (7) | | | $ | 0 | | | $ | (14) | | Interest rate swap contracts | $ | — | | | $ | (7) | | | $ | — | | | $ | (15) | |
| Cross-currency interest rate swap contracts | Cross-currency interest rate swap contracts | 0 | | | (3) | | | 0 | | | (5) | | Cross-currency interest rate swap contracts | — | | | (3) | | | — | | | (6) | |
| Foreign currency forward contracts | Foreign currency forward contracts | (35) | | | 21 | | | (58) | | | (55) | | Foreign currency forward contracts | 59 | | | 16 | | | 126 | | | (16) | |
| Foreign currency zero-cost collar contracts | 0 | | | 10 | | | 0 | | | 1 | | |
The following table summarizes the effect of derivative and non-derivative instruments designated as hedging instruments in Other Comprehensive Income/(Loss):Income:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Derivatives qualifying as cash flow hedges | Derivatives qualifying as cash flow hedges | | | | | | | | Derivatives qualifying as cash flow hedges | | | | | | | |
| Foreign currency forward contracts gain/(loss): | Foreign currency forward contracts gain/(loss): | | Foreign currency forward contracts gain/(loss): | |
Recognized in Other Comprehensive Income/(Loss)(a) | $ | (38) | | | $ | (34) | | | $ | 221 | | | $ | 63 | | |
Recognized in Other Comprehensive Income(a) | | Recognized in Other Comprehensive Income(a) | $ | 481 | | | $ | (38) | | | $ | 601 | | | $ | 221 | |
| Reclassified to Cost of products sold | Reclassified to Cost of products sold | 53 | | | (32) | | | 89 | | | (52) | | Reclassified to Cost of products sold | (131) | | | 53 | | | (213) | | | 89 | |
| Forward starting interest rate swap contract loss: | | Forward starting interest rate swap contract loss: | |
| Reclassified to Other (income)/expense, net | | Reclassified to Other (income)/expense, net | — | | | — | | | (3) | | | — | |
| | | Derivatives qualifying as net investment hedges | Derivatives qualifying as net investment hedges | | Derivatives qualifying as net investment hedges | |
| Cross-currency interest rate swap contracts gain: | Cross-currency interest rate swap contracts gain: | | Cross-currency interest rate swap contracts gain: | |
| Recognized in Other Comprehensive Income/(Loss) | 0 | | | 4 | | | 26 | | | 10 | | |
| Recognized in Other Comprehensive Income | | Recognized in Other Comprehensive Income | 51 | | | — | | | 64 | | | 26 | |
| | Non-derivatives qualifying as net investment hedges | Non-derivatives qualifying as net investment hedges | | Non-derivatives qualifying as net investment hedges | |
| Non-U.S. dollar borrowings gain: | Non-U.S. dollar borrowings gain: | | Non-U.S. dollar borrowings gain: | |
| Recognized in Other Comprehensive Income/(Loss) | (16) | | | (32) | | | 25 | | | (12) | | |
| Recognized in Other Comprehensive Income | | Recognized in Other Comprehensive Income | 68 | | | (16) | | | 83 | | | 25 | |
(a) The majority is expected to be reclassified into earnings in the next 1224 months.
Debt Obligations
Short-term debt obligations include:
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Non-U.S. short-term borrowings | Non-U.S. short-term borrowings | $ | 63 | | | $ | 176 | | Non-U.S. short-term borrowings | $ | 151 | | | $ | 105 | |
| Current portion of long-term debt | Current portion of long-term debt | 2,497 | | | 2,000 | | Current portion of long-term debt | 4,646 | | | 4,764 | |
| Other | Other | 95 | | | 164 | | Other | 156 | | | 79 | |
| Total | Total | $ | 2,655 | | | $ | 2,340 | | Total | $ | 4,953 | | | $ | 4,948 | |
Long-term debt and the current portion of long-term debt include:
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Principal Value | Principal Value | $ | 43,666 | | | $ | 48,711 | | Principal Value | $ | 40,993 | | | $ | 43,095 | |
| | Adjustments to Principal Value: | Adjustments to Principal Value: | | Adjustments to Principal Value: | |
| Fair value of interest rate swap contracts | Fair value of interest rate swap contracts | 16 | | | 24 | | Fair value of interest rate swap contracts | (9) | | | 10 | |
| Unamortized basis adjustment from swap terminations | Unamortized basis adjustment from swap terminations | 131 | | | 149 | | Unamortized basis adjustment from swap terminations | 107 | | | 119 | |
| Unamortized bond discounts and issuance costs | Unamortized bond discounts and issuance costs | (279) | | | (303) | | Unamortized bond discounts and issuance costs | (296) | | | (263) | |
| Unamortized purchase price adjustments of Celgene debt | Unamortized purchase price adjustments of Celgene debt | 1,466 | | | 1,755 | | Unamortized purchase price adjustments of Celgene debt | 958 | | | 1,408 | |
| Total | Total | $ | 45,000 | | | $ | 50,336 | | Total | $ | 41,753 | | | $ | 44,369 | |
| | Current portion of long-term debt | Current portion of long-term debt | $ | 2,497 | | | $ | 2,000 | | Current portion of long-term debt | $ | 4,646 | | | $ | 4,764 | |
| Long-term debt | Long-term debt | 42,503 | | | 48,336 | | Long-term debt | 37,107 | | | 39,605 | |
| Total | Total | $ | 45,000 | | | $ | 50,336 | | Total | $ | 41,753 | | | $ | 44,369 | |
The fair value of long-term debt was $50.6$39.7 billion at June 30, 20212022 and $58.5$49.1 billion at December 31, 20202021 valued using Level 2 inputs, which are based upon the quoted market prices for the same or similar debt instruments. The fair value of short-term borrowings approximates the carrying value due to the short maturities of the debt instruments.
During the six months ended June 30, 2022, BMS purchased an aggregate principal amount of $6.0 billion of certain of its debt securities for $6.6 billion of cash in tender offers and “make whole” redemptions. In connection with these transactions, a net of $266 million loss on debt redemption was recognized based on the carrying value of the debt and included in Other (income)/expense, net. In addition, $1.5 billion 2.60% Notes and $500 million Floating Rate Notes matured and were repaid.
InDuring the first quartersix months ended June 30, 2022, we issued an aggregate principal amount of $6.0 billion of debt with net proceeds of $5.9 billion. The table below summarizes the issuances:
| | | | | |
| Dollars in Millions | |
| Principal Value: | |
| 2.950% Notes due 2032 | 1,750 | |
| 3.550% Notes due 2042 | 1,250 | |
| 3.700% Notes due 2052 | 2,000 | |
| 3.900% Notes due 2062 | 1,000 | |
| Total | $ | 6,000 | |
The notes rank equally in right of payment with all of BMS's existing and future senior unsecured indebtedness and are redeemable at any time, in whole, or in part, at varying specified redemption prices plus accrued and unpaid interest.
During the six months ended June 30, 2021, BMS purchased an aggregate principal amount of $3.5 billion of certain of its debt securities for approximately $4.0 billion of cash in a series of tender offers and “make whole” redemptions. In connection with these transactions, a $281 million loss on debt redemption was recognized based on the carrying value of the debt and included in Other (income)/expense, net. In addition, the $500 million 2.875% Notes matured and were repaid.
In the second quarter of 2021, the $1.0 billion 2.550% Notes matured and were repaid.
Interest payments were $807$720 million and $845$807 million for the six months ended June 30, 20212022 and 2020,2021, respectively, net of amounts related to interest rate swap contracts.
As of June 30,At December 31, 2021, BMS had 4 separate revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility expiringwhich expired in January 2022, a three-year $1.0 billion facility expiringwhich expired in January 2022 and two five-year $1.5 billion facilities that were extended to September 2025 and July 2026, respectively. The facilities provide
In January 2022, BMS entered into a five-year $5.0 billion facility expiring in January 2027, which is extendable annually by one year with the consent of the lenders. This facility provides for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for BMS’sour commercial paper borrowings and are extendable annually by one year on the anniversary dateborrowings. Concurrently with the consent ofentry into this facility, the lenders. commitments under our existing five-year $1.5 billion facilities were terminated and the three-year $1.0 billion facility and 364-day $2.0 billion facility expired in accordance with their terms in January 2022. No borrowings were outstanding under any revolving credit facility at June 30, 20212022 or December 31, 2020.2021.
Note 10. RECEIVABLES
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Trade receivables | Trade receivables | $ | 8,309 | | | $ | 7,882 | | Trade receivables | $ | 8,186 | | | $ | 8,723 | |
| Less charge-backs and cash discounts | Less charge-backs and cash discounts | (569) | | | (645) | | Less charge-backs and cash discounts | (575) | | | (723) | |
| Less allowance for expected credit loss | Less allowance for expected credit loss | (27) | | | (18) | | Less allowance for expected credit loss | (25) | | | (21) | |
| Net trade receivables | Net trade receivables | 7,713 | | | 7,219 | | Net trade receivables | 7,586 | | | 7,979 | |
| Alliance, royalties, VAT and other | 1,304 | | | 1,282 | | |
| Alliance, Royalties, VAT and other | | Alliance, Royalties, VAT and other | 1,468 | | | 1,390 | |
| Receivables | Receivables | $ | 9,017 | | | $ | 8,501 | | Receivables | $ | 9,054 | | | $ | 9,369 | |
Non-U.S. receivables sold on a nonrecourse basis were $638$674 million and $464$638 million for the six months ended June 30, 20212022 and 2020,2021, respectively. Receivables from the 3 largest customers in the U.S. represented approximately 58%64% and 56%59% of total trade receivables at June 30, 20212022 and December 31, 2020,2021, respectively.
Note 11. INVENTORIES
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Finished goods | Finished goods | $ | 891 | | | $ | 932 | | Finished goods | $ | 469 | | | $ | 543 | |
| Work in process | Work in process | 1,852 | | | 2,015 | | Work in process | 1,912 | | | 2,111 | |
| Raw and packaging materials | Raw and packaging materials | 270 | | | 207 | | Raw and packaging materials | 422 | | | 350 | |
| Total inventories | Total inventories | $ | 3,013 | | | $ | 3,154 | | Total inventories | $ | 2,803 | | | $ | 3,004 | |
| | Inventories | Inventories | $ | 2,137 | | | $ | 2,074 | | Inventories | $ | 2,142 | | | $ | 2,095 | |
| Other non-current assets | Other non-current assets | 876 | | | 1,080 | | Other non-current assets | 661 | | | 909 | |
Total inventories includeThe fair value adjustments resulting fromrelated to the Celgene acquisition of $606were $245 million at June 30, 20212022 and $774$508 million at December 31, 2020.2021. Other non-current assets include inventory expected to remain on hand beyond one year12 months in both periods.
17In the first quarter of 2022, BMS recorded an out of period adjustment to reduce the remaining amount of inventory fair value adjustments resulting from the Celgene acquisition by $114 million with a corresponding increase to Cost of products sold of $32 million and Research and development expense of $82 million. The adjustment was not material to previously reported balance sheets or results of operations.
Note 12. PROPERTY, PLANT AND EQUIPMENT
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Land | Land | $ | 169 | | | $ | 189 | | Land | $ | 162 | | | $ | 169 | |
| Buildings | Buildings | 5,705 | | | 5,732 | | Buildings | 5,740 | | | 5,897 | |
| Machinery, equipment and fixtures | Machinery, equipment and fixtures | 3,194 | | | 3,063 | | Machinery, equipment and fixtures | 3,243 | | | 3,252 | |
| Construction in progress | Construction in progress | 565 | | | 487 | | Construction in progress | 850 | | | 764 | |
| Gross property, plant and equipment | Gross property, plant and equipment | 9,633 | | | 9,471 | | Gross property, plant and equipment | 9,995 | | | 10,082 | |
| Less accumulated depreciation | Less accumulated depreciation | (3,838) | | | (3,585) | | Less accumulated depreciation | (4,025) | | | (4,033) | |
| Property, plant and equipment | Property, plant and equipment | $ | 5,795 | | | $ | 5,886 | | Property, plant and equipment | $ | 5,970 | | | $ | 6,049 | |
Depreciation expense was $141 million and $286 million for the three and six months ended June 30, 2022 and $143 million and $278 million for the three and six months ended June 30, 2021, and $145 million and $315 million for the three and six months ended June 30, 2020, respectively.
Note 13. GOODWILL AND OTHER INTANGIBLE ASSETS
| | Dollars in Millions | Dollars in Millions | Estimated Useful Lives | | June 30,
2021 | | December 31,
2020 | Dollars in Millions | Estimated Useful Lives | | June 30,
2022 | | December 31,
2021 |
| Goodwill | Goodwill | | | $ | 20,529 | | | $ | 20,547 | | Goodwill | | | $ | 20,446 | | | $ | 20,502 | |
| | Other intangible assets: | Other intangible assets: | | Other intangible assets: | |
| Licenses | Licenses | 5 – 15 years | | 327 | | | 328 | | Licenses | 5 – 15 years | | 307 | | | 307 | |
| Acquired marketed product rights | Acquired marketed product rights | 3 – 15 years | | 60,712 | | | 59,076 | | Acquired marketed product rights | 3 – 15 years | | 60,477 | | | 60,454 | |
| Capitalized software | Capitalized software | 3 – 10 years | | 1,405 | | | 1,325 | | Capitalized software | 3 – 10 years | | 1,581 | | | 1,499 | |
| IPRD | IPRD | | 4,360 | | | 6,130 | | IPRD | | 3,710 | | | 3,750 | |
| Gross other intangible assets | Gross other intangible assets | | 66,804 | | | 66,859 | | Gross other intangible assets | | 66,075 | | | 66,010 | |
| Less accumulated amortization | Less accumulated amortization | | (18,739) | | | (13,616) | | Less accumulated amortization | | (28,385) | | | (23,483) | |
| Other intangible assets | Other intangible assets | | $ | 48,065 | | | $ | 53,243 | | Other intangible assets | | $ | 37,690 | | | $ | 42,527 | |
In the six months ended June 30, 2021, $1.5 billion of IPRD was reclassified to acquired marketed product rights upon approval of Breyanzi and Abecma in the U.S. Amortization expense of other intangible assets was $2.4 billion and $4.9 billion for the three and six months ended June 30, 2022 and $2.5 billion and $5.1 billion for the three and six months ended June 30, 2021, and $2.5 billion and $4.8 billion for the three and six months ended June 30, 2020, respectively.
In the first quarter of 2022, a $40 million IPRD impairment charge was recorded in Research and development expense following a decision to discontinue development of an investigational compound in connection with the prioritization of current pipeline opportunities. The compound was obtained in the acquisition of Celgene and was being studied as a potential treatment for autoimmune diseases. The charge represented a full write-down.
In the second quarter of 2021, a $230 million IPRD impairment charge was recorded in Research and development expense following a decision to discontinue development of an investigational compound in connection with the prioritization of current pipeline opportunities. The compound was being studied as a potential treatment for fibrotic diseases and was acquired in the acquisition of Celgene. The charge represented a full write-down based on the estimated fair value determined using discounted cash flow projections.
In the first of quarter of 2021, Inrebic EU regulatory approval milestones of $300 million were achieved resulting in a $385 million increase to the acquired marketed product rights intangible asset, after establishing the applicable deferred tax liability. An impairment charge of $315 million was recognized in Cost of products sold as the carrying value of this asset exceeded the projected undiscounted cash flows of the asset. The charge was equal to the excess of the asset's carrying value over its estimated fair value using discounted cash flow projections.
Note 14. SUPPLEMENTAL FINANCIAL INFORMATION
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31, 2020 | Dollars in Millions | June 30,
2022 | | December 31, 2021 |
| Income taxes | Income taxes | $ | 2,258 | | | $ | 1,799 | | Income taxes | $ | 3,067 | | | $ | 2,786 | |
| Research and development | Research and development | 576 | | | 492 | | Research and development | 664 | | | 514 | |
| Contract assets | | Contract assets | 419 | | | 361 | |
| Equity investments | Equity investments | 1,046 | | | 619 | | Equity investments | 38 | | | 255 | |
| Restricted cash | 174 | | | 89 | | |
Restricted cash(a) | | Restricted cash(a) | 153 | | | 140 | |
| Other | Other | 983 | | | 787 | | Other | 1,421 | | | 776 | |
| Other current assets | Other current assets | $ | 5,037 | | | $ | 3,786 | | Other current assets | $ | 5,762 | | | $ | 4,832 | |
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31, 2020 | Dollars in Millions | June 30,
2022 | | December 31, 2021 |
| Equity investments | Equity investments | $ | 3,622 | | | $ | 4,076 | | Equity investments | $ | 1,973 | | | $ | 2,713 | |
| Inventories | Inventories | 876 | | | 1,080 | | Inventories | 661 | | | 909 | |
| Operating leases | Operating leases | 1,006 | | | 859 | | Operating leases | 840 | | | 919 | |
| Pension and postretirement | Pension and postretirement | 234 | | | 208 | | Pension and postretirement | 315 | | | 317 | |
| Research and development | | Research and development | 572 | | | 248 | |
Restricted cash(a) | Restricted cash(a) | 199 | | | 338 | | Restricted cash(a) | 57 | | | 197 | |
| Other | Other | 517 | | | 458 | | Other | 310 | | | 232 | |
| Other non-current assets | Other non-current assets | $ | 6,454 | | | $ | 7,019 | | Other non-current assets | $ | 4,728 | | | $ | 5,535 | |
(a) Restricted cash consists of funds restricted for annual Company contributions to the defined contribution plan in the U.S. and escrow for litigation settlements. Cash is restricted when withdrawal or general use is contractually or legally restricted. Restricted cash of $373 million at June 30, 2021, and $428 million at June 30, 2020 was included in cash, cash equivalents and restricted cash in the consolidated statements of cash flows.
| | | | | | | | | | | |
| Dollars in Millions | June 30,
2021 | | December 31, 2020 |
| Rebates and returns | $ | 5,665 | | | $ | 5,688 | |
| Income taxes | 638 | | | 647 | |
| Employee compensation and benefits | 896 | | | 1,412 | |
| Research and development | 1,469 | | | 1,423 | |
| Dividends | 1,107 | | | 1,129 | |
| Interest | 373 | | | 434 | |
| Royalties | 386 | | | 461 | |
| Operating leases | 173 | | | 164 | |
| Contingent value rights | 0 | | | 515 | |
| Other | 2,020 | | | 2,154 | |
| Other current liabilities | $ | 12,727 | | | $ | 14,027 | |
| | | | | | | | | | | |
| Dollars in Millions | June 30,
2021 | | December 31, 2020 |
| Income taxes payable | $ | 4,690 | | | $ | 5,017 | |
| Pension and postretirement | 838 | | | 899 | |
| Operating leases | 962 | | | 833 | |
| Deferred income | 324 | | | 357 | |
| Deferred compensation | 416 | | | 344 | |
| Other | 268 | | | 326 | |
| Other non-current liabilities | $ | 7,498 | | | $ | 7,776 | |
| | | | | | | | | | | |
| Dollars in Millions | June 30,
2022 | | December 31, 2021 |
| Rebates and discounts | $ | 5,842 | | | $ | 6,399 | |
| Income taxes | 1,141 | | | 754 | |
| Employee compensation and benefits | 797 | | | 1,375 | |
| Research and development | 1,386 | | | 1,373 | |
| Dividends | 1,154 | | | 1,186 | |
| Interest | 352 | | | 378 | |
| Royalties | 384 | | | 410 | |
| Operating leases | 167 | | | 169 | |
| | | |
| Other | 1,857 | | | 1,927 | |
| Other current liabilities | $ | 13,080 | | | $ | 13,971 | |
| | | | | | | | | | | |
| Dollars in Millions | June 30,
2022 | | December 31, 2021 |
| Income taxes | $ | 4,366 | | | $ | 4,835 | |
| Pension and postretirement | 589 | | | 654 | |
| Operating leases | 815 | | | 874 | |
| Deferred income | 307 | | | 326 | |
| Deferred compensation | 354 | | | 427 | |
| Other | 209 | | | 218 | |
| Other non-current liabilities | $ | 6,640 | | | $ | 7,334 | |
Note 15. EQUITY
The following table summarizes changes in equity for the six months ended June 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Common Stock | | Capital in Excess of Par Value of Stock | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Treasury Stock | | Noncontrolling Interest |
| Dollars and Shares in Millions | Shares | | Par Value | | Shares | | Cost | |
| Balance at December 31, 2021 | 2,923 | | | $ | 292 | | | $ | 44,361 | | | $ | (1,268) | | | $ | 23,820 | | | 747 | | | $ | (31,259) | | | $ | 60 | |
| Net Earnings | — | | | — | | | — | | | — | | | 1,278 | | | — | | | — | | | 5 | |
| Other Comprehensive Income | — | | | — | | | — | | | 39 | | | — | | | — | | | — | | | — | |
Cash dividends declared(a) | — | | | — | | | — | | | — | | | (1,150) | | | — | | | — | | | — | |
| Share repurchase program | — | | | — | | | (750) | | | — | | | — | | | 65 | | | (4,250) | | | — | |
| Stock compensation | — | | | — | | | 145 | | | — | | | — | | | (18) | | | 322 | | | — | |
| | | | | | | | | | | | | | | |
| Balance at March 31, 2022 | 2,923 | | | $ | 292 | | | $ | 43,756 | | | $ | (1,229) | | | $ | 23,948 | | | 794 | | | $ | (35,187) | | | $ | 65 | |
| Net Earnings | — | | | — | | | — | | | — | | | 1,421 | | | — | | | — | | | 8 | |
| Other Comprehensive Income | — | | | — | | | — | | | 237 | | | — | | | — | | | — | | | — | |
Cash dividends declared(a) | — | | | — | | | — | | | — | | | (1,152) | | | — | | | — | | | — | |
| Share repurchase program | — | | | — | | | 300 | | | — | | | — | | | 2 | | | (300) | | | — | |
| Stock compensation | — | | | — | | | 319 | | | — | | | — | | | (8) | | | 195 | | | — | |
| Distributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (12) | |
| Balance at June 30, 2022 | 2,923 | | | 292 | | | 44,375 | | | (992) | | | 24,217 | | | 788 | | | (35,292) | | | 61 | |
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(a) Cash dividends declared per common share were $0.54 for the three months ended March 31, 2022 and June 30, 2022, respectively.
The following table summarizes changes in equity for the six months ended June 30, 2021:
| | | Common Stock | | Capital in Excess of Par Value of Stock | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Treasury Stock | | Noncontrolling Interest | | Common Stock | | Capital in Excess of Par Value of Stock | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Treasury Stock | | Noncontrolling Interest |
| Dollars and Shares in Millions | Dollars and Shares in Millions | Shares | | Par Value | | Shares | | Cost | | Dollars and Shares in Millions | Shares | | Par Value | | Shares | | Cost | |
| Balance at December 31, 2020 | Balance at December 31, 2020 | 2,923 | | | $ | 292 | | | $ | 44,325 | | | $ | (1,839) | | | $ | 21,281 | | | 679 | | | $ | (26,237) | | | $ | 60 | | Balance at December 31, 2020 | 2,923 | | | $ | 292 | | | $ | 44,325 | | | $ | (1,839) | | | $ | 21,281 | | | 679 | | | $ | (26,237) | | | $ | 60 | |
| Net earnings | — | | | — | | | — | | | — | | | 2,021 | | | — | | | — | | | 8 | | |
| Net Earnings | | Net Earnings | — | | | — | | | — | | | — | | | 2,021 | | | — | | | — | | | 8 | |
| Other Comprehensive Income | Other Comprehensive Income | — | | | — | | | — | | | 295 | | | — | | | — | | | — | | | — | | Other Comprehensive Income | — | | | — | | | — | | | 295 | | | — | | | — | | | — | | | — | |
Cash dividends declared(a) | Cash dividends declared(a) | — | | | — | | | — | | | — | | | (1,098) | | | — | | | — | | | — | | Cash dividends declared(a) | — | | | — | | | — | | | — | | | (1,098) | | | — | | | — | | | — | |
| Share repurchase program | Share repurchase program | — | | | — | | | — | | | — | | | — | | | 28 | | | (1,768) | | | — | | Share repurchase program | — | | | — | | | — | | | — | | | — | | | 28 | | | (1,768) | | | — | |
| Stock compensation | Stock compensation | — | | | — | | | (473) | | | — | | | — | | | (15) | | | 806 | | | — | | Stock compensation | — | | | — | | | (473) | | | — | | | — | | | (15) | | | 806 | | | — | |
| | Balance at March 31, 2021 | Balance at March 31, 2021 | 2,923 | | | $ | 292 | | | $ | 43,852 | | | $ | (1,544) | | | $ | 22,204 | | | 692 | | | $ | (27,199) | | | $ | 68 | | Balance at March 31, 2021 | 2,923 | | | $ | 292 | | | $ | 43,852 | | | $ | (1,544) | | | $ | 22,204 | | | 692 | | | $ | (27,199) | | | $ | 68 | |
| Net earnings | — | | | — | | | — | | | — | | | 1,055 | | | — | | | — | | | 6 | | |
| Other Comprehensive Income | — | | | — | | | — | | | 26 | | | — | | | — | | | — | | | — | | |
| Net Loss | | Net Loss | — | | | — | | | — | | | — | | | 1,055 | | | — | | | — | | | 6 | |
| Other Comprehensive Loss | | Other Comprehensive Loss | — | | | — | | | — | | | 26 | | | — | | | — | | | — | | | — | |
Cash dividends declared(a) | Cash dividends declared(a) | — | | | — | | | — | | | — | | | (1,091) | | | — | | | — | | | — | | Cash dividends declared(a) | — | | | — | | | — | | | — | | | (1,091) | | | — | | | — | | | — | |
| Stock repurchase program | Stock repurchase program | — | | | — | | | — | | | — | | | — | | | 19 | | | (1,235) | | | — | | Stock repurchase program | — | | | — | | | — | | | — | | | — | | | 19 | | | (1,235) | | | — | |
| Stock compensation | Stock compensation | — | | | — | | | 212 | | | — | | | — | | | (10) | | | 236 | | | — | | Stock compensation | — | | | — | | | 212 | | | — | | | — | | | (10) | | | 236 | | | — | |
| Distributions | Distributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (8) | | Distributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (8) | |
| Balance at June 30, 2021 | Balance at June 30, 2021 | 2,923 | | | 292 | | | 44,064 | | | (1,518) | | | 22,168 | | | 701 | | | (28,198) | | | 66 | | Balance at June 30, 2021 | 2,923 | | | 292 | | | 44,064 | | | (1,518) | | | 22,168 | | | 701 | | | (28,198) | | | 66 | |
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(a) Cash dividends declared per common share were $0.49 for the three months ended March 31, 2021 and June 30, 2021.2021, respectively.
The following table summarizes changes in equity for the six months ended June 30, 2020:
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| Common Stock | | Capital in Excess of Par Value of Stock | | Accumulated Other Comprehensive Loss | | Retained Earnings | | Treasury Stock | | Noncontrolling Interest |
| Dollars and Shares in Millions | Shares | | Par Value | | Shares | | Cost | |
| Balance at December 31, 2019 | 2,923 | | | $ | 292 | | | $ | 43,709 | | | $ | (1,520) | | | $ | 34,474 | | | 672 | | | $ | (25,357) | | | $ | 100 | |
| Net loss | — | | | — | | | — | | | — | | | (775) | | | — | | | — | | | 9 | |
| Other Comprehensive Loss | — | | | — | | | — | | | (29) | | | — | | | — | | | — | | | — | |
Cash dividends declared(a) | — | | | — | | | — | | | — | | | (1,028) | | | — | | | — | | | — | |
| Share repurchase program | — | | | — | | | — | | | — | | | — | | | 1 | | | (81) | | | — | |
| Stock compensation | — | | | — | | | (455) | | | — | | | — | | | (13) | | | 681 | | | — | |
| Distributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (43) | |
| Balance at March 31, 2020 | 2,923 | | | $ | 292 | | | $ | 43,254 | | | $ | (1,549) | | | $ | 32,671 | | | 660 | | | $ | (24,757) | | | $ | 66 | |
| Net loss | — | | | — | | | — | | | — | | | (85) | | | — | | | — | | | 5 | |
| Other Comprehensive Loss | — | | | — | | | — | | | (7) | | | — | | | — | | | — | | | — | |
Cash dividends declared(b) | — | | | — | | | — | | | — | | | (1,021) | | | — | | | — | | | — | |
| Stock repurchase program | — | | | — | | | 1,400 | | | — | | | — | | | 16 | | | (1,400) | | | — | |
| Stock compensation | — | | | — | | | (210) | | | — | | | — | | | (7) | | | 506 | | | — | |
| Distributions | — | | | — | | | — | | | — | | | — | | | — | | | — | | | (5) | |
| Balance at June 30, 2020 | 2,923 | | | 292 | | | 44,444 | | | (1,556) | | | 31,565 | | | 669 | | | (25,651) | | | 66 | |
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(a) Cash dividends declared per common share were $0.45 for the three months ended March 31, 2020 and June 30, 2020.
BMS has a share repurchase program, authorized by its Board of Directors, allowing for repurchases of its shares. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. Treasury stock is recognized at the cost to reacquire the shares. Shares issued from treasury are recognized utilizing the first-in first-out method.
The outstanding share repurchase authority authorization under the program was $4.4approximately $15.2 billion as of December 31, 2020. In January 2021, the Board of Directors approved an increase of $2.0 billion to the share repurchase authorization for BMS’s common stock. BMS repurchased approximately 47 million shares of its common stock for $3.0 billion during the six months ended June 30, 2021. The remaining share repurchase capacity under the share repurchase program was approximately $3.4 billion as of June 30, 2021.
BMS repurchased 1.4 million shares of its common stock for $81 million inDuring the six months ended June 30, 2020.
In the fourthfirst quarter of 2019,2022, BMS executedentered into accelerated share repurchase (“ASR”("ASR") agreements to repurchase an aggregate $7$5.0 billion of common stock.stock to be settled in two tranches during the second and third quarters of 2022. The ASR wasagreements were funded with cash on-hand. In the fourthfirst quarter of 2019,2022 approximately 9965 million shares of common stock (80%(85% of the $7$5.0 billion aggregate repurchase price) were received by BMS and included in treasury stock. InDuring the second quarterthree months ended June 30, 2022, the first tranche of 2020, the agreementASR was settled and approximately 162 million shares of common stock were received by BMS and transferred to treasury stock. The second tranche is expected to settle in the third quarter of 2022. The total number of shares to be repurchased under the ASR agreements will be based on volume-weighted average prices of BMS's common stock during the terms of the ASR transactions less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements. The remaining share repurchase capacity under the share repurchase program was approximately $10.2 billion as of June 30, 2022.
BMS repurchased 47 million shares of its common stock for $3.0 billion in the six months ended June 30, 2021.
The components of Other Comprehensive Income/(Loss)Income were as follows:
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| 2021 | | 2020 |
| Dollars in Millions | Pretax | | Tax | | After Tax | | Pretax | | Tax | | After Tax |
| Three Months Ended June 30, | | | | | | | | | | | |
| Derivatives qualifying as cash flow hedges: | | | | | | | | | | | |
| Unrealized gain/(losses) | $ | (38) | | | $ | (3) | | | $ | (41) | | | $ | (34) | | | $ | 4 | | | $ | (30) | |
Reclassified to net earnings(a) | 53 | | | (6) | | | 47 | | | (32) | | | 3 | | | (29) | |
| Derivatives qualifying as cash flow hedges | 15 | | | (9) | | | 6 | | | (66) | | | 7 | | | (59) | |
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| Pension and postretirement benefits: | | | | | | | | | | | |
| Actuarial losses | 1 | | | 2 | | | 3 | | | (20) | | | 5 | | | (15) | |
Amortization(b) | 10 | | | (2) | | | 8 | | | 9 | | | (2) | | | 7 | |
Settlements(b) | 5 | | | (1) | | | 4 | | | 2 | | | (1) | | | 1 | |
| Pension and postretirement benefits | 16 | | | (1) | | | 15 | | | (9) | | | 2 | | | (7) | |
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| Available-for-sale debt securities: | | | | | | | | | | | |
| Unrealized gains/(losses) | (3) | | | 1 | | | (2) | | | 12 | | | (3) | | | 9 | |
| Realized Losses | 0 | | | 0 | | | 0 | | | (1) | | | 0 | | | (1) | |
| Available-for-sale debt securities | (3) | | | 1 | | | (2) | | | 11 | | | (3) | | | 8 | |
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| Foreign currency translation | 3 | | | 4 | | | 7 | | | 45 | | | 6 | | | 51 | |
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| Other Comprehensive Income/(Loss) | $ | 31 | | | $ | (5) | | | $ | 26 | | | $ | (19) | | | $ | 12 | | | $ | (7) | |
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| | | 2021 | | 2020 | | 2022 | | 2021 |
| Dollars in Millions | Dollars in Millions | Pretax | | Tax | | After Tax | | Pretax | | Tax | | After Tax | Dollars in Millions | Pretax | | Tax | | After Tax | | Pretax | | Tax | | After Tax |
| Six Months Ended June 30, | | | | | | | | | | | | |
| Three Months Ended June 30, | | Three Months Ended June 30, | | | | | | | | | | | |
| Derivatives qualifying as cash flow hedges: | Derivatives qualifying as cash flow hedges: | | Derivatives qualifying as cash flow hedges: | |
| Unrealized gain/(losses) | $ | 221 | | | $ | (14) | | | $ | 207 | | | $ | 63 | | | $ | (6) | | | $ | 57 | | |
| Unrealized gains/(losses) | | Unrealized gains/(losses) | $ | 481 | | | $ | (65) | | | $ | 416 | | | $ | (38) | | | $ | (3) | | | $ | (41) | |
Reclassified to net earnings(a) | Reclassified to net earnings(a) | 89 | | | (10) | | | 79 | | | (52) | | | 6 | | | (46) | | Reclassified to net earnings(a) | (131) | | | 16 | | | (115) | | | 53 | | | (6) | | | 47 | |
| Derivatives qualifying as cash flow hedges | Derivatives qualifying as cash flow hedges | 310 | | | (24) | | | 286 | | | 11 | | | 0 | | | 11 | | Derivatives qualifying as cash flow hedges | 350 | | | (49) | | | 301 | | | 15 | | | (9) | | | 6 | |
| | Pension and postretirement benefits: | Pension and postretirement benefits: | | Pension and postretirement benefits: | |
| Actuarial losses | 22 | | | (3) | | | 19 | | | (12) | | | 3 | | | (9) | | |
| Actuarial gains/(losses) | | Actuarial gains/(losses) | 20 | | | (3) | | | 17 | | | 1 | | | 2 | | | 3 | |
Amortization(b) | Amortization(b) | 19 | | | (5) | | | 14 | | | 18 | | | (3) | | | 15 | | Amortization(b) | 6 | | | (1) | | | 5 | | | 10 | | | (2) | | | 8 | |
Settlements(b) | Settlements(b) | 6 | | | (1) | | | 5 | | | 4 | | | (1) | | | 3 | | Settlements(b) | 4 | | | (1) | | | 3 | | | 5 | | | (1) | | | 4 | |
| Pension and postretirement benefits | Pension and postretirement benefits | 47 | | | (9) | | | 38 | | | 10 | | | (1) | | | 9 | | Pension and postretirement benefits | 30 | | | (5) | | | 25 | | | 16 | | | (1) | | | 15 | |
| | Available-for-sale debt securities: | | |
| Unrealized gains/(losses) | (6) | | | 2 | | | (4) | | | 14 | | | (4) | | | 10 | | |
| Realized losses | 0 | | | 0 | | | 0 | | | (1) | | | 0 | | | (1) | | |
| Available-for-sale debt securities: | (6) | | | 2 | | | (4) | | | 13 | | | (4) | | | 9 | | |
| Marketable debt securities: | | Marketable debt securities: | |
| Unrealized (losses)/gains | | Unrealized (losses)/gains | — | | | (1) | | | (1) | | | (3) | | | 1 | | | (2) | |
| | Foreign currency translation | Foreign currency translation | 12 | | | (11) | | | 1 | | | (65) | | | 0 | | | (65) | | Foreign currency translation | (64) | | | (24) | | | (88) | | | 3 | | | 4 | | | 7 | |
| | Other Comprehensive Income/(Loss) | $ | 363 | | | $ | (42) | | | $ | 321 | | | $ | (31) | | | $ | (5) | | | $ | (36) | | |
| Other Comprehensive Income | | Other Comprehensive Income | $ | 316 | | | $ | (79) | | | $ | 237 | | | $ | 31 | | | $ | (5) | | | $ | 26 | |
| | Six Months Ended June 30, | | Six Months Ended June 30, | |
| Derivatives qualifying as cash flow hedges: | | Derivatives qualifying as cash flow hedges: | |
| Unrealized gains/(losses) | | Unrealized gains/(losses) | $ | 601 | | | $ | (81) | | | $ | 520 | | | $ | 221 | | | $ | (14) | | | $ | 207 | |
Reclassified to net earnings(a) | | Reclassified to net earnings(a) | (216) | | | 28 | | | (188) | | | 89 | | | (10) | | | 79 | |
| Derivatives qualifying as cash flow hedges | | Derivatives qualifying as cash flow hedges | 385 | | | (53) | | | 332 | | | 310 | | | (24) | | | 286 | |
| | Pension and postretirement benefits: | | Pension and postretirement benefits: | |
| Actuarial gains/(losses) | | Actuarial gains/(losses) | 40 | | | (7) | | | 33 | | | 22 | | | (3) | | | 19 | |
Amortization(b) | | Amortization(b) | 12 | | | (3) | | | 9 | | | 19 | | | (5) | | | 14 | |
Settlements(b) | | Settlements(b) | 5 | | | (1) | | | 4 | | | 6 | | | (1) | | | 5 | |
| Pension and postretirement benefits | | Pension and postretirement benefits | 57 | | | (11) | | | 46 | | | 47 | | | (9) | | | 38 | |
| | Marketable debt securities: | | Marketable debt securities: | |
| Unrealized gains | | Unrealized gains | (2) | | | — | | | (2) | | | (6) | | | 2 | | | (4) | |
| | Foreign currency translation | | Foreign currency translation | (70) | | | (30) | | | (100) | | | 12 | | | (11) | | | 1 | |
| | Total Other Comprehensive Income | | Total Other Comprehensive Income | $ | 370 | | | $ | (94) | | | $ | 276 | | | $ | 363 | | | $ | (42) | | | $ | 321 | |
(a)Included in Cost of products sold.
(b)Included in Other (income)/expense, net.
The accumulated balances related to each component of Other Comprehensive Income/(Loss),Income, net of taxes, were as follows:
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Derivatives qualifying as cash flow hedges | Derivatives qualifying as cash flow hedges | $ | 49 | | | $ | (237) | | Derivatives qualifying as cash flow hedges | $ | 510 | | | $ | 178 | |
| Pension and postretirement benefits | Pension and postretirement benefits | (936) | | | (974) | | Pension and postretirement benefits | (722) | | | (768) | |
| Available-for-sale debt securities | 7 | | | 11 | | |
| Marketable debt securities | | Marketable debt securities | — | | | 2 | |
| Foreign currency translation | Foreign currency translation | (638) | | | (639) | | Foreign currency translation | (780) | | | (680) | |
| Accumulated other comprehensive loss | Accumulated other comprehensive loss | $ | (1,518) | | | $ | (1,839) | | Accumulated other comprehensive loss | $ | (992) | | | $ | (1,268) | |
Note 16. EMPLOYEE STOCK BENEFIT PLANS
Stock-based compensation expense was as follows:
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Cost of products sold | Cost of products sold | $ | 15 | | | $ | 9 | | | $ | 30 | | | $ | 19 | | Cost of products sold | $ | 11 | | | $ | 15 | | | $ | 19 | | | $ | 30 | |
| Marketing, selling and administrative | Marketing, selling and administrative | 65 | | | 86 | | | 125 | | | 174 | | Marketing, selling and administrative | 48 | | | 65 | | | 96 | | | 125 | |
| Research and development | Research and development | 74 | | | 89 | | | 144 | | | 183 | | Research and development | 57 | | | 74 | | | 108 | | | 144 | |
| Other (income)/expense, net | Other (income)/expense, net | 3 | | | 29 | | | 9 | | | 47 | | Other (income)/expense, net | — | | | 3 | | | — | | | 9 | |
| Total stock-based compensation expense | Total stock-based compensation expense | $ | 157 | | | $ | 213 | | | $ | 308 | | | $ | 423 | | Total stock-based compensation expense | $ | 116 | | | $ | 157 | | | $ | 223 | | | $ | 308 | |
| Income tax benefit(a) | Income tax benefit(a) | $ | 33 | | | $ | 40 | | | $ | 64 | | | $ | 86 | | Income tax benefit(a) | $ | 22 | | | $ | 33 | | | $ | 44 | | | $ | 64 | |
(a) Income tax benefit excludes excess tax benefits from share-based compensation awards that were vested or exercised of $19 million and $59 million for the three and six months ended June 30, 2022 and $12 million and $29 million for the three and six months ended June 30, 2021, and $5 million and $28 million for the three and six months ended June 30, 2020, respectively.
The number of units granted and the weighted-average fair value on the grant date for the six months ended June 30, 20212022 were as follows:
| | Units in Millions | Units in Millions | Units | | Weighted-Average Fair Value | Units in Millions | Units | | Weighted-Average Fair Value |
| | Restricted stock units | Restricted stock units | 8.2 | | | $ | 56.62 | | Restricted stock units | 8.0 | | | $ | 63.81 | |
| Market share units | Market share units | 1.0 | | | 58.04 | | Market share units | 1.0 | | | 60.74 | |
| Performance share units | Performance share units | 1.5 | | | 59.04 | | Performance share units | 1.4 | | | 66.76 | |
| | Dollars in Millions | Dollars in Millions | Stock Options | | Restricted Stock Units | | Market Share Units | | Performance Share Units | Dollars in Millions | Stock Options | | Restricted Stock Units | | Market Share Units | | Performance Share Units |
| Unrecognized compensation cost | Unrecognized compensation cost | $ | 20 | | | $ | 953 | | | $ | 73 | | | $ | 124 | | Unrecognized compensation cost | $ | 1 | | | $ | 919 | | | $ | 76 | | | $ | 132 | |
| Expected weighted-average period in years of compensation cost to be recognized | Expected weighted-average period in years of compensation cost to be recognized | 0.9 | | 2.8 | | 3.2 | | 2.0 | Expected weighted-average period in years of compensation cost to be recognized | 0.3 | | 3.1 | | 3.2 | | 2.0 |
Note 17. LEGAL PROCEEDINGS AND CONTINGENCIES
BMS and certain of its subsidiaries are involved in various lawsuits, claims, government investigations and other legal proceedings that arise in the ordinary course of business. These claims or proceedings can involve various types of parties, including governments, competitors, customers, suppliers, service providers, licensees, employees, or shareholders, among others. These matters may involve patent infringement, antitrust, securities, pricing, sales and marketing practices, environmental, commercial, contractual rights, licensing obligations, health and safety matters, consumer fraud, employment matters, product liability and insurance coverage, among others. The resolution of these matters often develops over a long period of time and expectations can change as a result of new findings, rulings, appeals or settlement arrangements. Legal proceedings that are significant or that BMS believes could become significant or material are described below.
While BMS does not believe that any of these matters, except as otherwise specifically noted below, will have a material adverse effect on its financial position or liquidity as BMS believes it has substantial defenses in the matters, the outcomes of BMS’s legal proceedings and other contingencies are inherently unpredictable and subject to significant uncertainties. There can be no assurance that there will not be an increase in the scope of one or more of these pending matters or any other or future lawsuits, claims, government investigations or other legal proceedings will not be material to BMS’s financial position, results of operations or cash flows for a particular period. Furthermore, failure to successfully enforce BMS’s patent rights would likely result in substantial decreases in the respective product revenues from generic competition.
Unless otherwise noted, BMS is unable to assess the outcome of the respective matters nor is it able to estimate the possible loss or range of losses that could potentially result for such matters. Contingency accruals are recognized when it is probable that a liability will be incurred and the amount of the related loss can be reasonably estimated. Developments in legal proceedings and other matters that could cause changes in the amounts previously accrued are evaluated each reporting period. For a discussion of BMS’s tax contingencies, see “—Note 7. Income Taxes”.
INTELLECTUAL PROPERTY
Anti-PD-1 and Anti-PD-L1 Antibody Litigation
In September 2015, Dana-Farber Cancer Institute (“Dana-Farber”) filed a complaint in the U.S. District Court for the District of Massachusetts seeking to correct the inventorship on up to 6 related U.S. patents directed to methods of treating cancer using PD-1 and PD-L1 antibodies. Specifically, Dana-Farber is seekingsought to add two scientists as inventors to these patents. In October 2017, Pfizer was allowed to intervene in thisthe case alleging that one of the scientists identified by Dana-Farber was employed by a company eventually acquired by Pfizer during the relevant period. In February 2019, BMS settled the lawsuit with Pfizer. A bench trial in the lawsuit with Dana-Farber took place in February 2019. In May 2019, the District Court issued an opiniona decision ruling that the two scientists should be added as inventors to the patents which decision was affirmed on appeal. In May 2021, the U.S. Supreme Court declined to consider the case. In June 2019, Dana-Farber filed a new lawsuit in the District of Massachusetts against BMS seeking damages as a result of the Court’s decision adding the scientists as inventors. In February 2021, BMS filed a motion to dismiss that complaint. In August 2021, the complaint.Court denied the motion to dismiss, but ruled that Dana-Farber’s claims for damages before May 17, 2019—the date of the District Court’s ruling that Dana-Farber was a co-inventor of the patents—are preempted by federal patent law. A trial has been scheduled for May 2023.
On March 17, 2022, BMS filed a lawsuit in U.S. District Court for the District of Delaware against AstraZeneca Pharmaceuticals LP and AstraZeneca UK Ltd ("AZ") alleging that AZ's marketing of the PD-L1 antibody Imfinzi infringes certain claims of U.S. Patent Nos. 9,580,505, 9,580,507, 10,138,299, 10,308,714, 10,266,594, 10,266,595, 10,266,596 and 10,323,092. No trial date has been scheduled.
CAR T
In October 2017, Juno and Sloan Kettering Institute for Cancer Research (“SKI”) filed a complaint for patent infringement against Kite Pharma, Inc. (“Kite”) in the U.S. District Court for the Central District of California. The complaint alleged that Kite’s Yescarta* product infringes certain claims of U.S. Patent No. 7,446,190 (the “’190 Patent”) concerning CAR T cell technologies. Kite filed an answer and counterclaims asserting non-infringement and invalidity of the ’190 Patent. In December 2019, following an eight-day trial, the jury rejected Kite’s defenses, finding that Kite willfully infringed the ’190 Patent and awarding to Juno and SKI a reasonable royalty consisting of a $585 million upfront payment and a 27.6% running royalty on Kite’s sales of Yescarta* through the expiration of the ’190 Patent in August 2024. In January 2020, Kite renewed its previous motion for judgment as a matter of law and also moved for a new trial, and Juno filed a motion seeking enhanced damages, supplemental damages, ongoing royalties, and prejudgment interest. In March 2020, the Court denied both of Kite’s motions in their entirety. In April 2020, the Court granted in part Juno’s motion and entered a final judgment awarding to Juno and SKI approximately $1.2 billion in royalties, interest and enhanced damages and a 27.6% running royalty on Kite’s sales of Yescarta* from December 13, 2019 through the expiration of the ’190 Patent in August 2024. In April 2020, Kite appealed the final judgment to the U.S. Court of Appeals for the Federal Circuit and the Court held an oral hearing on July 6, 2021. In August 2021, a Federal Circuit panel reversed the jury verdict and district court decision and found the ’190 Patent to be invalid. In October 2021, Juno and SKI filed a petition with the Federal Circuit for panel and en banc rehearing which the Federal Circuit denied on January 14, 2022. On June 13, 2022, Juno and SKI filed a petition for a writ of certiorari with the U.S. Supreme Court.
Eliquis –- Europe
In November 2020 and January 2021, Sandoz Limited (“Sandoz”) and Teva Pharmaceutical Industries Ltd. (“Teva Limited”), respectively, filed lawsuits in the United Kingdom seeking revocation of the UK apixaban composition of matter patent and related Supplementary Protection Certificate.Certificate (“SPC”). BMS subsequently filed counterclaims for infringement in both actions. A trial took place in February 2022 and in a judgement issued on April 7, 2022, the judge found the UK apixaban composition of matter patent and related SPC invalid. The Company is scheduledseeking permission to begin in early 2022.appeal from the Court of Appeal.
There are similarSimilar lawsuits have been filed in the Republic of Ireland, the Netherlands and Swedenvarious other countries in Europe seeking revocation of aour composition of matter patentpatents and SPCs relating to Eliquis,.and trials have been scheduled in certain of those cases. In May 2022, a Dutch court issued a decision denying a request by the Company for a preliminary injunction that would have prevented an at-risk generic launch in the Netherlands by Sandoz prior to a full trial on the merits.
AdditionalFollowing the above decisions in the UK and the Netherlands, generic manufacturers have begun marketing generic versions of Eliquis in the UK and Netherlands, and may seek to market generic versions of Eliquis in additional countries in Europe, prior to the expiration of our patents, which may lead to additional infringement and invalidity actions involving Eliquis patents may bebeing filed in various countries in Europe in the coming months.
EliquisOnureg -– U.S.
In 2017,November 2021, BMS received a Notice LettersLetter from NaN generic companiesAccord notifying BMS that theyAccord had filed aNDAsan aNDA containing a paragraph IV certificationscertification seeking approval of a generic versionsversion of EliquisOnureg. As a result, 2 Eliquis patents listed in the U.S. and challenging the one FDA Orange Book are being challenged: the composition of matterBook-listed formulation patent claiming apixaban specifically and a formulation patent.expiring in 2030. In response, BMS along with its partner Pfizer, initiatedfiled a patent infringement actions under the Hatch-Waxman Actaction against all generic filersAccord in the U.S. District Court for the District of Delaware in April 2017. In August 2017, the U.S. Patent and Trademark Office granted patent term restoration to the composition of matter patent to November 2026, thereby restoring the term of the Eliquis composition of matter patent, which is BMS’s basis for projected LOE. BMS settled with a number of aNDA filers. These settlements do not affect BMS’s projected LOE for Eliquis. ADelaware. No trial with the remaining aNDA filers took place in late 2019. In August 2020, the U.S. District Court issued a decision finding that the remaining aNDA filers’ products infringed the Eliquis composition of matter and formulation patents and that both Eliquis patents are not invalid. The remaining aNDA filers have appealed to the U.S. Court of Appeals for the Federal Circuit. The oral argument for the appeal is scheduled to occur in September 2021.date has been scheduled.
Plavix* - Australia
Sanofi was notified that, in August 2007, GenRx Proprietary Limited (“GenRx”) obtained regulatory approval of an application for clopidogrel bisulfate 75mg tablets in Australia. GenRx, formerly a subsidiary of Apotex Inc., subsequently changed its name to Apotex (“GenRx-Apotex”). In August 2007, GenRx-Apotex filed an application in the Federal Court of Australia seeking revocation of Sanofi’s Australian Patent No. 597784 (Case No. NSD 1639 of 2007). Sanofi filed counterclaims of infringement and sought an injunction. On September 21, 2007, the Federal Court of Australia granted Sanofi’s injunction. A subsidiary of BMS was subsequently added as a party to the proceedings. In February 2008, a second company, Spirit Pharmaceuticals Pty. Ltd., also filed a revocation suit against the same patent. This case was consolidated with the GenRx-Apotex case. On August 12, 2008, the Federal Court of Australia held that claims of Patent No. 597784 covering clopidogrel bisulfate, hydrochloride, hydrobromide, and taurocholate salts were valid. The Federal Court also held that the process claims, pharmaceutical composition claims, and claim directed to clopidogrel and its pharmaceutically acceptable salts were invalid. BMS and Sanofi filed notices of appeal in the Full Court of the Federal Court of Australia (“Full Court”) appealing the holding of invalidity of the claim covering clopidogrel and its pharmaceutically acceptable salts, process claims, and pharmaceutical composition claims. GenRx-Apotex appealed the holding of validity of the clopidogrel bisulfate, hydrochloride, hydrobromide, and taurocholate claims.appealed. On September 29, 2009, the Full Court held all of the claims of Patent No. 597784 invalid. In March 2010, the High Court of Australia denied a request by BMS and Sanofi to hear an appeal of the Full Court decision. The case was remanded to the Federal Court for further proceedings related to damages sought by GenRx-Apotex. BMS and GenRx-Apotex settled, and the GenRx-Apotex case was dismissed. The Australian government intervened in this matter seeking maximum damages up to 449 million AUD ($341309 million), plus interest, which would be split between BMS and Sanofi, for alleged losses experienced for paying a higher price for branded Plavix* during the period when the injunction was in place. BMS and Sanofi dispute that the Australian government is entitled to any damages. A trial was concluded in September 2017. In April 2020, the Federal Court issued a decision dismissing the Australian government’s claim for damages. In May 2020, the Australian government appealed the Federal Court’s decision and an appeal hearing concluded in February 2021.
Pomalyst- Canada
Celgene received a Notice of Allegation in January 2020 from Natco Pharma (Canada) Inc. (“Natco Canada”) notifying Celgene that it had filed an Abbreviated New Drug Submission (“aNDS”) with Canada’s Minister of Health with respect to certain of Celgene’s Canadian patents. Natco Canada is seeking to market a generic version of Pomalyst in Canada. In response, Celgene initiated a patent infringement action in the Federal Court of Canada. Natco Canada alleges that the asserted patents are invalid and/or not infringed. A trial is scheduled to begin in November 2021.
Celgene received a second Notice of Allegation in November 2020 from Natco Canada notifying Celgene that it had filed a second aNDS with Canada’s Minister of Health with respect to certain of Celgene’s Canadian patents. In response, Celgene initiated a patent infringement action in the Federal Court of Canada. Natco Canada alleges that the asserted patents are invalid and/or not infringed. A trial is scheduled to begin in May 2022.
Celgene received four Notices of Allegation in February 2021 from Apotex Inc. notifying Celgene that it had filed two aNDSs with Canada’s Minister of Health with respect to certain of Celgene’s Canadian patents. Apotex Inc. is seeking to market a generic version of Pomalyst in Canada. In response, in April 2021, Celgene initiated patent infringement actions against Apotex Inc. in the Federal Court of Canada. In July 2021, Celgene and Apotex Inc. entered into a confidential settlement agreement and the cases were discontinued.
Pomalyst - U.S.
Beginning in 2017, Celgene received Notice letters on behalf of Apotex Inc. and Apotex Corp. (together, “Apotex”); Hetero Labs Limited, Hetero Labs Limited Unit-V, Hetero Drugs Limited, Hetero USA, Inc. (collectively, “Hetero”); Eugia Pharma Specialities Limited, Aurobindo Pharma Ltd., Aurobindo Pharma USA, Inc., and Aurolife Pharma LLC (collectively, “Aurobindo”); and Mylan Pharmaceuticals Inc. notifying Celgene that they had filed aNDAs containing paragraph IV certifications seeking approval to market generic versions of Pomalyst in the U.S. In response, Celgene filed patent infringement actions against the companies in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book-listed patents and the companies filed answers, counterclaims and declaratory judgment actions alleging that the asserted patents are invalid, unenforceable, and not infringed. These litigations were subsequently consolidated. In March 2020, Celgene subsequently filed additional patent infringement actions in the U.S. District Court for the District of New Jersey against each of the companies asserting a newly-issued patent that is listed in the FDA Orange Book and that covers formulations comprising pomalidomide. The companies each filed responsive pleadings alleging that the patent is invalid and not infringed. The Court has consolidated these additional litigations with the previously-consolidated litigations. In September 2020, the Court granted Mylan Pharmaceuticals Inc.’s motion to dismiss, which decision Celgene has appealed. In October 2020, Aurobindo received final approval from the FDA of its aNDA. In April and July 2021, Celgene entered into confidential settlement agreements with Apotex and Aurobindo, respectively, settling all outstanding claims in the litigation with Apotex and Aurobindo. Trial against the remaining defendant, Hetero, is set for November 2021.
In February and March 2019, Celgene filed additional patent infringement actions in the U.S. District Court for the District of New Jersey against the companies asserting certain patents that are not listed in the FDA Orange Book and that cover polymorphic forms of pomalidomide, and the companies filed answers and/or counterclaims alleging that each of these patents is invalid and/or not infringed. These actions have been consolidated with the earlier-filed actions against the companies.
In June 2019,2022, Celgene received a Notice Letter from Dr. Reddy’sMSN Laboratories Pvt. Ltd. and Dr. Reddy’s Laboratories, Inc. (together, “DRL”(“MSN”) notifying Celgene that theyMSN had filed an aNDA containing paragraph IV certifications seeking approval to market a generic version of Pomalyst in the U.S. In response, Celgene initiated a patent infringement action against DRLMSN in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book-listed patents, and DRL filed an answer and counterclaims alleging that each of the patents is invalid and/or not infringed.patents. In March 2020,June 2022, Celgene filed an additional patent infringement actionentered into a confidential settlement agreement with MSN, settling all outstanding claims in the U.S. District Court for the District of New Jersey against DRL asserting a newly-issued patent that is listed in the FDA Orange Book and that covers formulations comprising pomalidomide, which has been consolidatedlitigation with the above DRL case. In April 2021, DRL received tentative approval from the FDA of its aNDA. The Court has not set a trial date in this consolidated action.MSN.
In February 2021, Celgene filed an additional patent infringement action in the U.S. District Court for the District of New Jersey against DRL asserting certain patents that are not listed in the FDA Orange Book and that cover polymorphic forms of pomalidomide. No trial date has been set for this matter.
Revlimid - U.S.
Celgene has received a Notice Letters on behalf of Sun PharmaLetter from Alembic Pharmaceuticals Limited, Alembic Global FZE, Sun Pharma Global Inc., Sun Pharmaceutical Industries, Inc.,Holding SA, and Sun Pharmaceutical Industries Limited (collectively, “Sun”); Hetero; MylanAlembic Pharmaceuticals, Inc., Mylan Inc., and Mylan N.V. (collectively, “Mylan” (“Alembic”); Aurobindo; Lupin Limited (“Lupin”); Hikma Pharmaceuticals USA, Inc.; Biocon Pharma Limited, Biocon Limited, and Biocon Pharma, Inc.; and Torrent Pharmaceuticals Limited and Torrent Pharma Inc. notifying Celgene that theyAlembic had filed aNDAsan aNDA containing paragraph IV certifications seeking approval to market a generic versionsversion of Revlimid in the U.S. In response, Celgene filedinitiated a patent infringement actionsaction against the companiesAlembic in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book-listed patents as well as other litigations asserting other non-FDA Orange Book-listed patents against certain defendants, who havepatents. Alembic filed answers and/orand counterclaims alleging that the asserted patents are invalid and/or not infringed. No trial date has been scheduled in any of these New Jersey actions.The parties subsequently settled all disputes pertaining to the Alembic aNDA, and the case was dismissed.
In May 2022, Celgene alsoreceived a Notice Letter from Oncogen Pharma (Malaysia) Sdn. Bhd. (“Oncogen”) notifying Celgene that Oncogen has filed an aNDA containing paragraph IV certifications seeking approval to market a generic version of Revlimid in the U.S. In response, Celgene initiated a patent infringement action against MylanOncogen in the U.S. District Court for the Northern District of West VirginiaNew Jersey asserting certain FDA Orange Book-listed patentspatents. The parties subsequently settled all disputes pertaining to the Oncogen aNDA, and other non-FDAthe case was dismissed.
In May 2022, Celgene received a Notice Letter from Qilu Pharmaceutical Co. Ltd. (“Qilu”) notifying Celgene that Qilu has filed an aNDA containing paragraph IV certifications seeking approval to market a generic version of Revlimid in the U.S. In response, Celgene initiated a patent infringement action against Qilu in the U.S. District Court for the District of New Jersey asserting certain FDA Orange Book-listed patents. Mylan filed its answer and counterclaims alleging thatQilu has not yet responded to the patents are invalid and/or not infringed.
In June and July 2021, Celgenecomplaint. No schedule has been entered into confidential settlement agreements with Sun, Aurobindo, and Mylan, respectively, settling all outstanding claims inby the litigations with Sun, Aurobindo, and Mylan.Court.
Sprycel - U.S.
In August 2019,January 2022, BMS received a Notice Letter from Dr. Reddy’s Laboratories, Inc.Xspray Pharma AB ("Xspray") notifying BMS that itXspray had filed an aNDAa 505(b)(2) NDA application containing paragraph IV certifications seeking approval of a generic version of Spryceldasatinib product in the U.S. and challenging two FDA Orange Book-listed monohydrate form patents expiring in 2025 and 2026. In response,February 2022, BMS filed a patent infringement action against Xspray in the U.S. District Court for the District of New Jersey.
In 2020, BMS Subsequently, the Company also received a Notice Letter from Lupin notifying BMS that it had filed an aNDA containing paragraph IV certifications seeking approval of a generic version of Sprycel incertification letters from Accord, Biocon, and Nanocopoeia challenging the U.S.same patents, and challenging two FDA Orange Book-listed monohydrate form patents expiring in 2025 and 2026. In response, BMSthe Company filed patent infringement actions against all three companies. No trial dates have been scheduled in any of these actions.
Zeposia - U.S.
On October 15, 2021, Actelion Pharmaceuticals LTD and Actelion Pharmaceuticals US, INC (“Actelion”), filed a complaint for patent infringement in the U.S.United States District CourtsCourt for the District of New Jersey against BMS and Delaware.Celgene for alleged infringement of U.S. Patent No. 10,251,867 (the “’867 Patent”). The case in DelawareComplaint alleges that the sale of Zeposia infringes certain claims of the ’867 Patent and Actelion is seeking damages and injunctive relief. No trial date has been dismissed.scheduled.
In July 2021, BMS entered into confidential settlement agreements with Dr. Reddy’s Laboratories, Inc. and Lupin, settling all outstanding claims in the litigations.
PRICING, SALES AND PROMOTIONAL PRACTICES LITIGATION
Plavix* State Attorneys General Lawsuits
BMS and certain Sanofi entities are defendants in consumer protection actions brought by the attorneys general of Hawaii and New Mexico relating to the labeling, sales and/or promotion of Plavix*. A trial in the Hawaii matter occurred in 2020. In February 2021, the Court issued a decision against Sanofi and BMS, imposing penalties in the total amount of $834 million, with $417 million attributed to BMS. Sanofi and BMS disagree with the decision and are appealing it. BMS remains confident in the merits of its case and its likelihood of success on appeal and BMS does not believe establishing a reserve is warranted for this matter. A trial in the New Mexico matter ishas been scheduled to begin in April 2022.for January 2023.
PRODUCT LIABILITY LITIGATION
BMS is a party to various product liability lawsuits. Plaintiffs in these cases seek damages and other relief on various grounds for alleged personal injury and economic loss. As previously disclosed, in addition to lawsuits, BMS also faces unfiled claims involving its products.
Abilify*
BMS and Otsuka are co-defendants in product liability litigation related to Abilify*. Plaintiffs allege Abilify* caused them to engage in compulsive gambling and other impulse control disorders. There have been over 2,500 cases filed in state and federal courts and additional cases are pending in Canada. The Judicial Panel on Multidistrict Litigation consolidated the federal court cases for pretrial purposes in the U.S. District Court for the Northern District of Florida. In February 2019, BMS and Otsuka entered into a master settlement agreement establishing a proposed settlement program to resolve all Abilify* compulsivity claims filed as of January 28, 2019 in the MDL as well as various state courts, including California and New Jersey. To date, approximately 2,700 cases, comprising approximately 3,900 plaintiffs, have been dismissed based on participation in the settlement program or failure to comply with settlement related court orders. Inorders and all remaining cases in the U.S., less than 20 MDL litigation have since been resolved. Three inactive cases remain pending on behalf of plaintiffs, who either chose not to participate in the settlement program or filed their claims after the settlement cut-off date.New Jersey State court. There are eleven11 cases pending in Canada (four(4 class actions, seven7 individual injury claims). Out of the eleven11 cases, only two2 are active (the class actions in Quebec and Ontario). Both class actions have now been certified and will proceed separately, subject to a pending appealall appeals of the Ontario class certification decision.decision have now been exhausted.
Byetta*
Amylin, a former subsidiary of BMS, and Lilly are co-defendants in product liability litigation related to Byetta*. As of June 2021, there are approximately 590 separateThis litigation involved lawsuits pending on behalf of approximately 2,250 active plaintiffs, (including pending settlements), which include injury plaintiffs as well as claims by spouses and/or other beneficiaries, in various courts in the U.S. The majority of these cases have been brought by individuals who allege personal injury sustained after using Byetta*, primarily pancreatic cancer, and, in some cases, claiming alleged wrongful death. The majority of cases arewere pending in Federal Court in San Diego in an MDL or in a coordinated proceeding in California Superior Court in Los Angeles (“JCCP”). In April 2020 the defendants filed a motion for summary judgment based on federal preemption and a motion for summary judgment based on the absence of general causation evidence in the MDL and JCCP. Both motions were granted in March 2021 and April 2021, respectively. The orders will resultMDL decision is final as to Amylin and Lilly and all MDL claims have been dismissed. As of June 2022, 80% of the plaintiffs in the dismissal of allJCCP (including injury plaintiffs and spouse/beneficiary plaintiffs) alleging claims alleging an injury of pancreatic cancer in the MDLagainst Amylin and JCCP. PlaintiffsLilly have appealed the MDL order anddismissed their claims with prejudice. Additional dismissals are anticipated. Remaining plaintiffs, if any, may seek appeals into appeal the JCCP.JCCP dismissal orders. BMS sold Byetta* to AstraZeneca in February 2014 as part of BMS’s global diabetes business divestiture and any additional liability to Amylin with respect to Byetta* is expected to be shared with AstraZeneca.
Onglyza*
BMS and AstraZeneca are co-defendants in product liability litigation related to Onglyza*. Plaintiffs assert claims, including claims for wrongful death, as a result of heart failure or other cardiovascular injuries they allege were caused by their use of Onglyza*. As of June 2021,2022, claims are pending in statefederal and federalNY state court on behalf of approximately 270251 individuals who allege they ingested the product and suffered an injury. In February 2018, the Judicial Panel on Multidistrict Litigation ordered all federal cases to be transferred to an MDL in the U.S. District Court for the Eastern District of Kentucky. A significant majority of the claims are pending in the MDL.MDL, with others pending in a coordinated proceeding in California Superior Court in San Francisco (“JCCP”). In August 2021, the MDL and JCCP courts jointly heard evidence regarding the parties’ motions to exclude general causation experts. On September 24, 2021, the JCCP court granted defendants’ motion to exclude plaintiffs’ only general causation expert and largely denied plaintiffs’ motions to exclude defendants’ general causation experts; on January 5, 2022, the MDL court likewise granted defendants’ motion to exclude plaintiffs’ expert and denied entirely plaintiffs’ motions. On March 30, 2022, the JCCP court granted summary judgment to defendants, thus effectively dismissing the 18 claims previously pending in California state court. Plaintiffs have filed an appeal. Defendants have filed a summary judgment motion in the MDL as well, which remains pending. As part of BMS’s global diabetes business divestiture, BMS sold Onglyza* to AstraZeneca in February 2014 and any potential liability with respect to Onglyza* is expected to be shared with AstraZeneca.
SECURITIES LITIGATION
BMS Securities Class Action
Since February 2018, 2two separate putative class action complaints were filed in the U.S. District for the Northern District of California and in the U.S. District Court for the Southern District of New York against BMS, BMS’s Chief Executive Officer, Giovanni Caforio, BMS’s Chief Financial Officer at the time, Charles A. Bancroft and certain former and current executives of BMS. The case in California has beenwas voluntarily dismissed. The remaining complaint allegesalleged violations of securities laws for BMS’s disclosures related to the CheckMate-026 clinical trial in lung cancer. In September 2019, the Court granted BMS’s motion to dismiss, but allowed the plaintiffs leave to file an amended complaint. In October 2019, the plaintiffs filed an amended complaint. In September 2020, the Court granted BMS’s motion to dismiss the amended complaint with prejudice. The plaintiffs appealed the Court’s decision in October 2020. On March 11, 2022, the Second Circuit affirmed the dismissal with prejudice of the amended complaint. The deadline to file further appeals has expired and the decision in favor of the Company and current and former executives is final.
Celgene Securities Class ActionLitigations
Beginning in March 2018, 2two putative class actions were filed against Celgene and certain of its officers in the U.S. District Court for the District of New Jersey (the “Celgene Securities Class Action”). The complaints allege that the defendants violated federal securities laws by making misstatements and/or omissions concerning (1) trials of GED-0301, (2) Celgene’s 2020 outlook and projected sales of Otezla*, and (3) the new drug application for Zeposia. The Court consolidated the two actions and appointed a lead plaintiff, lead counsel, and co-liaison counsel for the putative class. In February 2019, the defendants filed a motion to dismiss plaintiff’s amended complaint in full. In December 2019, the Court denied the motion to dismiss in part and granted the motion to dismiss in part (including all claims arising from alleged misstatements regarding GED-0301). Although the Court gave the plaintiff leave to re-plead the dismissed claims, it elected not to do so, and the dismissed claims are now dismissed with prejudice. In November 2020, the Court granted class certification with respect to the remaining claims. In December 2020, the defendants sought leave to appeal the Court’s class certification decision, which was denied without prejudice in March 2021. No trial date has been scheduled.
In April 2020, certain Schwab management investment companies on behalf of certain Schwab funds filed an individual action in the U.S. District Court for the District of New Jersey asserting largely the same allegations as the Celgene Securities Class Action against the same remaining defendants in that action.action (the “Schwab Action”). In July 2020, the defendants filed a motion to dismiss the plaintiffs’ complaint in full. In March 2021, the Court granted in part and denied in part defendants’ motion to dismiss consistent with its decision in the Celgene Securities Class Action.
The California Public Employees’ Retirement System in April 2021 and(the “CalPERS Action”); DFA Investment Dimensions Group Inc., on behalf of certain of its funds,funds; and American Century Mutual Funds, Inc., on behalf of certain of its funds, in July 2021 (respectively the “DFA Action” and the “American Century Action”), and GIC Private Limited in September 2021 (the “GIC Action”), filed separate individual actions in the U.S. District Court for the District of New Jersey asserting largely the same allegations as the Celgene Securities Class Action and the Schwab individual action against the same remaining defendants in those actions. In October 2021, these actions were consolidated for pre-trial proceedings with the Schwab Action. The court also consolidated any future direct actions raising common questions of law and fact with the Schwab Action.
No trial dates have been scheduled in any of the above Celgene Securities Litigations.
Contingent Value Rights LitigationLitigations
In June 2021, an action was filed against BMS in the U.S. District Court for the Southern District of New York asserting claims of alleged breaches of a Contingent Value Rights Agreement (“CVR Agreement”) entered into in connection with the closing of BMS’s acquisition of Celgene Corporation in November 2019. The successor trustee under the CVR Agreement alleges that BMS breached the CVR Agreement by allegedly failing to use “diligent efforts” to obtain FDA approval of liso-cel (Breyanzi) before a contractual milestone date, thereby avoiding a $6.4 billion potential obligation to holders of the contingent value rights governed by the CVR Agreement and by allegedly failing to permit inspection of records in response to a request by the successor trustee. The successor trustee seeks damages in an amount to be determined at trial and other relief, including interest and attorneys’ fees. BMS disputes the successor trustee’s allegations.allegations and filed a motion to dismiss on July 23, 2021. On June 24, 2022, the court denied BMS’s motion to dismiss.
OTHER LITIGATION
Average Manufacturer Price Litigation
BMS isIn October 2021, alleged former Celgene stockholders filed a defendant in a qui tam (whistleblower) lawsuitcomplaint in the U.S. District Court for the EasternSouthern District of Pennsylvania,New York asserting claims on behalf of a putative class of Celgene stockholders who received CVRs in which the U.S. Government declinedBMS merger with Celgene for violations of sections 14(a) and 20(a) of the Securities Exchange Act of 1934 relating to intervene.the joint proxy statement. That action later was consolidated with another action filed in the same court, and a consolidated complaint thereafter was filed asserting claims on behalf of a class of CVR acquirers, whether in the BMS merger with Celgene or otherwise, for violations of sections 11, 12(a)(2), and 15 of the Securities Act of 1933 and sections 10(b), 14(a) and 20(2) of the Securities Exchange Act of 1934. The complaint alleges that the February 22, 2019 joint proxy statement was materially false or misleading because it failed to disclose that BMS inaccurately reportedallegedly had no intention to obtain FDA approval for liso-cel (Breyanzi) by the applicable milestone date in the CVR Agreement and that certain statements made by BMS or certain BMS officers in periodic SEC filings, earnings calls, press releases, and investor presentations between December 2019 and November 2020 were materially false or misleading for the same reason. Defendants have moved to dismiss the complaint.
In November 2021, an alleged purchaser of CVRs filed a complaint in the Supreme Court of the State of New York for New York County asserting claims on behalf of a putative class of CVR acquirers for violations of sections 11(a) and 12(a)(2) of the Securities Act of 1933. The complaint alleges that the registration statement filed in connection with the proposed merger transaction between Celgene and BMS was materially false or misleading because it failed to disclose that allegedly BMS had no intention at the time to obtain FDA approval for liso-cel (Breyanzi) by the contractual milestone date. The complaint asserts claims against BMS, the members of its average manufacturer pricesboard of directors at the time of the joint proxy statement, and certain BMS officers who signed the registration statement. BMS removed the action to the CentersU.S. District Court for Medicarethe Southern District of New York. The plaintiff has filed a motion to remand the action to the state court.
In November 2021, an alleged Celgene stockholder filed a complaint in the Superior Court of New Jersey, Union County asserting claims on behalf of two separate putative classes, one of acquirers of CVRs and Medicaid Servicesone of acquirers of BMS common stock, for violations of sections 11(a), 12(a)(2), and 15 of the Securities Act of 1933. The complaint alleges that the registration statement filed in connection with the proposed merger transaction between Celgene and BMS was materially false or misleading because it failed to lower what it owed. Similardisclose that allegedly BMS had no intention at the time to obtain FDA approval for liso-cel (Breyanzi) by the contractual milestone date. The complaint asserts claims against BMS, the members of its board of directors at the time of the joint proxy statement, certain BMS officers who signed the registration statement and Celgene’s former chairman and chief executive officer. BMS removed the action to the U.S. District Court for the District of New Jersey and filed a motion to transfer the action to the U.S. District Court for the Southern District of New York. The plaintiff has filed a motion to remand the action to the state court.
No trial dates have been filed against other companies. In January 2020, BMS reached an agreementscheduled in principle to resolve this matter subject to the negotiation of a definitive settlement agreement and other contingencies. In March 2021, BMS finalized an agreement with the U.S. government and qui tam relator to resolve the claims asserted in the lawsuit. BMS has paid $75 million plus interest to the federal and state governments. Individual agreements will be negotiated with participating states based on the federal agreement. To the extent BMS does not finalize a settlement agreement with any state, that state’s share of the settlement will revert to BMS.above CVR Litigations.
OTHER LITIGATION
HIV Medication Antitrust LawsuitsLitigations
BMS and twothree other manufacturers of HIV medications are defendants in related lawsuits pending in the Northern District of California. The initial lawsuits, allegefiled on behalf of indirect purchasers, alleged that the defendants’ agreements to develop and sell fixed-dose combination products for the treatment of HIV, including Atripla* and EvotazEvotaz®, violate antitrust laws. The currently pending actions, asserted on behalf of indirect purchasers, were initiated in 2019 in the Northern District of California and in 2020 in the Southern District of Florida. The Florida matter was transferred to the Northern District of California. In July 2020, the Court granted in part defendants’ motion to dismiss, including dismissing with prejudice plaintiffs’ claims as to an overarching conspiracy and plaintiffs’ theories based on the alleged payment of royalties after patent expiration. Other claims, however, remain. In October 2021, BMS entered a settlement agreement with the indirect purchasers. On May 6, 2022, the Court granted final approval of that settlement.
In September and October 2020, two purported class actions havewere also been filed asserting similar claims on behalf of direct purchasers. In March 2021, the Court dismissed one of the direct purchaser cases and limited the claims of the remaining direct purchaser case to those arising in 2016 or later. However, the Court gave plaintiffs leave to amend their complaints, and one plaintiff filed an amended complaint on March 16, 2021. A trial on bothIn March 2022, BMS entered into a settlement agreement with the direct and indirect purchaser claims is scheduled for November 2022.purchasers (excluding the retailers discussed below). In June 2022, the Court granted preliminary approval of that settlement.
27On September 22, 2021, two additional non-class action direct purchaser complaints were filed by a number of retail pharmacy and grocery store chains against BMS and two other manufacturers of HIV medications. These complaints make allegations similar to those raised in the other federal court cases and the New Mexico state court case described below. In January 2022, BMS entered into an agreement to settle the cases filed against it by the retail pharmacy and grocery store chains, and those cases were dismissed.
In February 2021, BMS and two other manufacturers of HIV medications were sued in State Court in New Mexico by the Attorney General of the State of New Mexico in a case alleging that the defendants’ agreements to develop and sell various fixed-dose combination products for the treatment of HIV, including Atripla*, and agreements to settle certain patent litigation violate the antitrust laws of the State of New Mexico. No scheduletrial date has been set forscheduled.
In December 2021, five additional non-class-action indirect purchaser cases were filed in the case.Northern District of California, and one additional non-class-action indirect purchaser case was filed in California state court naming BMS and two other manufacturers as defendants. These complaints make allegations similar to those in the other federal court cases. In February 2022, BMS reached a settlement agreement with one of the non-class-action indirect purchaser plaintiffs and that case has been dismissed. In April 2022, two additional indirect purchaser plaintiffs filed non-class suits against BMS and other defendants. In July 2022, BMS entered into a settlement agreement resolving these seven remaining indirect purchaser cases.
Thalomid and Revlimid Litigations
Beginning in November 2014, certain putative class action lawsuits were filed against Celgene in the U.S. District Court for the District of New Jersey alleging that Celgene violated various antitrust, consumer protection, and unfair competition laws by (a) allegedly securing an exclusive supply contract for the alleged purpose of preventing a generic manufacturer from securing its own supply of thalidomide active pharmaceutical ingredient, (b) allegedly refusing to sell samples of Thalomid and Revlimid brand drugs to various generic manufacturers for the alleged purpose of bioequivalence testing necessary for aNDAs to be submitted to the FDA for approval to market generic versions of these products, (c) allegedly bringing unjustified patent infringement lawsuits in order to allegedly delay approval for proposed generic versions of Thalomid and Revlimid, and/or (d) allegedly entering into settlements of patent infringement lawsuits with certain generic manufacturers that allegedly have had anticompetitive effects. The plaintiffs, on behalf of themselves and putative classes of third-party payers, sought injunctive relief and damages. The various lawsuits were consolidated into a master action for all purposes. In March 2020, Celgene reached a settlement with the class plaintiffs. In October 2020, the Court entered a final order approving the settlement and dismissed the matter. That settlement doesdid not resolve the claims of certain entities that opted out of the settlement.
In March 2019, Humana filed a lawsuit against Celgene in the U.S. District Court for the District of New Jersey. Humana’s complaint makes largely the same claims and allegations as were made in the Thalomid and Revlimid antitrust class action litigation. The complaint purports to assert claims on behalf of Humana and its subsidiaries in several capacities, including as a direct purchaser and as an indirect purchaser, and seeks, among other things, treble and punitive damages, injunctive relief and attorneys’ fees and costs. In May 2019, Celgene filed a motion to dismiss Humana’s complaint. In April 2022, the Court issued an order denying Celgene’s motion to dismiss. That order addressed only Celgene’s argument that certain of Humana’s claims were barred by the statute of limitations. The Court’s order did not address Celgene’s other grounds for dismissal and instead directed Celgene to present those arguments in a renewed motion to dismiss following the filing of amended complaints. In May 2022, Humana filed an amended complaint against Celgene and BMS asserting the same claims based on additional factual allegations. Celgene and BMS intend to file a renewed motion to dismiss. No trial date has been scheduled.
United HealthCare Services, Inc. (“UHS”), Blue Cross Blue Shield Association (“BCBSA”), BCBSM Inc., Health Care Service Corporation (“HCSC”), Blue Cross and Blue Shield of Florida Inc., Cigna Corporation (“Cigna”), and several MSP related entities (MSP Recovery Claims, Series LLC; MSPA Claims 1, LLC; MAO-MSO Recovery II, LLC, Series PMPI, a segregated series of MAO-MSO Recovery II, LLC; MSP Recovery Claims Series 44, LLC; MSP Recovery Claims PROV, Series LLC; and MSP Recovery Claims CAID, Series LLC (together, “MSP”)) filed lawsuits making largely the same claims and allegations as were made in the class action litigation. Certain of the matters have made additional claims related to copay assistance and off-label marketing of Thalomid and Revlimid. These cases are now pending in the U.S. District Court for the District of New Jersey and will proceed as described above with respect to the Humana opt-out antitrust action filed in March 2019. No trial dates have been scheduled.
In May 2021, Molina sued Celgene and BMS in San Francisco Superior Court. Molina’s complaint makes largely the same claims and allegations as were made in the class action litigation. In July 2021, Celgene and BMS removed the action to the U.S. District Court for the Northern District of California, and in January 2022, that court granted Molina’s motion to remand to San Francisco Superior Court. In June 2022, the San Francisco Superior Court dismissed 63 of Molina’s claims and stayed the remaining 4 claims. No activity is expected in this case until disposition of the New Jersey actions.
In May 2018, Humana, Inc. (“Humana”) filed a lawsuit against Celgene in the Pike County Circuit Court of the Commonwealth of Kentucky. Humana’s complaint alleges Celgene engaged in unlawful off-label marketing in connection with sales of Thalomid and Revlimid and asserts claims against Celgene for fraud, breach of contract, negligent misrepresentation, unjust enrichment and violations of New Jersey’s Racketeer Influenced and Corrupt Organizations Act. Humana subsequently dismissed its claims for breach of contract voluntarily. The complaint seeks, among other things, treble and punitive damages, injunctive relief and attorneys’ fees and costs. In April 2019, Celgene filed a motion to dismiss Humana’s complaint, which the Court denied in January 2020. NoA trial date has been scheduled.
In March 2019, Humana filed a lawsuit against Celgene in the U.S. District Courtscheduled for the District of New Jersey. Humana’s complaint makes largely the same claims and allegations as were made in the class action litigation. The complaint purports to assert claims on behalf of Humana and its subsidiaries in several capacities, including as a direct purchaser and as an indirect purchaser, and seeks, among other things, treble and punitive damages, injunctive relief and attorneys’ fees and costs. In May 2019, Celgene filed a motion to dismiss Humana’s complaint, and the Court has stayed discovery pending adjudication of that motion. No trial date has been scheduled.
In March 2020, United HealthCare Services, Inc. (“UHS”), affiliates of which opted out of the first settlement in the Thalomid and Revlimid Antitrust Class Action Litigation, filed a lawsuit against Celgene in the U.S. District Court for the District of Minnesota. UHS’s complaint makes largely the same claims and allegations as were made in the class action litigation in addition to certain claims regarding donations directed to copay assistance. The complaint purports to assert claims on behalf of UHS and its subsidiaries in several capacities, including as a direct purchaser and as an indirect purchaser, and seeks, among other things, treble and punitive damages, injunctive relief and attorneys’ fees and costs. In December 2020, Celgene’s motion to transfer the action to the District of New Jersey was granted and the case is now pending in that Court. In January 2021, Celgene filed a motion to dismiss UHS’s complaint, which the Court administratively terminated in June 2021 pending its decision on Celgene’s pending motion to dismiss Humana’s complaint. No trial date has been scheduled.2023.
In May 2020, Celgene filed suit against Humana Pharmacy, Inc. (“HPI”), a Humana subsidiary, in Delaware Superior Court. Celgene’s complaint alleges that HPI breached its contractual obligations to Celgene by assigning claims to Humana that Humana is now asserting. The complaint seeks damages for HPI’s breach as well as a declaratory judgment. In September 2020, HPI filed a motion to dismiss Celgene’s complaint, which was denied in February 2021. A trial has been scheduled for March 2023.
BeiGene Arbitration Matter
On July 5, 2017, Celgene Logistics Sàrl (“Celgene Logistics”) and BeiGene, Ltd. (together with its assignees, “BeiGene”), entered into a License and Supply Agreement (the “LSA”) pursuant to which BeiGene was granted, among other things, an exclusive license to distribute and commercialize Revlimid, Vidaza and Abraxane in China.
As has been disclosed publicly, BeiGene initiated an arbitration proceeding against Celgene Logistics and BMS at the International Chamber of Commerce in June 2020, asserting various claims, including breach of contract under the LSA. In July 2020, Blue Cross Blue Shield Association (“BCBSA”October 2021, Celgene Logistics delivered notice to BeiGene terminating the LSA with respect to Abraxane. A final hearing on the merits was held in June 2022, and the parties are currently engaged in post-hearing briefing.
MSK Contract Litigation
On April 1, 2022, Memorial Sloan Kettering Cancer Center and Eureka Therapeutics, Inc. (collectively, “Plaintiffs”) suedfiled a complaint against BMS, Celgene and BMS on behalfJuno (collectively, “Defendants”). In June 2022, Plaintiffs filed an amended complaint. Plaintiffs allege that Defendants breached a license agreement by allegedly failing to use commercially reasonable efforts to develop, manufacture, and commercialize a certain chimeric antigen receptor product and by failing to pay Plaintiffs a running royalty of at least 1.5% of worldwide sales of Abecma allegedly owed to Plaintiffs under the Federal Employee Program in the U.S. District Court for the District of Columbia. BCBSA’s complaint makes largely the samelicense agreement. Defendants disagree with plaintiffs' claims and allegations as were made in the class action litigation. In April 2021, the parties’ jointfiled a motion to transferdismiss the action to the District of New Jersey was granted and the case is now pendingamended complaint in that Court.July 2022. No trial date has been scheduled.
In August 2020, BCBSM Inc., Health Care Service Corporation (“HCSC”), Blue Cross and Blue Shield of Florida Inc., and Molina Healthcare, Inc. (“Molina”) sued Celgene and BMS in a Minnesota state court. The complaint makes largely the same claims and allegations as were made in the class action litigation but adds allegations on behalf of HCSC only as to alleged off-label marketing of Thalomid and Revlimid. In September 2020, Celgene and BMS removed the action to the U.S. District Court for the District of Minnesota. In March 2021, that Court denied plaintiffs’ motion to remand the action to state court, dismissed Molina for lack of personal jurisdiction and granted defendants’ motion to transfer the action to the District of New Jersey. The case is now pending in the District of New Jersey. No trial date has been scheduled.
In January 2021, Cigna Corporation (“Cigna”) sued Celgene and BMS in the U.S. District Court for the Eastern District of Pennsylvania. Cigna’s complaint makes largely the same claims and allegations as were made in the class action litigation. Cigna’s complaint purports to assert claims on behalf of Cigna and its subsidiaries in several capacities, including as a direct purchaser and as an indirect purchaser. In May 2021, the parties’ joint motion to transfer the action to the District of New Jersey was granted and the case is now pending in that Court. No trial date has been scheduled.
In May 2021, Molina sued Celgene and BMS in San Francisco Superior Court. Molina’s complaint makes largely the same claims and allegations as were made in the class action litigation. No trial date has been scheduled.
GOVERNMENT INVESTIGATIONS
Like other pharmaceutical companies, BMS and certain of its subsidiaries are subject to extensive regulation by national, state and local authorities in the U.S. and other countries in which BMS operates. As a result, BMS, from time to time, is subject to various governmental and regulatory inquiries and investigations as well as threatened legal actions and proceedings. It is possible that criminal charges, substantial fines and/or civil penalties, could result from government or regulatory investigations.
ENVIRONMENTAL PROCEEDINGS
As previously reported, BMS is a party to several environmental proceedings and other matters, and is responsible under various state, federal and foreign laws, including CERCLA, for certain costs of investigating and/or remediating contamination resulting from past industrial activity at BMS’s current or former sites or at waste disposal or reprocessing facilities operated by third parties.
CERCLA Matters
With respect to CERCLA matters for which BMS is responsible under various state, federal and foreigninternational laws, BMS typically estimates potential costs based on information obtained from the U.S. Environmental Protection Agency, or counterpart state or foreign agency and/or studies prepared by independent consultants, including the total estimated costs for the site and the expected cost-sharing, if any, with other “potentially responsible parties,” and BMS accrues liabilities when they are probable and reasonably estimable. BMS estimated its share of future costs for these sites to be $75$88 million at June 30, 2021,2022, which represents the sum of best estimates or, where no best estimate can reasonably be made, estimates of the minimal probable amount among a range of such costs (without taking into account any potential recoveries from other parties). The amount includes the estimated costs for any additional probable loss associated with the previously disclosed North Brunswick Township High School Remediation Site.
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management’s discussion and analysis of results of operations and financial condition is provided as a supplement to and should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q to enhance the understanding of our results of operations, financial condition and cash flows.
EXECUTIVE SUMMARY
Bristol-Myers Squibb Company is a global biopharmaceutical company whose mission is to discover, develop and deliver innovative medicines that help patients prevail over serious diseases. Our principal strategy is to combine the resources, scale and capability of a pharmaceutical company with the speed and focus on innovation of the biotech industry. Our focus as a biopharmaceutical company is on discovering, developing and delivering transformational medicines for patients facing serious diseases in areas where we believe that we have an opportunity to make a meaningful difference: oncology (both solid tumors and hematology), immunology, cardiovascular and fibrosis.neurology. Our four strategic priorities are to drive enterprise performance, maximize the value ofcontinue to renew and diversify our commercial portfolio ensure the long-term sustainability of our pipeline through combined internal and external innovation and establishlaunching our new cultureproduct portfolio, advancing our early, mid and embedlate-stage pipeline, and executing disciplined business development. We remain committed to reducing our people strategy.debt and returning capital to shareholders. For further information on our strategy, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Executive Summary-Strategy” in our 20202021 Form 10-K. Refer to the Summary of Abbreviated Terms at the end of this Quarterly Report on Form 10-Q for terms used throughout the document.
In 2021,2022, we received 1314 approvals for new medicines and additional indications and formulations of currently marketed medicines in major markets (the U.S., EU and Japan), including advancement in hematology malignanciesoncology through regulatoryFDA approval of Opdualag, the first PD-1 inhibitor and LAG-3 blocking antibody combination. Additionally, in the U.S., EU and Japan, two Opdivo based regimens as first line treatments for unresectable advanced or metastatic ESCC were approved. We continue to advance and invest in our cell therapy portfolio through the approval of Abecma in Japan for the treatment of multiple myeloma, and approvals of Breyanzi for the second line and Abecma,third line treatments of relapsed or refractory diffuse large B-cell lymphoma in the first approvalsU.S. and EU, respectively. We continue the expansion of our cell therapy portfolio. In support of our continued investment in our cell therapy portfolio, we are expanding our manufacturing capabilities through the construction of new state-of-the-art cell therapy manufacturing facilities in Devens, Massachusetts and Leiden, Netherlands. We continue to see momentum in our oncology portfolio with the approvals for both Opdivo and Opdivo+Yervoy in various indications. We continue to expand our portfolio in immunology with the FDA approval of Zeposia for the treatment of adults with moderately to severely active UC and an important opportunity for deucravacitinib, our TYK2 inhibitor, for the treatment of psoriasis and other diseases. We bolsteredWithin cardiovascular, we broadened our leading cardiovascular franchise by adding mavacamtenNew Product Portfolio with the acquisitionFDA approval of MyoKardiaCamzyos (mavacamten) in 2020. In March 2021, the FDA accepted the NDA for mavacamtenApril 2022 for patients with symptomatic obstructive HCM with an assigned PDUFA goal date of January 28, 2022.HCM.
Our revenues increased by 9%3% for the six months ended June 30, 20212022 due to In-Line Products (primarily Eliquis Revlimidand Opdivo) and New Product Portfolio (primarily Abecma, our IO Opdualag and new product portfoliosReblozyl), partially offset by Recent LOE Products (primarily Revlimid) and foreign exchange, partially offset by lower demand for established brands.exchange. The $1.74 change$0.11 decrease in GAAP EPS primarily resulted from specified items, including lower unwinding of inventoryequity investment and contingent consideration fair value adjustments, contingent value rights and lower tax charges, partially offset by lower impairment charges and higher research and development, impairment and debt redemption charges.divestiture gains in 2022. After adjusting for specified items, non-GAAP EPS increased $0.32$0.51 as a result of higher revenues, partially offset by higher costsroyalties and expenses to support product launcheslicensing income and the broader portfolio.lower weighted-average common shares outstanding.
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions, except per share data | Dollars in Millions, except per share data | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions, except per share data | 2022 | | 2021 | | 2022 | | 2021 |
| Total Revenues | Total Revenues | $ | 11,703 | | | $ | 10,129 | | | $ | 22,776 | | | $ | 20,910 | | Total Revenues | $ | 11,887 | | | $ | 11,703 | | | $ | 23,535 | | | $ | 22,776 | |
| | Diluted Earnings/(Loss) Per Share | | |
| Diluted Earnings Per Share | | Diluted Earnings Per Share | |
| GAAP | GAAP | $ | 0.47 | | | $ | (0.04) | | | $ | 1.36 | | | $ | (0.38) | | GAAP | $ | 0.66 | | | $ | 0.47 | | | $ | 1.25 | | | $ | 1.36 | |
| Non-GAAP | Non-GAAP | 1.93 | | | 1.63 | | | 3.67 | | | 3.35 | | Non-GAAP | 1.93 | | | 1.63 | | | 3.89 | | | 3.38 | |
Our non-GAAP financial measures, including non-GAAP earnings and related EPS information, are adjusted to exclude specified items that represent certain costs, expenses, gains and losses and other items impacting the comparability of financial results. For a detailed listing of all specified items and further information, reconciliations and reconciliations ofchanges to our non-GAAP financial measures refer to “—Non-GAAP Financial Measures.”
Economic and Market Factors
COVID-19
In December 2019,response to the COVID-19 emerged and subsequently expanded to a pandemic, resulting in international, federal, state and local public health and governmental authorities takinghave taken, and continue to take, a number of actions to limit the spread of COVID-19 and address materialrelated disruptions in the U.S. and global economy. Against this background,While we benefited from the impact of COVID-19 related buying patterns in the first quarter of 2020 but experienced sales channel inventory workdowns for our products during second quarter of 2020. We began to note improvement in the demand for certain products during the third and fourth quarters in 2020 but continue to experience impacts on revenues from COVID-19 primarily due to lower new patient starts and patient visits. Althoughvisits, the pandemic has not significantly impacted our results of operations,operations. The situation remains dynamic and it remainsis difficult to reasonably assess or predict the full extent of the negative impact that the COVID-19 pandemic may have on our business, financial condition, results of operations and cash flows. The future financial and operational impact of the COVID-19 pandemic on BMS will depend on future developments such as the ultimate duration and recovery from the pandemic, governmentseverity of the spread of COVID-19 and any variant strains in the U.S. and globally, the effectiveness and outreach of vaccines, the effectiveness of federal, state, local and international government's mitigation actions, the pandemic's impact on the U.S. and global economies, customerchanges in the behavior changesof patients and medical professionals and the timing for resumption to our normal operations, among others.as well as developments affecting healthcare and the delivery of medicines to patients. See risk factor on the Company’s risk factors resulting from the COVID-19 pandemic included under “Part I—Item 1A. Risk Factors—General Risks—The COVID-19 pandemic is affecting our business and could have a material adverse effect on us” in our 20202021 Form 10-K.
As the COVID-19 pandemic affected global healthcare systems as well as major economic and financial markets, we adopted several procedures focused on ensuring the continued supply of our medicines to our patients and protecting the health, wellbeing and safety of our workforce:
Workplace and Community
•workforce. Additional information on the procedures adopted are available at We are maintaining our steadfast commitment to protecting the health and safety of our workforce and our communities while ensuring uninterrupted supply of medicines to patients and building on our competitive advantage.
•www.bms.com/about-us/responsibility/coronavirus-updatesOur manufacturing sites have remained open throughout the pandemic supported by on site personnel. We have taken a thoughtful and phased approach to bringing the rest of our workforce back to our 250 plus sites around the world and into the field, guided by the following principles:
◦Serving the needs of our patients and customers
◦Prioritizing health and safety
◦Following medical advice and government direction
◦Leading with compassion and flexibility
◦Modeling key learnings
•Our timelines and circumstances have varied across the globe. We are monitoring local conditions and government direction closely and adjusting our plans as appropriate acting in a nimble and flexible manner.
•We continue to take significant measures to protect the safety of our colleagues on site, including providing protective equipment, ensuring physical distancing, enhanced cleaning and creating a robust COVID-19 website to assist our workforce..
Supply of Our Medicines and Support to Patients, Physicians and Advocacy Groups
•An important element of keeping our promise to patients, their families and our healthcare providers is to ensure that our supply chain is robust and carefully managed. Our clinical and commercial supply chain teams have proactively identified alternative means for moving our raw materials and products to our markets and clinical sites over the past months. As a result of these efforts, we have not seen any disruption in our clinical or commercial supply chain due to the pandemic.
•Our customer-facing personnel are employing a combination of in-person and remote interactions to ensure continued support for healthcare professionals, patient care, and access to our medicines across our global markets. The balance between in-person and remote engagement is varying market to market based on local conditions and government direction.
Our Clinical Trials and Research
•We are working with health authorities and investigators to protect our trial participants and personnel at BMS and our clinical trial sites, while ensuring regulatory compliance and the integrity of our science.
•We have provided clinical trial investigators with overarching principles and guidance regarding the conduct of our clinical trials worldwide in light of COVID-19, and are taking into account guidance from health authorities, where applicable.
Governmental Actions
Additional regulationsOur products continue to be subject to increasing pressures across the portfolio from pharmaceutical market access and pricing controls and discounting, changes to tax and importation laws and other restrictions in the U.S. may occur, the EU and other regions around the world that result in the future, including healthcare reform initiatives, further changes to tax lawslower prices, lower reimbursement rates and pricing laws and potential importation restrictions, that may reducesmaller populations for whom payers will reimburse, which can negatively impact our results of operations (including intangible asset impairment charges), operating cash flow, liquidity and financial flexibility. For example, Congress is currently considering a number of different proposals that would potentially: (i) allow the government to set or negotiate prices for prescription drugs, (ii) penalize manufacturers for price increases beyond inflationary measures, (iii) redesign the Part D benefit with new out of pocket limits for patients and new mandated discounts for manufacturers. The outcome of these Congressional actions is uncertain. Congress is also considering potential changes to U.S. income tax laws which would result in November 2020an increase to our income tax expense, including through increased taxation of our international operations. Furthermore, countries are expected to make changes to their tax laws and updates to international tax treaties to implement the U.S. federal government issued regulations regarding U.S. drug prices and payment for pharmaceutical products, including regulations that: (i) would reduce physician reimbursement for certain Medicare Part B drugs administered in doctors’ offices or hospitals to a “most favored nation price” drawn fromagreement by the lowest price paid by certain countries in the OrganisationOrganization for Economic Co-operation and Development which would apply to many cancer medications; (ii) would authorize states and private parties to develop and implement programs to import certain prescription drugs from Canada and sell them in the U.S.; and (iii) would reform the use of rebates in Medicare Part D. The outcome of these regulations remains uncertain asestablish a result of ongoing litigation and other factors.global minimum tax. See risk factor on the Company’s risk factors on the executive ordersthese items included under “Part I—Item 1A. Risk Factors—Product, Industry and Operational Risks—Increased pricing pressure and other restrictions in the U.S. and abroad continue to negatively affect our revenues and profit margins” and “—Changes to tax regulations could negatively impact our earnings” in our 20202021 Form 10-K.
In February 2022, the Russian Federation invaded Ukraine. As a result, the U.S. and many other countries have implemented extensive sanctions on the Russian Federation, with which BMS intends to fully comply. In June 2022, we transferred our commercial operations in the Russian Federation to a third-party distributor and incurred $39 million of exit costs. Our remaining net assets in the Russian Federation are not material. The Russian Federation and Ukraine represent less than 1% of our total revenues, net assets, workforce and clinical trials, and while the situation continues to evolve, as of now, we do not anticipate any significant negative impacts on our business. For a more complete discussion on the risks we encounter in our business, please refer to “Part I—Item 1A. Risk Factors” in our 2021 Form 10-K.
Significant Product and Pipeline Approvals
The following is a summary of the significant approvals received in 2021:2022 as of July 27, 2022:
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| Breyanzi | June 2022 | FDA approval of Breyanzi for the treatment of adult patients with relapsed or refractory large B-cell lymphoma after one line of therapy. |
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| Opdivo+Yervoy | June 2021May 2022 | ECJapan's Ministry of Health, Labour and Welfare approval of Opdivo plus Yervoy for theas a first-line treatment offor adult patients with mismatch repair deficientunresectable advanced or microsatellite instability-high mCRC after prior fluoropyrimidine-based combination chemotherapy.metastatic ESCC regardless of PD-L1 status.
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OnuregOpdivo | June 2021May 2022 | ECJapan's Ministry of Health, Labour and Welfare approval of OnuregOpdivo in combination with fluoropyrimidine- and platinum-containing chemotherapy as a maintenance therapy infirst-line treatment for adult patients with AML who achieved complete remissionunresectable advanced or complete remission with incomplete blood count recovery following induction therapy with or without consolidation treatment and who are not candidates for, including those who choose not to proceed to, hematopoietic stem cell transplantation.metastatic ESCC regardless of PD-L1 status.
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| Opdivo+Yervoy | June 2021May 2022 | FDA approval of Opdivo plus Yervoy as a first-line treatment for adult patients with unresectable advanced or metastatic ESCC regardless of PD-L1 status. |
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| Opdivo | May 2022 | FDA approval of Opdivo in combination with fluoropyrimidine- and platinum-containing chemotherapy as a first-line treatment for adult patients with unresectable advanced or metastatic ESCC regardless of PD-L1 status. |
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Camzyos (mavacamten) | April 2022 | FDA approval of Camzyos (mavacamten) for the treatment of adults with symptomatic obstructive HCM. |
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| Breyanzi | April 2022 | EC approval of Breyanzi for the treatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma, primary mediastinal large B-cell lymphoma and follicular lymphoma grade 3B after two or more lines of systemic therapy. |
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| Opdivo+Yervoy | April 2022 | EC approval of Opdivo plus Yervoy for the first-line treatment of adultsadult patients with unresectable malignant pleural mesothelioma.advanced, recurrent or metastatic ESCC with tumor cell PD-L1 expression > 1%. |
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Zeposia | May 2021 | FDA approval of Zeposia for the treatment of adults with moderately to severely active UC.
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Opdivo | May 2021 | Announced Japan’s Ministry of Health, Labour and Welfare approval of Opdivo and Yervoy in combination therapy for the first-line treatment of unresectable advanced or recurrent malignant pleural mesothelioma.
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Opdivo | May 2021 | FDA approval of Opdivo for the adjuvant treatment of patients with completely resected esophageal or gastroesophageal junction cancer with residual pathologic disease after neoadjuvant chemoradiotherapy.
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| Opdivo | April 20212022 | FDAEC approval of Opdivo in combinationfor the adjuvant treatment of adults with chemotherapy for patientsmuscle-invasive urothelial carcinoma with advanced or metastatic gastric cancer, gastroesophageal junction cancer, and esophageal adenocarcinoma, regardless oftumor cell PD-L1 expression status.> 1% who are at risk of recurrence after undergoing radical resection.
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| Opdivo | April 20212022 | EC approval of Opdivo in combination with Cabometyx*fluoropyrimidine- and platinum-based chemotherapy for the first-line treatment of adult patients with unresectable advanced, RCC.recurrent, or metastatic ESCC with PD-L1 expression > 1%. |
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| Opdualag | March 2022 | FDA approval of Opdualag, a fixed-dose combination of nivolumab and relatlimab, for the treatment of adult and pediatric patients 12 years of age and older with unresectable or metastatic melanoma. |
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| Opdivo | March 2022 | FDA approval of Opdivo in combination with platinum-doublet chemotherapy for adult patients with resectable NSCLC in the neoadjuvant setting. |
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| Opdivo | March 2022 | Japan's Ministry of Health, Labour and Welfare approval of Opdivo for the adjuvant treatment of urothelial carcinoma. |
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| Abecma | March 2021January 2022 | FDAJapan’s Ministry of Health, Labour and Welfare approval of Abecma (idecabtagene vicleucel; ide-cel) for the treatment of adult patients with relapsed or refractory multiple myeloma after four or morewho have received at least three prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody.therapies.
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Breyanzi | March 2021 | Announced Japan’s Ministry of Health, Labour and Welfare approval of Breyanzi (lisocabtagene maraleucel: liso-cel) for the treatment of patients with relapsed or refractory large B-cell lymphoma and relapsed or refractory follicular lymphoma.
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Inrebic | February 2021 | EC approval of Inrebic for the treatment of disease-related splenomegaly or symptoms in adult patients with primary myelofibrosis, post-polycythaemia vera myelofibrosis or post-essential thrombocythaemia myelofibrosis, who are Janus Associated Kinase inhibitor naïve or have been treated with ruxolitinib.
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Breyanzi | February 2021 | FDA approval of Breyanzi (lisocabtagene maraleucel; liso-cel) for the treatment of adult patients with relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy.
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Opdivo | January 2021 | FDA approval of Opdivo in combination with Cabometyx* for the first-line treatment of patients with advanced RCC.
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The FDA has indicated it is undertaking an industry-wide review of indications that received accelerated approval and for which the confirmatory studies did not meet their primary endpoints. This is not specific to BMS, but we have two Opdivo indications that are subject to this review by the FDA in the third-line treatment of SCLC and second-line treatment of HCC. In consultation with the FDA, we have withdrawn the Opdivo indication in the third-line treatment of SCLC. Additionally, we decided to withdraw the Opdivo indication in the second-line treatment of HCC.
Refer to “—Product and Pipeline Developments” for all of the developments in our marketed products and late-stage pipeline in 2021.since the start of the second quarter of 2022.
Acquisitions, Divestitures, Licensing and Other Arrangements
Divestitures, licensing and other arrangements allow us to focus our resources behind our growth opportunities that drive the greatest long-term value. Significant transactions entered into in 2021 are summarized below. Refer to “Item 1. Financial Statements—Note 3. Alliances” and “—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements” for further information.information on significant divestitures, licensing and other arrangements in 2022.
Agenus - We obtained a global exclusive license to Agenus’ proprietary bispecific antibody program, AGEN1777, that blocks TIGIT and an additional target. AGEN1777 is being studied in oncology and is in preclinical development.
Eisai - We commenced an exclusive global strategic collaboration with Eisai for the co-development and co-commercialization of MORAb-202, a selective folate receptor alpha antibody-drug conjugate being investigated in endometrial, ovarian, lung and breast cancers. MORAb-202 is currently in Phase I/II clinical trials for solid tumors.
Prothena - We exercised our option under the global neuroscience research and development collaboration to enter into an exclusive U.S. license for PRX005, an anti-tau antibody that specifically targets an area within the microtubule binding region for the potential treatment of Alzheimer’s disease. A Phase I clinical trial with PRX005 has been initiated.
Rockefeller University - We entered into an agreement with Rockefeller University, granting us the global exclusive license to develop, manufacture and commercialize Rockefeller’s novel monoclonal antibody duo treatment that neutralizes the SARS-CoV-2 virus for therapy, or prevents in certain patients, of COVID-19. Phase I clinical trials to assess dosing for IV and subcutaneous formulations and to assess safety have been completed by Rockefeller. In May 2021, enrollment initiated in the Phase II study within the NIH ACTIV-2 protocol at a network of sites within the U.S.
RESULTS OF OPERATIONS
Regional Revenues
The composition of the changes in revenues was as follows:
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | % Change | | Foreign Exchange(b) | | 2021 | | 2020 | | % Change | | Foreign Exchange(b) | Dollars in Millions | 2022 | | 2021 | | % Change | | Foreign Exchange(b) | | 2022 | | 2021 | | % Change | | Foreign Exchange(b) |
| United States | United States | $ | 7,388 | | | $ | 6,487 | | | 14 | % | | — | | | $ | 14,398 | | | $ | 13,253 | | | 9 | % | | — | | United States | $ | 8,268 | | | $ | 7,388 | | | 12 | % | | — | | | $ | 15,962 | | | $ | 14,398 | | | 11 | % | | — | |
| Europe | 2,689 | | | 2,136 | | | 26 | % | | 10 | % | | 5,242 | | | 4,703 | | | 11 | % | | 9 | % | |
| Rest of the World | 1,435 | | | 1,334 | | | 8 | % | | 4 | % | | 2,781 | | | 2,669 | | | 4 | % | | 3 | % | |
| International | | International | 3,427 | | | 4,124 | | | (17) | % | | (9) | % | | 7,154 | | | 8,023 | | | (11) | % | | (8) | % |
| Other(a) | Other(a) | 191 | | | 172 | | | 11 | % | | N/A | | 355 | | | 285 | | | 25 | % | | N/A | Other(a) | 192 | | | 191 | | | 1 | % | | — | | | 419 | | | 355 | | | 18 | % | | — | |
| Total | Total | $ | 11,703 | | | $ | 10,129 | | | 16 | % | | 3 | % | | $ | 22,776 | | | $ | 20,910 | | | 9 | % | | 2 | % | Total | $ | 11,887 | | | $ | 11,703 | | | 2 | % | | (3) | % | | $ | 23,535 | | | $ | 22,776 | | | 3 | % | | (3) | % |
(a) Other revenues include royalties and alliance-related revenues for products not sold by our regional commercial organizations.
(b) Foreign exchange impacts were derived by applying the prior period average currency rates to the current period sales.
United States
•U.S. revenues for the second quarter 2021of 2022 and year-to-date increased due to Eliquis, higher demand for Eliquis, our IO and new product portfoliosNew Product Portfolio and RevlimidOpdivo.. The second quarter 2020 was negatively impacted from sales channel inventory work downs and lower new patient starts due to the COVID-19 pandemic. Average U.S. net selling prices increased 1%4% year-to-date compared to the same period a year ago.
EuropeInternational
•EuropeInternational revenues for the second quarter 2021of 2022 and year-to-date increaseddecreased due to higherlower demand forof Revlimid as a result of generic erosion and foreign exchange impacts, partially offset by Eliquis, Revlimid,Opdivo and our IO portfolio and foreign exchange, partially offset by lower demand for established brands. The second quarter 2020 was negatively impacted from sales channel inventory work downs and lower new patient starts due to the COVID-19 pandemic.New Product Portfolio. Average net selling prices decreased year-to-date compared to the same period a year ago.
Rest of the World
•Rest of the World revenues for the second quarter 2021 and year-to-date increased due to higher demand for Pomalyst/Imnovid, our IO portfolio, and Eliquis and foreign exchange, partially offset by lower demand for established brands. The second quarter 2020 was negatively impacted from sales channel inventory work downs and lower new patient starts due to the COVID-19 pandemic. Average net selling prices decreased year-to-date compared to the same period a year ago.
No single country outside the U.S. contributed more than 10% of total revenues during the six months ended June 30, 2021 or 2020.2022 and 2021. Our business is typically not seasonal.
GTN Adjustments
The reconciliation of gross product sales to net product sales by each significant category of GTN adjustments was as follows:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change | Dollars in Millions | 2022 | | 2021 | | % Change | | 2022 | | 2021 | | % Change |
| Gross product sales | Gross product sales | $ | 16,782 | | | $ | 13,788 | | | 22 | % | | $ | 32,341 | | | $ | 28,474 | | | 14 | % | Gross product sales | $ | 17,299 | | | $ | 16,782 | | | 3 | % | | $ | 33,949 | | | $ | 32,341 | | | 5 | % |
| GTN adjustments | GTN adjustments | | GTN adjustments | |
| Charge-backs and cash discounts | Charge-backs and cash discounts | (1,720) | | | (1,292) | | | 33 | % | | (3,306) | | | (2,632) | | | 26 | % | Charge-backs and cash discounts | (1,750) | | | (1,720) | | | 2 | % | | (3,513) | | | (3,306) | | | 6 | % |
| Medicaid and Medicare rebates | Medicaid and Medicare rebates | (2,139) | | | (1,482) | | | 44 | % | | (3,857) | | | (2,980) | | | 29 | % | Medicaid and Medicare rebates | (2,624) | | | (2,139) | | | 23 | % | | (4,708) | | | (3,857) | | | 22 | % |
| Other rebates, returns, discounts and adjustments | Other rebates, returns, discounts and adjustments | (1,518) | | | (1,197) | | | 27 | % | | (2,975) | | | (2,504) | | | 19 | % | Other rebates, returns, discounts and adjustments | (1,440) | | | (1,518) | | | (5) | % | | (2,935) | | | (2,975) | | | (1) | % |
| Total GTN adjustments | Total GTN adjustments | (5,377) | | | (3,971) | | | 35 | % | | (10,138) | | | (8,116) | | | 25 | % | Total GTN adjustments | (5,814) | | | (5,377) | | | 8 | % | | (11,156) | | | (10,138) | | | 10 | % |
| Net product sales | Net product sales | $ | 11,405 | | | $ | 9,817 | | | 16 | % | | $ | 22,203 | | | $ | 20,358 | | | 9 | % | Net product sales | $ | 11,485 | | | $ | 11,405 | | | 1 | % | | $ | 22,793 | | | $ | 22,203 | | | 3 | % |
| | GTN adjustments percentage | GTN adjustments percentage | 32 | % | | 29 | % | | 3 | % | | 31 | % | | 28 | % | | 3 | % | GTN adjustments percentage | 34 | % | | 32 | % | | 2 | % | | 33 | % | | 31 | % | | 2 | % |
| U.S. | U.S. | 38 | % | | 34 | % | | 4 | % | | 37 | % | | 34 | % | | 3 | % | U.S. | 38 | % | | 38 | % | | — | | | 38 | % | | 37 | % | | 1 | % |
| Non-U.S. | Non-U.S. | 15 | % | | 16 | % | | (1) | % | | 16 | % | | 15 | % | | 1 | % | Non-U.S. | 16 | % | | 15 | % | | 1 | % | | 16 | % | | 16 | % | | — | |
Reductions to provisions for product sales made in prior periods resulting from changes in estimates were $302$123 million and $116$197 million for the three and six months ended June 30, 2022 and $85 million and $302 million for the three and six months ended June 30, 2021, and 2020, respectively. The reductions to provisions in 2021 was primarily related to Non-U.S. revisions in clawback amounts primarily driven by the VAT recoverable estimates in 2022 and Eliquis coverage gap discounts.discounts in 2021. GTN adjustments are primarily a function of product sales volume, regional and payer channel mix, contractual or legislative discounts and rebates. U.S. GTN adjustments percentage increased primarily due to higher government channel mix, which has higher GTN adjustment percentages.
Product Revenues
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change | Dollars in Millions | 2022 | | 2021 | | % Change | | 2022 | | 2021 | | % Change |
| Prioritized Brands | | | | | | | | | | | | |
| Revlimid | $ | 3,202 | | | $ | 2,884 | | | 11 | % | | $ | 6,146 | | | $ | 5,799 | | | 6 | % | |
| U.S. | 2,164 | | | 2,048 | | | 6 | % | | 4,122 | | | 4,014 | | | 3 | % | |
| Non-U.S. | 1,038 | | | 836 | | | 24 | % | | 2,024 | | | 1,785 | | | 13 | % | |
| | In-Line Products | | In-Line Products | | | | | | | | | | | |
| Eliquis | Eliquis | 2,792 | | | 2,163 | | | 29 | % | | 5,678 | | | 4,804 | | | 18 | % | Eliquis | $ | 3,235 | | | $ | 2,792 | | | 16 | % | | 6,446 | | | $ | 5,678 | | | 14 | % |
| U.S. | U.S. | 1,722 | | | 1,363 | | | 26 | % | | 3,645 | | | 3,140 | | | 16 | % | U.S. | 2,192 | | | 1,722 | | | 27 | % | | 4,339 | | | 3,645 | | | 19 | % |
| Non-U.S. | Non-U.S. | 1,070 | | | 800 | | | 34 | % | | 2,033 | | | 1,664 | | | 22 | % | Non-U.S. | 1,043 | | | 1,070 | | | (3) | % | | 2,107 | | | 2,033 | | | 4 | % |
| | Opdivo | Opdivo | 1,910 | | | 1,653 | | | 16 | % | | 3,630 | | | 3,419 | | | 6 | % | Opdivo | 2,063 | | | 1,910 | | | 8 | % | | 3,986 | | | 3,630 | | | 10 | % |
| U.S. | U.S. | 1,076 | | | 956 | | | 13 | % | | 2,020 | | | 1,964 | | | 3 | % | U.S. | 1,205 | | | 1,076 | | | 12 | % | | 2,304 | | | 2,020 | | | 14 | % |
| Non-U.S. | Non-U.S. | 834 | | | 697 | | | 20 | % | | 1,610 | | | 1,455 | | | 11 | % | Non-U.S. | 858 | | | 834 | | | 3 | % | | 1,682 | | | 1,610 | | | 4 | % |
| | Orencia | 814 | | | 750 | | | 9 | % | | 1,572 | | | 1,464 | | | 7 | % | |
| Pomalyst/Imnovid | | Pomalyst/Imnovid | 908 | | | 854 | | | 6 | % | | 1,734 | | | 1,627 | | | 7 | % |
| U.S. | U.S. | 593 | | | 554 | | | 7 | % | | 1,129 | | | 1,054 | | | 7 | % | U.S. | 616 | | | 567 | | | 9 | % | | 1,173 | | | 1,079 | | | 9 | % |
| Non-U.S. | Non-U.S. | 221 | | | 196 | | | 13 | % | | 443 | | | 410 | | | 8 | % | Non-U.S. | 292 | | | 287 | | | 2 | % | | 561 | | | 548 | | | 2 | % |
| | Pomalyst/Imnovid | 854 | | | 745 | | | 15 | % | | 1,627 | | | 1,458 | | | 12 | % | |
| Orencia | | Orencia | 876 | | | 814 | | | 8 | % | | 1,668 | | | 1,572 | | | 6 | % |
| U.S. | U.S. | 567 | | | 522 | | | 9 | % | | 1,079 | | | 1,011 | | | 7 | % | U.S. | 654 | | | 593 | | | 10 | % | | 1,246 | | | 1,129 | | | 10 | % |
| Non-U.S. | Non-U.S. | 287 | | | 223 | | | 29 | % | | 548 | | | 447 | | | 23 | % | Non-U.S. | 222 | | | 221 | | | — | | | 422 | | | 443 | | | (5) | % |
| | Sprycel | Sprycel | 541 | | | 511 | | | 6 | % | | 1,011 | | | 1,032 | | | (2) | % | Sprycel | 544 | | | 541 | | | 1 | % | | 1,027 | | | 1,011�� | | | 2 | % |
| U.S. | U.S. | 325 | | | 308 | | | 6 | % | | 600 | | | 608 | | | (1) | % | U.S. | 372 | | | 325 | | | 14 | % | | 677 | | | 600 | | | 13 | % |
| Non-U.S. | Non-U.S. | 216 | | | 203 | | | 6 | % | | 411 | | | 424 | | | (3) | % | Non-U.S. | 172 | | | 216 | | | (20) | % | | 350 | | | 411 | | | (15) | % |
| | Yervoy | Yervoy | 510 | | | 369 | | | 38 | % | | 966 | | | 765 | | | 26 | % | Yervoy | 525 | | | 510 | | | 3 | % | | 1,040 | | | 966 | | | 8 | % |
| U.S. | U.S. | 328 | | | 254 | | | 29 | % | | 622 | | | 511 | | | 22 | % | U.S. | 326 | | | 328 | | | (1) | % | | 637 | | | 622 | | | 2 | % |
| Non-U.S. | Non-U.S. | 182 | | | 115 | | | 58 | % | | 344 | | | 254 | | | 35 | % | Non-U.S. | 199 | | | 182 | | | 9 | % | | 403 | | | 344 | | | 17 | % |
| | Abraxane | 296 | | | 308 | | | (4) | % | | 610 | | | 608 | | | — | | |
| U.S. | 234 | | | 218 | | | 7 | % | | 459 | | | 423 | | | 9 | % | |
| Non-U.S. | 62 | | | 90 | | | (31) | % | | 151 | | | 185 | | | (18) | % | |
| | Empliciti | Empliciti | 86 | | | 97 | | | (11) | % | | 171 | | | 194 | | | (12) | % | Empliciti | 77 | | | 86 | | | (10) | % | | 152 | | | 171 | | | (11) | % |
| U.S. | U.S. | 51 | | | 59 | | | (14) | % | | 102 | | | 118 | | | (14) | % | U.S. | 47 | | | 51 | | | (8) | % | | 94 | | | 102 | | | (8) | % |
| Non-U.S. | Non-U.S. | 35 | | | 38 | | | (8) | % | | 69 | | | 76 | | | (9) | % | Non-U.S. | 30 | | | 35 | | | (14) | % | | 58 | | | 69 | | | (16) | % |
| | Reblozyl | 128 | | | 55 | | | ** | | 240 | | | 63 | | | ** | |
| U.S. | 110 | | | 55 | | | 100 | % | | 208 | | | 63 | | | ** | |
| Non-U.S. | 18 | | | — | | | N/A | | 32 | | | — | | | N/A | |
| | Inrebic | 16 | | | 15 | | | 7 | % | | 32 | | | 27 | | | 19 | % | |
| U.S. | 15 | | | 15 | | | — | | | 30 | | | 27 | | | 11 | % | |
| Non-U.S. | 1 | | | — | | | N/A | | 2 | | | — | | | N/A | |
| | Onureg | 12 | | | — | | | N/A | | 27 | | | — | | | N/A | |
| U.S. | 12 | | | — | | | N/A | | 26 | | | — | | | N/A | |
| Non-U.S. | — | | | — | | | N/A | | 1 | | | — | | | N/A | |
| | Zeposia | 28 | | | 1 | | | ** | | 46 | | | 1 | | | ** | |
| U.S. | 20 | | | 1 | | | ** | | 33 | | | 1 | | | ** | |
| Non-U.S. | 8 | | | — | | | N/A | | 13 | | | — | | | N/A | |
|
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change | Dollars in Millions | 2022 | | 2021 | | % Change | | 2022 | | 2021 | | % Change |
| Prioritized Brands | | | | | | | | | | | | |
| | Breyanzi | 17 | | | — | | | N/A | | 17 | | | — | | | N/A | |
| | Mature and other products | | Mature and other products | 435 | | | 473 | | | (8) | % | | 897 | | | 979 | | (8) | % |
| U.S. | | U.S. | 147 | | | 130 | | | 13 | % | | 280 | | | 282 | | | (1) | % |
| Non-U.S. | | Non-U.S. | 288 | | | 343 | | | (16) | % | | 617 | | | 697 | | | (11) | % |
| | New Product Portfolio | | New Product Portfolio | |
| Reblozyl | | Reblozyl | 172 | | | 128 | | | 34 | % | | 328 | | | 240 | | | 37 | % |
| U.S. | U.S. | 17 | | | — | | | N/A | | 17 | | | — | | | N/A | U.S. | 144 | | | 110 | | | 31 | % | | 278 | | | 208 | | | 34 | % |
| Non-U.S. | Non-U.S. | — | | | — | | | N/A | | — | | | — | | | N/A | Non-U.S. | 28 | | | 18 | | | 56 | % | | 50 | | | 32 | | | 56 | % |
| | Abecma | Abecma | 24 | | | — | | | N/A | | 24 | | | — | | | N/A | Abecma | 89 | | | 24 | | | ** | | 156 | | | 24 | | | 37 | % |
| U.S. | U.S. | 24 | | | — | | | N/A | | 24 | | | — | | | N/A | U.S. | 72 | | | 24 | | | ** | | 128 | | | 24 | | | ** |
| Non-U.S. | Non-U.S. | — | | | — | | | N/A | | — | | | — | | | N/A | Non-U.S. | 17 | | | — | | | N/A | | 28 | | | — | | | N/A |
| | Established Brands | | |
| Vidaza | 45 | | | 126 | | | (64) | % | | 99 | | | 284 | | | (65) | % | |
| Zeposia | | Zeposia | 66 | | | 28 | | | ** | | 102 | | | 46 | | | ** |
| U.S. | U.S. | 2 | | | — | | | N/A | | 7 | | | 2 | | | ** | U.S. | 48 | | | 20 | | | ** | | 69 | | | 33 | | | ** |
| Non-U.S. | Non-U.S. | 43 | | | 126 | | | (66) | % | | 92 | | | 282 | | | (67) | % | Non-U.S. | 18 | | | 8 | | | ** | | 33 | | | 13 | | | ** |
| | Baraclude | 109 | | | 121 | | | (10) | % | | 222 | | | 243 | | | (9) | % | |
| Breyanzi | | Breyanzi | 39 | | | 17 | | | ** | | 83 | | | 17 | | | ** |
| U.S. | U.S. | 2 | | | 3 | | | (33) | % | | 6 | | | 6 | | | — | | U.S. | 33 | | | 17 | | | 94 | % | | 74 | | | 17 | | | ** |
| Non-U.S. | Non-U.S. | 107 | | | 118 | | | (9) | % | | 216 | | | 237 | | | (9) | % | Non-U.S. | 6 | | | — | | | N/A | | 9 | | | — | | | N/A |
| | Other Brands | 319 | | | 331 | | | (4) | % | | 658 | | | 749 | | | (12) | % | |
| Inrebic | | Inrebic | 23 | | | 16 | | | 44 | % | | 41 | | | 32 | | | 28 | % |
| U.S. | | U.S. | 20 | | | 15 | | | 33 | % | | 35 | | | 30 | | | 17 | % |
| Non-U.S. | | Non-U.S. | 3 | | | 1 | | | ** | | 6 | | | 2 | | | ** |
| | Onureg | | Onureg | 32 | | | 12 | | | ** | | 55 | | | 27 | | | ** |
| U.S. | | U.S. | 25 | | | 12 | | | ** | | 44 | | | 26 | | | 69 | % |
| Non-U.S. | | Non-U.S. | 7 | | | — | | | N/A | | 11 | | | 1 | | | ** |
| | Opdualag | | Opdualag | 58 | | | — | | | N/A | | 64 | | | — | | | N/A |
| U.S. | | U.S. | 58 | | | — | | | N/A | | 64 | | | — | | | N/A |
| Non-U.S. | | Non-U.S. | — | | | — | | | N/A | | — | | | — | | | N/A |
| | Camzyos | | Camzyos | 3 | | | — | | | N/A | | 3 | | | — | | | N/A |
| U.S. | | U.S. | 3 | | | — | | | N/A | | 3 | | | — | | | N/A |
| Non-U.S. | | Non-U.S. | — | | | — | | | N/A | | — | | | — | | | N/A |
| Recent LOE Products(a) | | Recent LOE Products(a) | |
| Revlimid | | Revlimid | 2,501 | | | 3,202 | | | (22) | % | | 5,298 | | | 6,146 | | | (14) | % |
| U.S. | | U.S. | 2,130 | | | 2,164 | | | (2) | % | | 4,168 | | | 4,122 | | | 1 | % |
| Non-U.S. | | Non-U.S. | 371 | | | 1,038 | | | (64) | % | | 1,130 | | | 2,024 | | | (44) | % |
| | Abraxane | | Abraxane | 241 | | | 296 | | | (19) | % | | 455 | | | 610 | | | (25) | % |
| U.S. | U.S. | 126 | | | 131 | | | (4) | % | | 269 | | | 311 | | | (14) | % | U.S. | 176 | | | 234 | | | (25) | % | | 349 | | | 459 | | | (24) | % |
| Non-U.S. | Non-U.S. | 193 | | | 200 | | | (4) | % | | 389 | | | 438 | | | (11) | % | Non-U.S. | 65 | | | 62 | | | 5 | % | | 106 | | | 151 | | | (30) | % |
| | Total Revenues | Total Revenues | 11,703 | | | 10,129 | | | 16 | % | | 22,776 | | | 20,910 | | | 9 | % | Total Revenues | 11,887 | | | 11,703 | | | 2 | % | | 23,535 | | | 22,776 | | | 3 | % |
| U.S. | U.S. | 7,388 | | | 6,487 | | | 14 | % | | 14,398 | | | 13,253 | | | 9 | % | U.S. | 8,268 | | | 7,388 | | | 12 | % | | 15,962 | | | 14,398 | | | 11 | % |
| Non-U.S. | Non-U.S. | 4,315 | | | 3,642 | | | 18 | % | | 8,378 | | | 7,657 | | | 9 | % | Non-U.S. | 3,619 | | | 4,315 | | | (16) | % | | 7,573 | | | 8,378 | | | (10) | % |
** Change in excess of 100%.
Revlimid (lenalidomide)—an oral immunomodulatory drug that(a) Recent LOE Products includes products with significant decline in combination with dexamethasone is indicated for the treatment of patients with multiple myeloma. Revlimidrevenue from a prior reporting period as a single agent is also indicated asresult of a maintenance therapy in patients with multiple myeloma following autologous hematopoietic stem cell transplant.loss of exclusivity.
•U.S. revenues increased 6% in the second quarter 2021 due to higher demand and higher average net selling prices.
U.S. revenues increased 3% year-to-date due to higher average net selling prices.
•International revenues increased 24% in the second quarter 2021 due to higher demand and foreign exchange of 8%. Excluding foreign exchange impacts, revenues increased by 16%.
International revenues increased 13% year-to-date due to foreign exchange of 7% and higher demand. Excluding foreign exchange impacts, revenues increased 6%.
Eliquis (apixaban) — an oral Factor Xa inhibitor, targeted at stroke preventionindicated for the reduction in adult patients withrisk of stroke/systemic embolism in NVAF and for the prevention and treatment of VTE disorders.DVT/PE and reduction in risk of recurrence following initial therapy.
•U.S. revenues increased 26%27% in the second quarter 2021of 2022 and 19% year-to-date due to higher demandaverage net selling prices, including favorable GTN adjustments, and ahigher demand. A majority of Eliquis patients enter the coverage gap during the third and fourth quarters which is expected to result in lower revenues during the second half of the year.
•International revenues decreased 3% in the second quarter 2020 inventory work down resulting from the COVID-19 pandemic (primarily sales channel inventory work down)of 2022 due to foreign exchange impacts of 12%, partially offset by lower average net selling prices.higher demand. Excluding foreign exchange impacts, revenues increased by 9%.
U.S.International revenues increased 16%4% year-to-date due to higher demand, partially offset by foreign exchange impacts of 9% and lower average net selling prices.
•International revenues increased 34% in the second quarter 2021 and 22% year-to-date due to higher demand and foreign exchange of 10% and 9%, respectively. The second quarter 2020 was negatively affected from the COVID-19 pandemic (primarily sales channel inventory work down). Excluding foreign exchange impacts, revenues increased by 24% and 13%, respectively..
Following the May 2021 expiration of regulatory exclusivity for Eliquis in Europe, generic manufacturers have begun marketing generic versions of Eliquis in the UK and Netherlands, and may seek to market generic versions of Eliquis in additional countries in Europe,prior to the expiration of our patents, which may lead to additional infringement and invalidity actions involving our Eliquis patents being filed in various countries in Europe. We believe in the innovative science behind Eliquis and the strength of our intellectual property, which we will defend against infringement. Refer to “Item 1. Financial Statements—Note 17. Legal Proceedings and Contingencies—Intellectual Property—”Property” for further information.
Opdivo (nivolumab) — a fully human monoclonal antibody that binds to the PD-1 on T and NKT cells that has been approved for several anti-cancer indications including bladder, blood, colon,CRC, head and neck, kidney, liver,RCC, HCC, lung, melanoma, MPM, stomach and stomach.esophageal cancer. The Opdivo+Yervoy regimen also is approved in multiple markets for the treatment of NSCLC, melanoma, MPM, RCC, CRC and CRC.various gastric and esophageal cancers. There are several ongoing potentially registrational studies for Opdivo across other tumor types and disease areas, in monotherapy and in combination with Yervoy and various anti-cancer agents.
•U.S. revenues increased 13%12% in the second quarter 2021of 2022 and 3%14% year-to-date due to higher demand across multiple therapiesindications including the Opdivo+Yervoy combinations infor NSCLC, (launched in the second quarter 2020), Opdivo+Cabometyx* combination infor kidney cancer, bladder andOpdivo in various gastric and esophageal cancers, partially offset by declining second-line eligibility across tumor indications and increased competition. The second quarter 2020 was negatively affected from the COVID-19 pandemic (primarily lower new patient starts and patient visits).
•International revenues increased 20%3% in the second quarter 2021of 2022 and 11%4% year-to-date due to higher demand as a result of additional indication launches and core indications, partially offset by foreign exchange impacts of 7%10% and 5%9%, respectively. Excluding foreign exchange impacts, revenues increased by 13% and 6%, respectively.
Orencia (abatacept) — a fusion protein indicated for adult patients with moderate to severe active RA and PsA and is also indicated for reducing signs and symptoms in certain pediatric patients with moderately to severely active polyarticular JIA.
•U.S. revenues increased 7% in the second quarter 2021 and year-to-date due to higher demand. The second quarter 2020 was negatively impacted by lower demand from the COVID-19 pandemic.
•International revenues increased 13% in the second quarter 2021 and 8% year-to-date due to foreign exchange of 6% and 5%, respectively, higher demand and higher average net selling prices. The second quarter 2020 was negatively impacted by lower demand from the COVID-19 pandemic. Excluding foreign exchange impacts, revenues increased by 7% and 3%, respectively.both periods.
Pomalyst/Imnovid (pomalidomide) — a proprietary, distinct, small molecule that is administered orally and modulates the immune system and other biologically important targets. Pomalyst/Imnovid is indicated for patients with multiple myeloma who have received at least two prior therapies including lenalidomide and a proteasome inhibitor and have demonstrated disease progression on or within 60 days of completion of the last therapy.
•U.S. revenues increased 9% in both the second quarter 2021of 2022 and 7% year-to-date due to higher demand and higher average net selling prices.prices and higher demand.
•International revenues increased 29%2% in both the second quarter 2021of 2022 and 23% year-to-date due to higher demand, andpartially offset by foreign exchange impacts of 6% for both periods, partially offset by9% and 8%, respectively, and lower average net selling prices. Excluding foreign exchange impacts, revenues increased by 23%11% and 17%10%, respectively.
Orencia (abatacept) — a fusion protein indicated for adult patients with moderate to severe active RA and PsA and is also indicated for reducing signs and symptoms in certain pediatric patients with moderately to severely active polyarticular JIA.
•U.S. revenues increased 10% in both the second quarter of 2022 and year-to-date due to higher demand.
•International revenues remained consistent in the second quarter of 2022 due to higher demand, offset by foreign exchange impacts of 12%. Excluding foreign exchange impacts, revenues increased by 12%.
International revenues decreased 5% year-to-date due to foreign exchange impacts of 9%, partially offset by higher demand. Excluding foreign exchange impacts, revenues increased by 4%.
•In the U.S. and EU, estimated LOE dates are based on method of use patents that expired in 2021. Formulation and additional patents expire in 2026 and beyond. There are no Orencia biosimilars on the market in the U.S., EU or Japan.
Sprycel (dasatinib) — an oral inhibitor of multiple tyrosine kinase indicated for the first-line treatment of patients with Philadelphia chromosome-positive CML in chronic phase and the treatment of adults with chronic, accelerated, or myeloid or lymphoid blast phase CML with resistance or intolerance to prior therapy, including Gleevec* (imatinib mesylate) and the treatment of children and adolescents aged 1 year to 18 years with chronic phase Philadelphia chromosome-positive CML.
•U.S. revenues increased 6%14% in the second quarter 2021of 2022 and 13% year-to-date due to higher demand.
U.S. revenues decreased 1% year-to-date due lower average net selling prices.prices and higher demand.
•International revenues increased 6%decreased 20% in the second quarter 2021of 2022 and 15% year-to-date due to foreign exchange impacts of 4%10% and 9%, respectively and to a lesser extent, higher demand. Excluding foreign exchange impacts, revenues increased by 2%.
International revenues decreased 3% year-to-date due to lower demand as a result of increased generic competition and lower average net selling prices, partially offset by foreign exchange of 4%.erosion. Excluding foreign exchange impacts, revenues decreased by 7%.
39
Yervoy (ipilimumab) — a monoclonal antibody for the treatment of patients with unresectable or metastatic melanoma. The Opdivo+Yervoy regimen also is approved in multiple markets for the treatment of NSCLC, melanoma, MPM, RCC, CRC and CRC.esophageal cancer.
•U.S. revenues increased 29%remained consistent in the second quarter 2021 and 22%of 2022 due to lower demand offset by higher average net selling prices.
U.S. revenues increased 2% year-to-date due to higher average net selling prices and higher demand primarily from the Opdivo+Yervoy combination for NSCLC (launched in the second quarter 2020).NSCLC.
•International revenues increased 58%9% in the second quarter 2021of 2022 and 35%17% year-to-date due to higher demand as a result of additional indication launches and foreign exchange of 10% and 7%, respectively, partially offset by lower average net selling prices. Excluding foreign exchange impacts, revenues increased by 48% and 28%, respectively.
Abraxane (paclitaxel albumin-bound particles for injectable suspension)—a solvent-free protein-bound chemotherapy product that combines paclitaxel with albumin using our proprietary Nab® technology platform, and is used to treat breast cancer, NSCLC and pancreatic cancer, among others.
•U.S. revenues increased 7% in the second quarter 2021 due to higher demand,core indications, partially offset by lower average net selling prices and 9% year-to-date due to higher demand.
•International revenues decreased 31% in the second quarter 2021 and 18% year-to-date due to supply chain delays, partially offset by foreign exchange impacts of 5%12% and 4%10%, respectively. Excluding foreign exchange impacts, revenues decreasedincreased by 36%21% and 22%27%, respectively. We expect that the supply chain delays will continue into the third or fourth quarter 2021.
Empliciti (elotuzumab) — a humanized monoclonal antibody for the treatment of multiple myeloma.
Mature and other products — includes all other products, including those which have lost exclusivity in major markets, OTC products, royalty revenue and mature products.
•International revenues decreased 16% in the second quarter of 2022 and 11% year-to-date primarily due to continued generic erosion and foreign exchange impacts of 6% and 2%, respectively. Excluding foreign exchange impacts, revenues decreased by 10% and 9%, respectively.
Reblozyl (luspatercept-aamt) — an erythroid maturation agent indicated for the treatment of anemia in adult patients with beta thalassemia who require regular red blood cell transfusions and for the treatment of anemia failing an erythropoiesis stimulating agent (“ESA”)ESA in adult patients with very low- to intermediate-risk MDS who have ring sideroblasts and require RBC transfusions.
•ReblozylU.S. revenues increased 31% in the second quarter of 2022 and 34% year-to-date due to higher demand.
Abecma (idecabtagene vicleucel) — is a B-cell maturation antigen-directed genetically modified autologous CAR T cell therapy indicated for the treatment of adult patients with relapsed or refractory multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. Abecma was launched in May 2021.
Zeposia (ozanimod) — an oral immunomodulatory drug used to treat relapsing forms of multiple sclerosis, to include clinically isolated syndrome, relapsing-remitting disease, and active secondary progressive disease, in adults and to treat moderately to severely active UC in adults. Zeposia was launched in June 2020.
Breyanzi (lisocabtagene maraleucel) — is a CD19-directed genetically modified autologous CAR T cell therapy indicated for the treatment of adult patients with MDS previously treated with ESAcertain types of relapsed or refractory large B-cell lymphoma after one or more lines of systemic therapy. Breyanzi was launched in April 2020.2021.
Inrebic (fedratinib) — an oral kinase inhibitor indicated for the treatment of adult patients with intermediate-2 or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis. Inrebic was launched in August 2019.
Onureg (azacitidine) — an oral hypomethylating agent that incorporates into DNA and RNA, indicated for continued treatment of adult patients with AML who achieved first complete remission or complete remission with incomplete blood count recovery following intensive induction chemotherapy and are not able to complete intensive curative therapy. Onureg was launched in September 2020.
ZeposiaOpdualag ( (ozanimod) — an oral immunomodulatory drug used to treat relapsing forms of multiple sclerosis, to include clinically isolated syndrome, relapsing-remitting disease,nivolumab and active secondary progressive disease, in adults and to treat moderately to severely active UC in adults. relatlimab-rmbwZeposia) was launched in June 2020.
Breyanzi (lisocabtagene maraleucel) — a CD19-directed genetically modified autologous T cell immunotherapycombination of nivolumab, a PD-1 blocking antibody, and relatlimab, a lymphocyte activation gene-3 (LAG-3) blocking antibody, indicated for the treatment of adult and pediatric patients 12 years of age or older with certain typesunresectable or metastatic melanoma. Opdualag was launched in March 2022.
Camzyos (mavacamten) — a cardiac myosin inhibitor indicated for the treatment of relapsed or refractory large B-cell lymphoma after two or more lines of systemic therapy.adults with symptomatic obstructive HCM to improve functional capacity and symptoms. BreyanziCamzyos was launched in April 2021.2022.
AbecmaRevlimid (lenalidomide) (idecabtagene vicleucel) — a B-cell maturation antigen-directed genetically modified autologous T cell immunotherapyan oral immunomodulatory drug that in combination with dexamethasone is indicated for the treatment of adult patients with relapsed or refractorymultiple myeloma. Revlimid as a single agent is also indicated as a maintenance therapy in patients with multiple myeloma after four or more prior lines of therapy, including an immunomodulatory agent, a proteasome inhibitor, and an anti-CD38 monoclonal antibody. Abecma was launched in May 2021.following autologous hematopoietic stem cell transplant.
Vidaza •(azacitidine for injection)—U.S. revenues decreased 2% in the second quarter of 2022 and increased 1% year-to-date. The increase in revenues year-to-date was due to higher demand in the first quarter of 2022 and higher average net selling prices, partially offset by lower demand in the second quarter of 2022 due to generic erosion. As a hypomethylating agent with several approved indications worldwide for frontline treatmentresult of patients with myelodysplastic syndromes, chronic myelomonocytic leukemia (CMMoL), and acute myeloid leukemia.the availability of generic lenalidomide beginning in March 2022, we expect a material decline in revenue during the second half of 2022.
•International revenues decreased 64% in the second quarter of 2022 and 44% year-to-date due to lower demandgeneric erosion across several European countries and Canada, lower average net selling prices resulting from generic competition.and foreign exchange impacts of 3% and 4%, respectively. Excluding foreign exchange impacts, revenues decreased by 61% and 40%, respectively.
40•In the U.S., certain third parties have been granted volume-limited licenses to sell generic lenalidomide beginning in March 2022 or thereafter. In the EU, licenses have been granted to third parties to market generic lenalidomide products prior to expiry of our patent and supplementary protection certificate rights beginning in the UK in January 2022 and in various other major market European countries (e.g. France, Germany, Italy and Spain) where our supplementary protection certificate is in force beginning in February 2022. In Japan, the estimated minimum market exclusivity date is based on a composition of matter patent, which expires in July 2022. Global revenues for Revlimid are expected to decline to approximately $9.0 billion to $9.5 billion in 2022.
Abraxane (paclitaxel albumin-bound particles for injectable suspension)—a solvent-free protein-bound chemotherapy product that combines paclitaxel with albumin using our proprietary Nab® technology platform, and is used to treat breast cancer, NSCLC and pancreatic cancer, among others.
•U.S. revenues decreased 25% in the second quarter of 2022 and 24% year-to-date due to the entry of authorized generics and lower demand. Year-to-date was also impacted by manufacturing delays in the first quarter of 2022. Revenues in the second quarter of 2022 include product supply sales and profit sharing fees resulting from authorized generic arrangements.
Baraclude
•(entecavir) — an oral antiviral agent forInternational revenues increased 5% in the treatmentsecond quarter of chronic hepatitis B.2022 due to higher demand as the manufacturing delays experienced in the prior year were substantially resolved, partially offset by foreign exchange impacts of 8%. Excluding foreign exchange impacts, revenues increased by 13%.
•International revenues decreased 30% year-to-date due to generic erosion, lower demand resulting from generic competition.
Other Brands — includes all other brands, including those which have lost exclusivityas a result of manufacturing delays and foreign exchange impacts of 5%. Excluding foreign exchange impacts, revenues decreased by 25%. During the first quarter of 2022, the manufacturing delays experienced in major markets, OTC brandsthe U.S. and royalty revenue.International were substantially resolved.
•InternationalIn the U.S. and EU, generics have entered the market. In Japan, the estimated minimum market exclusivity date is 2023 based on a method of use patent. Global revenues decreased primarily duefor Abraxane are expected to continued generic erosion.decline by approximately 25% to 30% in 2022.
Estimated End-User Demand
Pursuant to the SEC Consent Order described in our 20202021 Form 10-K, we monitor inventory levels on hand in the U.S. wholesaler distribution channel and outside of the U.S. in the direct customer distribution channel. We are obligated to disclose products with levels of inventory in excess of one month on hand or expected demand, subject to a de minimis exception. There were no productsEstimated levels of inventory in the U.S. wholesaler distribution channel and outside of the U.S. in the direct customer distribution channel with estimated levels of inventory in excess of one month on hand for the following products were not material to our results of operations as of the dates indicated:
Camzyos had 5.1 months of inventory on hand at June 30, 2021 (U.S.) and March 31, 2021 (outside of2022 in the U.S.).U.S to support the product launch. The inventory is expected to be worked down as demand increases post launch.
In the U.S., we generally determine our months on hand estimates using inventory levels of product on hand and the amount of out-movement provided by our three largest wholesalers, which accountaccounted for approximately 85%77% of total gross sales of U.S. products for the six months ended June 30, 2021.2022. Factors that may influence our estimates include generic competition, seasonality of products, wholesaler purchases in light of increases in wholesaler list prices, new product launches, new warehouse openings by wholesalers and new customer stockings by wholesalers. In addition, these estimates are calculated using third-party data, which may be impacted by their recordkeeping processes.
Revlimid and Pomalyst are distributed in the U.S. primarily through contracted pharmacies under the Revlimid REMS and Pomalyst REMS programs, respectively. These are proprietary risk-management distribution programs tailored specifically to provide for the safe and appropriate distribution and use of Revlimid and Pomalyst. Internationally, Revlimid and Imnovid are distributed under mandatory risk-management distribution programs tailored to meet local authorities’ specifications to provide for the products’ safe and appropriate distribution and use. These programs may vary by country and, depending upon the country and the design of the risk-management program, the product may be sold through hospitals or retail pharmacies.
Our non-U.S. businesses have significantly more direct customers. Information on available direct customer product level inventory and corresponding out-movement information and the reliability of third-party demand information varies widely. We limit our direct customer sales channel inventory reporting to where we can influence demand. When this information does not exist or is otherwise not available, we have developed a variety of methodologies to estimate such data, including using historical sales made to direct customers and third-party market research data related to prescription trends and end-user demand. Given the difficulties inherent in estimating third-party demand information, we evaluate our methodologies to estimate direct customer product level inventory and to calculate months on hand on an ongoing basis and make changes as necessary. Factors that may affect our estimates include generic competition, seasonality of products, price increases, new product launches, new warehouse openings by direct customers, new customer stockings by direct customers and expected direct customer purchases for governmental bidding situations. As such, all of the information required to estimate months on hand in the direct customer distribution channel for non-U.S. business for the quarter ended June 30, 20212022 is not available prior to the filing of this Quarterly Report on Form 10-Q. We will disclose any product with levels of inventory in excess of one month on hand or expected demand for the current quarter, subject to a de minimis exception, in our next quarterly report on Form 10-Q.
Expenses
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change | Dollars in Millions | 2022 | | 2021 | | % Change | | 2022 | | 2021 | | % Change |
Cost of products sold(a) | Cost of products sold(a) | $ | 2,452 | | | $ | 2,699 | | | (9) | % | | $ | 5,293 | | | $ | 6,361 | | | (17) | % | Cost of products sold(a) | $ | 2,720 | | | $ | 2,452 | | | 11 | % | | $ | 5,191 | | | $ | 5,293 | | | (2) | % |
| Marketing, selling and administrative | Marketing, selling and administrative | 1,882 | | | 1,628 | | | 16 | % | | 3,548 | | | 3,234 | | | 10 | % | Marketing, selling and administrative | 1,787 | | | 1,882 | | | (5) | % | | 3,618 | | | 3,548 | | | 2 | % |
| Research and development | Research and development | 3,271 | | | 2,522 | | | 30 | % | | 5,496 | | | 4,894 | | | 12 | % | Research and development | 2,321 | | | 2,478 | | | (6) | % | | 4,581 | | | 4,697 | | | (2) | % |
| Acquired IPRD | | Acquired IPRD | 400 | | | 793 | | | (50) | % | | 733 | | | 799 | | | (8) | % |
| Amortization of acquired intangible assets | Amortization of acquired intangible assets | 2,547 | | | 2,389 | | | 7 | % | | 5,060 | | | 4,671 | | | 8 | % | Amortization of acquired intangible assets | 2,417 | | | 2,547 | | | (5) | % | | 4,834 | | | 5,060 | | | (4) | % |
| Other (income)/expense, net | Other (income)/expense, net | (2) | | | (736) | | | (100) | % | | (704) | | | 427 | | | ** | Other (income)/expense, net | 284 | | | (2) | | | ** | | 933 | | | (704) | | | ** |
| Total Expenses | Total Expenses | $ | 10,150 | | | $ | 8,502 | | | 19 | % | | $ | 18,693 | | | $ | 19,587 | | | (5) | % | Total Expenses | $ | 9,929 | | | $ | 10,150 | | | (2) | % | | $ | 19,890 | | | $ | 18,693 | | | 6 | % |
** In excess of +/- 100%.
(a) Excludes amortization of acquired intangible assets.
Cost of Products Sold
•Cost of products sold increased by $268 million in the second quarter of 2022, primarily due to higher profit sharing due to Eliquis revenue growth ($228 million), and an impairment charge resulting from the divestiture of a manufacturing site ($43 million), partially offset by foreign exchange and related hedging settlements.
Cost of products sold decreased by $247$102 million in the second quarter 2021year-to-date, primarily due to lower unwindingthe impairment of inventory fair value adjustmentsInrebic EU regulatory approval milestones ($626315 million), in 2021, foreign exchange and related hedging settlements, partially offset by higher profit sharing due to Eliquis profit sharingrevenue growth ($303378 million) and foreign exchange.
•Cost of products sold decreased by $1.1 billion year-to-date primarily due to lower unwinding of inventory fair value adjustments ($2.0 billion), partially offset by higher Eliquis profit sharing ($395 million), charges related to Inrebic regulatory approval milestones in the EU ($315 million) and foreign exchange..
Marketing, Selling and Administrative
Marketing, selling and administrative expenses decreased $95 million in the second quarter of 2022 primarily due to foreign exchange.
•
Marketing, selling and administrative expenses increased by $254 million in the second quarter 2021 and $314$70 million year-to-date, primarily due to higher advertising and promotion expenses and higher costs to support new product launches.launches, partially offset by foreign exchange.
Research and Development
•Research and development expense increaseddecreased by $749$157 million in the second quarter 2021of 2022 and $602$116 million year-to-date, primarily due to license and asset acquisition charges of $780 million in the second quarter 2021 primarily relating to Eisai ($650 million) and Prothena ($80 million) and a $230 million IPRD impairment charge resulting from the decision to discontinue further development of an investigational compound. Thecompound in the second quarter 2020 included license2021, partially offset by higher costs associated with the overall portfolio, and asset acquisition chargesthe unwinding of $300 million relating to bluebirdinventory purchase price adjustments for clinical use during the first six months of 2022 ($200108 million) and Cormorant ($100 million).
Acquired IPRD
Acquired IPRD charges resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights were as follows:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Mavacamten royalty extinguishment | $ | 295 | | | $ | — | | | $ | 295 | | | $ | — | |
| Dragonfly milestone | — | | | — | | | 175 | | | — | |
| Immatics upfront license fee | — | | | — | | | 150 | | | — | |
| BridgeBio upfront license fee | 90 | | | — | | | 90 | | | — | |
| Eisai upfront collaboration fee | — | | | 650 | | | — | | | 650 | |
| Prothena opt-in license fee | — | | | 80 | | | — | | | 80 | |
| Other | 15 | | | 63 | | | 23 | | | 69 | |
| Acquired IPRD charges | $ | 400 | | | $ | 793 | | | $ | 733 | | | $ | 799 | |
Amortization of Acquired Intangible Assets
•Amortization of acquired intangible assets increaseddecreased by $158$130 million in the second quarter 2021of 2022 and $389$226 million year-to-date, due to additional product approvals.a longer than previously expected market exclusivity period for Pomalyst.
Other (Income)/Expense, Net
•Other (income)/expense, net changed by $734$286 million in the second quarter 2021of 2022 and $1.1$1.6 billion year-to-date, primarily due to equity investments, contingent value rights and other items discussed below.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Interest expense | $ | 313 | | | $ | 330 | | | $ | 639 | | | $ | 683 | |
| Royalties and licensing income | (508) | | | (405) | | | (985) | | | (772) | |
| Equity investment losses/(gains) | 308 | | | (148) | | | 952 | | | (749) | |
| Integration expenses | 124 | | | 152 | | | 229 | | | 293 | |
| Contingent consideration | — | | | — | | | 1 | | | (510) | |
| (Gain)/Loss on debt redemption | (9) | | | — | | | 266 | | | 281 | |
| Provision for restructuring | 20 | | | 78 | | | 43 | | | 123 | |
| Litigation and other settlements | 25 | | | 44 | | | (12) | | | 36 | |
| | | | | | | |
| Investment income | (27) | | | (12) | | | (37) | | | (21) | |
| | | | | | | |
| Divestiture gains | — | | | (11) | | | (211) | | | (11) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Other | 38 | | | (30) | | | 48 | | | (57) | |
| Other (income)/expense, net | $ | 284 | | | $ | (2) | | | $ | 933 | | | $ | (704) | |
•Royalties and licensing income includes diabetes business royalties, Keytruda* royalties, Tecentriq* royalties, upfront licensing fees and milestones for products that have not obtained commercial approval. Refer to “Item 1. Financial Statements—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements” for further information.
•Equity investment losses/(gains) includes fair value adjustments for investments that have readily determinable fair value and observable price changes for investments without readily determinable fair values resulting primarily from initial public offerings or third-party acquisitions of entities which we held an ownership interest. Our share of income or loss from equity method investments is primarily due to fair value adjustments attributed to contingent value rightslimited partnerships. Refer to “Item 1. Financial Statements—Note 9. Financial Instruments and equity investments and other items discussed below.Fair Value Measurements” for more information.
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 |
| Interest expense | $ | 330 | | | $ | 357 | | | $ | 683 | | | $ | 719 | |
| Contingent consideration | — | | | (165) | | | (510) | | | 391 | |
| Royalties and licensing income | (405) | | | (311) | | | (772) | | | (721) | |
| Equity investment gains | (148) | | | (818) | | | (749) | | | (480) | |
| Integration expenses | 152 | | | 166 | | | 293 | | | 340 | |
| Provision for restructuring | 78 | | | 115 | | | 123 | | | 275 | |
| Litigation and other settlements | 44 | | | (1) | | | 36 | | | 31 | |
| Transition and other service fees | (22) | | | (50) | | | (37) | | | (111) | |
| Investment income | (12) | | | (25) | | | (21) | | | (86) | |
| Reversion excise tax | — | | | — | | | — | | | 76 | |
| Divestiture (gains)/losses | (11) | | | 9 | | | (11) | | | (7) | |
| Intangible asset impairment | — | | | 21 | | | — | | | 21 | |
| | | | | | | |
| | | | | | | |
| Loss on debt redemption | — | | | — | | | 281 | | | — | |
| Other | (8) | | | (34) | | | (20) | | | (21) | |
| Other (income)/expense, net | $ | (2) | | | $ | (736) | | | $ | (704) | | | $ | 427 | |
•Contingent consideration primarily includes fair value adjustments resulting from the change in the traded price of contingent value rights issued with the Celgene acquisition. The contractual obligation to pay the contingent value rights terminated in January 2021 because the FDA did not approve liso-cel (JCAR017) by December 31, 2020.
•Royalties and licensing income includes diabetes business royalties, Keytruda* royalties, Tecentriq* royalties, up-front licensing fees and milestones for products that have not obtained commercial approval. Refer to “Item 1. Financial Statements—Note 4. Divestitures, Licensing and Other Arrangements” for further information.
•Equity investment gains includes fair value adjustments(Gain)/Loss on equity investments that have readily determinable fair value and other observable price changes on equity investments without readily determinable fair values. The fair valuedebt redemption resulted from the early redemption of equity investments with or without readily determinable fair values in the first quarter 2020 were significantly negatively impacted by changes in market conditions primarily caused by the COVID-19 pandemic and subsequently recovered in the second quarter 2020. Refer to “Item 1. Financial Statements—Note 9. Financial Instruments and Fair Value Measurements” for more information. Our sharelong-term debt of income from equity method investments of $37$849 million in the second quarter 2021of 2022, $5.2 billion in the first quarter of 2022 and $174 million year-to-date are primarily due to fair value adjustments attributed to limited partnerships.
•Integration expenses primarily includes consulting fees to implement Celgene integration initiatives related to processes and systems.$3.5 billion in the first quarter of 2021.
•Provision for restructuring includes exit and other costs primarily related to the Celgene acquisition plan. We are on track to achieve the annualized pre-tax cost savings of approximately $3.0 billion through 2022 as detailed in the restructuring activities. Refer to “Item 1. Financial Statements—Note 6. Restructuring” for further information.
•InvestmentLitigation and other settlements includes income decreased primarily dueof $40 million resulting from a settlement resolving all legal claims and business interests pertaining to lower interest rates in the second quarter and year-to-date 2021.
•Reversion excise tax resulted from the transfer of the retiree medical plan assets back to the CompanyNimbus’ TYK2 inhibitor in the first quarter 2020.of 2022. The settlement also provides for contingent development, regulatory and sales-based milestones payable to BMS upon the occurrence of certain events.
•A loss on debt redemptionDivestiture gains resulted from the early redemptiondivestiture of $3.5 billion long-term debt obligationsproduct rights for several mature products in the first quarter of 2022.
•Other includes exit costs of $39 million resulting from the transition of our commercial operations in the Russian Federation to a third-party distributor during the second quarter of 2022 and transition and other service fees in 2021.
Income Taxes
| | | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Earnings Before Income Taxes | Earnings Before Income Taxes | $ | 1,553 | | | $ | 1,627 | | | $ | 4,083 | | | $ | 1,323 | | Earnings Before Income Taxes | $ | 1,958 | | | $ | 1,553 | | | $ | 3,645 | | | $ | 4,083 | |
| Provision for Income Taxes | Provision for Income Taxes | 492 | | | 1,707 | | | 993 | | | 2,169 | | Provision for Income Taxes | 529 | | | 492 | | | 933 | | | 993 | |
| Effective Tax Rate | Effective Tax Rate | 31.7 | % | | 104.9 | % | | 24.3 | % | | 163.9 | % | Effective Tax Rate | 27.0 | % | | 31.7 | % | | 25.6 | % | | 24.3 | % |
| | Impact of Specified Items | Impact of Specified Items | 14.8 | % | | 91.1 | % | | 7.5 | % | | 149.0 | % | Impact of Specified Items | 10.0 | % | | 14.1 | % | | 9.2 | % | | 7.1 | % |
| Effective Tax Rate Excluding Specified Items | Effective Tax Rate Excluding Specified Items | 16.9 | % | | 13.8 | % | | 16.8 | % | | 14.9 | % | Effective Tax Rate Excluding Specified Items | 17.0 | % | | 17.6 | % | | 16.4 | % | | 17.2 | % |
The tax impact attributed to specified items was primarily due to low jurisdictional tax rates attributed to the unwinding of inventory fair value adjustments and intangible asset amortization and contingent value rights fair value adjustments that arewere not taxable or deductible.in 2021. The three and six months ended June 30, 2020 includes an $853 million deferred tax charge resulting from an internal transfer of certain intangible assets to0.8% decrease in the U.S. and an additional $255 million GILTI tax charge upon finalization of the Otezla* divestiture tax consequences with tax authorities. Theyear-to-date effective tax rate excluding specified items increased by 3.1% in the second quarter 2021 and 1.9% year-to-dateduring 2022 was due to unfavorablejurisdictional earnings mix and the catch-up effect of a decreaseincluding income taxes attributed to the estimated annual effective tax rate in the second quarter 2020.Acquired IPRD charges. Refer to “Item 1. Financial Statements—Note 7. Income Taxes” for additional information.
Non-GAAP Financial Measures
Our non-GAAP financial measures, such as non-GAAP earnings and related EPS information, are adjusted to exclude certain costs, expenses, gains and losses and other specified items that are evaluated on an individual basis. These items are adjusted after considering their quantitative and qualitative aspects and typically have one or more of the following characteristics, such as being highly variable, difficult to project, unusual in nature, significant to the results of a particular period or not indicative of past or future operating results. These items are excluded from non-GAAP earnings and related EPS information because the Company believes they neither relate to the ordinary course of the Company's business nor reflect the Company's underlying business performance. Similar charges or gains were recognized in prior periods and will likely reoccur in future periods including (i) amortization of acquired intangible assets, including product rights that generate a significant portion of our ongoing revenue and will recur until the intangible assets are fully amortized, (ii) unwind of inventory fair valuepurchase price adjustments, (iii) acquisition and integration expenses, (iv) restructuring costs, (v) accelerated depreciation and impairment of property, plant and equipment and intangible assets, (vi) R&D charges or other income resulting from upfront or contingent milestone payments in connection with the acquisition or licensing of third-party intellectual property rights, (vii) divestiture gains or losses, (viii)(vii) stock compensation resulting from accelerated vesting of Celgene awards and certain retention-related employee compensation charges related to the Celgene transaction, (ix)(viii) pension, legal and other contractual settlement charges, (x)(ix) equity investment and contingent value rights fair value adjustments including(including fair value adjustments attributed to limited partnership equity method investmentsinvestments) and (xi)(x) amortization of fair value adjustments of debt acquired from Celgene in our 2019 exchange offer, among other items. Deferred and current income taxes attributed to these items are also adjusted for considering their individual impact to the overall tax expense, deductibility and jurisdictional tax rates. Certain other significant tax items are also excluded such as the impact resulting from internal transfer of intangible assets and the Otezla* divestiture in the second quarter 2020. We also provide international revenues for our priority products excluding the impact of foreign exchange. We calculate foreign exchange impacts by converting our current-period local currency financial results using the prior period average currency rates and comparing these adjusted amounts to our current-period results. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in Exhibit 99.2 to our Form 8-K filed on July 28, 202127, 2022 and are incorporated herein by reference.
Beginning with the first quarter of 2022, significant R&D charges or other income resulting from upfront or contingent milestone payments in connection with asset acquisitions or licensing of third-party intellectual property rights are no longer excluded from our non-GAAP financial measures. We are making these changes to our presentation of non-GAAP financial measures following comments from and discussions with the SEC. For purposes of comparability, the non-GAAP financial measures for the three and six months ended June 30, 2021 have been updated to reflect this change.
Non-GAAP information is intended to portray the results of our baseline performance, supplement or enhance management, analysts and investors’ overall understanding of our underlying financial performance and facilitate comparisons among current, past and future periods. For example, non-GAAP earnings and EPS information is an indication of our baseline performance before items that are considered by us to not be reflective of our ongoing results. In addition, this information is among the primary indicators that we use as a basis for evaluating performance, allocating resources, setting incentive compensation targets and planning and forecasting for future periods. This information is not intended to be considered in isolation or as a substitute for net earnings or diluted EPSthe related financial measures prepared in accordance with GAAP and may not be the same as or comparable to similarly titled measures presented by other companies due to possible differences in method and in the items being adjusted. We encourage investors to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.
Specified items were as follows:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 | | 2022 | | 2021 |
| Inventory purchase price accounting adjustments | Inventory purchase price accounting adjustments | $ | 88 | | | $ | 714 | | | $ | 167 | | | $ | 2,134 | | Inventory purchase price accounting adjustments | $ | 102 | | | $ | 88 | | | $ | 154 | | | $ | 167 | |
| Intangible asset impairment | Intangible asset impairment | — | | | — | | | 315 | | | — | | Intangible asset impairment | — | | | — | | | — | | | 315 | |
| Employee compensation charges | — | | | 1 | | | — | | | 3 | | |
| | Site exit and other costs | Site exit and other costs | 1 | | | 13 | | | 24 | | | 29 | | Site exit and other costs | 43 | | | 1 | | | 43 | | | 24 | |
| Cost of products sold | Cost of products sold | 89 | | | 728 | | | 506 | | | 2,166 | | Cost of products sold | 145 | | | 89 | | | 197 | | | 506 | |
| | Employee compensation charges | Employee compensation charges | 1 | | | 12 | | | 1 | | | 27 | | Employee compensation charges | — | | | 1 | | | — | | | 1 | |
| Site exit and other costs | Site exit and other costs | — | | | (1) | | | (1) | | | 5 | | Site exit and other costs | 4 | | | — | | | 6 | | | (1) | |
| Marketing, selling and administrative | Marketing, selling and administrative | 1 | | | 11 | | | — | | | 32 | | Marketing, selling and administrative | 4 | | | 1 | | | 6 | | | — | |
| | License and asset acquisition charges | 780 | | | 300 | | | 780 | | | 325 | | |
| IPRD impairments | IPRD impairments | 230 | | | — | | | 230 | | | — | | IPRD impairments | — | | | 230 | | | 40 | | | 230 | |
| Inventory purchase price accounting adjustments | Inventory purchase price accounting adjustments | — | | | — | | | — | | | 17 | | Inventory purchase price accounting adjustments | 21 | | | — | | | 108 | | | — | |
| Employee compensation charges | Employee compensation charges | — | | | 15 | | | 1 | | | 33 | | Employee compensation charges | — | | | — | | | — | | | 1 | |
| Site exit and other costs | — | | | 39 | | | — | | | 95 | | |
| | Research and development | Research and development | 1,010 | | | 354 | | | 1,011 | | | 470 | | Research and development | 21 | | | 230 | | | 148 | | | 231 | |
| | Amortization of acquired intangible assets | Amortization of acquired intangible assets | 2,547 | | | 2,389 | | | 5,060 | | | 4,671 | | Amortization of acquired intangible assets | 2,417 | | | 2,547 | | | 4,834 | | | 5,060 | |
| Interest expense(a) | Interest expense(a) | (28) | | | (41) | | | (62) | | | (82) | | Interest expense(a) | (21) | | | (28) | | | (48) | | | (62) | |
| Equity investment losses/(gains) | | Equity investment losses/(gains) | 307 | | | (154) | | | 950 | | | (762) | |
| Integration expenses | | Integration expenses | 124 | | | 152 | | | 229 | | | 293 | |
| Contingent consideration | Contingent consideration | — | | | (165) | | | (510) | | | 391 | | Contingent consideration | — | | | — | | | — | | | (510) | |
| Royalties and licensing income | (15) | | | (18) | | | (29) | | | (101) | | |
| Equity investment gains | (154) | | | (818) | | | (762) | | | (479) | | |
| Integration expenses | 152 | | | 166 | | | 293 | | | 340 | | |
| (Gain)/Loss on debt redemption | | (Gain)/Loss on debt redemption | (9) | | | — | | | 266 | | | 281 | |
| | Provision for restructuring | Provision for restructuring | 78 | | | 115 | | | 123 | | | 275 | | Provision for restructuring | 20 | | | 78 | | | 43 | | | 123 | |
| Litigation and other settlements | | Litigation and other settlements | — | | | — | | | (40) | | | — | |
| | Reversion excise tax | — | | | — | | | — | | | 76 | | |
| Divestiture (gains)/losses | (11) | | | 9 | | | (11) | | | (7) | | |
| Divestiture gains | | Divestiture gains | — | | | (11) | | | (211) | | | (11) | |
| | Loss on debt redemption | — | | | — | | | 281 | | | — | | |
| | Other | | Other | 42 | | | — | | | 42 | | | — | |
| Other (income)/expense, net | Other (income)/expense, net | 22 | | | (752) | | | (677) | | | 413 | | Other (income)/expense, net | 463 | | | 37 | | | 1,231 | | | (648) | |
| | Increase to pretax income | Increase to pretax income | 3,669 | | | 2,730 | | | 5,900 | | | 7,752 | | Increase to pretax income | 3,050 | | | 2,904 | | | 6,416 | | | 5,149 | |
| | Income taxes on items above | Income taxes on items above | (388) | | | (3) | | | (688) | | | (294) | | Income taxes on items above | (321) | | | (292) | | | (719) | | | (595) | |
Income taxes attributed to Otezla* divestiture | — | | | 255 | | | — | | | 255 | | |
| Income taxes attributed to internal transfer of intangible assets | — | | | 853 | | | — | | | 853 | | |
| Income taxes | (388) | | | 1,105 | | | (688) | | | 814 | | |
| | | Increase to net earnings | Increase to net earnings | $ | 3,281 | | | $ | 3,835 | | | $ | 5,212 | | | $ | 8,566 | | Increase to net earnings | $ | 2,729 | | | $ | 2,612 | | | $ | 5,697 | | | $ | 4,554 | |
(a) Includes amortization of purchase price adjustments to Celgene debt.
The reconciliations from GAAP to Non-GAAP were as follows:
| | | Three Months Ended June 30, | | Six Months Ended June 30, | | Three Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions, except per share data | Dollars in Millions, except per share data | 2021 | | 2020 | | 2021 | | 2020 | Dollars in Millions, except per share data | 2022 | | 2021 | | 2022 | | 2021 |
| Net Earnings/(Loss) Attributable to BMS Used for Diluted EPS Calculation – GAAP | $ | 1,055 | | | $ | (85) | | | $ | 3,076 | | | $ | (860) | | |
| Net Earnings Attributable to BMS Used for Diluted EPS Calculation – GAAP | | Net Earnings Attributable to BMS Used for Diluted EPS Calculation – GAAP | $ | 1,421 | | | $ | 1,055 | | | $ | 2,699 | | | $ | 3,076 | |
| Specified Items | Specified Items | 3,281 | | | 3,835 | | | 5,212 | | | 8,566 | | Specified Items | 2,729 | | | 2,612 | | | 5,697 | | | 4,554 | |
| Net Earnings Attributable to BMS Used for Diluted EPS Calculation – Non-GAAP | Net Earnings Attributable to BMS Used for Diluted EPS Calculation – Non-GAAP | $ | 4,336 | | | $ | 3,750 | | | $ | 8,288 | | | $ | 7,706 | | Net Earnings Attributable to BMS Used for Diluted EPS Calculation – Non-GAAP | $ | 4,150 | | | $ | 3,667 | | | $ | 8,396 | | | $ | 7,630 | |
| | Weighted-Average Common Shares Outstanding – Diluted – GAAP | 2,252 | | | 2,263 | | | 2,258 | | | 2,261 | | |
| Incremental Shares Attributable to Share-Based Compensation Plans | — | | | 34 | | | — | | | 37 | | |
| Weighted-Average Common Shares Outstanding – Diluted – Non-GAAP | 2,252 | | | 2,297 | | | 2,258 | | | 2,298 | | |
| Weighted-Average Common Shares Outstanding – Diluted | | Weighted-Average Common Shares Outstanding – Diluted | 2,149 | | | 2,252 | | | 2,157 | | | 2,258 | |
| | Diluted Earnings/(Loss) Per Share Attributable to BMS – GAAP | $ | 0.47 | | | $ | (0.04) | | | $ | 1.36 | | | $ | (0.38) | | |
| | | Diluted Earnings Per Share Attributable to BMS – GAAP | | Diluted Earnings Per Share Attributable to BMS – GAAP | $ | 0.66 | | | $ | 0.47 | | | $ | 1.25 | | | $ | 1.36 | |
| Diluted EPS Attributable to Specified Items | Diluted EPS Attributable to Specified Items | 1.46 | | | 1.67 | | | 2.31 | | | 3.73 | | Diluted EPS Attributable to Specified Items | 1.27 | | | 1.16 | | | 2.64 | | | 2.02 | |
| Diluted EPS Attributable to BMS – Non-GAAP | Diluted EPS Attributable to BMS – Non-GAAP | $ | 1.93 | | | $ | 1.63 | | | $ | 3.67 | | | $ | 3.35 | | Diluted EPS Attributable to BMS – Non-GAAP | $ | 1.93 | | | $ | 1.63 | | | $ | 3.89 | | | $ | 3.38 | |
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Our net debt position was as follows:
| | Dollars in Millions | Dollars in Millions | June 30,
2021 | | December 31,
2020 | Dollars in Millions | June 30,
2022 | | December 31,
2021 |
| Cash and cash equivalents | Cash and cash equivalents | $ | 11,024 | | | $ | 14,546 | | Cash and cash equivalents | $ | 10,750 | | | $ | 13,979 | |
| Marketable debt securities – current | Marketable debt securities – current | 1,946 | | | 1,285 | | Marketable debt securities – current | 2,478 | | | 2,987 | |
| Marketable debt securities – non-current | 143 | | | 433 | | |
| | Total cash, cash equivalents and marketable debt securities | Total cash, cash equivalents and marketable debt securities | 13,113 | | | 16,264 | | Total cash, cash equivalents and marketable debt securities | 13,228 | | | 16,966 | |
| Short-term debt obligations | Short-term debt obligations | (2,655) | | | (2,340) | | Short-term debt obligations | (4,953) | | | (4,948) | |
| Long-term debt | Long-term debt | (42,503) | | | (48,336) | | Long-term debt | (37,107) | | | (39,605) | |
| Net debt position | Net debt position | $ | (32,045) | | | $ | (34,412) | | Net debt position | $ | (28,832) | | | $ | (27,587) | |
We regularly assess our anticipated working capital needs, debt and leverage levels, debt maturities, capital expenditure requirements, dividend payouts, potential share repurchases and future investments or acquisitions in order to maximize shareholder return, efficiently finance our ongoing operations and maintain flexibility for future strategic transactions. We also regularly evaluate our capital structure to ensure financial risks, adequate liquidity access and lower cost of capital are efficiently managed, which may lead to the issuance of additional debt securities, the repurchase of debt securities prior to maturity or the issuance or repurchase of common stock. Under the Tax Cuts and Jobs Act of 2017, research and development costs are required to be capitalized and amortized for U.S. tax purposes effective January 1, 2022. Absent a change in law, we estimate our U.S. income tax payments will increase by nearly $2.0 billion as compared to 2021.
We believe that our existing cash, cash equivalents and marketable debt securities together with cash generated from operations and, if required, from the issuance of commercial paper will be sufficient to satisfy our anticipated cash needs for at least the next few years, including dividends, capital expenditures, milestone payments, working capital, income taxes, restructuring initiatives, business development, business combinations, asset acquisitions, repurchase of common stock, debt maturities of approximately $12.0$13.4 billion through 20242026, as well as any debt repurchases through redemptions or tender offers. During the six months ended June 30, 2022, our net debt position increased by $1.2 billion due to common stock repurchases and dividends of $7.3 billion, partially offset by cash from operating activities of $6.1 billion.
We have a share repurchase program authorized by our Board of Directors allowing for repurchases of our shares. The specific timing and number of shares repurchased will be determined by our management at its discretion and will vary based on market conditions, securities law limitations and other factors. The share repurchase program does not obligate us to repurchase any specific number of shares, does not have a specific expiration date and may be suspended or discontinued at any time. The repurchases may be effected through a combination of one or more open market repurchases, privately negotiated transactions, transactions structured through investment banking institutions and other derivative transactions, relying on Rule 10b-18 and Rule 10b5-1 under the Exchange Act. The outstanding share repurchase authority authorization under the program was $4.4$15.2 billion as of December 31, 2020. In January 2021, our Board2021. During the first quarter of Directors approved2022, we executed ASR agreements to repurchase an increaseaggregate $5.0 billion of $2.0 billion to the share repurchase authorization for our common stock, increasing the total outstanding share repurchase authorization to approximately $6.4 billion. We repurchased approximately 47 million shares of our common stock for $3.0 billion during the six months ended June 30, 2021 reducing thestock. The remaining share repurchase capacity under the share repurchase program towas approximately $3.4$10.2 billion as of June 30, 2021.2022. Refer to “Item 1. Financial Statements—Note 15. Equity” for additional information.
Dividend payments were $2.2$2.3 billion induring the six months ended June 30, 2021. Dividends declared2022. Dividend per common share were $0.98 inof $0.54 was declared during each of the six months ended June 30, 2021.first and second quarters of 2022. Dividend decisions are made on a quarterly basis by our Board of Directors.
Annual capital expenditures were approximately $750$970 million in 20202021 and are expected to be approximately $1.1 billion in 2021 and $1.2 billion in 2022.2022 and 2023 in each year. We continue to make capital expenditures in connection with the expansion of our manufacturing capabilities, research and development and other facility-related activities.
During the six months ended June 30, 2022, we purchased an aggregate principal amount of $6.0 billion of certain of our debt securities for $6.6 billion of cash in tender offers and “make whole” redemptions. In connection with these transactions, a net $266 million loss on debt redemption was recognized based on the carrying value of the debt and included in Other (income)/expense, net.
During the six months ended June 30, 2022, we issued an aggregate principal amount of $6.0 billion of debt with net proceeds of $5.9 billion. Refer to “Item 1. Financial Statements—Note 9. Financial Instruments and Fair Value Measurements” for further information.
At December 31, 2021, we had four separate revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility which expired in January 2022, a three-year $1.0 billion facility which expired in January 2022 and two five-year $1.5 billion facilities that were extended to September 2025 and July 2026, respectively.
In January 2022, we entered into a five-year $5.0 billion facility expiring in January 2027, which is extendable annually by one year with the consent of the lenders. This facility provides for customary terms and conditions with no financial covenants and may be used to provide backup liquidity for our commercial paper borrowings. Concurrently with the entry into this facility, the commitments under our existing five-year $1.5 billion facilities were terminated and the three-year $1.0 billion facility and 364-day $2.0 billion facility expired in accordance with their terms in January 2022. No borrowings were outstanding under revolving credit facilities at June 30, 2022 or December 31, 2021.
Under our commercial paper program, we may issue a maximum of $5.0 billion unsecured notes that have maturities of not more than 366 days from the date of issuance. There were no commercial paper borrowings outstanding as of June 30, 2021.
In 2021, we purchased aggregate principal amount of $3.5 billion of certain of our debt securities for approximately $4.0 billion of cash in a series of tender offers and “make whole” redemptions and $1.5 billion of notes matured and were repaid.
As of June 30, 2021, we had four separate revolving credit facilities totaling $6.0 billion, which consisted of a 364-day $2.0 billion facility expiring in January 2022, a three-year $1.0 billion facility expiring in January 2022 and two five-year $1.5 billion facilities that were extended to September 2025 and July 2026, respectively. The revolving facilities provide for customary terms and conditions with no financial covenants, may be used to provide backup liquidity for our commercial paper borrowings and are extendable annually by one year on the anniversary date with the consent of the lenders. No borrowings were outstanding under revolving credit facilities at June 30, 2021 or December 31, 2020.
In November 2020, we entered into a $4.0 billion delayed draw term loan credit agreement which was terminated in February 2021.2022.
Our investment portfolio includes non-current marketable debt securities, which are subject to changes in fair value as a result of interest rate fluctuations and other market factors. Our investment policy establishes limits on the amount and time to maturity of investments with any institution. The policy also requires that investments are only entered into with corporate and financial institutions that meet high credit quality standards. Refer to “Item 1. Financial Statements—Note 9. Financial Instruments and Fair Value Measurements” for further information.
In June 2022, we entered into a definitive merger agreement to acquire Turning Point, a clinical-stage precision oncology company with a pipeline of investigational medicines designed to target the most common mutations associated with oncogenesis. We commenced a tender offer in June 2022, which was extended through August 15, 2022, to acquire all of the issued and outstanding shares of Turning Point's common stock for $76.00 per share in an all-cash transaction for a total consideration of $4.1 billion, including cash settlements of equity stock awards. We expect to finance the acquisition with cash on hand. Refer to “Item 1. Financial Statements—Note 4. Acquisitions, Divestitures, Licensing and Other Arrangements” for further information.
Credit Ratings
Our current long-term and short-term credit ratings assigned by Moody’s Investors Service are A2 and Prime-1, respectively, with a stable long-term credit outlook, and our current long-term and short-term credit ratings assigned by Standard & Poor’s are A+ and A-1, respectively with a negativestable long-term credit outlook. The long-term ratings reflect the agencies’ opinion that we have a low default risk but are somewhat susceptible to adverse effects of changes in circumstances and economic conditions. The short-term ratings reflect the agencies’ opinion that we have good to extremely strong capacity for timely repayment. Any credit rating downgrade may affect the interest rate of any debt we may incur, the fair market value of existing debt and our ability to access the capital markets generally.
Cash Flows
The following is a discussion of cash flow activities:
| | | Six Months Ended June 30, | | Six Months Ended June 30, |
| Dollars in Millions | Dollars in Millions | 2021 | | 2020 | Dollars in Millions | 2022 | | 2021 |
| Cash flow provided by/(used in): | Cash flow provided by/(used in): | | | | Cash flow provided by/(used in): | | | |
| Operating activities | Operating activities | $ | 6,884 | | | $ | 8,430 | | Operating activities | $ | 6,073 | | | $ | 6,884 | |
| Investing activities | Investing activities | 37 | | | 1,166 | | Investing activities | (194) | | | 37 | |
| Financing activities | Financing activities | (10,477) | | | (2,047) | | Financing activities | (9,173) | | | (10,477) | |
Operating Activities
Cash flow from operating activities represents the cash receipts and disbursements from all of our activities other than investing and financing activities. Operating cash flow is derived by adjusting net earnings for noncontrolling interest, non-cash operating items, gains and losses attributed to investing and financing activities and changes in operating assets and liabilities resulting from timing differences between the receipts and payments of cash and when the transactions are recognized in our results of operations. As a result, changes in cash from operating activities reflect the timing of cash collections from customers and alliance partners; payments to suppliers, alliance partners and employees; customer discounts and rebates; and tax payments in the ordinary course of business. For example, annual employee bonuses are typically paid in the first quarter of the subsequent year.
The $1.5 billion$811 million change in cash flow fromprovided by operating activities compared to 20202021 was primarily due todriven by higher tax payments of approximately $1.3 billion in 2021, the timing of Otezla* receivable collection reimbursementsprimarily related to Amgen of $500 million in 2020research and the reversion of retirement medical plan assets of approximately $300 million (net of excise taxes) in 2020,development expenses that are capitalized and amortized for tax purposes ($900 million), partially offset by cash collections and timing of payments in the ordinary course of business.
Investing Activities
Cash requirements from investing activities include cash used for acquisitions, manufacturing and facility-related capital expenditures and purchases of marketable securities with original maturities greater than 90 days at the time of purchase, proceeds from business divestitures (including royalties), the sale and maturity of marketable securities, sale of equity investments, andas well as upfront and contingent milestones from licensing arrangements.
The $1.1 billion$231 million change in cash flow fromused in investing activities compared to 20202021 was primarily due to lower proceeds from the sale of equity investments ($660 million) and higher Acquired IPRD payments ($410 million) in 2022, partially offset by changes in the amount of marketable debt securities held of $2.0 billion, partially offset by higher proceeds from sales of equity investments of approximately $800 million.($870 million).
Financing Activities
Cash requirements from financing activities include cash used to pay dividends, repurchase common stock and repay long-term debt and other borrowings reduced by proceeds from the exercise of stock options and issuance of long-term debt and other borrowings.
The $8.4$1.3 billion change in cash flow fromused in financing activities compared to 20202021 was primarily due to higherchanges in the amount of debt repayments of $5.7 billion, including a series of tender offers and “make whole” redemptions, andsecurities ($3.1 billion), partially offset by higher share repurchases of $2.9 billion in 2021.
Product and Pipeline Developments
Our R&D programs are managed on a portfolio basis from early discovery through late-stage development and include a balance of early-stage and late-stage programs to support future growth. Our late stage R&D programs in Phase III development include both investigational compounds for initial indications and additional indications or formulations for marketed products. The following are the developments in our marketed products and our late-stage pipeline since the start of the second quarter:quarter of 2022:
| | | | | | | | | | | |
| Product | Indication | Date | Developments |
| | | | | | | | | | | |
| Opdivo | Bladder | April 20212022 | Announced that the FDA accepted the sBLA for Opdivo for the adjuvant treatment of patients with surgically resected, high-risk muscle-invasive urothelial carcinoma. The FDA granted the application Priority Review and assigned a PDUFA goal date of September 3, 2021. The application is based on results from the Phase III CheckMate-274 trial. |
Gastric and Esophageal Cancers | June 2021 | Received a positive CHMP opinion of Opdivo for the adjuvant treatment of adult patients with esophageal or gastroesophageal junction cancer who have residual pathologic disease following prior neoadjuvant chemoradiotherapy. The opinion is based on data from the Phase III CheckMate-577 trial.
|
May 2021 | Announced FDAEC approval of Opdivo for the adjuvant treatment of patientsadults with completely resected esophageal or gastroesophageal junction cancermuscle-invasive urothelial carcinoma with residual pathologic diseasetumor cell PD-LI expression > 1% who have received neoadjuvant chemoradiotherapy.are at risk of recurrence after undergoing radical resection. The approval is based on results from the Phase III CheckMate-577CheckMate -274 trial.
|
April 2021Esophageal | May 2022 | Ono, our alliance partner for Opdivo in Japan, announced that Japan's Ministry of Health, Labour and Welfare approved Opdivo in combination with fluoropyrimidine- and platinum- containing chemotherapy for the first-line treatment for adult patients with previously untreated unresectable advanced or metastatic ESCC with PD-L1 expression > 1%, as well as in the all-randomized population percentage. The approval is based on the Phase III CheckMate -648 trial. (ONO-4538-50/CA209648). |
| May 2022 | Announced FDA approval of Opdivo in combination with combination with fluoropyrimidine- and platinum-containingplatinum- containing chemotherapy as a first-line treatment for the treatment ofadult patients with unresectable advanced or metastatic gastric cancer, gastroesophageal junction cancer, and esophageal adenocarcinoma,ESCC regardless of PD-L1 expression status. The approval is based on the Phase III CheckMate-649CheckMate -648 trial. |
April 2021 | Announced positive topline results from the Phase III CheckMate-648 trial evaluating treatment with Opdivo plus chemotherapy or Opdivo plus Yervoy in patients with unresectable advanced or metastatic ESCC. Opdivo plus chemotherapy met primary and secondary endpoints of overall survival in patients with tumors expressing PD-L1 and in the all-randomized patient population, and also the primary endpoint of progression free survival in the PD-L1+ population. Opdivo plus Yervoy met primary and secondary endpoints of overall survival in both populations, whereas the other primary endpoint of progression free survival in the PD-L1+ population was not met.
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HCC | July 2021 | Announced that in consultation with the FDA, we withdrew the U.S. indication for Opdivo in HCC who were previously treated with sorafenib. Opdivo was granted accelerated approval for this indication in 2017 based on tumor responses from the Phase I/II CheckMate-040 trial. CheckMate-459, the confirmatory randomized study of Opdivo versus sorafenib in the first-line setting, did not achieve statistical significance for its primary endpoint of overall survival per the pre-specified analysis.
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RCC | April 20212022 | Announced EC approval of Opdivo in combination with Cabometyx*fluoropyrimidine- and platinum-based chemotherapy for the first-line treatment of adultsadult patients with unresectable advanced, RCC.recurrent, or metastatic ESCC with PD-L1 expression > 1%. The approval is based on results from the Phase III CheckMate-9ERCheckMate -648 trial. |
| NSCLC | April 2022 | Ono, our alliance partner for Opdivo in Japan, announced that the companies have submitted the supplemental Japanese New Drug Application to Pharmaceuticals and Medical Devices Agency for Opdivo to expand its use as a neoadjuvant treatment of resectable NSCLC in combination with chemotherapy for a partial change in approved items of the manufacturing and marketing approval in Japan. The application is based on the Phase III CheckMate -816 study. |
| April 2022 | Announced results from the Phase III CheckMate-816 trial which showed that neoadjuvant treatment with Opdivo in combination with chemotherapy significantly improved event-free survival, a primary endpoint, compared to chemotherapy alone in patients with resectable NSCLC. Opdivo in combination with chemotherapy reduced the risk of disease recurrence, progression or death by 37%, and demonstrated favorable early overall survival trend. |
| RCC | April 2022 | Announced, with our alliance partner Nektar, that based on results from pre-planned analysis of two late-stage clinical studies of bempegaldesleukin in combination with Opdivo in RCC and bladder cancer, to jointly end the global clinical development program for bempegaldesleukin in combination with Opdivo. These studies and all other ongoing studies in the program will be discontinued. |
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| Product | Indication | Date | Developments |
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| Opdivo + Yervoy | CRCNSCLC | June 20212022 | Announced EC approvalfive-year follow up results from Part I of the Phase III CheckMate -227 trial demonstrating long-term, durable survival outcomes with Opdivo plus Yervoy for thein first-line treatment of adult patients with mismatch repair deficient (dMMR) or microsatellite instability-high mCRC after prior fluoropyrimidine-basedmetastatic NSCLC regardless of PD-L1 expression levels. In the primary endpoint population, the combination nearly doubled overall survival rate compared to chemotherapy. The approval is based on |
| June 2022 | Announced three-year follow up results from the Phase II CheckMate-142 trial. |
Melanoma | May 2021 | Announced new six-and-a-half year data from the Phase III CheckMate-067CheckMate -9LA trial demonstrating long-term, durable improvement in survival benefits with first-line Opdivo plus Yervoy therapy and Opdivo monotherapy, versus Yervoy alone,with two cycles of chemotherapy compared to four cycles of chemotherapy in patients with advanced melanoma.previously untreated metastatic NSCLC regardless of PD-L1 expression and histology.
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Malignant Pleural MesotheliomaBladder | June 2021May 2022 | Announced EC approval ofthat results from Phase III CheckMate -901 trial, comparing Opdivo plus Yervoy to standard-of-care chemotherapy as a first-line treatment for patients with untreated unresectable or metastatic urothelial carcinoma, who are ineligible for cisplatin baseed chemotherapy, did not meet the first line treatmentprimary endpoint of adults with unresectable malignant pleural mesothelioma. The approval is based on results from the Phase III CheckMate-743 trial.overall survival in patients whose tumor cells express PD-L1 > 1% at final analysis. |
| Esophageal | May 20212022 | Ono, our alliance partner for Opdivo in Japan, announced that Japan's Ministry of Health, Labour and Welfare approved Opdivo in combination with fluoropyrimidine- and platinum- containing chemotherapy for the companies receivedfirst-line treatment for adult patients with previously untreated unresectable advanced or metastatic ESCC with PD-L1 expression ≥1%, as well as in the all-randomized population. The approval for combination therapyis based on the Phase III CheckMate -648 trial. |
| May 2022 | Announced FDA approval of Opdivo andplus Yervoy in Japanas a first-line treatment for adult patients with unresectable advanced or metastatic ESCC regardless of PD-L1 status. The approval is based on the Phase III CheckMate -648 trial. |
| April 2022 | Announced EC approval of Opdivo plus Yervoy for the first-line treatment of adult patients with unresectable advanced, recurrent or recurrent malignant pleural mesothelioma, for a partial change in approved items of the manufacturing and marketing approval.metastatic ESCC with tumor cell PD-L1 expression > 1%. The approval is based on results from the Phase III CheckMate-743CheckMate -648 trial. |
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NSCLCOpdualag | May 2021Melanoma | July 2022 | Announced that Part 1CHMP recommended approval for LAG-3-blocking antibody combination Opdualag (nivolumab and relatlimab) for first-line treatment of advanced melanoma patients with tumor cell PD-L1 expression < 1%. The approval recommendation is based on data from the Phase II/III CheckMate-227 trial continues to demonstrate the long-term survival benefits of first-line treatment with Opdivo plus Yervoy compared to chemotherapy in patients with advanced NSCLC, regardless of PD-L1 expression level or histology, with a minimum follow-up of over four years.RELATIVITY-047 trial. |
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May 2021Orencia | COVID-19 | June 2022 | Announced that Opdivo plus Yervoy with two cycles of chemotherapy showed a durable survival benefit compared to four cycles of chemotherapy alone after two years of follow-up in previously untreated patients with advanced NSCLC ininitial results from the Phase III CheckMate-9LA trial. |
SCCHN | July 2021 | Announced an update onAccelerating COVID-19 Therapeutic Interventions and Vaccines (ACTIV-1) immune modulators clinical trial sponsored by the Phase III CheckMate-651 trial comparing Opdivo plus Yervoy to the EXTREME regimen (cetuximab, cisplatin/carboplatin and fluorouracil) as a first-line treatment in platinum-eligible patients with recurrent or metastatic SCCHN. Although Opdivo plus YervoyNational Institutes of Health showed a clear, positive trend towards overall survivalstrong, but not statistically significant improvement in patients whose tumors express PD-L1 with a combined positive score ≥ 20,the primary endpoint of time to recovery as measured by day of hospital discharge. Analyses of the secondary endpoints, including mortality and clinical status, demonstrated Orencia reduced participants' risk of death and improved their clinical status at 28 days after entering the study did not meet its primary endpoints.when compared with placebo.
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| Reblozyl | Beta Thalassemia | June 20212022 | Announced with Acceleron, that Phase II BEYOND study evaluatingthe withdrawal of the sBLA for Reblozyl plus best supportive carefor the treatment of anemia in adult patientsadults with non-transfusion dependent beta thalassemia demonstrated that 77.7%thalassemia. We could not appropriately address the FDA's questions about the benefit-risk profile of patients treated with Reblozyl achieved a hemoglobin increase (≥1.0 gram/deciliter) compared to 0% of patients in the placebo arm. |
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Onureg | AML | June 2021 | Announced EC approval of Onureg as a maintenance therapy in adult patients with AML who achieved complete remission or complete remission with incomplete blood count recovery following induction therapy with or without consolidation treatment and who are not candidates for, including those who choose not to proceed to, hematopoietic stem cell transplantation. The approval isthis patient population based on datathe current dataset from the Phase III QUAZAR AML-001 study.II BEYOND trial.
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| Zeposia | UCMS | May 2021June 2022 | Announced FDA approvalpost-hoc analyses from the Zeposia Phase III DAYBREAK open-label extension and Phase III SUNBEAM trials, showing that the majority of patients receiving Zeposia for multiple sclerosis reported improved or preserved cognitive function, with the treatment of adultsgreatest improvement seen when used early in the disease when thalamic volume remains high. |
| COVID-19 | June 2022 | Announced new data on COVID-19 vaccine responses in participants treated with moderately to severely active UC. The approval is based on dataZeposia from the pivotal Phase III True North trial.DAYBREAK open-label extension study in relapsing MS. For participants who showed no evidence of recent COVID-19 infection, results showed seroconversion occurred in 100% (80/80) and 62% (18/29) of fully vaccinated mRNA and non-mRNA vaccine recipients, respectively. |
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| Product | Indication | Date | Developments |
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| Breyanzi | Lymphoma | June 20212022 | Announced positive toplineFDA approval of Breyanzi for the second-line treatment of adult patients with large B-cell lymphoma, including diffuse large B-cell lymphoma not otherwise specified high-grade B-cell lymphoma, primary mediastinal large B-cell lymphoma and follicular lymphoma grade 3B who have: refractory disease to first line chemoimmunotherapy or relapsed within 12 months of first-line chemoimmunotherapy; or refractory disease to first-line chemoimmunotherapy or relapse after first-line chemoimmunotherapy and are not eligible for hematopoietic stem cell transplant due to comorbidities or age. The approval is based on results from the Phase II PILOT and Phase III TRANSFORM trialtrials. |
| June 2022 | Announced that the EMA validated its Type II Variation application for extension of the indication for Breyanzi in second-line treatment of adult patients with diffuse large B-cell lymphoma, high grade B-cell lymphoma, primary mediastinal large B-cell lymphoma and follicular lymphoma grade 3B, who are refractory or have relapsed within 12 months of initial therapy and are candidates for haematopoietic stem cell transplant. The application is based on the Phase III TRANSFORM study. |
| May 2022 | Announced results from the primary analysis of PILOT, a multicenter, Phase II study evaluating Breyanzias a second-line treatment in adults with relapsedrefractory or refractoryrelapsed large B-cell lymphoma compared to salvageafter first-line therapy followed bywho were not deemed candidates for high-dose chemotherapy and hematopoietic stem cell transplant. ResultsWith a median follow-up of 12.3 months, the majority of patients treated with Breyanzi saw a pre-specified interim analysis conducted by an independent review committee showedreduction in disease, with 80% of patients responding to treatment and 54% of patients achieving a complete response. |
| April 2022 | Announced EC approval of Breyanzi for the studytreatment of adult patients with relapsed or refractory diffuse large B-cell lymphoma, primary mediastinal large B-cell lymphoma, and follicular lymphoma grade 3B after two or more lines of systemic therapy. The approval is based on results from the TRANSCEND WORLD and TRANSCEND NHL 001 trials. |
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Camzyos (mavacamten) | Obstructive HCM | April 2022 | Announced FDA approval of Camzyos (mavacamten) for the treatment of adults with symptomatic obstructive HCM to improve functional capacity and symptoms. The approval is based on results from the Phase III EXPLORER-HCM trial. |
| April 2022 | Announced that Phase III VALOR-HCM trial met its primary endpoint of demonstrating a clinically meaningful and highly statistically significant improvement in event-free survival, as well as key secondary endpoints, significantly reducing the need for septal reduction therapy (SRT) in patients with severely symptomatic obstructive HCM who had been appropriate for SRT per the 2011 American College of complete response rateCardiology/American Heart Association Guidelines at baseline, after 16 weeks of treatment with mavacamten. |
| April 2022 | Announced that interim results from the EXPLORER-LTE cohort of the MAVA-LTE trial in patients with symptomatic obstructive HCM showed sustained improvements in cardiovascular function and progression-free survival compared to standard of care.patient symptoms at 48 and 84-weeks, no new safety signals were observed. |
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Abecmadeucravacitinib | Multiple MyelomaSLE | June 20212022 | Received a positive CHMP opinion of Abecma for the treatment of adult patients with RRMM who have received at least three prior therapies, including an immunomodulatory agent, a proteasome inhibitor and an anti-CD38 antibody and have demonstrated disease progression on the last therapy. The opinion is based on dataAnnounced results from the Phase II KarMMa trial.
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| | | | | | | | | | | PAISLEY trial that showed statistically significant efficacy at the primary endpoint of SLE Responder Index-4 responses at week 32 among patients with moderate to severe SLE who were treated with deucravacitinib versus placebo. Secondary endpoints demonstrated clinically meaningful improvements at Week 48. The safety profile of deucravacitinib was consistent with previously reported studies in patients with psoriasis and psoriatic arthritis with no new safety signals observed. Data demonstrated favorable risk-benefit profile supportive of progressing into Phase III. |
mavacamten | Obstructive HCMPlaque Psoriasis | May 20212022 | Announced a new analysis of datatwo-year results from the Phase III EXPLORER-HCM study evaluating mavacamten, an investigational, first-in-class cardiac myosin inhibitor,POETYK PSO long-term extension trial demonstrating durable efficacy and a consistent safety profile with deucravacitinib treatment in adult patients with oHCM. At 30 weeks, the change in Kansas City Cardiomyopathy Questionnaire Overall Summary Score (KCCQ OSS)moderate to severe plaque psoriasis. Clinical efficacy was greater in mavacamten patients than placebo, with similar benefits across all KCCQ subscalesmaintained through up to two years of deucravacitinib treatment. |
Critical Accounting Policies
The preparation of financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. Our critical accounting policies are those that significantly impact our financial condition and results of operations and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Because of this uncertainty, actual results may vary from these estimates. For a discussion of our critical accounting policies, refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 20202021 Form 10-K. There have been no material changes to our critical accounting policies during the six months ended June 30, 2021.2022. For information regarding the impact of recently adopted accounting standards, refer to “Item 1. Financial Statements—Note.1Note 1. Basis of Presentation and Recently Issued Accounting Standards.”
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q (including documents incorporated by reference) and other written and oral statements we make from time to time contain certain “forward-looking” statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. You can identify these forward-looking statements by the fact they use words such as “should,” “could,” “expect,” “anticipate,” “estimate,” “target,” “may,” “project,” “guidance,” “intend,” “plan,” “believe,” “will” and other words and terms of similar meaning and expression in connection with any discussion of future operating or financial performance. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. Such forward-looking statements are based on historical performance and current expectations and projections about our future financial results, goals, plans and objectives and involve inherent risks, assumptions and uncertainties, including internal or external factors that could delay, divert or change any of them in the next several years, and could cause our future financial results, goals, plans and objectives to differ materially from those expressed in, or implied by, the statements. These statements are likely to relate to, among other things, our goals, plans and objectives regarding our financial position, results of operations, cash flows, market position, product development, product approvals, sales efforts, expenses, performance or results of current and anticipated products, our business development strategy, generally and in relation to our ability to realize the projected benefits of our acquisitions of Celgene and MyoKardia, the full extent of the impact of the COVID-19 pandemic on our operations and the development and commercialization of our products, potential laws and regulations to lower drug costs, market actions taken by private and government payers to manage drug utilization and contain costs, the expiration of patents or data protection on certain products, including assumptions about our ability to retain patentmarketing exclusivity of certain products, and the outcome of contingencies such as legal proceedings and financial results. No forward-looking statement can be guaranteed. We included in thisThis Quarterly Report on Form 10-Q, in the 2020our 2021 Form 10-K, particularly under the captionsection “Item 1A. Risk Factors,” and in our other filings with the SEC, include additional information on the factors that we believe could cause actual results to differ materially from any forward-looking statement.
Although we believe that we have been prudent in our plans and assumptions, no assurance can be given that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this Quarterly Report on Form 10-Q not to occur. Except as otherwise required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise after the date of this Quarterly Report on Form 10-Q.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of our market risk, refer to “Item 7A. Quantitative and Qualitative Disclosures about Market Risk” in our 20202021 Form 10-K.
Item 4. CONTROLS AND PROCEDURES
Management carried out an evaluation, under the supervision and with the participation of its chief executive officer and chief financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of June 30, 2021,2022, such disclosure controls and procedures are effective.
There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Information pertaining to legal proceedings can be found in “Item 1. Financial Statements—Note 17. Legal Proceedings and Contingencies,” to the interim consolidated financial statements, and is incorporated by reference herein.
Item 1A. RISK FACTORS
There have been no material changes from the risk factors disclosed in the Company’s 20202021 Form 10-K.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table summarizes the surrenders of our equity securities during the three months ended June 30, 2021:2022:
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| Period | Total Number of Shares Purchased(a) | | Average Price Paid per Share(a) | | Total Number of Shares Purchased as Part of Publicly Announced Programs(b) | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs(b) |
| Dollars in Millions, Except Per Share Data | | | | | | | |
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| April 1 to 30, 2021 | 6,542,163 | | | $ | 64.17 | | | 6,443,618 | | | $ | 4,227 | |
| May 1 to 31, 2021 | 6,553,060 | | | 65.28 | | | 6,001,116 | | | 3,835 | |
| June 1 to 30, 2021 | 6,578,972 | | | 66.02 | | | 6,501,411 | | | 3,406 | |
| Three months ended June 30, 2021 | 19,674,195 | | | | | 18,946,145 | | | |
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| Period | Total Number of Shares Purchased(a) | | Average Price Paid per Share(a) | | Total Number of Shares Purchased as Part of Publicly Announced Programs(b) | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs(b) |
| Dollars in Millions, Except Per Share Data | | | | | | | |
| April 1 to 30, 2022 | 68,474 | | | $ | 73.84 | | | — | | | $ | 10,169 | |
May 1 to 31, 2022(c) | 2,038,743 | | | | | 1,987,135 | | | 10,169 | |
| June 1 to 30, 2022 | 47,405 | | | 75.27 | | | — | | | 10,169 | |
| Three months ended June 30, 2022 | 2,154,622 | | | | | 1,987,135 | | | |
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(a)Includes shares repurchased as part of publicly announced programs and shares of common stock surrendered to the Company to satisfy tax-withholding obligations in connection with the vesting of awards under our long-term incentive program. Shares surrendered for tax withholding included 68,474 in April, 51,608 in May and 47,405 in June with average prices of $73.84, $76.05 and $75.27, respectively.
(b)In May 2010, the Board of Directors authorized the repurchase of up to $3.0 billion of our common stock and in June 2012 increased its authorization for the repurchase of our common stock by an additional $3.0 billion. The Board of Directors approved a new share repurchase program authorizing the repurchase of an additional $3.0 billion of our common stock in October 2016 and further increased its authorization for the repurchase of our common stock by approximately $7.0 billion in November 2019 and $5.0 billion in February 2020. In January and December 2021, the Board of Directors approved an increase of $2.0 billion and $15.0 billion, respectively, to the share repurchase authorization for our common stock. The remaining share repurchase capacity under the program wasis approximately $3.4$10.2 billion as of June 30, 2021.2022. Refer to “Item 1. Financial Statements-Note 15. Equity” for information on the share repurchase program.
(c)During the first quarter of 2022, BMS entered into accelerated share repurchase (“ASR”) agreements to repurchase an aggregate $5.0 billion of common stock. Approximately 65 million shares of common stock (85% of the $5.0 billion aggregate purchase price calculated on the basis of a price of $65.89 per share, the closing share price of the Company's common stock on February 8, 2022) were received by BMS and included in treasury stock. During the three months ended June 30, 2022, the first tranche of the ASR was settled and approximately 2 million shares of common stock were received by BMS and transferred to treasury stock. The total number of shares to be repurchased under the ASR agreements, and the average price paid per share, will be determined at the settlement of the ASR agreements and will be based on volume-weighted average prices of BMS's common stock during the terms of the ASR transactions less a discount and subject to adjustments pursuant to the terms and conditions of the ASR agreements.
Item 6. EXHIBITS
Exhibits (listed by number corresponding to the Exhibit Table of Item 601 in Regulation S-K).
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| Exhibit No. | | Description |
3a. | | |
3b. | | |
10a. | | |
10b. | | |
10c. | | |
10d. | | |
10e. | | |
10f. | | |
10g. | | |
10h. | | |
10i. | | |
| 31a. | | |
| 31b. | | |
| 32a. | | |
| 32b. | | |
| 101.INS | | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
| 101.SCH | | XBRL Taxonomy Extension Schema Document. |
| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | | XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | | XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
* Indicates, in this Quarterly Report on Form 10-Q, brand names of products, which are registered trademarks not solely owned by the Company or its subsidiaries. Abilify is a trademark of Otsuka Pharmaceutical Co., Ltd.; Atripla is a trademark of Gilead Sciences, LLC.; Avapro/Avalide (known in the EU as Aprovel/Karvea) and Plavix are trademarks of Sanofi; Byetta is a trademark of Amylin Pharmaceuticals, LLC; Cabometyx is a trademark of Exelixis, Inc.; Erbitux is a trademark of ImClone LLC; Onglyza is a trademark of AstraZeneca AB;Gleevec is a trademark of Novartis AG; Keytruda is a trademark of Merck Sharp & Dohme Corp; Otezla is a trademark of Amgen Inc.;Plavix is a trademark of Sanofi-aventis U.S. Tecentriq is a trademark of Genentech, Inc.; and Yescarta is a trademark of Kite Pharma, Inc. Brand names of products that are in all italicized letters, without an asterisk, are registered trademarks of BMS and/or one of its subsidiaries.
SUMMARY OF ABBREVIATED TERMS
Bristol-Myers Squibb Company and its consolidated subsidiaries may be referred to as Bristol Myers Squibb, BMS, the Company, we, our or us in this Quarterly Report on Form 10-Q, unless the context otherwise indicates. Throughout this Quarterly Report on Form 10-Q we have used terms which are defined below:
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20202021 Form 10-K | Annual Report on Form 10-K for the fiscal year ended December 31, 20202021 | Lilly | Eli Lilly and Company |
AgenusAML | Agenus Inc.acute myeloid leukemia | LOE | loss of exclusivity |
AmgenAmylin | AmgenAmylin Pharmaceuticals, Inc. | MAA | marketing authorization application |
| aNDA | abbreviated new drug application | MDL | multi-district litigation |
AMLAstraZeneca | acute myeloid leukemiaAstraZeneca PLC | MDS | myelodysplastic syndromes |
AmylinBLA | Amylin Pharmaceuticals, Inc.biologics license application | MPM | malignant pleural mesothelioma |
aNDABridgeBio | abbreviated new drug applications | MyoKardia | MyoKardia, Inc. |
AstraZeneca | AstraZeneca PLC | NKT | natural killer T cells |
BCMA | B-cell maturation antigen | NSCLC | non-small cell lung cancer |
BLA | biologics license application | NVAF | non-valvular atrial fibrillation |
bluebird | bluebird bio,BridgeBio Pharma Inc. | oHCMMS | obstructive hypertrophic cardiomyopathyMultiple Sceloris |
| CAR T | chimeric antigen receptor T-cell | OnoMyoKardia | Ono Pharmaceutical Co., Ltd.MyoKardia, Inc. |
| Celgene | Celgene Corporation | OTCNDA | over-the-counternew drug application |
| CERCLA | U.S. Comprehensive Environmental Response, Compensation and Liability Act | NKT | natural killer T cells |
| CHMP | Committee for Medicinal Products for Human Use | NSCLC | non-small cell lung cancer |
| CML | chronic myeloid leukemia | NVAF | non-valvular atrial fibrillation |
| CRC | Colorectal carcinoma | OTC | over-the-counter |
| CVR | contingent value rights | Otsuka | Otsuka Pharmaceutical Co., Ltd. |
CMLEC | chronic myeloid leukemiaEuropean Commission | PD-1 | programmed cell death protein 1 |
CormorantEisai | Cormorant PharmaceuticalsEisai Co., Ltd. | PD-L1 | programmed death-ligand 1 |
CRCEMA | Colorectal carcinoma | PDUFA | The Prescription Drug User Fee Act |
CVR | contingent value rightsEuropean Medicines Agency | Pfizer | Pfizer, Inc. |
ECEPS | European Commission | Prothena | Prothena Corporation plc |
Eisai | Eisai Co., Ltd.earnings per share | PsA | psoriatic arthritis |
EMAESCC | European Medicines Agencyesophageal squamous cell carcinoma | Quarterly Report on Form 10-Q | Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2021 |
EPS | earnings per share | R&D | research and development |
ESCC | esophageal squamous cell carcinoma | RA | rheumatoid arthritis2022 |
| EU | European Union | RBCR&D | red blood cellresearch and development |
| FASB | Financial Accounting Standards Board | RCCRA | renal cell carcinomarheumatoid arthritis |
| FDA | U.S. Food and Drug Administration | REMSRBC | risk evaluation and mitigation strategyred blood cell |
| GAAP | U.S. generally accepted accounting principles | RRMMRCC | relapsed and refractory multiple myelomarenal cell carcinoma |
GILTIGTN | Global intangible low-taxed incomegross-to-net | REMS | risk evaluation and mitigation strategy |
| HCC | hepatocellular carcinoma | Sanofi | Sanofi S.A. |
GTNHCM | gross-to-nethypertrophic cardiomyopathy | sBLA | supplemental Biologics License Application |
HCC | hepatocellular carcinoma | SCLC | small cell lung cancer |
| HIV | human immunodeficiency viruses | SEC | Securities and Exchange Commission |
| IO | immuno-oncology | TNBCSLE | triple-negative breast cancerSystemic Lupus Erythematosus |
| IPRD | in-process research and development | UCTurning Point | ulcerative colitisTurning Point Therapeutics, Inc. |
| IRS | Internal Revenue Service | U.S.UC | United Statesulcerative colitis |
| JIA | juvenile idiopathic arthritis | UKU.S. | United KingdomStates |
| Juno | Juno Therapeutics, Inc. | VATUK | value added taxUnited Kingdom |
| LIBOR | London Interbank Offered Rate | VTEVAT | venous thromboembolicvalue added tax |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | BRISTOL-MYERS SQUIBB COMPANY
(REGISTRANT) |
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| Date: | July 28, 202127, 2022 | By: | /s/ Giovanni Caforio, M.D. |
| | | Giovanni Caforio, M.D. Chairman of the Board and Chief Executive Officer |
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| Date: | July 28, 202127, 2022 | By: | /s/ David V. Elkins |
| | | David V. Elkins Chief Financial Officer |